Nigeria’s International Financial Reporting Standard Experts Forum (IFRSEF) has called on the International Accounting Standard Board (IASB) to consider costs and other peculiar problems of emerging markets in its current effort to amending primary financial statements.
IASB is responsible for issuing the International Financial Reporting Standard (IFRS), which Nigeriaandsomeotheremerging markets have adopted. Recently, IASB issued an Exposure Draft on primary financial statements inviting comments from the public to enable it amend the statements. Primary financial statements are a statement of profit or loss and statement of financial positions and their notes.
The amendment if effected will mean that the way companies in Nigeria present their income statement and statement of financial position will change. Companies are likely to incur a heavy cost to implement the new changes. Such costs may include training cost for accountants and audit staff and investment to update the accounting system to be able to generate financial statements that comply with the amendment.
The call for comment on the exposure draft ended on 30th September, 2020 and organisations that submitted comments to IASB include Accountancy Europe, America Accounting Association, Japanese Bankers Association, IATA Industry Accounting Working Group, Saudi Organisation for Certified Public Accountants, New Zealand Accounting Standards Board, CPA Australia, European Securities and Markets Authority (ESMA), Accounting Standards Board of Japan (ASBJ), New York State Society of Certified Public
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Accountants, The Institute of Chartered Accountants of India, The Swedish Financial Reporting Board, Korea Accounting Standards Board, Johannesburg Stock Exchange (JSE), South African Institute of Professional Accountants, Financial Reporting Council, UK, among others.
A copy of IFRSEF response made available to newsmen shows that IFRSEF has approached its response from cost-benefit analysis taking into consideration the peculiar circumstances of Nigeria and emerging markets in general. Specifically, where IASB asked for other comments, IFRSEF advised as follows:
“We wish to draw attention to ambiguity, complexity and lack of clear definition of certain proposals, especially main business activity. We are also concerned with the requirement for additional disclosures that do not contain new information and are not useful information to providers of financial capital. The effects of ambiguity and additional disclosures that are not useful are increased implementation costs especially in emerging markets.”
On where IASB wanted to introduce disclosure of management performance information, IFRSEF has this to say: “We do not agree that information about management performance measures as defined by the Board should be included in the notes to the financial statements?” It then proceeded to give reason for the disagreement as follows:
“These figures are already available within financial statements and can be assembled by analysts and users of financial statement. A requirement to disclose this in the notes to the financial statements is expanding IFRS financial statement which to preparers amounts to extra cost to produce information that does not increase the usefulness of financial information.
