ONLY INNOVATIVE COYS WILL BENEFIT FROM IFRS - OJAIDE, ICAN PRESIDENT
Ojaide, ICAN president
N igeria adopted the International Financial Reporting Standards (IFRS) as its financial reporting framework, last January. This is to align the nation's financial reporting standards with international best practices. What is the advantage of this to companies operating in the country? 'Transparency and full disclosures of accounting and related practices will be the rule rather than exception,' says Professor Francis Ojaide, the president of the Institute of Chartered Accountants of Nigeria (ICAN).
At the award of IFRS and insolvency proficiency certificates to qualified members in Lagos recently, the ICAN boss warned that only organisations willing to embrace change, invest in capacity building - both technical and human - will benefit from the new financial reporting framework, which has the capacity to broaden and enhance their accessibility to global capital markets.
As you know, organisations, like human beings, have a life cycle: when it is incorporated, when it develops and grows, when it reaches maturity, when it declines and when it is harvested. In all these stages, the chartered accountant is the company's inevitable strategic partner as his/her expertise can significantly assist the entity to derive optimum value from its resources.
The insolvency and corporate re-engineering faculty is one of the six faculties created by the (ICAN) Council and charged with the responsibility of enhancing the professional skills of members by providing a platform through which they can interact, share experiences and disseminate technical information that will positively impact their value creating efforts. Pursuant to this, the board of the faculty commendably commenced a certification training programme designed to help bridge the knowledge gap in this fledgling business area. I am greatly enthused by the importance of this faculty and its certification programme to the business world.
Accordingly, the mandate of the faculty is to technically equip its members, through this certification programme, with the expertise to assist companies in distress to minimise their losses, improve their liquidity positions, optimise possible benefits from their scarce resources and continue to operate as going concerns. They can also help to minimise the exit pains of terminally ill corporate entities to stakeholders.
Given the spate of corporate collapses in USA, Europe and Asia and loss of jobs by millions worldwide, the imperfections of the market are manifesting clearly in government intervention with taxpayers' money in many jurisdictions. Rather than have less government and allow market forces to determine the prices of goods and services including share prices, the world is moving gradually to the visible mind of politicians!
What is clear is that, the crisis, as a global phenomenon, requires global actions by all players to be effectively checked. As the scenario continues to unfold and the desire for secured investments heightens, the services of chartered accountants with expertise in insolvency and corporate re-engineering, will be highly sought by discerning investors and resource owners. It is to prepare our members for these future opportunities that the insolvency and corporate re-engineeering faculty initiated this 2-part certification programme last year to equip members with up-to-date skills on business reconstruction and insolvency practices.
I am very delighted that eight chartered accountants have completed this unique specialist programme and were successful at the qualifying examinations held in December 2011.
Adoption of IFRS
The year 2012 marks a significant watershed in Nigeria's financial reporting as the country wholly adopted the principles-based International Financial Reporting Standards (IFRS) as its financial reporting framework with effect from January 1, 2012. This was in line with the recommendations of the Committee on the Roadmap for the Adoption of IFRS in Nigeria which were accepted by the government and officially unveiled on September 2, 2010 in Abuja. As approved by the government, all listed companies and significant public interest entities in Nigeria must adopt IFRS by January 1, 2012.
All other public interest entities will adopt IFRS by January 1, 2013 while Small and Medium-sized Enterprises (SMEs) will key into the initiative by January 1, 2014. Entities that do not meet the IFRS criteria for SMEs, shall prepare and issue their reports using SMEs Guidelines on Accounting ,that is, Tier 3 or Micro-GAAP, issued by the Geneva-based United Nations Conference on Trade and Development
(UNCTAD).This wholesale adoption of IFRS by Nigeria, no doubt, has profound implications for financial reporting practices in the country. The people, financial and operating systems and processes including accounting policies will be impacted in varying degrees. As we key into this global framework, transparency and full disclosures of accounting and related practices will be the rule rather than exception. Given the severity of the situation coupled with the fact that IFRS themselves are still undergoing changes, only organisations willing to embrace change, invest in capacity building, both technical and human, will benefit from the new financial reporting framework which has the capacity to broaden and enhance their accessibility to global capital markets.
Indeed, the evolving financial reporting framework is considerably different from the subsisting Statement of Accounting Standards (SAS) and therefore persons trained in the latter need to be de-briefed and extensively re-trained in the new knowledge. I dare add that capacity building will be the main critical success factor in this transition from SAS to IFRS as the skills gap will be very profound and costly, if ignored. It is in this respect that the current IFRS Certification programme of the Corporate Finance Management Faculty of Institute (ICAN) finds great relevance.
Conceived to make the task of capacity building easier for corporate entities and regulators, two-module certification programme was developed for chartered accountants who have responsibility for the preparation of financial statements. At the end of the training in 2011, 101 candidates sat for the final examinations out of which 51 candidates were successful.
As an Institute, we will continue to sensitise users of services of chartered accountants and regulators in order to appraise them of the fundamental changes that will occur or are already occurring in financial reporting architecture, the associated benefits as well as how its challenges can be addressed. To ensure that all our future products are IFRS compliant, we have set in motion the machinery for the wholesale review of our training curricula, syllabi and certification processes in order to capture all ramifications of the new financial reporting knowledge.
We will strive to collaborate with the National Universities Commission (NUC) and the National Board for Technical Education (NBTE) in order to spread the knowledge of IFRS to all tertiary institutions through the review of their curriculum. The students need to have adequate dose of this emerging body of knowledge and indeed, become IFRS proficient before qualifying as chartered accountants. Thus, everybody involved in the financial reporting chain, old or young, should be reached with the new knowledge. The institute will also expeditiously arrange a train-the-trainers programme for its accounting teachers, assessors and examiners who are the vehicle for the implementation of the certification processes. Except they are trained in the new knowledge, it might be difficult to ultimately produce the IFRS-proficient chartered accountants.