IMPACT OF INTERNATIONAL FINANCIAL REPORTING

STANDARD (IFRS) ON THE FINANCIAL STATEMETN OF

DEPOSIT MONEY BANKS IN NIGERIA
(A CASE STUDY OF FIRST BANK OF NIGERIA)

BY
AGBOOLA FAROUK OLAWALE
HND/22/ACC/FT/626
BEING A RESEARCH PROJECT SUBMITTED TO THE

DEPARTMENT OF ACCOUNTANCY, INSTITUTE OF FINANCE

AND MANAGEMENT STUDIES (IFMS), KWARA STATE

POLYTECHNIC, ILORIN.

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR

THE AWARD OF HIGHER NATIONAL DIPLOMA (HND) IN

ACCOUNTANCY.

MAY, 2024

1
 CERTIFICATION

This is to certify that this project has been written by AGBOOLA

FAROUK OLAWALE with Matric Number HND/22/ACC/FT/626 has

been read and approved as meeting part of the requirements for the Award of

Higher National Diploma in Department of Accountancy, Institute of Finance

and Management Studies, Kwara State Polytechnic Ilorin Kwara State.

MR. YUSUF A. S DATE

(PROJECT SUPERVISOR)

MRS. ADEGBOYE B. B DATE

(PROJECT CO-ORDINATOR)

MR. YUSUF A.S DATE

(HEAD OF DEPARTMENT)

IKHU-OMOREGBE SUNDAY (F.C.A) DATE

EXTERNAL EXAMINER
DEDICATION

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 This project work is dedicated to Almighty Allah, He is the beginning

and the end of all things and He has made this project writing a reality, Also

to my beloved Parent, MR. AND MRS. AGBOOLA for their support may

Almighty Allah continue to bless your ways (Amen).

3
 ACKNOWLEDGMENT

My profound and deepest appreciation goes to Almighty Allah for His

infinite mercy in my life since my birth and through my academic career in

Kwara State Polytechnic for his provision, blessing, protection and favour

always.

My sincere gratitude goes to my parent, MR. AND MRS. AGBOOLA

for their financial support, advice and guidance, they are my back bone. I

really appreciate them for seeing me through this necessary stage of my

education. May you stay healthy and live long to eat the fruit of your labour

(Amin).

I also appreciate my supervisor MR. YUSUF A. S for his comment and

guidance throughout the period of this project. May Almighty God continue

to shower his blessing upon you and your family.

I pray for all live long enough to eat the fruit of your labour, I really

appreciate your love my lovely brother and sisters, AGBOOLA, ABDUL

RASHEED, AGBOOLA FUAD OLAYINKE, AGBOOLA ROFIAT

BISOLA, AGBOOLA FAIZAT AJOKE and my little princess

AGBOOLA KABIRAT ABIKE for their support to my academic generally

a bright futures await for you all.

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 My appreciation also goes to my UZTAS SHEIK ISIAK, MUSA

OBADAGBAGBE, I sincerely appreciate your love, support and advice

always, may Almighty Allah bless you sir.

My acknowledgment and appreciation will not be complete without

mention my close friends such as; IBRAHIM, FAROUK, ROHEEMAT,

NAFISAT MUDRAT, my only OLAWALE (VIBE) AND OLAJUWON

for their support and contribution towards the success of this project, they

have been there through thick and thin. I cannot appreciate you guys enough.

May Almighty Allah bless you all for me. I pray we all survive and make it

in this journey of life. I appreciate everyone that has participated and

contributed to this project on one way or the other.

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 TABLE OF CONTENT

Tittle page i
Certification ii
Dedication iii
Acknowledgment iv
Table of Content v
CHAPTER ONE: INTRODUCTION
1.1 Background to the Study 1
1.2 Statement of the Problem 2
1.3 Research Questions 3
1.4 Objectives of the Study 4
1.5 Research Hypotheses 4
1.6 Significance of the Study 4
1.7 Scope of the Study 4
1.8 Limitation of the Study 5
1.9 Definition of Key Terms 5
CHAPTER TWO: LITERATURE REVIEW
2.1 Conceptual Issues 6
2.2 Theoretical Framework 18
2.3 Conceptual Framework 20
2.4 Gap in Literature 24

CHAPTER THREE: METHODOLOGY

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3.1 Introduction 25
3.2 Research Design 25
3.3 Population of the Study 25
3.4 Sampling Procedure and Sampling Techniques 25
3.6 Method of Data Analysis 28
3.7 Model Specification 28
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.1 Introduction 30
4.2 Normality Test 32
4.3 Test of Hypothesis 33
CHAPTER FIVE: SUMMARY, CONCLUSION AND
RECOMMENDATIONS
5.1 Summary of the Findings 43
5.2 Conclusion 43
5.3 Recommendations 43
Reference

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 CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The political economic and social development of any century depends on the

amount of revenue generated for the provision of basic infrastructure in the given country.

This perhaps explains why the government shows great concern for a medium through

which fund can be made available to achieve their set goals for the society development.

Government needs money to be able to execute its social obligation to the public.

These social obligations include but not limited to the provision of infrastructure and social

services. According to Markur (2001) meeting the needs of the society calls for huge funds

which an individual or society could not contribute alone. It becomes the responsibility of

government to source for the funds to enable it provide these basic amenities to the citizen

who are beneficiaries.

However, one means of generating the amount of revenue for providing the needed

infrastructure is through a well structure tax system. Tax is a very imposed in individuals,

partnerships estates, trustees or corporates basic amenities. This contributes to the

development and administration of the society at large (Murkur, 2009). However this

contribution is minima due to tax evasion which rubbed government of some of the money

it would have realized to provide these amenities.

Chumya (2006), tax evasion in most developing countries is so rampant, and the

scenario is much worsened by the fact not many of these governments have made an effort

to measure the ethical reasons that tax payer gives, the extent of this problem and analyze

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its that tax payers gives, the extent of this problem and analyze its impact. Hence, when

required revenue for smooth operation of the country economy could not be raised, these

countries often resort to increasing tax rates or borrowing which may not only resort to

increasing tax rates or borrowing which may not only crowd out the private sector of their

economics but also lead them to bell traps. Tax evasion has the effect of distorting the

principles of perfect market resources allocation and income redistribution. This can lead

to economic growth stagnation and far much reaching socio economic repercussion. Thus,

there is the need to understand the behavior of tax payer the reasons for tax evasion and the

consequent impact of tax evasion or revenue generation in Nigeria.

Although, tax evasion and avoidance are twin problems that face every tax system,

the Nigeria situation seems unique when viewed against the scale if corrupt practiced in

Nigeria under direct personal taxation as practiced in Nigeria, the major problem lies in the

collection of the taxes especially from the self-employed such as the businessmen,

contractors, professional practitioners like layers, doctors, accountants, architects, and

traders in shop among others as observed by Ayual (1960), these persons blatantly refuse

to pay by reporting loses every year.

