Indian Journal of Commerce & Management Studies ISSN: 2240-0310 EISSN: 2229-5674

PERCIEVED CHALLENGES OF INTERNATIONAL

FINANCIAL REPORTING STANDARDS (IFRS)
ADOPTION IN NIGERIA

Professor Stephen Ocheni,

Department of Accounting,
Kogi State University, Anyigba, Nigeria.

ABSTRACT

The IFRS adoption is already an issue of global relevance among various countries of the world due
to the quest for uniformity, reliability and comparability of financial statement of companies. This
research paper, therefore, investigated the perceptions of Nigerian accounting professionals,
regarding the perceived challenges of IFRS adoption in Nigeria. The population consists of three
different sub-groups of accountants (i.e., auditors, accountants, and academics. Stratified random
sampling method was adopted, and primary data used to elicit responses with a structured
questionnaire administered. The survey instrument was developed after review from recent literature.
The questionnaire was pre-tested, 30 targeting audiences and a questionnaire survey were conducted.
The mailing questionnaire was designed as a booklet. The questionnaire booklets were addressed to
2,100 target participants of all three accountant sub-groups (700 participants for each group. The
questions were designed using five-point Likert scales, the questionnaire was self-administered, and
Data used for the purpose of this paper consists of the responses received to selected items included
in the survey questionnaire which explored the benefits, costs and challenges of IFRS in the context of
Nigeria. Respondents were required to rate the extent to which they agreed or disagreed with these
statements based on a five-point rating scale. Open-ended questions were also provided to allow any
other opinions that the respondents may have concerning the questioning variables. The finding
shows that there is no statistically significant difference in the opinions between the Auditors and
Accountants (Group 1,2) since p>0.017. Therefore, the statistically significant differences in Group
(1,3) and Group (2,3) with p <0.001 solely cause by the different perceptions between the academics
(Group 3) and the practitioners (Groups 1 & 2). The researchers recommended that FRCN should
ensure that increased volatility of earnings is addressed. The government should not mind the cost of
implementing IFRS in Nigeria and do well to embrace it financially.

Keywords: IFRS, FRCN, Post Challenges, Nigeria.

Introduction: Nigeria accounting standards board (NASB), now
designated as financial reporting council of Nigeria
The evolution of this international convergence
(FRCN) in December 2010, asserted through the
towards a global set of accounting standards started in
issuance of what is known as implementation roadmap
1993, when 16 professional accounting bodies from
for Nigerian adoption of IFRS which set a January
Austria, Canada, France, Germany, Japan, Mexico, the
2012 date for compliance for publicly quoted
Netherlands, the United Kingdom, and United States
companies and banks in Nigeria. The Central Bank of
decided to establish the internationals accounting
Nigeria (CBN) and Securities and Exchange
standard board (IASB). The rapid development of
Commission also adopted their date for compliance
global financial markets demands harmonization of
and has issued guidance compliance circular to ensure
accounting standards and approach around the world.
full implementation of IFRS in Nigeria. It is worthy to
In 1999, the demand was polled by stakeholders in
state that since the adoption and implementation of
financial reporting. The federal executive council, the

