THE CHANGES IN ACCOUNTING STANDARDS ITS IMPACT ON FINANCIAL STATEMENT ( A CASE STUDY OF GUINNESS NIGERIA PLC BENIN BRANCH, EDO STATE)
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
In recent years, there has been a lot of criticism about accounting standard and the impact of the recent changes in financial report they prepare. A lot of people have led to question the validity of the profit measuring procedures applied in arising at the profit disclosed in published accounting. Quite a number of proposal have been made in an attempt to reform the methods generally in used.
This has resulted in coming together of different countries with a view to working out modalities for the standardization of these profit measuring and reporting procedures.
The international accounting standard committee (IASC) produces international accounting standards (IAS) to be followed by all member countries, of which Nigeria is one of them. Also they also produce additional statement to accounting standard (SAS) in an attempt to make the international standard meet with the local condition with the aid of globalization and increasing demand for transparency. The (IASC) as reconstructed in 2001 by creating the international accounting standard board (IASB) among other changes.
A new set of rules, which would align Nigeria with other countries and also improve investors confidence was formed in May 2011 known as international financial reporting standards (IFRS) which was issued out by international accounting standard boards which is globally accepted specially IFRS are defined in comprise
- 13 in issue of the international financial reporting standard (IFRS) issued by IASB from 2001
- 29 is issue of international accounting standard (IAS) issued by IAS before April 2001.
- 15 in issue of interpretations originated from the internation financial reporting standard international committee (IFRSIC)
- 11 in issue of the standard interpretation committee (SIC) statement, issued before April 2001.
The 13 IFRS in issue are:
IFRS 1 – First time adoption of IFRS
IFRS 2 – Share based payment
IFRS 3 – Business combination
IFRS 4 – Insurance contract
IFRS 5 – Non-current asset held for sale and discontinued
operation.
IFRS 6 – Exploitation for and evaluation of mineral resources
IFRS 7 – Financial instruments disclosure
IFRS 8 – operating segments
IFRS 9 – Financial instrument
IFRS 10 – Consolidated financial statement
IFRS 11 – Joint arrangements
IFRS 12 – Disclosure of interest in other entities
IFRS 13 – Fair value measurement.
This work intends to analyze and examine the impact of these standards, the financial statement with particular emphasis on Guinness Nigeria Plc Benin, Edo state.
1.2 STATEMENT OF THE PROBLEM
Good accounting practice means that the account must be in accordance with the international financial reporting standard (IFRS), and the international accounting standard (IAS). The impact of accounting standard in the finance statement of an organization cannot be over emphasizes.
Moreover, the problem can be summarized below:
a Lack of personnel with adequate knowledge of accounting standard is a major issues affecting the changes.
b Lack of infrastructures and equipment which help to obtain most accurate information and report.
c Inadequate accounting standard applied on financial statement to provide information for its users.
d The problem of poorly designed accounting system in organization
e The effect if faulty financial statement and report and the analysis produced by the management towards the achievement of the organizational goal.
f The effect of financial statement and report which are not prepared at the appropriate tine.
g Ineffectiveness of financial statement due to its improper application.
1.3 OBJECTIVE OF THE STUDY
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