According to Ayual (1996) many of these professionals live a lifestyle in consistent

with the reported income, which is usually unrealistically low to the nature of their

business.

1.2 STATEMENTS OF THE PROBLEMS

Post researchers had shown that those civil servants and other salaries workers are

the only class of people that actually pay taxes in Nigeria. Whom people fail to pay, this

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will affect the revenue that would be generated by the government. When revenue

generated is being reduced, government will not be able to provide adequate social

amenities needed for its citizen government capital project will be delayed.

However, even among the salaries workers, many have turned the statutory

personal allowances and reliefs into a fertile ground for tax evasion. Almost all Nigerian

tax payers are married with four children each similarly despite the tax provision meant to

plug loopholes through which taxable persons can minimize tax ability. The self employed

person employ all kinds of avoidance scheme to minimize or escape tax liabilities and make

sure you winder whether are still any tax officials working in that capacity such be carried

no doubt, say a lot about tax administration system in Nigeria both in its design and in the

disposition of some tax payers towards taxation while it immediately presupposes that there

are legal frameworks put in place to punish tax evaders, it perhaps raises a poser on the

efficiency and effectiveness of tax laws and administration in Nigeria.

According to Alabi (2001), some state governments in an effort towards solving

this problem had even gone to the extent of engaging the source of tax consultants. The

government tax evasion and avoidance still persist. There is no doubt that revenue due to

any government will be reduced by the unpatriotic act of tax evaders.

1.3 RESEARCH QUESTIONS

In order to ensure that adequate revenue is generated for the government through

taxation and subsequent provision of sufficient infrastructure and necessary amenities it is

important that we know the effect of tax evasion in revenue generation in Nigeria.

i. What is the effect of tax evasion on revenue generation in nigeria?

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ii. What benefit will Nigeria derive from cubing tax evasion?

1.4 OBJECTIVE OF THE STUDY

The general objective of this research work is to assess the effects of tax evasion

on revenue generation in Nigeria. The specific objectives are to;

i. Examine the effect of tax evasion on revenue generation in Nigeria

ii. Analyze the benefit (if any) Nigeria will derive from curbing tax evasion

1.5 RESEARCH HYPOTHESES

The following hypothesis will be tested for the purpose of this study;

i. Ho1: There is no significant relationship between tax evasion and revenue generation in

Nigeria.

ii. Ho2: Lack of proper books of account is not the major factor causing tax evasion in

Nigeria.

1.6 SIGNIFICANCE OF THE STUDY

The reason for carrying out research is to discover hidden truth that will contribute

to the existing body of knowledge. Hence, the significant of this study is based on the fact

that it will help to curb tax evasion and tax avoidance in Nigeria economy.

Tax evasion and avoidance are problems that face every tax system, the Nigeria

situation seems unique when viewed against the scale of corrupt practices prevalent in

Nigeria.

1.7 SCOPE OF THE STUDY

This study will focus on the effect of tax evasion on revenue generation in Nigeria

using the federal inland revenue service (FIRS), Ilorin as the case study. Data covering the

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period between years 2008 to 2012 will be used for the case study. This is because the

Nigeria economy needs to be examined. The study will also examine the necessary steps

to curb the measure of tax evasion in Nigeria.

1.8 LIMITATION OF THE STUDY

This research work is designed to focus on the effect of tax evasion in Nigeria using

the federal inland revenue service as the case study. The research could not be extends to

other annexes of the inland revenue due to financial constraint which made transportation

for unaffordable. Hence, the conclusion reached in this research work, the recommendation

of the entire population.

Also, the fact that the time limit for this study was very short made it impossible to

extend the study to other revenue and also prevented the researcher from using an elaborate

research questionnaire.

1.9 DEFINITION OF KEY TERMS

TAX: This means any levy in conformity with the provision of section 100 of the personal

income tax act 1993 as amended (Aguolu, 1999).

TAXATION: According to Stuart (1992), it is a system of raising money by levying taxes.

TAX AVOIDANCE: This is deliberate act by taxpayers to pay less than he or she ought

to pay legally. It is an “act of winning games without actually cheating”.

TAX EVASION: This is an illegal method of reducing one’s tax liability such as declaring

liver income or outright refusal to pay tax.

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 CHAPTER TWO

INTRODUCTION

2.1 CONCEPTUAL ISSUES

2.1.1 CONCEPTUALIZING IFRS AND DEFINITIONS

International financial reporting standards (IFRS) are standard, rules principle

benchmarks and best practices that preparing of financial statements these standards are

issued by the international accounting standard board (IASB), a technical committee of

IFAC (International Federation of Accountant) IFRS apply to private sector entities. The

public sector equivalent of IFRS is the international public sector accounting standards

(IPSAS). IFRS provides guidance in the preparation of general purpose financial

statements (GPFs) and are required to the followed by private sector and related

organization in the preparation of their financial statements. IFRS is a combination of

international accounting standards, originally issued by the international accounting

standards committee (IASC) and international financial reporting standards issued by the

international accounting standards issued by the international accounting standards issued

by the international accounting standards board (IASB).

2.1.2 OBJECTIVES OF INTERNATIONAL FINANCIAL REPORTING

STANDARD

The world has been a global village and the current reality is that the worlds capital

market now operate across borders. World economic are interdependent accounting and

auditing needs strengthening and high quality information facilities the allocation of global

capital. To meet the financial reporting needs of diverse users of cross-border financial

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statements, the international accounting standards board (IASB) in its wisdom thought wise

to harmonies financial reporting standards used in the preparation of financial statements

globally. The objectives of IFRS are as follows:

1. Serves as a global set of accounting standard to be adopted by prepares of financial

statement of private sector entities.

2. To ensure the influence of IFRS and comparability of fair value reporting on quality

of financial statement of deposit money banks reports by private sector entities.

3. To improve the quality of IFRS high disclosure of financial information influence

on the report of private sector entity.

4. To influence IFRS efficiency in financial reporting and as such facilitate

standardization of information systems eliminate wasteful reconciliations, enhance audit

efficiencies and facilitate education and training of prepares of financial statements.

5. To disclose the financial information thereby attracting investment through

transparency reducing the cost of capital increasing worldwide investment.

2.1.3 BRIEF HISTORY OF INTERNATIONAL FINANCIAL REPORTING

STANDARDS

For a proper understanding of the historical development of international financial

reporting standards, it is important to exaine the history of international accounting

standard since international accounting standards predate international financial reporting

standard since International Accounting Standards predate International financial reporting

standards. Before the constitution of the international accounting standards committee

(IASC). Which was the body charged with the responsibility for the development of

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accounting standard between 1973 and 2001 – efforts had been made by professional

accounting bodies in Canada, the United Kingdom and the United State of America

towards convergence of accounting standards. The first move towards accounting

standards convergence was the proposal to create the accountants international study group

(AISG) by professional accountancy bodies in Canada, the United Kingdom and the United

States in 1966 (Odia & Ogiedu, 2013).

