The Impacts and Benefits of International Financial Reporting Standards on Financial Statements of Companies in Nigeria

Nigeria has recently adopted International Financial Reporting Standards (IFRS) beginning from January, 2012 with public listed entities, followed by private entities in 2013 and lastly IFRS for SMEs in 2014. Therefore, this study examines the impact of IFRS adoption on listed companies in Nigeria. It also highlights the benefits and challenges of IFRS adoption as well as identifying the major differences between Nigerian Generally Accepted Accounting Principles (GAAP) and IFRS. Financial statements prepared according to NIG-GAAP and IFRS were observed and Wilcoxon signed-rank test was used in the analysis. The findings revealed that, adoption of IFRS has led to a decrease in Return on Shareholders’ Fund, Return on Capital Employed, Current Ratio and Earnings Per Share. These findings led to the conclusion that the adoption of IFRS has significant impact on four financial ratios ROSF, ROCE, CR and EPS of listed companies in Nigeria. On the other hand, the study also found that Operating Profit Margin and Gearing ratios have increased after the convergence from local GAAP to IFRS. These findings led to the conclusion that the adoption of IFRS has no significant impact on GR and OPM of listed companies in Nigeria.