IMPACT OF IFRS DISCLOSURES ON ORGANIZATIONAL PERFORMANCE
ABSTRACT
The study examine impact of IFRS disclosures on organizational performance, the study has the following objectives,To examine the impact of IFRS disclosures on organizational performance, To examine the level of compliance with the IFRS disclosure principles by companies in Nigeria, To identify the problems associated with IFRS disclosure in organizations in Nigeria.
Concerning methodology for this study, data was obtained from primary source that is questionnaire and secondary source. The collected questionnaire was administered randomly on selected staff of the Ministry of Finance and some members of the public.This study employed the use of survey research design.The design was suitable for the study as the study sought to examine the impact of IFRS disclosures on organizational performance using Ministry of housing and works, Akwa Ibom State as a case study. The population of this study consisted of eighty two (82) staff of the ministry of works and housing,Uyo, AkwaIbom State. As a result of the inability of the researcher to effectively study the whole staff strength (population) of the organisation, a representative number was chosen as the sample size population. Sixty eight (68) staff was used as the sample size. Tables and simple percentage was used as technique of analyzing the research questions while chi-square was used to test the research hypotheses. All the tests were conducted at 0.05 level of significance. The decision to either reject or accept the null hypothesis (Ho) was reached.
The study has the following findings; IFRS disclosures are beneficial to companies.Most companies comply with IFRS disclosure.There is a significant relationship between IFRS disclosure and organizational performance.There are problems associated with IFRS disclosure in Nigeria.There is a high level of IFRS disclosure in Nigeria.
Outcome of this study will educate business managers on the impact (negative and positive) of IFRS disclosure on organizational performance in Nigeria.
TABLE OF CONTENTS
Title Page - - - - - - - - - i
Approval Page - - - - - - - - ii
Declaration - - - - - - - - iii
Dedication - - - - - - - - - iv
Acknowledgement - - - - - - - v
Abstract - - - - - - - - - vi
Table of Contents - - - - - - - vii
CHAPTER ONE – INTRODUCTION
1.1 Background of the Study - - - - - -
1.2 Statement of General Problem - - - - -
1.3 Objective of the Study - - - - - - -
1.4 Research Questions - - - - - - -
1.5 Hypothesis - - - - - - - - - -
1.6 Significance of the Study - - - - - -
1.7 Scope of the Study - - - - - - -
1.8 Definition of Terms - - - - - - -
CHAPTER TWO – REVIEW OF RELATED LITERATURE
2.1 Introduction - - - - - - - -
2.2 Theoretical framework- - - - - - -
2.2.1 Stakeholder Theory - - - - - - -
2.2.2 Stewardship Theory - - - - - -
2.2.3 Agency Theory - - - - - - -
2.4 IFRS Acceptability - - - - - - -
2.5 IFRS Enforceability- - - - - - -
2.6 IFRS Disclosures - - - - - - -
2.6.4 Ordering the notes in reference to importance- -
2.6.5 Grouping disclosures by nature - - - -
2.7 Empirical review- - - - - - - -
CHAPTER THREE – RESEARCH METHODOLOGY
3.1 Introduction - - - - - - - -
3.2 Research Design - - - - - - -
3.3 Area of the Study - - - - - - -
3.4 Population of Study - - - - - - -
3.5 Sample size and Sampling Techniques - - - -
3.6 Instrument for Data Collection - - - - -
3.7 Validity of the Instrument - - - - - -
3.8 Reliability of the Instrument - - - - -
3.9 Method of Data Collection - - - - - -
3.10 Method of Data Analysis - - - - - -
CHAPTER FOUR – DATA PRESENTATION AND ANALYSIS
4.0 Introduction - - - - - - - -
4.1 Data Presentation and Analysis - - - - -
4.2 Characteristics of the Respondents - - - -
4.3 Data Analysis - - - - - - - -
4.4 Testing Hypothesis - - - - - - -
4.5 Summary of Findings - - - - - - -
4.6 Discussion of Findings - - - - - -
CHAPTER FIVE – SUMMARY, CONCLUSION AND RECOMMENDATION
5.0 Introduction - - - - - - - -
5.1 Summary - - - - - - - - -
5.2 Conclusion - - - - - - - - -
5.3 Recommendations - - - - - - -
References - - - - - - - - -
Appendix - - - - - - - - -
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
As the business world becomes closer in its financial and trade ties, many countries are moving towards International Financial Reporting Standards (IFRS), common accounting rules that define how transactions should be reported and what information should be disclosed in financial statements (IASB, 2007). This unitary set of standards has solved many problems while creating others. However, this study is examining the impact of IFRS disclosures on the organizational performance.
