The Implementation of Provisions of IFRS Framework and Financial Perfomance of Banks

The need for global financial language gave birth to International Financial Reporting Standards (IFRS). The adoption of IFRS has been argues to have changed the manner in which the financial statements are prepared, presented and reported. IFRS represents a single set of high quality, globally accepted accounting standards that can enhance comparability of financial reporting across the globe. The significant disparities between the Nigerian Statement of Accounting Standards and International Financial Reporting Standards have resulted in the Statement of Accounting Standards being regarded as outdated and incomplete as an authoritative and internationally accepted guide to the preparation of financial statements. The study however examined the extent to which Nigerian banks have implemented the provisions of IFRS frameworks. The sample comprises of fourteen quoted deposit money banks in Nigeria. Specifically, financial statement figures of 2007 – 2011 (pre-adoption period) and 2012 – 2016 (post-adoption period) were utilized. The study adopted the ex-post facto research design. Annual panel data were collected from the financial statements and accounts of 14 deposit money banks quoted on the Nigerian Stock Exchange as well from the Securities and Exchange Commission statistical bulletin from 2007 to 2016. The findings revealed that the return on shareholders’ funds has improved since implementation of International Financial Reporting Standards (IFRS) on Nigerian banks. IFRS implementation has significant effect on the profitability of quoted banks in Nigeria. The implementation of International Financial Reporting Standards (IFRS) has significantly influenced banks’ earnings and it was concluded that IFRS has positive impact on equity and earnings of banks. It was recommended that government and regulatory authorities should organize more quality training to get bankers informed.


INTRODUCTION
The worldwide economic system is almost interdependent. The economic interdependence is such that no country of the world is an island unto itself. What affects or influences one country economically indirectly affects or influences the other (Appah, 2010& Ezejulue, 2008. Wilson, Tsegba, Adeaze and Anyahara (2013) state that the fast pace of globalisation with the integration of national financial markets has stimulated the need for a common financial language, because good financial reporting makes investment and financial decisions more efficient .According to Adegite (2009) the globalisation and rapid advancement in information and communication technology had resulted in the emergence of borderless business entities and growth of multinational corporations. She said Nigeria as a member of the international community could not but conform to international standards and practices in its business dealings in order to continue to benefit from the enormous economic gains derivable there from. Any company that involved in international business must of necessity hold and own assets, owe liabilities, and deal in transactions that are denominated in other countries' currencies. These brought about international accounting standards (Appah, 2010). International accounting standards that provide a common accounting language are spreading up as global investing and lending has grown enormously. Adejoh  Page: 744 harmonization of financial statements and single set of consistent high quality financial reporting standard gained wide spread acceptance amongst policies makers, standard setters and preparers of financial statement. The need for quality and uniformity in the preparation and presentation of financial reports gave birth to International Financial Reporting Standards (IFRSs).
According to Nyor (2012) the process of international convergence towards a global set of accounting standards started in 1973 when 16  However, implementation of IFRS in Nigerian banks has been motivated due to many problems associated and envisaged in the banking system. These problems are: inaccurate reporting and non-compliance with regulatory requirements, decrease in bank earnings and poor revenue generation, poor return on shareholders' funds due to operating losses, late or non-publication of annual accounts, lack of comparability of financial statements of different banks, falsification or creative accounting practices , weak corporate governance and falling ethics. In view of the above problem, the study is geared towards examining the extent to which Nigerian banks have implemented the provisions of IFRS framework and its effect on financial performance of banks.

Hypotheses
In order to achieve the purpose of the study, the following hypotheses were formulated:

IFRS Adoption and Nigerian Banking Industry
The Nigerian banking sector is made up of commercial banks and other financial institutions such as finance companies, micro-finance companies, discount houses and mortgage institutions. The Central Bank of Nigeria (CBN) regulates their activities. The CBN has authorized only 21 commercial banks to transact business in Nigeria. Out of these banks, only 15 are listed in Nigeria Stock Exchange (NSE). Nigerian listed banks and other public and significant public interest entities were required to adopt IFRS for years beginning on or after January 1, 2012. Among the listed companies, the listed banks were the first to complete the transition and have adopted the standard for their reporting (Adebimpe & Ekwere, 2015). Many countries of the world have made the decision to adopt IFRS given by the understanding that IFRS is a product with network effect. As more countries adopt IFRS, it becomes more appealing to others that are yet to consider the adoption. Ball (2011) in his work was of the view that, complying with the IFRS cannot be considered in isolation to any relevant institutions because its effectiveness will depend on the understanding of any given industry and the economic and institutional factors that affect that industry reporting incentives. Banks all over the world have long had major issues with recognition of asset and liability. The issue of disclosure rules in IAS 32 and IAS 39 dictating measurement rules for financial assets and liabilities was thus mired in controversy; so IFRS 9 has now solved the problem and meet the user needs. According to Akpan-Essien (2011) the adoption of the IFRS in the Nigerian Banking sector will ensure transparency, better accountability and integrity in financial reporting necessary for addressing the crisis in the financial sector in Nigeria which was responsible for the Nigeria loss of the Foreign Direct Investment (FDI) in the oil and gas sector to countries such as Ghana who have begun oil production in commercial quantity and who are perceived to have better financial reporting standards in place.

