N ACIMIENTO DE LA C ADENA COPE

The research findings provide information to (1) users of financial statements (2) IFRS adopters and non-adopters, and (3) accounting regulators in countries where IFRS are currently applied and countries intending to implement IFRS in the future. The findings can be used to develop effective IFRS adoption strategies. The results also provide useful information for the continuous improvement of IFRS. The information includes insights into current challenges companies face in IFRS adoption. The specific practical and policy implications of this study are discussed as follows.

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Users of Financial Statements

Firstly, the cultural model showed the evidence that companies are challenged by different cultural factors. For example, a company tends to shift away from IFRS adoption when the

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financial statements from IFRS appear to be more transparent (see Table 6.3). The result also shows that companies that are likely to maintain strict confidentiality in the financial transactions are more likely to decline IFRS adoption, thereby finding IFRS a challenge due to the level of transparency in IFRS financial statements. Therefore, the users of financial statements can specifically identify IFRS financial statements of the companies that require further analysis, particularly when such companies are aligned with a cultural dimension of secrecy. This is because the company’s financial statement is less likely to comply with IFRS requirements.

Further, the significance of the statutory control in Model 1 indicates some sampled companies are likely to adopt IFRS simply to comply with FRC regulations rather than adopting IFRS to report the financial transactions of the company. Therefore, users of financial statements would require further information from the preparers of financial statements for the substance over form of the companies’ financial activities. This implication does not only apply to Nigerian companies but other countries such as Turkey based on the finding reported in Misirlioglu et al. (2013), in which companies were only complying with the statutory requirements rather than reporting the economic situation. The implication is that, by relying on some financial statements because they are prepared based on IFRS requirements may increase investment risk in companies adopting IFRS based on regulatory requirements, rather than objectivity principles in financial reporting.

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Preparers of Financial Statements

Secondly, the research shows that Nigerian audit firms require further training on IFRS policies and applications. This will enhance the Nigerian audit firms’ capabilities to provide audit services to companies adopting IFRS requirements. To be successful in IFRS adoption, a company requires technical support from international audit firms based on this research finding. This is the implication of inadequate Nigerian audit firms to provide the technical support for companies’ transiting from GAAPs to IFRS. Consequently, the majority of IFRS adopters will choose to use international audits which could limit the competitiveness of local audit firms in the transition from GAAPs to IFRS (Chu, Simunic, Ye, & Zhang, 2015). Previous studies have identified that for companies to attain the full benefits of IFRS, relevant training and new accounting skills must be acquired prior to the transition from GAAPs to IFRS

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(Bova & Pereira, 2012; Ionascu, Ionascu, Sacarin, & Minu, 2014; Pran, 2006). Therefore, preparers of financial statements should ensure existing and new accounting staff are trained in IFRS financial statement preparation and review and develop the existing internal control system ahead of IFRS adoption. The Nigerian IFRS Academy should extend the training programs to publicly accountable companies at affordable costs. The implication of the significance of knowledge of IFRS and IFRS adoption means that continuous professional development should be encouraged to adapt to new changes in IFRS which occur almost annually (Nobes & Stadler, 2015).

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Accounting Standard Settings and Regulation

Thirdly, the FRC can use some of the findings to frame policies in IFRS adoption and enforcement in Nigeria. For example, the challenges from cultural factors, practical difficulties and industry type on IFRS adoption varied among the companies. The differences revealed that some companies are willing to adopt IFRS with little or no enforcement, while others are unlikely to adopt IFRS. The diverse factors influencing IFRS adoption can cause adoption challenges for accounting regulators. The factors identified in this study can be used by accounting regulators to develop enforcement strategies. For example, the findings showed that the type of industry contributes to the companies’ willingness to adopt IFRS. Based on the significance of the industry variable, the FRC requires a review of the type of companies to adopt IFRS in relation to their industry business activities. This indicates that the companies in the financial services industry require fewer enforcement efforts. However, the construction and oil and gas industries are also likely to adopt IFRS requirements but marginally. Therefore, these industries required greater enforcement and monitoring. The significance of the oil and gas industry variable indicates the uniqueness of how companies in Nigeria reacted to IFRS adoption which differs from prior findings by Ibrahim (2014). Further, the adoption of IFRS in the oil and gas industry provides an optimism that the financial statements from companies in the oil and gas industry in Nigeria would meets foreign investors financial reporting requirements. This therefore reduces or eliminate the fatigues and difficulties in comparing companies’ financial performance by users of financial statements.

The results show company’s listing status has a significant impact on IFRS adoption in Model 3. This implies that the level of IFRS adoption can be increased following IFRS adoption if the companies are listed on the stock exchange. Therefore, some companies should be permitted

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to apply IFRS voluntarily such as the application of GAAPs in non-listed companies. This method is currently used in the case of EU IFRS adoption, where only listed companies of member countries are required to adopt IFRS requirement, while non-listed companies are given the options to adopt IFRS or otherwise GAAPs (Jung et al., 2016).

Lastly, the ownership structure of the companies significantly influences the decision to adopt or not to adopt IFRS. There is a likelihood of material misrepresentations of financial information in a family owned company based on previous studies (Bakre & Lauwo, 2016; Wallace, 1987). Therefore, enforcement of IFRS adoption should include enforcement strategies directed at the companies whose shareholders are family related. The Directorate of Accounting Standards Private Sector of the FRC should give more attention to and increase the risk level when examining compliance with IFRS requirements among family owned companies.