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APC311 International Financial Reporting Assignment Help

In Japan, most firms have adopted IFRS standards with substantial convergence and the number of firms using US GAAP is shrinking, as shown from the article extract titled:

‘Chairman's speech: Japan and IFRS® Standards' written 2018, 29 August.

Chairman of the IASB Hans Hoogervorst spoke at an event hosted by the Accounting Standards Board of Japan about adoption of IFRS Standards around the world.

Read the article and use it to develop an appreciation of the progress of IFRS in Japan and apply a similar but rigorous critical evaluation of your chosen Country.

For your chosen Country, critically evaluate the progress towards global accounting standards and the model of IFRS adoption. Include a critical evaluation of the benefits and limitations of adopting IFRS in that particular jurisdiction and any other relevant issues that may impact adoption such as international trading, influence of corporate governance, financial markets etc.

Your assignment should aim to provide readers with comprehensive knowledge and critical reviews of these areas covering, for example:

- A knowledge of different accounting treatments in individual accounting standards

- A knowledge of implications of different accounting treatments on usefulness of financial statements

- Your own understandings of, comments on, arguments and contributions to the topic, such as key qualitative characteristics, true and fair view/fair presentation, creative accounting, etc..

- Any other important issues which you think should be addressed Further details.

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International Financial Reporting 


International Financial Reporting Standards (IFRS) consists of common rules and regulations which ensure that the financial statements are transparent, comparable and consistent all around the world. International Accounting Standards has issued IFRS. It directs how organizations should report and maintain their accounts. IFRS has assisted to create a common and appropriate accounting language in order to make the financial statements reliable and consistent from organization to organization and nation to nation (IFRS, 2019). Most of the firms in Japan have adopted International Financial Reporting standards with the substantial convergences and number of organizations is shrinking which using US GAAP. Hans Hoogervorst, chairman of the IASB spoke at an event organized in Japan by the Accounting Standards Board about the adoption of International Financial Reporting Standards all around the globe. The chairman discussed the progress on the way to the global accounting standards and examined the economy and accounting standard followed in Japan in order to enable people to decide whether to adopt International Financial Reporting Standards.

Main Context

Global accounting standards and the model of IFRS adoption

Since 2001, a large number of jurisdictions has been adopted International Financial Reporting Standards and it is still increasing. The implementation of IFRS can be seen in most part of the world and the progress seems to be increasing with less effort but it is not like that. The first jurisdictions that adopted IFRS were the nations of Europe in the year 2005 and it also consisted of other nations such as South Africa, Hong Kong, and Australia. The FASB and IASB working together to integrate and enhance US GAAP and IFRS standards towards the achievement of an objective of a single accounting standard set. The United States is still hesitating to adopt global standards from the US GAAP (IFRS, 2019). In 2011, Japan after a terrible hit by tsunami slowed down the adoption of International Financial Reporting Standards. Various jurisdictions have selected different IFRS paths. The ‘big bang approach' for most of the jurisdictions has considered being the best approach. In the year 2011, G20 jurisdictions of Saudi Arabia, Russia, Mexico, Korea, Canada, and Argentina have adopted fully IFRS standards. G20 three quarters have adopted the standards. Current research depicted 144 jurisdictions out of 166 have adopted the standard. Other jurisdictions such as India and China have been able to integrate IFRS standards and their accounting requirements. However, some differences are still there and China is seen to be very close to the convergence. Many big organizations of China depicted identical results under Chinese GAAP and IFRS.

