INTRODUCTION TO ACCOUNTING STANDARDS

Accounting standards are authoritative statements of how particular types of

transactions and events are reflected in the financial statements. Accounting
standards are written policy documents issued by expert accounting body or by
Government or other regulatory body covering the aspects of recognition,
measurement, presentation and disclosure of accounting transactions in the
financial statements.
The objective of financial statements is to provide information about the financial
position, financial performance and cash flows of an entity that is useful to a wide
range of users in making economic decisions. The Accounting Standards describes
the accounting principles and the methods of applying these principles in the
preparation and presentation of financial statements so that they give a true and
fair view.
Accounting standards deal with the following issues:
(a) Recognition of events and transactions in the financial statements,
(b) Measurement of these transactions and events,
(c) Presentation of these transactions and events in the financial statements in a
manner that is meaningful and understandable to the users, and
(d) Disclosure requirements which should be there to enable the public at large
and the stakeholders and the potential investors in particular, to get an insight into
what these financial statements are trying to reflect and thereby facilitating them to
take prudent and informed business decisions.
International Accounting Standards (IAS) / International Financial Reporting
Standards (IFRS)
In the year 1973, the International Accounting Standards Committee (IASC) was
established so as to have international harmonization of accounting standards. In
the year 2001, it was reconstituted as the International Accounting Standards
Board (IASB), under newly Constituted International Accounting Standards
Committee Foundation. Following the change in the constitution of IASC in 2001,
two new bodies were established to replace the IASC and its supporting body, the
SIC. The bodies were International Accounting Standards Board (IASB) and the
International Financial Reporting Interpretations Committee (IFRSIC).
There are 25 IAS and 16 IFRS currently in effect, totaling 41 international
standards. IFRS has become the global language of financial reporting with its
adoption by over 100 countries.
The International Accounting Standards Board (IASB)
The International Accounting Standards Board (IASB) is the standard-setting body
of the IFRS Foundation. The IASB is responsible for developing international
accounting standards. It has full responsibility for all IASB technical matters,
including the issue of IFRSs and revised IASs Following the establishment of the
IFRS Foundation in 2001, the IASB became the body responsible for:
• developing and publishing accounting standards as IFRSs; and
• approving and publishing Interpretations of IFRSs.
Previously, standards had been published as International Accounting Standards
(IASs) The IASC was supported by another body called the Standing Interpretation
Committee (SIC) which issued interpretations of rules in standards when
practitioners have divergent opinion in treatment of items. The IASB adopted all
IASs and SICs that were extant at the time but said that standards written from
that time were to be called International Financial Reporting Standards (IFRS).
Interpretations are known as IFRICs. The term IFRS is also used to refer to the whole
body of rules (i.e., IAS and IFRS in total)
Published by IASC (up Published by IASB (from
to 2001) 2001)
Accounting Standard IASs IFRSs
Interpretation SICs IFRSICs

The objectives of the IASB are to:

i. Develop, in the public interest, a single set of high-quality global accounting
standards;
ii. Promote the use and rigorous application of those standards;
iii. To take account of the special needs of small and medium sized entities and
emerging economies; and
iv. To promote and facilitate the adoption of IFRS through the convergence of
national accounting standards and the international accounting standards.
The IASB consists of 14 members, all with a very high level of technical expertise in
accounting, are appointed by the trustees of the IFRS Foundation. Each IASB
member is appointed for a five-year term, which might be renewed once for a further
five years.
List of International Accounting Standards (IAS) and International Financial
Reporting Standards (IFRS):
International Accounting Standards (IAS):
1. IAS 1: Presentation of Financial Statements
2. IAS 2: Inventories
3. IAS 7: Statement of Cash Flows
4. IAS 8: Accounting Policies, Changes in Accounting Estimates, and Errors
5. IAS 10: Events after the Reporting Period
6. IAS 11: Construction Contracts
7. IAS 12: Income Taxes
8. IAS 16: Property, Plant and Equipment
9. IAS 17: Leases
10. IAS 18: Revenue
11. IAS 19: Employee Benefits
12. IAS 20: Accounting for Government Grants and Disclosure of Government
Assistance
13. IAS 21: The Effects of Changes in Foreign Exchange Rates
14. IAS 23: Borrowing Costs
15. IAS 24: Related Party Disclosures
16. IAS 26: Accounting and Reporting by Retirement Benefit Plans
17. IAS 27: Separate Financial Statements (effective date has been deferred)
18. IAS 28: Investments in Associates and Joint Ventures
19. IAS 29: Financial Reporting in Hyperinflationary Economies
20. IAS 32: Financial Instruments: Presentation
21. IAS 33: Earnings per Share
22. IAS 34: Interim Financial Reporting
23. IAS 36: Impairment of Assets
24. IAS 37: Provisions, Contingent Liabilities, and Contingent Assets
25. IAS 38: Intangible Assets
International Financial Reporting Standards (IFRS):
1. IFRS 1: First-time Adoption of International Financial Reporting Standards
2. IFRS 2: Share-based Payment
3. IFRS 3: Business Combinations
4. IFRS 4: Insurance Contracts (Superseded in 2023 by IFRS 17)
5. IFRS 5: Non-current Assets Held for Sale and Discontinued Operations
6. IFRS 6: Exploration for and Evaluation of Mineral Resources
7. IFRS 7: Financial Instruments: Disclosures
8. IFRS 8: Operating Segments
9. IFRS 9: Financial Instruments
10. IFRS 10: Consolidated Financial Statements
11. IFRS 11: Joint Arrangements
12. IFRS 12: Disclosure of Interests in Other Entities
13. IFRS 13: Fair Value Measurement
14. IFRS 14: Regulatory Deferral Accounts
15. IFRS 15: Revenue from Contracts with Customers
16. IFRS 16: Leases
17. IFRS 17: Insurance Contract
Note: There is also IFRS for SMEs (Small and Medium Sized Enterprise).

Accounting Standards in Nigeria

Background to accounting standards in Nigeria
The Nigerian Accounting Standards Board (NASB) which came into being in 1982
was an independent body which was previously responsible for the development and
issuance of Nigerian accounting standards. These were called Statements of
Accounting Standards. The Nigerian Accounting Standards Board was formally
established as a parastatal in 1992.
Financial Reporting Council of Nigeria (FRCN)
In June 2011, Financial Reporting Council of Nigeria Act, No. 6, 2011 repealed the
Nigerian Accounting Standards Board Act No. 22, 2003. This Act resulted in the
Nigerian Accounting Standards Board being replaced by the Financial Reporting
Council of Nigeria (FRCN). The Financial Reporting Council of Nigeria is a federal
government parastatal under the supervision of the Federal Ministry of Industry,
Trade and Investment.
The FRCN’s main objects, as defined in the FRC Act, are:
i. To protect investors and other stakeholder’s interest;
ii. To give guidance on issues relating to financial reporting and corporate
governance to professional, institutional and regulatory bodies in Nigeria;
iii. To ensure good corporate governance practices in the public and private
sectors of the Nigerian economy
iv. To ensure accuracy and reliability of financial reports and corporate
disclosures, pursuant to the various laws and regulations currently in
existence in Nigeria;
v. To harmonise activities of relevant professional and regulatory bodies as
relating to corporate governance and financial reporting;
vi. To promote the highest standards among auditors and other professionals
engaged in the financial reporting process;
 vii. To enhance the credibility of financial reporting; and
viii. To improve the quality of accountancy and audit services, actuarial, valuation
and corporate governance standards.
Adoption of IFRS in Nigeria
IFRS cannot be applied in any country without the approval of the national
regulators in that country. All jurisdictions have some kind of formal approval
process which is followed before IFRS can be applied in that jurisdiction. In Nigeria,
however, the FRCN has not published any formal procedure for adoption of IFRS,
but appears to follow IASB prescription on when a new standard comes into force.
The implication is that a new IFRS becomes applicable in Nigeria on the effective
date prescribed by IASB. As such, it does not permit early adoption.
The FRCN oversaw the convergence of Nigerian GAAP to IFRS through a plan (known
as a roadmap) which set out the route to conversion. Effectively Nigeria adopted
IFRS from January 1, 2012. Nigerian accounting standards have been replaced by
International Financial Reporting Standards.
However, Nigerian standards included industry specific rules which are not found
in IFRS. Companies in the industries covered are expected to continue to apply these
rules (insofar as they do not conflict with IFRS). Such relevant standards include:
SAS 14: Accounting in the petroleum industry: Down-stream activities
SAS 17: Accounting in the petroleum industry: Up-stream activities
SAS 25: Telecommunications activities
SAS 32: On accounting by not-for-profit organisations.