The AISG was creatd in 1967 to develop comparative studies of accounting and

auditing practices in the three nations mentioned above until it was disbanded in 1977. The

IASG had published 20 studies on accounting and auditing practices. In 1972, Sir Henry

Benson put forward the proposal for the setting up of the international accounting standards

committee (IASC) at the 40th world congress of accountants in studies and become the first

elected chairman of the IASC when it was formed in 1973. Thus, the development of

international accounting standards committee (IASC) by accounting bodies in nine

countries which are Australia, Canada, France, Germany, Japan, Mexico, the Netherlands,

United Kingdom and Ireland and the United states of America. The purpose of the IASC

is to promote worldwide acceptance of accounting standards that would improve

comparability of financial standards that would improve comparability of financial

information in years subsequent to 1973, additional sponsoring member were added and

by 1982 the sponsoring members comprised all the professional accountancy bodies that

were members of the international federation of accountants (IFAC). Before the formation

of the IASC, effort had been made by some countries around the world to develop

accounting standards used in the preparation of financial statements in their jurisdiction.

15
Mohamad (2012) The history of international accounting reporting standard can be traced

to March 2001 when the International Accounting Standard Committee (IASC) Foundation

was formed (the IASC foundation later becames the IFRS foundation). In April, 2001, the

international accounting standard committee was disbanded and the international

accounting standard board (IASB), was established to assume accounting standard seeting

responsibilities. The IASB is an independent, privately funded accounting standards setter

based in London. Contributors to the IASB include major accountings firms, private

financial institutions, industrial, companies throughout the world, central and development

banks and others international and professional organizations. With the establishment to

the IASB standards previously developed by the IASC were evaluated to determine their

applicability given changing global circumstance with a view to reviewing or revising

them. Existing IAS which were reviewed re-designated IFRS while new standards issued

subsequent to April, 2001 were designated IFRS, the first one being IFRS 1 (first time

adoption of international financial reporting standards). Issued in June, 2003. Okoye P.V.C

& Akenbor C.O (2012).

2.1.4 IFRS AND COMPARABILITY FAIR VALUE REPORTING

Financial reporting quality is a key issue given the widespread acceptance of

IAS/IFRS all over the worlds. IAS/IFRS or local variants have been adopted in

purisdictions as diverse as Australia, Canada, Hong Kong, Central and Eastern Europe,

including Russia, parts of the middle east and Africa, India, Japan and much of South

America are in the process of discussing and deciding upon mandatory adoption of

IAS/IFRS at least for part of their economies. Several other countries have not adopted.

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Moreover, in 2007, the security and exchange commission (SEC) in the United State of

America eliminated the reconciliation from IAS/IFRS to US GAAP required by foreign

companies listed on US markets. The SEC also announced that IAS/IFRS would be

permitted in US markets as an alternative to US GAAP, although in this case, the time

seaters is lengthy and subject to various conditions. Mandawaki, A (2012).

2.1.5 BENEFITS OF ADOPTION OF INTERNATIONAL FINANCIAL

REPORTING STANDARD IN NIGERIA

This paper shall approach the discussion on the benefits of adoption of IFRS in

Nigeria by first and foremost considering the benefits that flow from adopting uniform

reporting standards. According to Herbert (2010), at least five affirmative reliefs flow from

adopting uniform reporting standards, the first three relating to voluntary adoption (i.e

without government flat), while the remaining two are dictated by regulatory and user

influences. The first affirmative argument, which relates to scale economics underlies

introduced once. They constitute a type of public good in that the marginal cost of an

additional user adopting them is Zar, and nobody is disadvantage by another using them.

The second advantage if uniform standards is the protection they give auditors against

manager playing an ‘opinion shopping’ game (Ball, 2006). If all auditors are required to

enforce the same rules. Managers cannot threaten to shop for an auditor who will give an

unqualified opinion on a more favourable rule.

The third argument supporting uniform financial reporting is the potential of

eliminating information externalities arising from lack of comparability. If firms and/or

countries use different accounting standard and techniques even if unambiguously

17
disclosure to all users they can impose costs on others (in economics parlances, create

negative externalities) due to lack of comparability. To the extent that firms internalize

these effects it will be advantageous for them to use the same standards as others. IFRS.

The fourth advantage derives from the worldwide support from multinational corporation

(MNCs), regulators and users because of the belief that common standard in the preparation

of corporate financial statements will facilitate international comparability from different

countries. Large MNCs operating in Multiple jurisdictions would be able to use one

accounting language company wide and present group financial standards in the same

language as their competitors. The fifth benefit is the belief that in a truly global economy

finance professionals will be more moblie, and companies will more easily respond to their

group human capital needs around the world.

The advantages imply that the IFRS offer some degree of uniformity in accounting

standards that is prospective in a market setting in addition to the above, direct and indirect

advantages of IFRS adoption for investors have been isolated.

Direct advantage to investors include:

IFRS promise more accurate, comprehensive and timely financial statement information,

relative to the national standards they replace for public financial reporting in most of the

countries adopting for public financial reporting in most of the countries adopting them.

To the extent that financial statement information is derived form IFRS sources, this should

lead to more informed valuation in the equity markets, and hence lower risk to investors.

Small investor are less likely them investment professionals to anticipate financial

statement information from other sources. Improving financial reporting quality through

18
uniform standard allows them to compete better with professionals and hence reduces the

risk of adverse selection through a better informed professional (known as adverse

selection) (Diamond & Varreichia, 1991, Lenz & Varreiching, 2000).

By eliminating many international differences in accounting standard, and standardizing

reporting formats. IFRS eliminate many of the adjustments analysts historically make in

order to make companies financials more comparable internationally IFRS adoption has

the potential to reduce the cost of processing financial information. The gain would be

greatest for institutions that creates large, standardized format financial databases.

Reducing the cost of processing financial information will most likely increase market

efficiency, that is, the efficiency with which the stock market incorporate it inprices.

Investors are expected to gain from increased market efficiency. Reducing international

differences in accounting standard assists to some degree in removing parries to cross-

border acquisition and divestitures, which in theory will reward investors with increasd

takeover preminums (Bradley, Desui & Kun, 1988).

In addition, IFRS offer several additional indirect advantages to investor first, it is expected

that IFRS should induce higher information quality which in turn, should reduce the risk

of equity investment and the risk to less informed investors due to adverse selection.

Theoretically, therefore, IFRS should lead to a reduction in firms costs of equity capital

which would increase share prices and make new investments more attractive ceteris

paritbus in transparency and usefulness of financial statement information in contracting

between firms and other stakeholders, notably lenders and managers (Watts, 1977: Watts

& Zimmaman, 1956) increased transparency causes managers to act more in the interests

19
of shareholders in particular, timely loss recognition in the financial statements increases

the incentives of mangers to attend to existing loss. Making investmetns and strategies

more quickly and to undertake fewer new investments with negative net present values

(Ball, 2001, Ball & Shivakumar, 2005).