It is important to look at the big picture and the overarching aim of IFRS. In an increasingly global market place, international comparability is critical to enable the effective allocation of scarce resources. To achieve international comparability the key nations around the world need to commit to one global set of accounting standards. While over 100 countries have already adopted IFRS, key countries like the United States, Japan and India are yet to require IFRS for listed companies (Bradshaw et al, 2012).
It is important to note that companies that use the same standards to prepare their financial statements can be compared to each other more accurately. This is especially important when comparing companies located in different countries, as they might otherwise be using different rules and methodologies to prepare their statements. This increase in comparability has helped investors better determine where their investment dollars should go thereby enhancing organizational performance as there will be more investors to invest in the company. Though, the United States has not yet adopted International Financial Reporting Standards and other countries continue to hold out as well (Bradshaw et al, 2012). This makes accounting by foreign-based companies that do business in America difficult as they often have to prepare financial statements using IFRS and another set using American Generally Accepted Accounting Principles (Bradshaw et al, 2012).
IFRS disclosures use a principles-based, rather than rules-based, philosophy. A principles-based philosophy means that the goal of each standard is to arrive at a reasonable valuation and that there are many ways to get there. This gives companies the freedom to adapt IFRS disclosures to their particular situation, which leads to more easily read and useful statements. There is a downside to the flexibility that IFRS disclosure allowsorganizationsto utilize only the methods they wish to, allowing the financial statements to show only desired results. This can lead to revenue or profit manipulation, can be used to hide financial problems in the company and can even encourage fraud. For example, changing the method of inventory valuation can bring more income into the current year's profit and loss statement, making the company appear more profitable than it really is. While IFRS requires that changes to the application of the rules must be justifiable, it is often possible for companies to "invent" reasons for making the changes. Stricter rules would ensure that all companies are valuing their statements the same way.
1.2 STATEMENT OF THE PROBLEM
Several researchers had examined the effect of the adoption of IFRS disclosure on organizations and the findings revealed both the advantages and the disadvantages of IFRS disclosure. Considering the fact that small company would be impacted by a country's adoption of IFRS disclosure in the same way a larger one would. However, small businesses do not have as many resources at their disposal to implement the changes and train staff. This results in smaller companies bringing in accountants or other outside consultants to help make the changeover. These smaller companies will bear more of a financial burden than larger ones in this area. However, this study will examine the impact of IFRS disclosures on organizational performance.
1.3 OBJECTIVES OF THE STUDY
The following are the objectives of this study:
1. To examine the impact of IFRS disclosures on organizational performance
2. To examine the level of compliance with the IFRS disclosure principles by companies in Nigeria.
3. To identify the problems associated with IFRS disclosure in organizations in Nigeria.
1.4 RESEARCH QUESTIONS
1. What is the impact of IFRS disclosures on organizational performance?
2. What is the level of compliance with the IFRS disclosure principles by companies in Nigeria?
3. What are the problems associated with IFRS disclosure in organizations in Nigeria?
1.5 HYPOTHESIS
HO: There is no significant relationship between IFRS disclosures and organizational performance.
HA: There is significant relationship between IFRS disclosures and organizational performance.
1.6 SIGNIFICANCE OF THE STUDY
The following are the significance of this study:
1. Outcome of this study will educate business managers on the impact (negative and positive) of IFRS disclosure on organizational performance in Nigeria.
2. This research will be a contribution to the body of literature in the area of the effect of personality trait on student’s academic performance, thereby constituting the empirical literature for future research in the subject area.
1.7 SCOPE/LIMITATIONS OF THE STUDY
This study will cover the impact (negative and positive) of IFRS disclosure on organizational performance in Nigeria
LIMITATION OF STUDY
Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.
1.7 DEFINITION OF TERMS
ORGANIZATION: A group of people who form a business, club, etc, together in order to achieve a particular aim.
DISCLOSURE: The act of making something known or public that was previously secret or private.
PERFORMANCE: The act or process of performing a task, an action, etc.
IFRS: International Financial Reporting Standards.
ORGANIZATIONAL PERFORMANCE: comprises the actual output or results of an organization as measured against its intended outputs (or goals and objectives).
REFERENCES
Bradshaw, M., et al (2010). Response to the SEC's Proposed Rule- Roadmap for the Potential Use of Financial Statements Prepared in Accordance with International Financial Reporting Standards (IFRS) by U.S. Issuers. Accounting Horizons(24)1
International Accounting Standards Board (2007): International Financial Reporting Standards 2007 (including International Accounting Standards (IAS(TM)) and Interpretations as of 1 January 2007), LexisNexis, ISBN 1-4224-1813-8
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