Japan has seen to be on the path of adopting the International Financial Reporting Standards. The market has to decide whether the adoption of IFRS is fruitful for them. The organizations have many choices such as do they stick with US GAAP or national GAAP or they adopt international standards and if they the adopt then do they select a version of the International Financial Reporting standards for meeting the local preferences or pure International Financial Reporting standards. No organizations in Japan are being forced to implement a specific set of standards (IASB, 2019). However, it is being found that around 200 large multinational organizations of Japan have selected to adopt full International Financial Reporting Standards. The organizations represent 30 percent of the total market capitalization of TSE (Tokyo Stock Exchange). Apart from this, some of the big organizations of Japan are moving towards the adoption of the standard. The number of organizations using US GAAP in Japan has been shrinking steadily. The path of moving towards the adoption has provided academics and policymakers some useful information. The organizations are ready to incur the transition cost for getting the required benefits. The organizations that are transitioning have selected full IFRS and not the modified version in order to meet the local preferences. Jurisdiction's ‘third way' has been explored by Japan in order to move towards the adoption (IFRS, 2019). The approach allowed big organizations to adopt the standard without forcing them to switch. For other jurisdictions, the option of adopting IFRS can be a challenging one because they might develop IFRS expertise. A few countries of Asia, for this reason, are seriously looking at the model of IFRS adoption by Japan.

The Financial Reporting Council of Nigeria (FRCN) has the authority in Nigeria to create financial reporting standards for the ‘public interest organizations'. It not only consists of unquoted and quoted organizations but also government organizations, not-for-profit organizations, and governments. The Financial Reporting Council of Nigeria promotes compliances with the standards adopted that are being issued by the IASB (International Accounting Standards Board) and IFA (International Federation of Accountants). IFRS Standards are needed for the financial statements of the public interest organizations (Watson and Head, 2019). Nigerian Federal Executive Council took step towards the adoption of IFRS standards. The action of the council for adopting IFRS standards was relied on the suggestions given in the committee report on the road map for the implementation of the standards in Nigeria. IFRS was adopted for the public interest and quoted companies were become effective in January 2012. It was also for the small and medium-sized enterprises which became effective in January 2014. The companies are still in progress towards the adoption of IFRS standards in Nigeria. Ethiopia is seen to be moving towards the adoption of the International Financial Reporting Standards in the next five years.

The existing accounting system can be changed by a country to a globally recognized financial and accounting standard with the adoption of IFRS. Nigeria can opt for ‘big bang' or adoption approach which is also known as convergence approach. Adoption of the ‘big bang' approach is considered to be the strategic decision for the adoption of IFRS standards on a specific date or different date applied to organizations of different sizes. Once IFRS is adopted under this approach then all the IFRS standards would be complied during the preparation of the financial statements and it will replace the existing accounting standards. The gradual shift towards the IFRS is seen in a convergence approach through customizing and integrating into the existing accounting standards (Kimmel, 2018). Integrating some of the local standards into International Financial Reporting Standards can allow the auditors and local preparers to gain knowledge on a few topics. It also assists to allow time to make necessary amendments in the domestic legal frameworks. The implementation of IFRS needs careful planning complete understanding and commitment of its implications. The adopters have to pass through three steps in order to implement the standard. The first step is to develop policy frameworks after consulting with the stakeholders. The second step is to prepare a plan by creating deadlines and targets and making people understand the issues that should be overcome. The third step is to determine the resources that would be needed for the implementation of the new standard.

The organizations in Nigeria are moving towards the adoption of IFRS standards. However, they have to understand the model of IFRS adoption in order to ensure appropriate implementation within the framework. First-time Adoption of the International Financial Reporting Standards IFRS 1 sets out the procedure that a company should follow during the adoption of the International Financial Reporting Standards for the first time. The organization adopting the standards for the first time makes an unreserved and explicit statement that the preparation of the financial statement complies with IFRS. IAS 1 need at least one comparative year before financial information is presented (IFRS, 2019). It means the first financial statement of the organization should include at least two profits or losses and other comprehensive income statements, two separate profits or loss statement, two cash flow statement, two changes in statement of equity and related notes. The organization should remove previous GAAP liabilities and assets from the opening financial position statement if they do not qualify under IFRS for recognition. The organization should recognize all liabilities and assets that are needed to be recognized by International Financial Reporting Standards. The previous GAAP financial position opening statement should be classified by the organization into a proper IFRS classification.

