Analysis of Financial Accounting Standards and Their Effects on Financial Reporting and Practices of Modern Business Organizations in Nigeria.

Abstract

This study focused on the effects of financial accounting standards on financial reporting and practices of modern business organizations in Nigeria. It discussed extensively the objectives, impacts, approaches and processes leading to standard setting and financial reporting.  It also discussed some arguments in favour and against financial accounting standards.  The study looked at critical issues in standard setting as well as the application of accounting standards in financial reporting and practices.  Both quantitative and qualitative survey methods were used to obtain relevant data for the study.  These data were analyzed using Pearson’s product moment correlation coefficient to test the relationship between accounting standards and financial reporting and practices of business organizations in Nigeria. The result showed a high and positive level of correlation.  The chi-square statistical tool was also used to test the cost implication of adhering to accounting standards.  The result showed that there is a significant level of cost associated with the application of financial accounting standards in financial reporting and practices.  Suggestions were made that standard setter should state the limit to which the public contribute to the standard setting while looking at the peculiarities of individual enterprise as this will prevent the watering down of standards through the exposure draft.  Finally, that Financial Accounting Standard Board should state the cost/benefit of adhering to financial standards in financial reporting particularly in terms of the disclosure of intangible assets as this will build the confidence of the financial reporters .and users of financial reports.

Keywords: Financial Accounting Standards, Financial Reporting, Exposure Draft, Free-market Approach, Regulatory Approach, National Accounting Standard Board.