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Indian Journal of Commerce & Management Studies ISSN: 2240-0310 EISSN: 2229-5674
IFRS, it has been facing a lot of challenges and many Relevance of IFRS adoption:
more perceived challenges which will entail
Proponents of IFRS claim that IFRS possess many
significant costs and will have far-reaching challenges
advantages over the domestic accounting standards of
on a wide variety of stakeholders in the financial
individual countries. Several studies report
reporting process; including financial statement
improvements in accounting quality following
preparers, investors, analysts, auditors, regulators and
voluntary IFRS adoption (Barth, Landsman & Lang
other partakers of financial reporting process. These
2008) as well as mandatory IFRS adoption (Daske et
stakeholders are faced with a number of
al. 2008). For example, Barth et al. (2008) provided
implementation challenges on the financial reporting
evidence from 21 countries, showing that firms
process which include amongst;- conversion will
applying international accounting standards generally
require companies to re-align their systems, train
had less earnings management, more timely loss
employees and educate users of the financial
recognition, and more value relevance of accounting
statement on changes to financial reports. Auditors
amounts than others.
will be required to implement extensive training
Prior researchers provided many reasons for a higher
programme to ensure that future accounting
accounting quality in the financial statements under
professionals receive a sound education on the
IFRS: They were originally designed for developed
application of international financial report standards
capital markets and therefore, more relevant to
(IFRS).
investors (Ball 2006); they reduce the alternative
The perceived challenges of IFRS adoption is the
accounting methods, leading to lower earning
major concern in Nigeria today. In view of the above
management (Jeanjean&Stolowy 2008); They require
fact that reported accounting numbers are shaped
higher quality measurement and recognition rules (De
historical, economical and institutional structure in the
Franco, Kothari & Verdi 2010) that better reflect a
local where firms are domicile. Soderstrom and Sun
firms underlying economic position, hence more
(2007) argue that cross –country difference in
transparent than local GAAP (Ding et al. 2007)and
accounting quality are likely to remain, sequel to IFRS
they require higher disclosure levels, thereby
adoption, because accounting qualitative is a function
mitigating information asymmetries between firms
if the firms overall institutional infrastructure where
and their shareholders (Healy & Palepu 2001).
they reside.
Besides the higher financial reporting quality
To address this concern, of perceived challenges of
argument, advocates of IFRS also claim that IFRS
IFRS adoption, three research questions were
reporting increases comparability of firms across
formulated to guide the study: What are the perceptions
markets and countries (DeFond et al. 2010), thus,
of Nigerian accountants about the potential benefits
facilitating cross-border investment (Lee & Fargher
from IFRS?; Do Nigerian Accountants anticipate post
2010) and integration of capital market (Saudagaran
implementation challenges of IFRS adoption in
2008). In light of the IFRS effects on the capital
Nigeria? And does different Accountants sub-group
market, the promoters of IFRS often argue that
have a different perception regarding IFRS adoption?
companies could access the international capital
The following hypotheses guided the paper: Nigeria
market more easily (Christensen, Hail &Leuz 2011),
Accountants are not optimistic about the potential
especially the ones with high level of
benefits from IFRS adoption; Nigeria Accountants
internationalization such as trading or raising fund in
anticipate significant challenges (cost and challenges)
overseas markets (Daske et al. 2009) .
during the IFRS transition and Practitioner and
In addition, there are also the intangible advantages
academicians have different perspective regarding IFRS
that adopting firms might be able to benefit from,
adoption in Nigeria.
when they implement additional disclosure policy
under IFRS (Florou& Pope 2012). For example, the
Literature Review:
firm may more easily access capital market
Over the last two decades a considerable amount of (Soderstrom& Sun 2007), charge higher price for
literature has been published on the topic of IFRS products (Ray 2010), and attract more experienced
harmonization, convergence and a feasibility of a staff (Naoum, Sykianakis & Tzovas 2011) thanks to
single set of globally accepted accounting standards. the reputation of more transparency than their
For the purpose of this paper, we draw our literature competitors (Fox et al. 2013).
review on more recent literature that addresses both In the same line of argument, prior researchers
desirable and non-desirable characteristics of IFRS reported that „serious. IFRS adopters experienced
convergence as well as the potential perceived significant declines in their cost of capital and
challenges of a smooth IFRS convergence process in substantial improvements in their market liquidity
the accounting process in Nigeria. compared to label, adopters (Daske et al. 2009).
Accordingly, it is predicted that the IFRS related
effects for first-time adopters are likely to be greater
in countries with higher quality institutions and

