TO unlock global capital funding in Nigeria, companies in the country need a robust International Financial Reporting Standards, IFRS, reporting platform. Omobolanle Adekoya, accounting consulting services leader at PwC Nigeria, who highlighted the benefits of IFRS reporting, said dealing with the IFRS on a sustainable basis requires immediate action and this may provide some market advantage when implemented in a seamless manner.
This, she said, would keep the cost of financial reporting at a cost-efficient level in the long run. “An additional benefit some companies are not aware of is the fact that having a robust IFRS reporting platform and financial statements opens up global capital funding opportunities to companies as all international investors require the IFRS data to make their investment decisions. Although the first wave of transition is over, a lot of companies are still struggling with the IFRS. Internally, most companies still run parallel reporting systems with the IFRS running side by side local reporting. This is expected; given the nascent nature of Nigeria’s IFRS reporting,” she said.
Adekoya said the IFRS had become the new business reporting language, adding that companies must seek to harmonise existing structures to ensure that the IFRS is engrained in their policies and day-to-day procedures and activities. “In all, companies must embed the IFRS and embrace the spirit of the letter. That way, we can minimise diversity in practice and prevent a haphazard adoption. Doing this will also help us set solid building blocks for a more rewarding and structured financial reporting environment and by extension make us truly a part of the global family.”
According to her, among the key issues that need to be addressed is the IFRS skill gap that companies have to close up. “Another key issue is the lack of sufficient market data of the right quality to aid the application of core IFRS principles especially the concept of fair value. The benefits of a single set of high-quality global accounting standards, consistently applied, are worth the challenges that IFRS pose. Its revolutionary impact however requires a great deal of decisiveness and commitment by all stakeholders.”
Adekoya said since companies were different, the impact of the IFRS adoption would differ from one company to another as was seen in the PwC’s survey last year. “Industry segment, business complexity, and other environmental factors will play a role in determining the level of impact and the timing of companies’ approaches.”
The PwC partner said in order to gainfully implement and utilise the IFRS, organisations must stay abreast of updates to the standards, given that it is a constantly changing platform, and also propose changes to these standards based on their experience. “That way we can begin to take an active part in the standard setting process. We cannot afford to sit on the sidelines.”
According to her, among those surveyed by the PwC were 38 finance executives drawn from various companies across four sectors; financial services, energy, manufacturing and conglomerates and the telecommunication sectors. She said the results showed that 83.3 per cent of respondents had an approved budget for the IFRS implementation, while 32 per cent of the respondents had budgets in excess of N75m. “All respondents said that the total cost of the IFRS implementation was more than they had initially envisaged and that adopting the IFRS had not reduced their financial reporting costs. In fact, 96.7 per cent of respondents commented that preparing financial reports under the IFRS was more costly when compared to preparing same under previous local standards.”
— Apr. 27, 2015 @ 01:00 GMT