BY Providence Obuh, Vanguard

The Institute of Chartered Accountants of Nigeria, ICAN, has emphasized the need for Microfinance Banks and Small and Medium scale Enterprises, SMEs, to adopt the International Financial Reporting Standards, IFRS, despite the challenges it would pose to them, saying that the adoption would help promote accountability and transparency in financial reporting.

Speaking at a seminar organized by the Forum of Firms, Chairman Board of Audit Investigations and Forensic Accounting Faculty, Mr. Bolaji Medessou said that the drive behind IFRS adoption globally is to promote transparency and accountability.

Medessou said “it will bring additional cost and pain to these entities, especially the cost of implementation, because they do not have the personnel, they do not have the training, they do not have the other resources that are required to implement IFRS.

“However, I believe that the regulators are also conversant with these possibilities that they may have challenges, but as I said the driving force for IFRS implementation globally is to promote accountability and transparency given the break down of corporate governance in many entities.

“IFRS is a major difficulty that we have to endure, I believe the International Federation of Accountants (IFAC), who are driving the IFRS are also designing IFRS for medium and small enterprises, that is smaller entities who lack resources, can use as a bases for implementing IFRS rather than the global one that is being put in place.”

Also speaking, President of the ICAN, Mr. Adedoyin Owolabi explained that following the collapse of some multinational organizations, the issue of quality control has assumed greater importance in global discourse particularly as a strategy for rebuilding the confidence of the public in accountancy profession.

Owolabi pointed out that the debate on quality control are the issue of compliance to standards, peer review, adherence to professional ethics, independence of the auditor, continuous training, among others, adding that the ability of sole practitioners, small and medium-sized practices to understand and apply IFRS is in doubt.

He said, “While the big firms have fewer problems with quality control, it is doubtful if the sole practitioners and small and medium-sized practices (SMPs) firms posses the ability and competence to satisfy these benchmarks.

He said that all the listed companies and significant public interest entities in Nigeria have adopted and started preparing their financial statement in line with IFRS since January 1, 2012, saying that the other public interest entities are expected to follow by January 1, 2013, while the small and medium-sized enterprises SMEs will key into the initiative by January 1, 2014.

“The wholesome adoption of IFRS by Nigeria, no doubt has profound implications for financial reporting practices in the country, in general, the transition is more than just an accounting exercise.

“We shall continue to educate our members, users of services of chartered accountants and regulators in order to apprise them of the fundamental changes that will occur or are already occurring in financial reporting architecture, the associated benefits as well as how its challenges can be addressed.”