THE VALUE RELEVANCE OF RECONCILIATION ADJUSTMENTS OF FIRST-TIME IFR ADOPTERS: EVIDENCE FROM THE NIGERIAN DEPOSIT MONEY BANKS.
CHAPTER ONE
INTRODUCTION
1.1 INTRODUCTION
Following increasing worldwide movement towards adoption of International Financial Reporting Standards (IFRS) as the preferred accounting regime, the Federal Executive Council of Nigeria on 28th October, 2010 approved the adoption of IFRS in Nigeria. The approved Roadmap for the adoption of IFRS mandates the implementation of IFRS in three phases viz:
(i) publicly listed entities and significant public interest entities, 1 January 2012,
(ii) other public interest entities, 1 January 2013, and
(iii) small and medium sized entities,1 January 2014.
Thus, listed deposit money banks (DMBs) were mandated to prepare their financial statements for the year ended 31st December, 2012 based on IFRS.
To prepare the first IFRS financial statements, the DMBs must comply with the requirements of IFRS 1(First Time Adoption of International Financial Reporting Standards). IFRS 1 requires, amongst other things, that the first time adopters prepare opening IFRS Statement of Financial Position and perform IFRS reconciliation [reconcile accounting numbers based on local GAAP, i.e from Statement of Accounting Standards(SAS) issued by the Nigerian Accounting Standards Board (NASB) to IFRS] so as to provide comparative data for the first IFRS financial statement. SAS/IFRS reconciliation involves restating the last financial statement prepared on the basis of Statement of Accounting Standards (SAS) to IFRS principles which essentially entails
(i) recognizing all assets and liabilities whose recognition is required under IFRS;
(ii) unrecognizing items as assets or liabilities if IFRS do not permit such recognition,
(iii) reclassifying items that it recognized under SAS as one type of asset or liability or components of equity but are different types of asset, liability or component of equity under IFRS, and
(iv) measuring all recognized assets and liabilities according to IFRS principles (IASB, 2004).
1.2 Objective of the Study
The objective of financial reporting is to provide financial information about the reporting entity that is useful to present and potential equity investors, lenders and other creditors in making investment decisions. To be decision useful, the financial information must, in addition to other characteristics, be relevant. The IASB Conceptual Framework states that information is relevant if it influences the economic decisions of users by helping them to evaluate past, present and future events or confirming or correcting their past evaluations. In view of this, this paper seeks to assess whether or not the reconciliation adjustments performed by the Nigerian DMBs who are first time adopters of IFRS are the value relevant. If value relevant, to what extent are the reconciliation adjustments incrementally value relevant?
Terms of Use: This is an academic paper. Students should NOT copy our materials word to word, as we DO NOT encourage Plagiarism. Only use as a guide in developing your original research work. Thanks.
Disclaimer: All undertaking works, records, and reports posted on this website, eprojectguide.com are the property/copyright of their individual proprietors. They are for research reference/direction purposes and the works are publicly supported. Do not present another person’s work as your own to maintain a strategic distance from counterfeiting its results. Use it as a guide and not duplicate the work in exactly the same words (verbatim). eprojectguide.com is a vault of exploration works simply like academia.edu, researchgate.net, scribd.com, docsity.com, course hero, and numerous different stages where clients transfer works. The paid membership on eprojectguide.com is a method by which the site is kept up to help Open Education. In the event that you see your work posted here, and you need it to be eliminated/credited, it would be ideal if you call us on +2348064699975 or send us a mail along with the web address linked to the work, to eprojectguide@gmail.com. We will answer to and honor each solicitation. Kindly note notification it might take up to 24 – 48 hours to handle your solicitation.