IMPACT OF IFRS ON THE FINANCIAL STATEMENTS FIGURES AND KEY FINANCIAL RATIOS OF NIGERIAN BANKS
No Thumbnail Available
Date
2015-07
Journal Title
Journal ISSN
Volume Title
Publisher
The Journal of Commerce, Hailey College of Commerce, University of the Punjab, Lahore, Pakistan
Abstract
International Financial Reporting Standards has become the new dominant set of accounting
standards; however, the transition to the new was fairly disruptive for users of financial
statements. Comparability and trend analyses was impaired as the differences between IFRS
and local generally accepted accounting principles (GAAP) impact figures presented in
financial statements and lead to variances in financial ratios computed under the two regimes.
This study examines the impact of IFRS adoption in Nigeria on financial statement figures
and key financial ratios of Nigeria Banks that adopted IFRS. The study likewise seeks to
identify the sources of differences in financial reporting experienced by Banks due to the
changes in the regime. A number of recommendations are provided based on the findings of
this study. Those involved in the analysis of financial statements are advised to accord
attention to the trend analysis when comparing pre-adoption data under NGAAP with postadoption
data in IFRS. The comparison of financial ratios under both NGAAP and IFRS for
the comparative year prior to IFRS adoption may be seen as a prudent first step prior to
undertaking a trend analysis of a particular company. It may also be prudent to rely on cash
flows to avoid the subjectivity inherent to accounting adjustments. Being aware of the higher
volatility of accounting figures under IFRS and understanding the main categories of
adjustments affecting accounting figures and ratios in IFRS may likewise be important.
Description
Keywords
Financial Ratio, Financial Statement, IFRS