Volume VI Issue 1, Jan. 2015 8 www.scholarshub.net

Indian Journal of Commerce & Management Studies ISSN: 2240-0310 EISSN: 2229-5674
IFRS, it has been facing a lot of challenges and many Relevance of IFRS adoption:
more perceived challenges which will entail
Proponents of IFRS claim that IFRS possess many
significant costs and will have far-reaching challenges
advantages over the domestic accounting standards of
on a wide variety of stakeholders in the financial
individual countries. Several studies report
reporting process; including financial statement
improvements in accounting quality following
preparers, investors, analysts, auditors, regulators and
voluntary IFRS adoption (Barth, Landsman & Lang
other partakers of financial reporting process. These
2008) as well as mandatory IFRS adoption (Daske et
stakeholders are faced with a number of
al. 2008). For example, Barth et al. (2008) provided
implementation challenges on the financial reporting
evidence from 21 countries, showing that firms
process which include amongst;- conversion will
applying international accounting standards generally
require companies to re-align their systems, train
had less earnings management, more timely loss
employees and educate users of the financial
recognition, and more value relevance of accounting
statement on changes to financial reports. Auditors
amounts than others.
will be required to implement extensive training
Prior researchers provided many reasons for a higher
programme to ensure that future accounting
accounting quality in the financial statements under
professionals receive a sound education on the
IFRS: They were originally designed for developed
application of international financial report standards
capital markets and therefore, more relevant to
(IFRS).
investors (Ball 2006); they reduce the alternative
The perceived challenges of IFRS adoption is the
accounting methods, leading to lower earning
major concern in Nigeria today. In view of the above
management (Jeanjean&Stolowy 2008); They require
fact that reported accounting numbers are shaped
higher quality measurement and recognition rules (De
historical, economical and institutional structure in the
Franco, Kothari & Verdi 2010) that better reflect a
local where firms are domicile. Soderstrom and Sun
firms underlying economic position, hence more
(2007) argue that cross –country difference in
transparent than local GAAP (Ding et al. 2007)and
accounting quality are likely to remain, sequel to IFRS
they require higher disclosure levels, thereby
adoption, because accounting qualitative is a function
mitigating information asymmetries between firms
if the firms overall institutional infrastructure where
and their shareholders (Healy & Palepu 2001).
they reside.
Besides the higher financial reporting quality
To address this concern, of perceived challenges of
argument, advocates of IFRS also claim that IFRS
IFRS adoption, three research questions were
reporting increases comparability of firms across
formulated to guide the study: What are the perceptions
markets and countries (DeFond et al. 2010), thus,
of Nigerian accountants about the potential benefits
facilitating cross-border investment (Lee & Fargher
from IFRS?; Do Nigerian Accountants anticipate post
2010) and integration of capital market (Saudagaran
implementation challenges of IFRS adoption in
2008). In light of the IFRS effects on the capital
Nigeria? And does different Accountants sub-group
market, the promoters of IFRS often argue that
have a different perception regarding IFRS adoption?
companies could access the international capital
The following hypotheses guided the paper: Nigeria
market more easily (Christensen, Hail &Leuz 2011),
Accountants are not optimistic about the potential
especially the ones with high level of
benefits from IFRS adoption; Nigeria Accountants
internationalization such as trading or raising fund in
anticipate significant challenges (cost and challenges)
overseas markets (Daske et al. 2009) .
during the IFRS transition and Practitioner and
In addition, there are also the intangible advantages
academicians have different perspective regarding IFRS
that adopting firms might be able to benefit from,
adoption in Nigeria.
when they implement additional disclosure policy
under IFRS (Florou& Pope 2012). For example, the
Literature Review:
firm may more easily access capital market
Over the last two decades a considerable amount of (Soderstrom& Sun 2007), charge higher price for
literature has been published on the topic of IFRS products (Ray 2010), and attract more experienced
harmonization, convergence and a feasibility of a staff (Naoum, Sykianakis & Tzovas 2011) thanks to
single set of globally accepted accounting standards. the reputation of more transparency than their
For the purpose of this paper, we draw our literature competitors (Fox et al. 2013).
review on more recent literature that addresses both In the same line of argument, prior researchers
desirable and non-desirable characteristics of IFRS reported that „serious. IFRS adopters experienced
convergence as well as the potential perceived significant declines in their cost of capital and
challenges of a smooth IFRS convergence process in substantial improvements in their market liquidity
the accounting process in Nigeria. compared to label, adopters (Daske et al. 2009).
Accordingly, it is predicted that the IFRS related
effects for first-time adopters are likely to be greater
in countries with higher quality institutions and

