Nigeria is among countries that have adopted the International Financial Reporting Standards (IFRS), and there is no doubt that investors in international companies, their auditors and regulators are getting the value.
Since Nigeria joined the League of Nations reporting IFRS, particularly when all listed and significant public entities started producing first IFRS financial statements, investors changed their perception about investing in Nigeria – thereby boosting foreign direct investments (FDIs) inflows.
The global financial crisis has shown how difficult it is to retain investor confidence when investors are uncertain about the information available to them.
“The use of IFRS as a common financial reporting language has markedly improved the quality of cross-border financial communication,” according to financial experts at EY, noting that a move away from IFRS as a common financial reporting language would therefore be a step backward.
Leo van der Tas, EY’s Global IFRS leader, says: “Over the past decade the use of IFRS as a common financial reporting language has been able to bring a degree of consistency and comparability that is now expected from a single set of global standards. As more and more countries, with different traditions of financial reporting and enforcement, join the IFRS fold, the challenge of consistent application of IFRS – essential for its credibility – increases.”
Over the past year, the use of IFRS has continued to increase. The International Accounting Standards Board (IASB) reported in 2014 that 114 of the 138 jurisdictions it had researched required the use of IFRS for all or most listed companies and financial institutions, while a further 12 permitted the use of IFRS in their jurisdiction. During this time, the IASB has enhanced its legitimacy as a global standard setter with its increasing commitments to public authorities, while being structured as a private sector body.
“By providing reliable and internationally comparable financial information, IFRSs are a very important fundamental of our market economy. I believe that the bedrock of support for our work is an understanding of this public interest of IFRSs,” Hans hoogeRvorst, chairman, IASB, says.
Iheanyi Nwachukwu