The adjustments needed to move to IFRS from previous GAAP at the transition date need to be directly recognized in the retained earnings. The organization in preparation of IFRS estimates should use the assumptions and inputs that are being used for determining the previous estimates of GAAP. For many organizations, new disclosure areas would be added as per the requirement of the standard. IFRS 1 need disclosures that show how the transition to IFRS from previous GAAP impacted the financial performance, cash flows and financial position statement of the organization (IFRS, 2019). In Nigeria, the organizations have to follow the rules and regulations developed by International Financial Reporting Standards. The aim is to enhance the quality of accounting by improving the uniform set of the financial reporting standards. Improved is relied on the fact that IFRS changes lead to changes in GAAP which lead to an increase in the quality of the financial reporting. IFRS adopted by the firms have more timely loss recognitions, more relevance value of earnings and fewer earnings management which shows enhance of the quality of accounting. The accounting system is considered to be complementary components of the institutional system of the nation and it is determined by incentives of the firm for financial reporting.

Benefits and limitations of adopting IFRS

The adoption of IFRS standards assists the countries to gain benefits but it also possesses challenges. The standards are implemented in different organizations in the world because of its benefits that cover the costs incurred by the organizations. It has been argued by the supporters of IFRS that there are multiple advantages which can be achieved from greater cross-country comparability of the financial report of the organizations (Eisen, 2019). Nigeria would be able to decrease the cost of information and the auditors would be able to prepare the statements in an appropriate manner. The auditors would be able to be familiar with singe common standard that can be integrated into local accounting standards. Nigeria considers adopting IFRS as they are expected to increase trade in their economy and overseas shares of foreign capital. Nigeria might choose to adopt IFRS as they are expecting growth in these segments.


The adoption of IFRS can make the accounting standards more reliable that can help Nigeria in attracting foreign investment. This foreign investment will increase and the risk profile of Nigeria would become more predictable. Additionally, Investors are more about to be attracted to environments where the rewards would be high relative to the risks. Access of dependable information expected to contribute to minimizing this risk. It has been found that there is a relationship between FDI in Nigeria and IFRS acceptance of organization which can enhance the economy in return. Credible financial information can help Nigeria in making investment decisions efficiently (Regoli, 2019). Organizations look for investment opportunities in different nations or within the nation, their financial statement needs to be correct and similar across jurisdictions and industries for attracting financial support and proper investment. Moreover, the aim of credible financial reporting should be followed in such a way that there must not be any doubt regarding the quality of the financial statement that is shaped by organizations of Nigeria.

There are numerous financial and accounting information users and their requirements are also different. It is important to present financial information in such language that can be communicated efficiently with multiple users. IFRS can provide a platform to Nigeria where they can improve their communication with superior stakeholders. There will not be a need for conversion if the language of preparation understood by the international potential and current investors. Acceptance of IIFRS can help Nigerian organizations in increasing their confidence level regarding worldwide investment analysis and users in the financial statement (Britton and Waterston, 2013). Moreover, multinational companies of Nigeria will get help form it in fulfilling the disclosure necessities for stock exchange across the world. IFRS will help Nigeria in getting consistency in accounting language around the world which considered being pre requites for the globalization of corporate. Nigeria needs to eliminate the unnecessary complexity that presents in numerous reporting languages. There are differences in the level of disclosure, classification of financial information and concepts of accounting between nations. The adoption of IFRS can facilitate Nigeria with greater suitability of financial reports by the supervisory body and this can assist them in enhancing the secondary listing of their organizations in world-wide stoke markets.


