By Ademola Alawiye

Monday, 13 Dec 2010

International Financial Reporting Standards will lead to an increase in investments in the country, when it is fully adopted, accounting experts have said.

The experts said at a seminar on IFRS on Thursday, that IFRS would attract international investors and enable easy monitoring of overseas investments.

According to them, shareholders and other stakeholders will have more information on their companies as the accounting system allows for more information on companies‘balance sheets.

Speaking at the seminar, the Managing Partner, PricewaterhouseCoopers, Mr. Ken Igbokwe, said, ”In addition to removing some of the subjectivity from financial reporting, IFRS provides more consistent platform for recognition, measurement and disclosure of transactions and events in financial statements, leading to greater transparency. This, in turn, will lead to increased investment in Nigeria.

“IFRS is not just about reporting; it is about measuring and reporting business performance, and therefore, it is more important that line managers understand it than it is for the accountants who will report it.”

The Director, Assurance Practice, PwC, Mr. Darrell McGraw, said, ”IFRS will have a broad impact on companies‘ financials. It will help the credit risk and market risk departments of companies. With IFRS, there will be more disclosures because it is all encompassing.”

McGraw added that IFRS would increase transparency in the financial statements of public companies, thereby encouraging investments by both local and foreign investors.

He said, “Things that you will see include statement of comprehensive income statement; statement of changes in equity; cash inflow statement; and significant management estimates and judgements.”

The Chairman, IFRS Roadmap Committee, Mr. Jim Obazee, said that the transformation to IFRS by companies would be in different phases, noting that the committee was working together with all the regulators.

Obazee said, ”We are going to have the transformation in different stages. The first step is what we are going through now. We are setting up centers of excellence in Abuja; the regulators will be trained first, while university lecturers will follow so that IFRS can be instituted in universities.”

On guidelines for effective transition, he said, ”We‘ve put some measures in place, which include public sensitisation, passing of the Financial Reporting Council Bill into law, updating the information technology systems and chart of accounts in the public sector.

“We are reviewing the existing legislation that is inconsistent with effective implementation of IFRS and also directing universities to update syllabus of tertiary institutions to accommodate IFRS.”

Source: Punch