The increased transparency and loss recognition timeliness promised by IFRS therefore

could increase the efficiency of contracting between firms and their mangers, reduce

agency costs between managers and shareholders, and enhance cooperate governance. The

potential gain to investors arises from mangers acting more in their (i.e investors) interests

in other words, the increased transparency and loss recognition timeliness promised by

IFRS could increased the efficiency of contracting in debt markets, between firms and

lenders with potential gains to equites investors in terms of reduced cost of debt capital.

The discussion in the benefits of adoption IFRS in Nigeria can also be approached from

the perspective of the benefit of IFRS on the performance of deposit money bank Leaning

Media (2012). Accordingly, the benefits of IFRS based on the benefits to users and

preparers of financial statement includes:

2.1.6 IFRS ADOPTION

The adoption of IFRS has several benefits. Madawaki (2012) outlined some of these

benefit as follow:

1. Promotion of the compilation of meaningful data on the performance of various

reporting entities at both public and private levels in Nigeria thereby encouraging

comparability, transparency, efficiency and reliability of financial reporting in Nigeria.

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2. Assurance of useful and meaningful decision on investment portfolio in Nigeria.

Investors can easily compare financial results of corporation and make investment

decision.

3. Attraction of foreign direct investment – countries attract investment through greater

transparency and a lower cost of capital for potential investors.

4. Assurance of easier access to external capital local companies.

5. Reduction of the cost of doing business across borders by eliminating the need for

supplementary information from Nigeria companies.

6. Facilitation or easy consolidation of financial information of the same company with

offices in different countries.

7. Easier regulation of financial information of entities in Nigeria.

8. Enhanced knowledge of global financial reporting standard by tertiary institutions in

Nigeria.

9. Better quantity financial information for shareholders and supervisory authorities.

10. Government to be able to better access the tax liability of multinational companies.

In addition, Ahmed (2010) states that, adopting IFRS reduces information asyminatory

which would lower costs of equity and debt financing, it smoothens the communication

between operators, shareholder, lenders and other interested parties resulting in lower

costs. IFRS adoption, would offers comparability and reduces accounting manipulations

and positively impacts firms “stock return and stock related financial performance measure

(Epstein, 2009).

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2.1.8 IFRS AND CORPORATE PERFORMANCE OF ENTITIES IN NIGERIA

The performance of public listed companies in Nigeria is expected to improve as a result

of IFRS adoption. As business responds to the demands and opportunities of IFRS

conversion, revisiting its fundamental business performance.

Management (BPM) process will likely prove worthwhile (Rusnak, 2009). Corporate

performance can be measured in various ways. For examples Ventrakaman and Pamanijam

in Hasan et al (2010) divide corporate performance into operational and financial

performances. Operational performance includes. (i) Market share (ii) Product quality, and

(iii) Marketing effectiveness. Financial performance is broken down into two subcategories

(i). Market-based performance (e.g stock price, dididend payout and earnings per share)

and (ii) accounting-based performance (e.g return on assets and return on equity).

The concept of corporate performance in accounting literature refers normally to financial

aspects such as profit, return on assets (ROA) and economic value added (EVA), using the

nick name of botton line (Hassan et al, 2010). Kaptain & Norton (1992) coined the

extended measurement of corporate performance as balanced score card, where the core

ideas is to balance the domination of financial and non-financial aspects in corporate

performance . Kaptain and Norton’s extended corporate performance is in line with the

measurement of corporate performance by Ventakraman & Paimanujam.

Simon (2000) defines corporate performance using an approach of market mechanism by

which the company actively interacts with the financial factor and customer product market

in the financial market, the corporate performance strives to satisfy shareholders and

creditors in the form of financial indicators. In the factor market, such as suppliers and

22
other production ownes, the corperate ability to pay in time and in agreed amount are

important in evaluating corporate performance.

Finally from the perspective of customer product market, corporate performance will be

evaluated by parties in the market based in the ability of the corporation.

2.1.8 CHALLENGES OF ADOPTING INTERNATIONAL FINANCIAL

REPORTING STANDARDS IN NIGERIA

Irrespective of the prospects and preserved benefits of adopting IFRS in Nigeria, a plethora

of obstacles have been identified especially in relations to the implementation of IFRS.

Most of these challenges as pointed out by Obazee (2007) relate to technical and cultural

issues, mental model, legal implements educational needs and political influences, some of

the challenges of adopting international financial reporting standards in nigeria as

identified in this study include;

i. Lack of education, understanding and experience by prepares of financial reports:

This is a major problem in the adoption of IFRS in Nigeria. Many preparers of financial

statement in Nigeria are not conversant with the technicalities involved in the preparation

of IFRS. This challenge in further compounded by the fact that many accountants in

Nigeria have became accustonmed to the application of the local GAAP (the statement on

accounting standards). Thus, to be effective in the application of IFRS will require a long

period of learning and experience.

ii. Initial cost of adoption: To effectively implement IFRS require enormous

expenditure. The three tiers of government and organisation in Nigeria will have to expend

significant amount of money in deploying accounting software compatible with IFRS,

23
training of accounting personel responsible for preparing financial statement, valuation of

assets to ensure they met recognition criteria, etc, high cost of setting up an IFRS compliant

accounting system could discourage or prolong implementation.

iii. Lack of political will corruption: one of the benefit of IFRS adoption is the

increased transparency and accountability that is associated with financial reporting under

IFRS. The Nigerian operating environment is bedevilled with insincerity from political

leaders in government and corruption. Thus, the effort of governmental implementing IFRS

may be undermined or scuttled by political office holder and public servants who do not

subscribe to transparency and accountability.

iv. Percieved uncertainties about IFRS: The average Nigerian still believes that IFRS

is a foreign practice or the white man’s methods so many people do not believe that the

adoption of IFRS in Nigeria is a possibility, hence the lack of support towards achieving

implementation.

Lack of legislative support and commitment: apart from the establishment of the financial

reporting council of Nigeria (FRCN), the development of a roadmap to the adoption of

IFRS by the council and the enlightenment campaigns being carried out by the council,

there has not been further legislative support for IFRS adoption and implementation in

Nigeria. Up till now, the national assembly has not came up with a bill making the adoption

of IFRS by organizations in Nigeria compulsory, hence the slow acceptance and

implementation of IFRS in Nigeria since it was embraced in 2010.

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2.2 THEORETICAL FRAMEWORK

The study is anchored on a member of theories, which are briefly discussed and

related to the study includes.