Volume VI Issue 1, Jan. 2015 8 www.scholarshub.net

Indian Journal of Commerce & Management Studies ISSN: 2240-0310 EISSN: 2229-5674
countries with higher divergence between domestic the real costs of resources could be higher than the
GAAP and IFRS (Ding et al. 2007). reported figures. The survey results in ICAEW (2007)
also observed that, depending on the size of the
Problems of IFRS: company, the ranking of cost of preparing the first set
of IFRS financial statements and recurring costs varies
There are several reasons why the expected benefits of
depending on the size of the firm, and these costs can
IFRS may not be achieved. Reducing accounting
represent up to 24 percent of turnover. Other less
alternatives may result in a less true and faithful
tangible costs also become apparent when disclosures
representation of the firms, underlying economics
which create a concern in the investors about the
(Barth, Landsman & Lang 2008).
abilities or reputation of the reporting firms and
disclosed information supply other firms with a
 As a result of the principle-based nature of IFRS
competitive advantages are present (Fox et al., 2013)
(Hong 2008), professional judgment may create the
Despite some costs of IFRS, implementation is
opportunities for earning management (Chand, Patel
obvious such as those discussed in ICAEW (2007);
& Patel 2005; Jeanjean & Stolowy 2008).
Fox et al. (2013) argued that other costs are less
 Weak enforcement mechanisms of adopting nations tangible. They provided examples of these intangible
can reduce financial reporting quality, even when costs occurring when: Disclosures which create a
high-quality accounting standards are implemented concern in the investors about the abilities or
(Brown & Tarca 2007; Chen & Cheng 2007) reputation of the reporting firms and Disclosed
information supply other firms with a competitive
Furthermore, capital market effects of IFRS are more advantages In summary, the key arguments in favor of
pronounced in countries with stricter enforcement IFRS adoption focus on the effects on capital and
regimes and therefore better IFRS implementation investors; and the less favorable arguments give
(Chen & Cheng 2007; Hail &Leuz 2006). Wang & Yu emphasis to the costs occurring during and after the
(2009) and Leuz (2006) showed that capital market transition period. Though the evidence of economic
effects were also apparent when stronger reporting consequences of IFRS implementation in the literature
incentives and thus higher quality financial reporting is mixed and inconclusive, there is a growing demand
were evident. A higher divergence between IFRS and for IFRS and potentially a single set of global
local GAAP and therefore larger change of domestic accounting standards.
accounting rules (Byard, Li & Yu 2011; Daske et al.
2008) are also relevant factors. Perceived Challenges of IFRS adoption:
Regarding the capital market effects, prior authors
suggested that the introduction of IFRS reporting can The move to a new reporting system (like IFRS)
improve stock market liquidity (Narayan &Zheng brings many challenges for different stakeholders
2010) and reduce cost of capital (Ahmed, Neel & involving in the process such as regulators, preparers,
Wang 2010; Li 2010) although many other authors auditors and users. In particular, the challenge for
argued that this may not always be the case regulators is to identify to what extent national GAAP
(Armstrong et al. 2010; Daske 2006; Hail &Leuz will be similar or distant from IFRS (Heidhues &
2009; Karamanou&Nishiotis 2009; Lambert, Leuz Patel 2008). This, in turn, requires the practitioners to
&Verrecchia 2008). develop or obtain an in-depth analysis what changes in
In addition to the potential disadvantages, previous hardware, software, reporting processes are required;
authors also expressed some concerns regarding the what transitional workload adding to the normal day-
costs of transitioning to IFRS. Smith (2009) expressed to-day activities (AICPA 2011). Managing public
that transition costs may vary from firm to firm, and perceptions around the changes in financial statements
some may be common to all firms across many are another challenge for the management of adopting
countries. For example, according to the report “EU firms (PWC 2011). From the perspective of auditors,
implementation of IFRS and the Fair Value Directive” they need to well plan so that their professional staff
(ICAEW 2007), the ten common costs of conversion have the necessary skills at the time their clients begin
(as shown in Figure 1) to IFRS include: IFRS project the process of conversion, but not so early that the
team,Software and systems changes, knowledge is out of date or forgotten from lack of use
iii. Additional external audit costs, External technical (Deloitte 2008).
advice, Training of staff, Training other staff (such as Furthermore, Jermakowicz (2004) listed some key
IT staff, internal audit and management), challenges in the process of adopting IFRS including:
Communications with third parties, Tax advice, The complicated nature of some standards of IFRS
Additional external data costs and Costs arising from (e.g. impairment test in IAS 36); the lack of guidance
changes such as renegotiating debt covenants surveys of first time IFRS reporting (e.g. IFRS 1); the
of accounting firms (Larson & Street 2004; PWC underdevelopment of capital market and the weak
2011) unveiled that most companies hire extra staff or enforcement of law and regulations. Tokar (2005)
use subcontractors for IFRS project team, therefore, added that for the country that has a different official