The adoption of IFRS can generate multiple benefits to Nigeria but it can also cause certain disadvantages in the future. It needs high cost. All businesses either small or large would feel the impact of the adoption of IFRS standards. Small organizations might struggle in getting sufficient resources of implementing changes that will need for carrying out the process. They will have to provide training to their staff or hiring consultants or accountants for assistance. It may lead to concern with standards manipulations. Companies will be limited to utilize only those methods that they are willing to include in their reporting, letting their financial statement to present the outcomes they want. The structure of IFRS makes it easier to include the revenue or profit manipulation into the outcomes. It can also lead to fraudulent activities, such as modifying the technique of inventory evaluation for making more revenue coming into the profit and loss statement to show like the organization is in the healthier situation than it actually is. The latest standards might require modifications for applied regulations to be justifiable (Jordan, 2013).

The issues with implementing IFRS has been encountered in most of the countries as it is not possible because of multiple reasons beyond IASC or IASB control as the application of IFRS cannot be enforced to all counties of the world. Another major disadvantage of IFRS is considered to be the monopolization. It makes IASB monopolist in relations with setting the standards. It can be strengthened if the corporations of the United States adopt it. The organizations of Nigeria are experiencing huge transactional cost after the adoption of IFRS. The advantages of it cannot be noticed because of the fact that it takes some time to harmonize and some years would be required for the financial statement to be drafted according to the standards of IFRS for improving consistency (Kimmel, Weygandt and Kieso, 2019). Nigeria can face cost issues during the process of adoption because the adoption of IFRS is quite costly and complex. The organizations of Nigeria might experience delays or mistakes during the transaction period because it is usual the organizations would be shifting from their present accounting standards instructed by the nation of the origin to the global accounting standards regulation developed by International Financial Reporting Standards.

Other relevant issues

Nigeria can face other relevant issues that can impose an impact on the adoption of IFRS. The organizations can face problems to account and depict the financial information that consisted of foreign transactions. The fluctuations in the market and the nations that have not yet adopted the International Financial Reporting Standards can create differences. Corporate governance can also influence the adoption of the standard. The functioning of the board and the effectiveness of the audit is also considered to be important in order to ensure appropriate implementation of IFRS standards (Simegn, 2015). The management has to ensure that the organization is maintaining both disclosure quality and compliance. It is being found that the organizations having stronger governance are seen to be disclosing more information and data. The deregulation of financial markets has led to the creation of the unified objective which has assisted to move towards the development of uniform accounting standards in order to assist in the smooth capital flow all across the economies. The adoption of IFRS can affect the operations and functioning of the financial markets. Thus, the integration of the IFRS standards and financial market of Nigeria is considered to be very much important.

The adopters in Nigeria need stable funding, appropriate governance, and expert staffing in order to ensure that the implementation process of the standards is not influenced by any other factors. There should be an enforcement mechanisms and coordinated regulatory reviews in order to facilitate consistent applications. There have been different compliance levels with IFRS and the organizations ensure that the financial statements are being complied with the standards (Odo, 2018). The auditors also fail to express their opinion on non-compliance or compliance with IFRS. The major issue that can be faced by the country is jurisdictions with weak enforcement organizations and institutions. There can also be language, cultural, accounting profession and regulatory challenges, wider participation of political system, embracing political reforms and demands for higher accountability. There is increasing requirement for education and training for accountants, investors, users, auditors, and preparers of the financial reports. Lack of knowledge, acceptance, resources, and behaviour of the stakeholders of the organizations can influence the adoption of the standards (Odia and Ogiedu, 2013).


The organizations in Japan are moving towards the adoption of IFRS standards. Nigeria is also making efforts for the implementation of the standards in order to enhance the quality of the financial reporting. There are benefits and opportunities for the countries from the adoption of the standards. However, in the developing countries, the adoption is considered to be a big challenge and huge task. The organizations of Nigeria have to follow the implementation process and ensure appropriate adoption of the standard. An effective implementation needs careful planning and public education, a regulator and legal support system, institutional support and allocation of the resources. The users of the financial statements should be able to examine the financial reports in an appropriate manner. Continual training of regulators, analysts, auditors, and other users is considered to be the significant factor for carrying out the accounting process in an appropriate. The organizations would be able to provide true, reliable and fair accounting information to the stakeholders.

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