AGENCY THEORY

STEWARDSHIP THEORY

2.2.1 AGENET THEORY

Agency theory is a theory which relates the principal (direct or and manager) with the agent

(shareholders). The agency theory was developed by Jensen and Meckling (1976). They

suggested a theory of how governance of a company is based on the conflicts of interest

between the company’s owners (shareholders), its manager and major providers of debt

finance (ACCA, 2010).

Agency theory provides the theoretical underpinning upon which the literature on corporate

governance has flourished. The theory states that in the presence of information asyminetry

the agent is likely to pursue interest that may hurt the principal or shareholders (Ross, 1973,

Fama, 1980).

As a result of conflicts of interest between the shareholders and mangers of corporates,

there will be issue of agency problems. However, the presence of independent directors on

the board of corporation will helps in reducing the so called agency problem as independent

director are presumed to have no significant interest in the company and acts on behalf of

shareholder Fama and Jensen, argued that an effectives board must consist largely of

independent non executive director. (ACCA, 2010).

25
Also independent non executive director is meant to take decisions where there is conflict

of interest between the executive director and the best interest of the company e.g in the

case of determination of renumenation of package of executive director as well as that of

senior managers. As agent of the company, the board of director is expected to be

accountable to tier principals (shareholders) on issue relating to the performance of the

corporation. Hence, to ensure transparency in the accountability of the board of directors,

there is need for the presence of reasonable number of independent non executive director

on the board. The accountability of management depends on both the right of the

shareholders to call the director account as well as their ability to do so.

2.2.2 NEW INSTITUTION THEORY (NIS)

Institution theory indicates that in order for organization to survive, she must confirm to

the rules and belief system prevailing in the environment. In the context of IFRS

convergence miliatives, institutionalization can be seen as a social process through which

a nation accept that local accounting standards are engrossed in the interests of international

accounting harmonization (Podigues & Crag, 2007) Wahyumic (2012) added that when a

country adopt IFRS and dump their Previns accounting standard, the man motive should

be economical such as IFRS will bring economic benefit to the country. The economics

advantage can be a reduction in the cost of capital or an increase significantly in foreign

investors to the country’s capital market. Touron (2005) stated that companies in European

Union faced a strong coencive pressure in adopting IFRS in 2003 when European

commision approved the proposal to adopt IFRS in 2005. These institution factors include

26
National Accounting Standard Board, government, financial reporting council, IFRS

oversight body.

The researcher therefore concludes that the success of country adopting IFRS should

mainly come from the structure available to operate on rather than coercive. Therefore,

structural changes should be determinant factors for IFRS convergence by countries.

2.3 EMPIRICAL REVIEW

Mathew (2019) examined the impact of international financial reporting standard

(IFRS) in financial reporting from 50 employees KPMG (a leading professional financial

service provider) through the use of structured questionnaire and analysed using mean

scores, standard deviation and Pearson Chi-square analysis. The findings than GAAP

(means = 4.72).

The findings further showed that IFRS directly affects how earnings and other key aspect

of the business processes and operations, financial position of companies and reduction in

cost of finance were the least contribution of IFRS to financial reporting practice of KPMG.

The results of pearson chi-square analysis showed that financial reports prepared under

IFRS enhance best practices in a corporate organization pearson chi-square = 37.857).

financial statemetns prepared in line with IFRS provides greater benefits than the former

GAAP (SAS) (Person chi-square = 75. 783); the compliance with IFRS will relatively

improve the performance of companies (Person chi-square = 20,417).

Adebimpe and Ekwere (2019), examine whether mandatory adoption of IFRS has

improved value relevance of accounting information of listed commercial banks in Nigeria

stock exchange. The duty covered a period of 2010 and 2011 (as pre-adoption) and 2012

27
and 2013 (as post adoption period) and reported that equity value and earnings of banks

determined under IFRS are relatively value relevant to market share prices than under

Nigeria SAS cold accounting standards). They also found earnings per share to be

incrementally value relevant during the period of post IFRS and book value per share is

incrementally less value relevant during the post IFRS period.

Aliyu and Tariro (2015), investigates the scholarly literatures in IFRS with a bias towards

compliance. The study aims to investigate the position of the research topic from 2005 to

2024 in leading academic journals and assesses focus areas of such research. Analysis

research paradigins adopted in each research article and it compares and contrasts several

type of research articles methodological research designs used in various researches in

literature finally, it reveals the effects of the investigation and enemies for future research.

Mgboure, Donwa and Agbonkpular (2015) examine the effect of international financial

and non-financial sectors and also to find out if IFRS adoption enhanced the uniformity,

comparability transparency and reliability of the financial statement of these sectors.

The study was conduced through a review of extant literature it was found that the adoption

of IFRS has improved financial reporting in oil and gas, financial and non-financial sectors

in Nigeria especially tool for enhancing the uniformity, comparability transparency and

reliability of financial statement and that it is an effective tool for enhancing the uniformity,

comparability transparency and reliability of financial statements of the various sectors in

Nigeria. This study recommends that efforts should be made by regulators and authorities

continually to monitor reporting by these sectors and also encourage consistent and

comparability reporting.

28
A study by Akintoye and Mafimisebi, (2017) examined the impact IFRS adoption on the

financial performance of Nigerian banks. The study used data from 10 banks and found

that the adoption of IFRS had a positive impact on the banks financial performance. The

study also found that IFRS adoption improved the comparability of financial statements

across banks.

Author study by Adediran and Undiale (2016) investigated the impact of IFRS adoption in

the financial statements of Nigerian banks. The study used data from 14 banks and found

that the adoption of IFRS led to an increase in the quality of financial reporting. The study

also found that IFRS adoption improved the comparability of financial statements across

banks.

A study by Akindele and Uwaigbe (2018) examined the impact of IFRS adoption in the

financial performance of banks in Nigeria. The study used data from 10 banks and found

that the adoption of IFRS has a positive impact on the banks financial performance. The

study also found that IFRS adoption improved the transparency and comparability of

financial statements.

In a study by Adegbia and Fakile (2016), the impact of IFRS adoption on the financial

statements of Nigeria banks was investigated. The study used data from 14 banks and found

that the adoption of IFRS led to an improvement in the quality of financial reporting. The

study used data from 14 banks and found that adoption of IFRS led to an improvement in

the quality of financial reporting the study also found that IFRS adoption led to an increase

in the comparability of financial statements across banks.

29
Similarly, Emini and Umoran (2018) conducted a study to examine the impact of IFRS in

the financial statement of Nigeria DMBs. The study used a sample of fifteen banks and

found that IFRS adoption had a significant positive impact on the profitability, liquidity

and capital adequacy of the banks. The study recommended that DMBs should continue to

adhere to IFRS to ensure transparency and accuracy in financial reporting.

In Gham, Boateng et al. (2016) conducted a study to assess the impact of IFRS adoption

on the financial statemetns at DMBs. The study used a sample of ten banks and founds that

IFRS adoption had a positive impact on the quality of financial reporting, as it improved

the comparability and consistency of financial statement across banks. The study

recommended that DMBs should continue to comply with IFRS to enhance their financial

reporting quality.