Questions
Objective
1. What do accounting standards primarily address?
A. Regulatory procedures B. Recognition, measurement, presentation, and
disclosure in financial statements C. Industry-specific guidelines D. Fiscal policies
2. When was the International Accounting Standards Committee (IASC)
established?
A. 1973 B. 1982 C. 2001 D. 2011
3. What is the main objective of financial statements?
A. To provide information about the financial position, performance, and cash flows
B. To outline regulatory procedures C. To facilitate cross-border transfers of capital
D. To promote industry-specific guidelines
4.How many IAS and IFRS are currently in effect, totaling international standards?
A. 20 B. 41 C. 57 D. 68

5. What bodies replaced the International Accounting Standards Committee (IASC)

and the Standing Interpretation Committee (SIC) in 2001?
A. IASB and IFRSIC B. IAS and IFRS C. IFRS Foundation and IASB D. IASB and SIC
6. What is the role of the International Accounting Standards Board (IASB) in the
adoption of IFRS?
A. Develop industry-specific guidelines B. Approve and publish IFRS interpretations
C. Develop a single set of global accounting standards D. Implement regulatory
procedures
7. How many members constitute the International Accounting Standards Board
(IASB)?
A. 7 B. 10 C. 14 D. 20
8. When did Nigeria officially adopt IFRS, according to the note?
A. 1990 B. 2005 C. 2011 D. 2012
9. Which body oversees the convergence of Nigerian GAAP to IFRS?
A. Financial Reporting Council of Nigeria (FRCN) B. Nigerian Accounting Standards
Board (NASB) C. International Accounting Standards Committee (IASC) D. Federal
Ministry of Industry, Trade, and Investment
10. What industry-specific rules continue to apply in Nigeria, according to the note?
A. IAS B. IFRS C. SAS D. IFRSIC

Short-Answer Questions
1. Accounting standards are authoritative statements governing the ________,
________, ________, and ________ of financial transactions in the financial statements.
2. The International Accounting Standards Committee (IASC) was reconstituted as
the International Accounting Standards Board (IASB) in the year ________.
3. **The primary objective of financial statements is to provide information about
the financial position, financial performance, and cash flows of an entity that is
useful to a wide range of users in making ________ decisions.
4. IASB's responsibility includes developing and publishing accounting standards
as ________ and approving and publishing Interpretations of ________.
5. The IASB consists of ________ members, all with a very high level of technical
expertise in accounting.
6. The Financial Reporting Council of Nigeria (FRCN) aims to protect investors and
other stakeholders' interests, ensure good corporate governance practices, and
enhance the credibility of financial ________ and ________.
7. IFRS adoption in Nigeria followed a roadmap for convergence from January 1,
________.
8. Nigerian standards included industry-specific rules such as SAS 14: Accounting
in the petroleum industry - ________ activities.
9. The Nigerian Accounting Standards Board (NASB) was formally established as a
parastatal in ________.
10. The IFRS Foundation was established in ________.
Essay Question
1. Discuss the challenges and benefits associated with the convergence of
Nigerian GAAP to International Financial Reporting Standards (IFRS).
2. In simple terms, what is the difference between International Accounting
Standards (IAS) and International Financial Reporting Standards (IFRS)? How
do these standards contribute to global financial reporting consistency?
3. Describe the role of the International Accounting Standards Board (IASB) in
the development and promotion of international accounting standards.