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Indian Journal of Commerce & Management Studies ISSN: 2240-0310 EISSN: 2229-5674
language other than English, timely IFRS translation received, 106 of which were not usable because they
into the national language is another obstacle during were incomplete, thus providing 141 usable responses
the transition period. The task of implementing IFRS (representing a usable response rate of 20 percent,
is further complicated by the fact that IFRS are same response rate as Group 1). The overall usable
continually evolving, and not yet finalised (Fox et al. response rate of all three groups is 26 per cent.
2013). This challenge makes it more difficult for a There were a few numbers of questionnaires that were
smooth transition to the status of full compliance received outside the cut-off date. The early responses
under IFRS (Joshi et al. 2008). were compared with the late responses of the same
Several authors have also expressed their concerns accountant subgroups for each question of the
about how IFRS will be taught to students and how questionnaire at 5% level of statistical significance
professionals will keep up to date with new standards using SPSS. The differences between these responses
(Heidhues & Patel 2008; Wong 2004). Education for were non-significant. As a result, it is reasonable to
both professional and non-professional resources also conclude that the error due to non-response bias was
then becomes an important barrier for making IFRS negligible or insignificant. Given the length of the
convergence with national accounting standards survey (7 pages) and scope of the research project
happening. Other challenges according to Egbere et al (152 questions in 8 sections), the overall usable
(2013) include: Increased vitality of earnings; High response rate 26 per cent compared favourably to the
cost of implementing IFRS; Complex nature of IFRS; response rates of other similar academic surveys. For
Lack of IFRS implementation guidance and Tax example, Graham et al. (2005) suggested that a
driven nature of national standards. common response rate of such long questionnaires
would range from 8 to 10 per cent. This suggestion is
Methodology: consistent with the results of Foo (2008).
The questions were designed using five point Likert
The mail questionnaire was designed as a booklet. The
scales so that the individuals, knowledge and
questionnaire booklets were addressed to 2,100 target
perceptions of IFRS could easily be determined. The
participants of all three accountant sub-groups (700
questionnaire was self-administered, as this design
participants for each group). Reminder letters were
was considered preferable for a large number of
sent to all the participants one month and one week
responses, allowing conclusions to be drawn with
before the closing date. Respondents were asked to
greater confidence and allow for comparison across
answer the survey and return the completed survey
groups. Creswell & Clark (2011) concluded that the
booklets in the prepaid envelope attached. In addition,
self-administered questionnaire was an appropriate
in the survey booklet and both reminder letters, the
method for analyzing a large volume of data or
link of an online survey and the email address of the
number of people. Data used for the purpose of this
researcher were provided as the alternative options to
paper consists of the responses received to selected
participate online or return the completed
items included in the survey questionnaire which
questionnaire electronically. The respondents were
explored the benefits, costs and challenges of IFRS in
anonymous. The sample size and responses per
the context of Nigeria. Respondents were required to
accountant-sub group are illustrated in Table 1.
rate the extent to which they agreed or disagreed with
these statements based on the five-point rating scale.
Table 1: Sample Size and Response Rate per
Open-ended questions were also provided to allow
Accountant Sub-Group
any other opinions that the respondents may have
Accountant
Questionnaires Rates concerning the questioning variables.
sub-group Response Usable
Sent Returned Unusable Usable
rate rate
Group 1:
700 274 130 144 39.1 21 Table 2: Reliability Statistics
Auditors
Group 2:
(Cronbach’s alpha test)
700 372 102 270 53 39
Accountants
Group 3: Cronbach’s Cronbach’s Alpha based No of
700 247 106 141 35 20 Items
Academics Alpha on standardized items items
Total 2100 893 338 555 43 26 Relevance .862 .865 10
Problems .806 .801 14
Source: Ocheni (2014) Perceived
.907 .908 10
implications
Table 1 indicates that 274 responses were received Cost .815 .815 4
All .809 .823 38
from the Group 1, 130 of which were not usable
Source: Ocheni (2014)
because they were incomplete, thus providing 144
usable responses (representing a usable response rate
A test for internal reliability is presented in table 1.
of 39 per cent). Out of 372 responses received from
The scores of Cronbach's alpha between 0.801 and
Group 2, 270 responses were usable, representing a
0.908 for each and all items indicate a high level of
usable response rate of 39 percent (the highest rate
internal consistency for our scale (Pallant 2011).
among three groups). In Group 3, 247 responses were