In Kenya, Ndwwiga et al (2018) conducted a study to examine the impact of IFRS adoption

on the financial statements of DMBs. The study used a sample of eleven banks and found

that IFRS adoption had a significance positive impact on the profitability and asset quality

o the banks. The study recommended that DMBs should continue to adhere to IFRS to

ensure accurate and reliable financial reporting. Overall, the empirical evidence suggests

that the adoption of IFRS has had a positive impact on the financial statements of deposit

money banks in Nigeria. IFRS adoption has led to an improvement in the quality of

financial reporting increased transparency and improved comparability of financial

statement across banks.

30
2.3 GAP IN LETERATURE

This chapter is aimed at presenting a review of the literature related to the purpose

of the study. The purpose has been study the impact of interventional financial reporting

standard (IFRS) on the quality of financial reporting of banks. The vast majority of studies

conducted tend to point towards adoption of IFRS in manufacturing companies. In

particular, they fail to explicitly address the potential bases induced by the existence of

cross – country heterogeneity, which may lead to inconsistent and misleading estimates

(Ghirmary, 2004). This empirical study therefore aimed at filling the research gap by

examining the impact of international financial reporting standards (IFRS) on the quality

of financial reporting of banks.

Given the absence of empirical evidence on this subject matter there is therefore a gap in

the empirical evidence available, this study seeks to bridge the gap.

31
 CHAPTER THREE

METHODOLOGY

3.1 INTRODUCTION

This chapter presents the research methods that researcher used to facilitate

execution of the study to satisfy study objectives. The steps included research design, data

collection instruments and variables used in the study.

3.2 RESEARCH DESIGN

Research design is the plan and structure of investigation so conceived as to obtain

answers to research questions. The main purpose of this research was to determine the

impact of international reporting standard on the quality of financial reporting. Therefore

a descriptive research was used to study whether adoption of IFRS has indeed improved

the quality of financial reporting in Nigeria banks.

3.3 POPULATION OF THE STUDY

Population of the study encompasses the entire group of individual with common

characteristic existing a space at a particular point of time. The staff of first bank of Nigeria

i.e Ilorin but the target population of the work consist of the chief accountant, services,

accountant and the accounting officer which consist of the population of 103 employees.

3.3.1 SAMPLE SIZE AND SAMPLING TECHNIQUES CARRIED OUT

Sample is a fraction or segment of the total population whose characteristics is used

to represent the entire population sampling idea arise because of the difficulty in studying

the entire population. in view of this, the sampling method to be used in this study is the

32
same random method. This will be done by picking randomly among the professional

accountants in the distribution of questionnaire and oral interview.

The sample size of this study is determine using Yanrane Yaro’s

Formula N = N

1+N (e)2

Where

n = Sample size

N = The finite population (103)

e = level of significance (or limit of tolerable error)

I = Unity (I e constant)

Taking the maximum accepted margin of error of 5% (0.05) and population size of 103

N= 103 .

1 + (103 (0.05)2

103 .

1 + (103 x 0.0025)

103 .

1 + 0.2575

103 .

1.2575

819085 =

= 82

Therefore, the sample size chose is 82

33
3.4 METHOD OF DATA COLLECTION

Data collection is gathering empirical evidence in order to gain insights about a

situation and answer question that prompt undertaking of the research. The study used both

primary and secondary data collection methods which will be obtained from financial

statements and structured questionnaire of the bank.

3.5 INSTRUMENTS OF DATA COLLECTION

The research instrument used as main source of information for this research work

title “The impact of International Financial Reporting Standard (IFRS) on Financial

Statement of Deposit Money Bank” was structured questionnaire based on a five point

psychometric Likert scale.

1. Section 1: This contains the respondents bio-data i.e general information about the

respondents and respondent. Organization seeking the demographic characteristics of the

respondents

2. Section 2: This deals with questions that are directly related to the variable factors stated

objective i.e questions and hypotheses for the purpose of this research work eliciting

suggestions for managing financial information. The section consisted of 10 simple scale

questions on the impact of international financial reporting standard (IFRS) on financial

statement of deposit money bank.

The data collection adopted the closed ended structured questionnaire. The standard

was phrased with a possible response contrinium based on a 5 point psychanemtric Likert

Scale.

34
Questionnaire;

5 – Strongly Agreed (SA)

4 – Agreed (A)

3 – Indifference (I)

2 – Disagreed (D)

1 – Strongly Disagree (SD)

This research also employs quantitative data (Secondary Source). The instrument

used to gather this quantitative data is the annual reports and accounts of the selected banks.

3.6 METHOD OF DATA ANALYSIS

The quantitative approach will be employed to arrive at the finding of the study.

Correction and regression analysis will be used in the study. Correlation and regression

analysis will be used in the study to identify nature and extent of relationship and to find

out the impact of adoption of IFRS on qualitative performance financial report in banks.

The fist hypothesis will be analysed using a parametric statistic, t-test is a significant test

which makes use of data in the form of expected and observes variable, it is a measure that

analyses the relationship between the variables and spell out all variables responsible for

compliance to the adoptions IFRS on financial reporting of banks in Nigeria.

3.7 MODEL SPECIFICATION

The model, attempt to explain the separate influence of the independent variables in order

to establish the effect of IFRS on bank performance the expected relationship of the above-

mentioned variable is a linear relationship of which one determines the other. However, in

order to capture the relationship that exist between IFRS and the financial report on bank

35
performance this study adapt the model in Muhammed Tank() (2012) in his work "The

effect of International Financial Reporting Standards (IFRS) Adoption on the performance

of banks in Nigeria" the model assumes.

BEFORE ADOPTION OF IFRS

AEb=uo+ dlFRQb+ (12GROWTHb+ U3FVb+ d4TtJRNb+ U5NCFb+ e

Equation 1

AFTER ADOPTION OF IFRS

AEa-uo+ UIFRQa+ (12GROWTHa+ U3LEVa+ U4TtJRNa+ U5NCFa+

Where:

AE = Changes in annual earnings (based on end of year total assets).

FRQ = Market value of equity in millions of Naira as of year-end.

GROWTH = Annual % of changes in gross earnings.

FV = Fair value by end year book value of equity.

TURN = Turnover divided by end of year total assets.

NCF = Annual net cash flow from operating activities.

36
 CHAPTER FOUR

ANALYSIS AND DISCUSSION

4.1 INTRODUCTION

This study is primarily interested in finding out the impact of international financial

reporting standards (IFRS) adoptions on financial reporting of banks in Nigeria. The data

presented here are the answers of the respondent to the questionnaire served to them and

the data obtained from annual reports of first bank Nigeria, plc. To present and analyze the

data collected through questionnaire, all questions in the questionnaire were analyzed

including those that have close relationship with research question, objectives as well as

hypothesis one also, the hypothesis was tested using correlation and SPSS was used to

analyze the hypothesis however, to present and analyze the data collected through annual

reports, as well as to test hypothesis two, the analysis of secondary data was carried out

using Ordinary Least Squared (OLS).

