ICAN’s FRFaculty to deepen IFRS
THE FINANCIAL REPORTING FACULTY (FRF) of the Institute of Chartered Accountants of Nigeria (ICAN) at its 2019 inaugural meeting last week, said it plans to help build capacity and align Nigeria’s financial
THE FINANCIAL REPORTING FAC ULTY (FRF) of the Institute of Chartered Accountants of Nigeria (ICAN) at its 2019 inaugural meeting last week, said it plans to help build capacity and align Nigeria’s financial reporting standards with the international best practice, globally regarded as the International Financial Reporting Standards (IFRS).
The faculty also said it would address the knowledge gap and expertise crisis in matters of IFRS within the professional audit and accounting industry in Nigeria.
The ICAN initiative was borne out of the low level of expertise in IFRS matters among professional accountants as well as the technical nature and ever evolving natures of IFRS, which they are not well equipped to deal with.
At the inaugural meeting of the FRF in Lagos, which was attended by experts in the field, concerns were expressed by members over IFRS implementation among companies in Nigeria, especially the small and medium enterprises which are yet to embrace the IFRS reporting format. They were, however happy with the level of compliance by listed companies.
Present at the meeting were some IFRS experts, including Innocent Okwuosa, PhD, a council member of the ICAN and deputy chairman of the committee; the current chairman of the committee, Bolaji Osho; the previous chairman, Femi Awoteye, who is the IFRS partner at KPMG; another council member of the institute, Jamiu Olasekan, who is also the IFRS partner at Ernst and Young; Jide Adeola, a partner with Pricewater-houseCoopers; Ugochukwu Okwechime, a senior manager, assurance, with Ernst and Young, among other members.
They noted that IFRS had not been embedded with the SMEs financial reporting system in such a way as to be able to generate an IFRS financial statement, as they tend to grapple with some other problems which preoccupy them.
The practitioners among the faculty members are of the view that the strategy in the industry is such that these companies have continued with their practice, before the adoption of IFRS in Nigeria, of producing a normal financial statement, and then do a ‘conversion’ to IFRS financial statement.
The attitude of the SMEs to IFRS may have been influenced by other factors, such as resource issues, lack of expertise or not being convinced of the benefits of IFRS adoption. Even among the listed companies, technical expertise remains an issue as IFRS is continually changing. The technical nature of IFRS coupled with changes in the business environment that then necessitate a change in the IFRS, meant that its knowledge is in constant change.
To ensure wider adoption of IFRS by companies, the committee’s deliberation centred on how to build capacity among ICAN members who in their day to day practice are confronted with IFRS issues. The knowledge built will then be made available to other professional bodies such as Association of National Accountants of Nigeria (ANAN), Chartered Institute of Bankers of Nigeria (CIBN), among others.
In addition, the faculty agreed to come up with audio recorded IFRS materials that enable members to engage in independent study of three key critical new standards, namely, IFRS 9 – Financial Instruments Measurement and Recognition; IFRS 15, which deals with revenue from contracts; and IFRS 16, deals with leases.
“When success is achieved in these three standards, the Faculty will then extend to the rest standards,” a source at the meeting told
business a.m.
The faculty currently runs a certification training programme on IFRS and plans to have two forums for its members before the end of the presidential year, in addition to these two initiatives. Technical bulletin will also be introduced to give views on controversial IFRS issues.
The above is in line with the earlier move by Innocent Okwuosa, lecturer in accounting at the University of Hertfordshire in the United Kingdom, who has set up a group of IFRS Experts with the aim of dealing with the knowledge gap and expertise in IFRS within the industry.
He had revealed in an exclusive interview with business a.m. that contact would be made by the group with International Accounting Standards Board (IASB) to ensure that Nigeria’s voice is heard in the accounting standard setting process.
Okwuosa said the expert group will engage in research and come together to make comments on exposure draft which reflects the peculiar business environment in Nigeria.
It is generally believed that the adoption of International Financial Reporting Standards has enhanced the perception of Nigeria in the international economic and business community, when it comes to financial reporting. However, this needs to be taken to the next level with equipping practitioners with technical expertise. The emerging IFRS Expert group will assist in this.
business a.m. will be partnering with the IFRS Expert group to keep the business community in Nigeria abreast with developments in IFRS, including implementation issues, IFRS updates, new IFRSs and controversies in the reporting.