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Indian Journal of Commerce & Management Studies ISSN: 2240-0310 EISSN: 2229-5674
Data Analysis and Findings: Despite the diversity of views regarding the problems
Descriptive analysis: of IFRS, the respondents have consensus about the
challenges that they likely to face if IFRS conversion
Table3: Stakeholder of financial reporting
occurs as seen in Table 5. The majority of concerns
perception on the Relevance of IFRS in Nigeria
(over 80%) are focused on the training/education
Respondents agreeing fields and guidance material (see the top 5 items in
Survey items Frequency Per cent Table 5).
q1 Reliable 474 85
q1 investor confidence 464 84 Table 5: Stakeholder of financial reporting
q104 comparable 556 82
perception on the IFRS Implementation
Challenges in Nigeria
q102 Relevant 454 82
q107 Access global market 450 81 Respondents
Survey items agreeing
q106 Creditability 428 77
Frequency Percent
q108 External financing 384 69 q307 Educate financial staff 461 83
q105 Higher quality than VAS 324 58 q302 Update accounting process 454 82
q109 Creditor relationship 304 55 q310 Limited coverage in University 450 81
q103 Understandable 292 53 q304 Manage public perception 449 81
Source: Ocheni (2014) q306 Educate non-financial staff 449 81
q301 IT system 444 80
A table three illustrates the perception of the q305 Manage transition workloads 437 79
respondents upon relevance, problems, and q308 Insufficient guidance 437 79
implications of IFRS in the context of Nigeria. The q309 Update auditing process 422 76
score “ Respondents agreeing” was computed from q309 Not timely translated 414 75
the rating 4 (agree) and rating 5 (strongly agree) of the Sources: Ocheni(2014)
Likert 5-point scale in the questionnaire. A majority of
the respondents (over 80%) agreed that IFRS possess The majority of the respondents (94%) do not know
many advantages including reliability, improving how much it would cost their organizations to change
investors, confidence, comparability across firms and from their current reporting systems to new systems and
nations, relevant to public users, and make access to fully comply with IFRS. Additionally, only 35 out of
global market easier than the current national 555 (6%) respondents could provide a draft estimate of
accounting standards. This result is consistent with the the IFRS reporting costs. Descriptive statistics relating
literature in this area (Jermakowicz 2004; Joshi et al. to IFRS reporting costs. Estimated cost varied widely
2008). Thus, it confirms the hypothesis H1. (from zero to 1 million dollars). Except for one
There is however less agreement on the perception of respondent who answered with a zero cost (as their
disadvantages than advantages. The majority of company already had the process in place to comply
respondents (around 70%) agreed that both IFRS and with IFRS under its overseas head office’s
IFRS for SME were overly complicated for Nigerians requirements), the estimated costs of IFRS conversion
companies. were significantly correlated with the firms size.

