AN INVESTIGATION INTO THE CHALLENGES OF IFRS ADOPTION AND IMPLEMENTATION AMONGST SMALL SCALE ENTERPRISES OPERATOR IN NIGERIA
BACKGROUND OF THE STUDY
With the introduction of IFRS, SMEs in Nigeria are mandated to adopt the new reporting standard from January 2014. The awareness, acceptance and implementation of the new IFRS gudielines for SMEs are challenging for many African countries.
Many businesses still do not un derstand what options are available and how IFRS for SMEs interplay to their benefits (Fourtuin, 2011). This is an indication of the lack of awareness of the benefits accrued through the use of IFRS for SMEs which may inturn inhibits SMEs from adopting them.
The result of the survey by Deloitte in 2009 revealed that 43% of SME respondents were not aware of the IASB’s standard for SMEs.
Furthermore, poor financial management and book-keeping are two major barriers confronting SMEs when it comes to accessing funds from financial institution and government agencies.so it is important for SMEs to follow the current trend of financial reporting and enjoy the full benefits that are associated with it.
OBJECTIVES OF THE STUDY
The main aim of the study is to investigate the challenges facing the adoption and implementation of IFRS amongst small scale enterprises owners in Ikeja, Lagos.
Other specific objectives of the study include:
- Determine the level of awareness of IFRS guidelines among SMEs operator
- Examine the extent to which IFRS is adopted by small and medium scale enterprises
- Ascertain the challenges confronting the implementation of IFRS guidelines for SMEs by Small scale business.
- Identify the various categories of IFRS standards used by SMEs
- Provide possible suggestion and recommendation for problems faced by SMEs when applying IFRS guidelines to their business decision making.
In order to set a good base for carrying out the research, the following hypothesis were posed, believing that by the time adequate answers are provided, the study would have covered necessary grounds. To achieve this, the study seeks to test the following two operational hypothesis outlined in null form:
The level of adoption of IFRS guidelines by small scale enterprises is low
The implementation of the IFRS does not significantly affect the profitability of small scale enterprises.
SIGNIFICANCE OF THE STUDY
Given the vital and contribution which small scale businesses in developed and developing countries make, and considering the ongoing reforms by the Central Bank of Nigeria for a sustainable financial literacy framework for SMEs in Nigeria, the significvance of this study cannot be over emphasized.
The significance of this study therefore lies in an attempt to document the factor responsible for hindering the adoption of IFRS standards and guidelines among small scale enterprises but which have not been appreciated, recognized or factored into the various incentives schemes and policy measures being put up for SSEs in the state and the nation at large.
In addition, this research will equip owners of small scale enterprises by encouraging them to give the proper accounting records a greater priority in the objectives of their business, with the adoption adequate profitability of the business will be adequately known.
It would also be a pre-requisite for those who intends to graduate from various tertiary institution.
SCOPE AND LIMITATION OF THE STUDY
With a large percentage of business in the state capital falling within the small scale enterprises sector, the need to clearly define the scope and area of the study becomes imperatives.
The study is therefore confined to the small scale enterprises operating in Ikeja Local Government area of Lagos State, and yet it is easy to use the result of this research to gain insight into the entire small scale enterprises.
A study of this research could not have been carried out without any hitches or difficulties, notable among the constraint was the paucity of relevant empirical literature in the adoption of IFRS among small scale enterprises. Empirical information on problems of small scale enterprises are abundant but work done on the financial literature are still scanty and pose a serious limitation to the study.
Also the issue of time management was not put into consideration, because the researcher was not able to generate enough research material and other relevant materials needed for the research work.
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