For correspondence:-
Received: 27 April 2018 Accepted: 30 July, 2018 Published: 30 September 2018
Citation: IFRS Adoption and Financial Reporting Quality: IASB Qualitative Characteristics Approach. Account Tax Rev 2003; 2(3):30-47 doi:
© 2003 The authors.
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Abstract
The concept of ‘quality’ has been fundamental to any debate on financial reporting, regulation and accounting standard setting globally. One of the reasons often advanced for the adoption of International Financial Reporting Standards (IFRSs) is that it improves financial reporting quality; however, the major challenge found in most prior literature is how to operationalise and assess this quality. This study aims to investigate the change in financial reporting quality after the adoption of IFRS in the Nigeria Money Deposit Banks (MDBs) using the operationalised qualitative characteristics of financial reports by IASB conceptual framework. We used operationalised the Fundamental and Enhancing Qualitative Characteristic measurement scale. We used census approached as all MDBs which is the population also formed the sample. Data were obtained from the annual reports and accounts of all quoted MDBs and Mann-Whitney statistics was used for the analysis. Our findings revealed that there is astatistically significant difference in the quality of financial reporting between the pre and post IFRS adoption in Nigeria. Financial reporting quality increased in the post-IFRS adoption across the five qualitative features (i.e. relevance, faithful representation, comparability, understandability and timeliness) examined. Our study contributes to the small but burgeoningbody of knowledge on financial reporting quality using operationalised qualitative characteristics of the conceptual framework of IASB. Our results do not only extend the literature on the empirical evaluation of the effects of IFRS adoption by showing that it increased financial reporting quality, but it is also a radical change from the common accrual model which is an indirect proxy to operationalised qualitative characteristics of the IASB’s conceptual framework.
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