Table 4: Stakeholder of financial reporting Table 6: Awareness of Costs of IFRS Transition

perception on the problems of IFRS in Nigeria
Awareness of IFRS
Respondents agreeing Frequency Percent
cost
Survey items Frequency Percent No 521 94
q208 Too complicated for SME 394 71
Yes 34 6
q110 Complicated 388 70
Sources: Ocheni(2014)
q203 Time consuming 327 59
q205 Hard to understand 297 54
q2010 Impossible global standards 292 53
Table 7: Costs of IFRS Transition
q207 Not yet globally accepted 253 46 Cost of IFRS
N Min Max Mean Std. Division
qQ202 Subjective 135 24 conservation
Naira billion 34 10 20,000 3,917 6,863
q206 Political intervention 119 21 Equivalent
34 458.36 $179,536.90 $179,536.90 $314,559.26
q2012 Vietnam has no voice 113 20 AUD (*)
q204 Lack details 84 15 Sources: Ocheni(2014)
q209 Fraud risk 82 15
q2013 Compromise national pride 71 13 As the majority of companies operating in Nigerian
q2011 Vietnam does not need 22 4 are small to medium sizes with the average net
Sources: Ocheni (2014) turnover estimated to be approximately a$2.12 million

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Indian Journal of Commerce & Management Studies ISSN: 2240-0310 EISSN: 2229-5674
(see Table 10), the estimated average IFRS Reporting Table 10: More Costly than Beneficial for
cost of over a$179,000 (see Table 9) is likely to be a IFRS Adoption?
financial burden to most of companies. This would put All
IFRS reporting costs at 8% of net annual turnover, Opinion Auditor Accountant Academic
groups
which is more than two times net annual profit before 24 125
Agree 39 (14%) 62 (44%)
tax, 17% of the values of fixed assets and long-term (17%) (23%)
investments or 7% of capital.This result agreed with 61 131
Disagree 124 (46%) 46 (33%)
(42%) (42%)
the findings from prior studies (ICAEW 2007). Thus, No 59 199
the hypothesis H2 was confirmed. 107 (40%) 33 (23%)
opinion (41%) (36%)
Sources: Ocheni (2014)
Table 8: Comparing the Estimated Cost of IFRS to
other Financial Indicators From this perception of long-term benefit, the
31.12.2008 IFRS majority of the respondents (60%) said yes to
31.12.2008
Item
VND billion
AUD equivalent cost voluntary IFRS adopting if the Nigerian accounting
(***) ratio jurisdiction allows. This finding confirms hypothesis
Net annual
turnover
5,315,444 435,406,261,954 H1.
Net annual Table 11: Willingness to Voluntary Adopt IFRS?
profits before 211,432 17,319,120,807 All
Tax Opinion Auditor Accountant Academic
groups
Fixed Assets 333
and Long- Yes 93 (65%) 153 (41%) 87 (62%)
2.579,595 211,303,480,256 (60%)
term
192
investment No 44 (31%) 101 (27%) 47 (33%)
(35%)
Corking
6,335,827 518,989,335,690 Not sure 7 (4%) 16 (32%) 7 (5%) 30 (5%)
Capital
Sources: Ocheni(2014)
Number of
8,154,850 8,154,850 The survey participants also provided their opinion on
employees
Number of
205,689 205,689 the general impact of IFRS upon the operation of their
enterprises organizations. The results are consistent with the
Average per
Enterprise
above findings from an earlier question regarding a
Net annual general impact of IFRS upon the organizations.
25.84 2,116,818.41 8%
turnover The majority of the respondents (57%) also believed
Net annual that IFRS would leave either positive or extremely
profit before 1.03 84,200.52 213% positive impact on the operation of their companies
Tax
Fixed Assets (rating 4 and 5). Only three respondents (less than 1
and long- percent) were concerned about the negative impacts
12.54 1,027,295.97 17%
term (rating 1 and 2).
investments
Working
capital
30.80 2,523,174.97 7% Table 12: Impact of IFRS to the Organization
Sources: Ocheni(2014) Opinion Auditor Accountant Academic
All
groups
182
Since the respondents’ perceptions regarding the 0 Don’t know 15 (10%) 14(5%) 53 (38%)
(15%)
benefits and costs of IFRS are diverse, the 1 Extremely
- - - -
negative
questionnaire contained the questions to gain insights 2 Negative - 2 (1%) 1 (1%) 3 (1%)
of views on the overall cost-benefit of IFRS adoption 155
3 No effect 56 (39%) 81 (30%) 18 (13%)
and the intention to voluntarily adopting IFRS. (28%)
60 232
Although the estimated IFRS reporting cost is 4 Positive
(421%)
128 (47%) 44 (31%)
(42%)
significant, the respondents are optimistic about the 5 Extremely 83
13 (9%) 45 (17%) 25 (18%)
net economic consequences of an IFRS switch. In positive (15%)
particular, only 23% of the respondents perceive that Sources: Ocheni (2014)
costs outweigh benefits and up to 42% disagree. This
indicates that Nigerian accountants are optimistic on Non-Parametric Tests:
the view that the upfront cost could be recovered, and Two non-parametric tests i.e. the Kruskal-Wallis H
net benefit will incur in the future. (KW) and the Mann-Whitney U test (MW) were
conducted (see tables 14 and 15). The KW test enables
an investigation of possible differences of perceptions
amongst the three groups of accountants. Upon the
results of the KW test, the MW was conducted to

