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The federal government has said the adoption of International Financial Reporting Standards (IFRS) will enable investors make appropriate investment decisions in Nigeria.
The Minister of Industry, Trade and Investment, Mr. Olusegun Aganga said this in a keynote address presented at the train-the-trainer workshop for the IFRS for SMEs organised by the Financial Reporting Council of Nigeria (FRCN) in Lagos.
The minister who was represented by the Director-General of the Standards Organisation of Nigeria (SON), Dr. Joseph Odumodu cited the collapse of the US energy giant (Enron), WorldCom, among others in the past, saying it made the accounting profession to come under sharp scrutiny.
According to Aganga, countries that hitherto thought their financial reporting standards were impermeable found that to realise the full gains of cross border listing, no individual country could act alone in its financial reporting standards, rather converge their national standards with international financial reporting standards.
“There is growing evidence that the world economies are even more interconnected and symbiotic than anyone really understands. Judging from the global financial crisis, it is obvious to all that nations strained the initial system of differential national accounting standards to its limit,” he said.
According to the minister, nations that are truly desirous of moving forward are now aiming to free their countries from the limits of national financial reporting standards.
“Nigeria indeed is part of this globalisation. In recent times a number of Nigerian companies have raised capital from international stock markets; others have established significant presence in other jurisdictions.
“Therefore, for a better understanding and appreciation of the risks and consequently making decisions about the flow of economic capital, it make sense that financial statements prepared in Nigeria use these global financial reporting benchmarks,” Aganga stated.
The minister expressed optimism that the workshop would go a long way in to prepare SME operators and users of financial statements, educators, regulators and other stakeholders for IFRS adoption.
“I believe that this workshop will create awareness on the potential impact of the conversion, identify regulatory synergies to be derived and communicate the temporary impact of the transition on business performance and financial position at the level of small and medium sized entities.
“Finally, for reasons of enhancement of knowledge of IFRS by stakeholders in Nigeria, the Nigerian Universities Commission has been working together with the FRC towards aligning accounting curriculum to cover the teaching of IFRS,” he said.