Nigeria to adopt international financial reporting system in January 2012

By Henry Umoru & Salamatu Ismail
AS part of plans to meet international standards, the Federal government has disclosed that new accounting system , the International Financial Reporting Standard (IFRS) will take off in Nigeria on first of January, 2012. According to the government, the choice of the date is anchored on the need to effectively transit to IFRS over a three year period.

Unveiling the IFRS road map, , Minister of Commerce and Industry, Senator Jibril Martin-Kuye noted that the search for global accounting standard as captured by the IFRS became imperative following the collapse of US energy giant, Enron when accounting profession came under scrutiny and led to the global questioning of accounts experience, integrity and existence of standards in corporate governance.

According to the Minister, all other public interest entities are expected to mandatorily adopt IFRS for statutory purposes by January 1, 2013, while Small and Medium-sized entities, SMEs shall mandatorily adopt the system on January 1, 2014, adding that with this, all SMEs in Nigeria will statutorily be required to issue IFRS based financial statements for the year ended December 31, 2014.

He warned that entities which fail to meet the IFRS for SMEs criteria shall report using Small and Medium-sized Entities Guidelines on Accounting (BMEGA) level three issued by the United Nations Conference on Trade and Development (UNCTAD).

Senator Martin-Kuye who noted that countries that hitherto believed accounting standards were impermeable found out that to realize the full gains of international listing, no individual country could act alone in its financial reporting standards.

The Minister who stressed that in recent times , a number of Nigerian companies had raised capital from international stock markets while others established significant presence in other jurisdiction, adding that for a better understanding and appreciation of the risks involved, it became mandatory that financial statements prepared in Nigeria use global reporting benchmarks.

In his contribution, Board member, International Accounting Standards Board, IASB, Prabhakar Kalavacherla said that with Nigeria’s latest move, it would serve as a lesson to other Africa countries and to a large extent, the rest of the world, adding that the IFRS would help create jobs and alleviate poverty in Nigeria, just as he urged Nigeria to diversify its earnings from the oil sector to what he termed service industry.

Earlier, in his remarks the Chairman, Governing Council of the Nigerian Accounting Standard Board (NASB) Mr. Michael Adebisi Popoola who noted that the NASB was convinced that the support and commitment of other stakeholders were indispensable in the march towards achieving the commonly shared goal of ensuring that financial statements prepared, stressed that with this, Nigeria will meet the highest degree of credibility and reliability.

According to him, “at NASB, we are approaching regulation with novel pragmatism. We believe that any step we take in convergence efforts must primarily be that of public interest and the general interest of organizations as well as contribute to the effectiveness of good governance and ultimately promote economic growth.”

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