CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Internationalization of economic trade and globalization of business is on the ascend-ency. Consequently, financial statements prepared according to a nation’s local accounting system may hardly meet the needs of investors, business partners, financiers and decisions – makers who are conversant with international standards. A financial reporting system supported by governance, high quality standards, and sound regulatory frameworks is the key to economic development. Indeed, high quality standards of financial reporting, auditing, and ethnics underpins the trust that investors place in financial and non-financial information. This, thus play an integral role in contributing to a country’s economic growth and financial stability. According to financial system experts, the major strength of the IFRS is that it offers a lot of benefits to corporate and public enterprises in terms of costs; easy consolidation of financial statements; better management control of internal consistencies of reporting; and improved access to global financial capital markets and investment havens. The IFRS helps to facilitate the elevation of potential cross-border acquisitions, ventures and spin-os for companies with focus on global operations or markets, amongst other financial reporting opportunities. One of the professional bodies with enormous roles in the IFRS project in 2011 implementation, the Institute of Chartered Accountants of Nigeria (ICAN) announced its plan to train its members on the standard with a view to exposing them to all the operational issues and the skills needed to handle them. According to Onwuama (2010), it is imperative for accountants to have the required skills that would make them be at the vanguard of the country’s eorts aimed at adopting the globally accepted standards for financial reporting for corporate entities. Appreciating the challenges of implementation of the novel standards in Nigeria is enormous. He observed that adequate time and resources need to be committed by corporate entities, including practicing firms, to revisit their operational and internal control systems with a view to changing them, where necessary, in order to meet the requirements of the IFRS in reporting the research for performance locally and internationally. The implication for this decision is that they are profoundly needed to build capacity to drive the process. Organizations need to revisit their operational and internal control systems. The laws need to be amended. The transition processes need to be handled eiciently, eectively and professionally in order to sustain the confidence of users of accounting services on the skills of chartered accountants. In view of this, there is need to build member’s capacity particularly in IFRS such that financial reports need to meet global practices in terms of quality, technical content, transparency of rules and stakeholders’ friendliness (Onwuama 2010). There are indications that most entities are still groping with sundry challenges that might scuttle the adoption of the nationwide agenda to which so much eorts had been committed and other stakeholders in the past one and – a-half years. According to Sule (2011), subsidiaries of multinational companies in Nigeria as well as local companies like Guaranty Trust Bank, Access Bank and Oando Nigeria PLC had started reporting on the basis of IFRS. There are still some issues that must be tackled by the SPIEs in order to achieve broad policy objectives of the IFRS in Nigeria economy. Many companies in Nigeria have began to nurse fear over the consequences of adopting this international standards from countries that are highly advanced. There are much financial risks companies are bound to face if this standards are adopted. However, the adoption of international accounting standard and international financial reporting standard does reveal high volatility and risk that will be inherent in companies if the latter are applied in producing quality financial reporting in Nigeria. (Tyrral, Wood ward and Rakhunbekova, 2010) It is against these back drops that this research is under taken by the student researcher to critically assess the influence of the adoption of IFRS on corporate performance in Nigeria