Out of the 100 questionnaire distribution, only 82 were available to retrieve back from the

respondents.

Demographic Presentation Of The Respondent

Gender Frequency Percent Valid percent Cumulative

percent

Male 44 53.7 53.7 53.7

Female 38 46.3 46.3 46.3

Total 82 100 100 100

Source: Field Survey, 2024

37
 Age valid Frequency Percent Valid percent Cumulative

percent

21-30 34 41.5 41.5

31-40 20 24.4 24.4

41-50 16 19.5 19.5

51-60 12 14.6 14.6

Total 82 100 100 100

Qualification Frequency Percent Valid percent Cumulative

percent

NCE/OND 42 51 51

BSC/HND 18 22 22

POST 10 12 12

GRADUATE

PROFESSIONAL 12 15 15

QUALIFICATION

TOTAL 82 100 100 100

Source Field Survey, 2024

38
 Marital Status Frequency Percent Valid percent Cumulative

percent

Single 48 59 59 59

Married 34 41 41 41

Total 82 100 100 100

Source Field Survey, 2024

4.2.4 NORMALITY TEST

Adoption of IFRs has not improved relevance of accounting information

N 26

Normal parameters Mean 3.65

Std. 1.384

Deviation

Mist Extreme Differences Absolute 253

Positive 165

Negative -253

Kilmogorou – Smirnov Z 1.288

Asymp. Sig (2-tailed) 072

a. Test distribution is normal

Source: Researcher’s Computation, 2024

39
The normality test shows that our data was normally distribution for research question 1

with aggregate of 0.72, in view of the use of parametric tools T-test will be employed to

test the hypothesis

4.3 TEST OF HYPOTHESIS

H0: Adoption of IFRS has not improved relevance of accounting information

Table 4: Frequency Table

Observed N Expected N Residual

DISAGREE 17 33.3 -16.3

AGREE 34 33.3 7

STRONGLY 49 33.3 15.7

AGREE

TOTAL 100

40
HYPOTHESIS 1

One – Sample Test

T Sig (2 95%

tailed) confidence

interval of

the

Mean Difference

Difference Difference

Lower

Upper

Adoption of

IFRS has not 3.09 4.21

improved 13.462 25 0.21 3.654

relevance of

accounting

information

Source: Researcher’s Computation, 2024

Decision rule:

The hypothesis tested above shows the T-Value is relevant at 5% level of significance since

t cal 0.021 < 0.05, therefore, the null hypothesis is rejected and alternate is accepted which

state that adoption of IFRS has improve the quality of accounting information.

41
Hypothesis II

There is no significant relationship between International Financial Reporting Standard

(IFRS) and bank performance. The measure of performance was divided into two phase,

the first phase is the pre-adoption of IFRS i.e before adoption of IFRS and the second phase

is post adoption of IFRS i.e after the adoption of IFRS. The study take into consideration

five years before adoption (2005 - 2009) and six years after adoption (2010 - 2020). The

model formulated attempt to explain the separate influence of the independent variable in

other to establish the effect of IFRS on bank performance, the expected relationship of the

above mentioned variable is a linear relationship of which one determines the other.

However in other to capture the relationship that exist between IFRS and banks

performance the model assumes.

Before adoption of IFRS

AEb = α0 + α0 + α0 + α0 + α2

Equation 2

TABLE 4: Pre-Adoption of IFRS, Model Summary

Model R R Square Adjusted R square Std. Error of

1 4890 846 676 the Formulate

046172

Predictors: (Constant) Nest cash flow from operating activities, End year total liabilities

divided by end year book value of Equity, Market value of equity Annual % of changes in

gross earnings.

42
Turnover divided by end year total assets

TABLE 5: Pre-Adoption of IFRS: ANOVAb

Mode Sum of squares df Mean square F Sig.

1 Regression 2.622E15 5 1105E 6180 2644

Residual 600 3 1.105E14

TOTAL 2.622E15 8 2.132E13

a. Predictors: (constant), Nest cash flow from operating activities,

End year total liabilities devided by end year book value of

Equity Market Value of equity, Annual % of changes in goes earnings. Turn over divided

by end year total assets

b. Dependent Variable, change in Annual Earnings.

c. Table 6: Pre-Adoption of IFRS: Coefficientsa

Model Unstandardized Coefficients Standardized Coefficients Sig.

B Std Error Beta f

1. (constant) -4.010E7 050 - 0024 -

End year Fair Value 2.614E7 -014 867 007 115

divided by end year

book

Value of Equity

Net cash flow from - 439 100 - 522 0254 144

operating Activities

43
 Market Value of equity - 562 879 - 456 - 745 028

Annual % of changes in - 458 658 0036 126 035

gross earnings

Turnover divided by end 265 214 362 - 854 000

year

Total assets

a. Dependant Variable: Change in Annual Earnings

From table 4 above the R Square Unadjusted is 0.846 while the adjusted R Square is 0.676

which shows a strong prediction power of the variable. Table 5 shows the F statistics

calculated is 6.180 which is not significant at 5%. Significant level and the F statistics

tabulated value is 9 01 with a p value if 0.264 signifies, it is seen that source of the variables

where not statistically significant in the pre-adoption period. Also, table 6 show the p value

of the individual variables. It is shown that variables FV and NCF are not statistically.

Significant with a p value of 0.115 and 0.14 respectively which is greater than 0.05.

however, variable FRQ. GROWTH and TURN are statistically significant with a p value

of 0.028, 0.035 and 0.0000024 respectively which are all less than 5% i.e. 0.05. Also, the

t-statistics shown in table 7 gives a t-values of all the variables, and variable FV, FRQ and

TURN with t-values of 0.007, -.745 and -.854 respectively are statistically significant since

their p-values is less than 0.01 while variables NCF and GROWTH t values of 0.0254 and

0.126 respectively are not statistically significant since their p values is greater than 0.01.

AEF-4.010+0.867LEVb- 0.522NCFb-.456 FRQb+ 0.0036GROWTHb+ 0.362TURNb

44
In the pre-adoption era, overall regression of the variables show that a positisely

relationship exist between variables LEV, GROWTH, TURN and AE though not

significant. Follow the expectation it is assume that a negative relationship should exist

between AE and LEV.

