Background of the study
Because users rely on financial reports to judge economic decisions, particularly financial reports provided by public firms, guidelines to control the compilation of such statements were needed to increase their credibility. Accounting standards have been developed in a number of countries to regulate accounting systems that are unique to each country’s circumstances. Over time, the businesses have grown and extended across national lines. Corporate capital requirements have also risen, with additional cash coming from international markets.
Different information needs of consumers from national and international sources have emerged, as well as issues in degree comparability due to disparities in standards. Corporations all throughout the world must try to match the actions of international companies as international marketplaces become more integrated (Beier, 2008). In order to discover the finest portfolio, Tafara (2008) correctly noted that stakeholders and investors are no longer limited in their choice of companies and investment options.
According to Choi and Meek (2005), as international audiences become more aware of the various national accounting standards under which financial statements are issued, a better level of comparability and quality of financial statements is necessary.
Additional costs in the form of potential capital losses or investment possibilities will result in a lack of confidence in the companies if investors and stakeholders are unable to obtain a reasonable and transparent perspective of the selected companies.
Public and commercial companies are increasingly recognizing the benefits of globalization as the forces of globalization drive more governments to open their doors to foreign investment and as companies grow outside their boundaries. Uniform financial reporting system supported by globally recognized strict accounting standards. Harmonization efforts in 1973 resulted in the formation of the International Accounting Standards Committee (IASC), which released the International Accounting Standards series of standards (IAS). The International Accounting Standards Board (IASB) has been in charge of defining accounting standards since April 2001, taking over from its predecessor, the International Accounting Standards Committee (IASC), in order to make the standards created binding for all members. The IASB has embraced all of the IASC’s standards, which are still referred to as IAS. The new standards, on the other hand, would be published as part of a series known as International Financial Reporting Standards (IFRS). With the IASB’s establishment of IFRSs, the globally recognized and long-awaited accounting standard has been a success, with more than 120 nations adopting their standards to IFRS (Institute of International Financial Reporting Standards).
As part of its attempts to foster quicker private sector growth, Nigeria adopted IFRSs in place of the prior national accounting standards (ANAN) on January 1, 2007. On January 23, 2007, the Institute of Chartered Accountants of Nigeria (ICAN) officially passed its adoption, binding all publicly traded corporations, government agencies, banks, and insurance companies to use IFRS by December 31, 2007, among other things. An extended two-year transition period has been granted to entities (United Nations, 2007). Nigeria, along with Botswana, Egypt, Ethiopia, Kenya, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Sierra Leone, South Africa, Tanzania, Swaziland, and Uganda, is one of 15 African countries. IFRS (International Financial Reporting Standards) (Zori 2011, PricewaterhouseCoopers 2010). However, empirical research by Street and Gray (2001) and Glaum and Street (2003) indicated that corporations frequently claimed to completely conform with IFRS in their annual reports, when in reality, there are major discrepancies across IFRSs. Similarly, the International Federation of Accountants (IFAC) discovered that although accounting policies and ratings suggest otherwise, accountants confirm that organizations conform with IAS (Cairns, 1997). The study’s goal was to evaluate the degree of IFRS compliance for all companies listed on the Nigerian Stock Exchange (NSE), as well as to identify the drivers of IFRS compliance and the variations, if any, between the kinds in terms of IFRS compliance.
Purpose of the study
The study’s goal is to determine the extent to which WEMA Bank PLC complies with the International Financial Reporting Standard. The study will, in particular:
- Examine the extent to which WEMA bank plc complies with the International Financial Reporting Standards (IFRS).
- To figure out what factors influence IFRS compliance
- To see whether there are any variances between different types of industries in terms of IFRS compliance.
Significance of the study
The goal of the study is to assist the public sector in adopting a holistic approach to accounting standards and IFRS. Public universities, higher education institutions, research institutes, and independent researchers interested in accounting standards will be interested in the findings and will use them to conduct additional research. Researchers will be encouraged to determine the sector’s effectiveness and efficiency as a result of this study. Individual banks will be able to better grasp their situation in relation to the standard of their financial reports as a result of the investigation.
The following is the study hypothesis:
HO1: WEMA bank plc is not in accordance with the International Financial Reporting Standards (IFRS).
HO2: There are no substantial variances in IFRS compliance amongst different types of industries.
Scope and Limitations of the Study
The scope of the research is limited. the examination of WEMA Bank PLC’s conformity with the International Financial Reporting Standard. The research was hampered by a lack of time and financial resources.
Definition of Basic terminologies
Corporate Size: The size of a corporation, regardless of how it is defined (e.g., total assets, sales turnover, and number of shares), is a variable that can explain the quality of a firm’s disclosures to a reasonable extent.
Profitability is the degree to which a firm or activity makes a profit or generates a financial gain.
The ratio of a company’s loan capital (debt) to the value of its ordinary shares (equity) is known as leverage.