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Indian Journal of Commerce & Management Studies ISSN: 2240-0310 EISSN: 2229-5674
Table 13: Computed Variables
Std.
Items Mean Std. Error Variance Skewness Kurtosis
Deviation
Advantages 3.8452 .02458 .57905 .335 -.098 .088
Disadvantages 3.0090 .02313 .54494 .297 -.171 -.491
Challenges 4.0180 .02772 .65304 .426 -.616 .243
Costs 3.1305 .02597 .61191 .374 -.034 -.043
Source: Egbere et al. (2013)

Table 15 displays the summary from the SPSS output of the differences in the perceptions of the respondents
amongst the three accountant subgroups.

Table 14: Krustal Wallis H-test

Kruskal Wallis H-
Auditor Accountant Academics test (for all 3
Items groups)
Mean of Mean Mean of Mean Mean of Mean Chi-
P value
response Rank response Rank Response Rank square
Advantage 3.7278 253.07 3.9007 291.34 3.8589 277.92 5.378 .068
Disadvantage 3.0139 280.44 2.9644 265.48 3.0895 299.49 4.226 .121
Challenges 4.0194 273.72 3.9193 252.76 4.2057 273.72 22.133 .000*
Cost 3.1069 278.17 3.1563 287.20 3.1050 260.22 2.654 .265
* mean statically significant at 5% level

The results of the KW test (Table 15) indicate except the challenges item, the accountants of all three subgroups
agreed on the significance of advantages, disadvantages and costs of IFRS. Opinion regarding the potential
challenges of IFRS implementation are diverse between the respondents (since p<0.05). However, the KW test
results do not tell which pairs of means of the accountant subgroups were different on the views of challenges
variable. Therefore, the MW tests (post hoc KW test, pair wise comparisons amongst three groups) were performed.
The MW tests were conducted for the following pairs of accountant subgroups:

Group [1,2] = Auditors vs. Accountants

Group [1,3] = Auditors vs. Academics

Group [2,3] = Accountants vs. Academics

The results from the MW test are displayed in Table 16. The entries marked by asterisks (***) demonstrated that
this particular value is statistically significant since p<0.017. As previously mentioned, the significant value of the
MW test is adjusted by Bonferroni adjustment (diving 5% by three as 0.017).

Table 15: Mann-Whitney U-test

Mean of responses Group (1, 2) Group (1, 3) Group (2, 3)
Mea
Attrib Mean
P n diff P Mean P
utes 1 2 3 diff MW WW MW WW MW WW
Value (1)- Value (2)-(3) value
(1)-(2)
(3)
Challen 4.019 3.919 4.205 17635 54220. 0.186 18170. - 1402 5060
0.1002 0.119 7730.5 … …
ges 4 3 7 .5 5 2 5 0.2864 5 9.5

Sources: Ocheni(2014)

From Table 15, we observe that there is no statistically significant difference of opinions between the Auditors and
Accountants (Group 1,2) since p>0.017. Therefore, the statistically significant differences in Group (1,3) and
Group (2,3) with p <0.001 solely cause by the different perceptions between the academics (Group 3) and the
practitioners (Groups 1 & 2) as shown in Table 16. This agreed with the finding of prior studies (Pandaram 2002;
Rezaee et al. 2010). Thus, our hypothesis H3 is accepted.

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Indian Journal of Commerce & Management Studies ISSN: 2240-0310 EISSN: 2229-5674
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