Also, the result show that a negative relationship exists between variables NCF, FRQ and

AE which is contrary to the expectation that a positively relationship assume between NCF,

FRQ and AE. However, from the result an increase in FV will bring about 86.7% increase

in AE, increase in GROWTH will bring about 0.36% increase and decrease in TURN will

increase by AE

POST ADOPTION PERIOD

TABLE 7: Post Adoption of IFRS: Model Summary

Model R R. Square Adjusted R. Square Std. Error of the Estimate

1 9954 986 - 976 020241

a. Predictions: (constant) NCF, LEV, FRQ, GROWTH, TURN

From table 7. Above, the R. Square unadjusted is 0.986 while the adjusted R. Square is

0.976 which shows a strong prediction powper of the variable. Table 8 shows the F

statistics 23.254 with a p value of 0.027 with a regression of all the variables which signifies

than all the variables are statistically significant and a strong relationship with the

dependent variable

45
Table 8: Post Adoption of IFRS: ANOVAb

Mode Sum of squares df Mean square F Sig.

1 Regression 2.622E15 5 1105E 6180 2644

Residual 600 3 1.105E14

TOTAL 2.622E15 8 2.132E13

a. Predictors: (Constant) NCF, LEV, FRQ, GROWTH TURN

b. Dependent Variable: AE

Interpretation: R2which is the unadjusted multiple correlation coefficients signifies the

goodness of the equationand also denotes the coefficient of multiple determinations. It also

shows that 98.6% of changes in Annual Earnings (dependent variable) were influenced by

changes in the independent variables (NCF, LEV, FRQ, GROWTH, TURN). The F -

statistics test computed show a figure of 23.254 at the degree of freedom 5, is used to test

the overall significance of the regression while the F-statistics tabulated value is 9.01. The

p-volue in the F statistic is 0.027 which is less than 0.05, which suggest that there is very

strong evidence that Ho is not true. The null hypotheses is rejected which suggest that a

there is no significant relationship between International Financial Reporting Standard

(IFRS) and banks performance. With all these explanations and analysis, the null

hypothesis is rejected and the alternate hypothesis which states there is significant

relationship between International Financial Reporting Standard (IFRS) and banks

performance is accepted.

46
Table 9: Post-Adoption of IFRS: Coefficients a

Model Unstandardized Coefficients Standardized Coefficients Sig.

B Std Error Beta f

1. (constant) 44.058967 020 - 0062 -

LEV 2.6147 0004 -167 005 002

NCF 2.6147 -005 522 0054 005

FRQ 8.439 -079 -234 - 045 005

GROWTH 5.458 -658 - 478 - 106 018

TURN 6.265 -254 -647 -695 000

a. Dependent Variable Change in Annual Earnings

AEF-4.010+0.867LEVb- 0.522NCFb-.456 FRQb+ 0.0036GROWTHb+ 0.362TURNb

In the post-adoption era, overall regression of the variables shows that a positively

relationship exist between some the independent variables (GROWTH, NCF, FRQ,

TURN) and the dependent (AE). Follow the expectation it is assume that a negative

relationship should exist between AE and FV which was affirm from that a negative

relationship exist between variable FV and AE.

However, from the result an increase in FRQ will bring about 23.4% increases in AE, an

increase in GROWTH will bring about 47.8% increase in AE, an increase in TURN will

increase AE by 64.7% while an increase in NCF will bring about increase in AE by 52.2%

and an increase in FV will bring about decrease in AE by 16.7%. It is shown that variables

LEV, NCF, FRQ, GROWTH and TURN are statistically significant with a p value of 0.002,

0.005, 0.018, 0.0018 and 0.00003 respectively which are less than 0.05 i.e. 5%. Also, the

47
t-statistics shown in table 8 gives a t-values of all the variables, and variable LEV, NCF,

FRQ, GROWTH and TURN with tvalues of 0.005, 0.0054, -.045, 106 and -.695

respectively are statistically significant since their p-values is less than 0.01.

4.4 DISCUSSION OF FINDINGS

The hypotheses formulated were tested using the result of the questionnaire distributed and

the data gathered from the annual report of First bank Plc. The hypothesis one was tested

using T-test at degree of freedom 2 and at 5% level of significance, the table value is 0.021

since the calculated value is less than the 5%; we accept the alternative hypothesis and

conclude that there is significant relationship between adoption of International Financial

Reporting Standard and financial reporting of banks in Nigeria. The second hypothesis was

tested using OLS and the measure of performance was divided into two phase, the first

phase is the pre_ adoption of IFRS i.e. before adoption of IFRS and the second phase is

post adoption of IFRS i.e. after adoption of IFRS. The study takes into consideration four

years before adoption (2006-2009) and six years after adoption (2010-2020). In the

preadoption era, it is shown that not all the variables are statistically relevance i.e. not all

the independent variables has significant relationships with the dependent variable, it is

also shown that of all the independent variables tested (NCF, FRQ, LEV, and TURN) only

LEV, FRQ and TURN has significant relationship with the dependent variables (AE).

However, in the post adoption period, it is shovyn that all the variables are statistically

relevance i.e. all the independent variables (NCF, FRQ, LEV, GROWTH and TURN) has

significant relationships with the dependent variable (AE). this result is accordance with

the stewardship theory previously adopted for the research project because the essence of

48
adoption of IFRS is to ensure reliable financial report as propounded by Davis, Schoorman

and Donaldsons (1997) that mangers are trustworthy and competent administrators of

corporate resources and are best situated to maximize the interests of the shareholders since

they are not familiar with the intricacies of corporate strengths, weakness, opportunities

and threats. This is what adoption of IFRS intends to solve.

49
 CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 SUMMARY OF THE FINDINGS

The study reveals that Nigerians agree to adopt IFRs but in a gradual manner, in view of

the anticipated problems that the adoption may create. consequently, concludes that

Nigerian companies should converge to IFRs in view Of the fact it will enhance better

accountability and transparency and improve quality. From the discussion of findings, it

was revealed that Nigeria banks have fully IFRS in their financial reporting and that IFRs

has significant relationship with performance.

5.2 CONCLUSION

Based on the findings and subsequent recommendation of this study, it was concluded that

the adoption of IFRS is a right step in the right direction. Although there are many issues

and challenges facing the implementation, the benefits outweigh the challenge. With

adoption, Nigeria companies will produce a more credible financial statements that will

not only be uniformed but also provide a basis for better interpretation. The invariably will

boost investors' confidence and attract cross border financial transactions which is the basis

for economic growth.

5.3 POLICY RECOMMENDATIONS

However, owing to the fact that IFRS being a principle-based the financial companies to

utilize only the methods they wish, thus allowing the financial Nigerian GAAP to still be

mandatory for individual company's accounts of listed companies. Also, IFRS should be

50
optional for group accounts of non-listed companies but prohibited for individual

company's account.

The research work recommends comprehensive implementation of the standard to its

totality by firms in the country, and the regulatory authorities should monitor strict

compliance. Further research in the area of other sectors of the economy and to expand the

sample size will assist in documenting the impact of the adoption on the performance of

the firms. It is evident that such may affect the outcome of research.

51
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