Disclosure in Corporate Financial Reporting of Nigerian Banks
The main reason for financial reporting and disclosure is to present the result of the economic activities of companies and justified financial position in monetary terms. It shows how organizations strive to achieve their objectives in the period under review. Thus, Mayer (1990) opined that, the financial report of one organization if honestly and sincerely prepared, could serve as the basis in making a comprehensive comparative assessment of it operation with the like company. Wahien (1995) stated that the Necessity for full disclosure in corporate financial reporting arose for a reason that, the information contained in the financial statements brings in clear terms the position of a particular firm at a point in time. In agreement with the above statement, Mainoma (2005) added that, only through the position statement, one is expected to determine the capital formation of a firm. However, Mainoma (2005) stated that, there is a lot of concern in today's world about the integrity of financial statements. This view can simply be supported with the rampant cases of companies that report good performances and soon collapse without trace. Although some researchers argued that, it is either falsification or creative accounting practices were involved or the basis upon which the report was prepared is faulty. However, Nigerian Corporate financial reporting should be a highly regulated practice in which ethics of best conduct must be observed and followed. In Nigeria, Companies and

Challenges of IFRS Adoption in Nigeria
The adoption of IFRS is known to be a herculean task owing to the fact that several challenges are often encountered in the cause of implementation. These challenges are not peculiar to Nigeria but are common in most countries that are in the process of adopting the global standard, although there are some unique challenges that are specific to particular countries (Robyn & Graeme, 2009). According to Oduware (2012), the challenges include: 1. Cost of Implementation: The first time adoption of IFRS framework is perceived by most entities as costly, the existing accounting system to effect the change. This challenge has propt management of most firm to be reluctant in embracing the change which invariably resulted in mellow attitude by staff on IFRS issues and therefore, contributed immensely to retardation in IFRS conversion process in Nigeria (Oduware, 2012 Young, 2013). These tax considerations are complex and therefore arise from the computation of deferred tax attributed to IFRS adjustments effect. With the adoption of IFRS, the basis for computation of deferred tax varies from how it was previously computed during SAS regime. IFRS involves the use of the balance sheet liability method and therefore focused on temporary differences, while Nigerian SAS dwells on income statement method which focus on timing differences. In this respect, the use of the balance sheet liability method will demand full deferred tax provision which is more complex when compared to the income statement method (Oduware, 2012).

Education, skills and Experience: IFRS
implementation is strategic and a critical decision that requires a high level of education, adequate skills, expertise and competence to enable users to understand, interpret and effectively use the standards in financial reporting (Adeyemo, 2013). Therefore, lack of adequate education and skills, and weak experience in IFRS reporting in Nigeria has become a barrier to successful implementation of IFRS framework. 4. Awareness level: The IFRS transition process and its implication for preparers and other stakeholders including regulators and educators need to be effectively coordinated and communicated. But despite effort made by different regulatory bodies and stakeholders through organizing series of sensitization workshop and other means of reaching out to targeted audience across the country, the level of awareness among entities' executives is relatively low, and managers of most firms tends to look at the transition process as a means of increasing cost of reporting ignoring the benefit to be derived from the entire process (Oduware, 2012 reporting. According to Oduware (2012), in most firms, an average accountant does not have the knowledge of advanced financial management techniques which includes forecasting, impairment analysis and financial instruments. Hence, this had been a setback on IFRS implementation process in Nigeria. 6. Technology: the level Technology has a major effect on IFRS implementation. Therefore, Information Technology (IT) is definitely a key factor in IFRS transition process considering the important role played by Enterprise Resource Planning (ERP) systems in companies operational, accounting and reporting processes (Uzor, 2011). Therefore, for firms to achieve a seamless conversion to IFRS; there is a need to be familiar with specific IT challenges and issues confronting their organization. In Nigeria, organisations give less emphasis on information technology which is invariably affecting the pace with which implementation of IFRS is going on in the country (Oduware, 2012).

Enforcement Mechanism: The IFRS transition in
Nigeria has a serious implication for financial regulators, and it requires extensive use of judgments and assumptions that need to be considered by relevant regulatory authorities (Ehijeagbon, 2010). The slow legal process in Nigeria has discourages regulators from taking legal recourse as regards enforcing compliance with accounting and financial reporting requirements. This state of affairs is affecting seriously on the ongoing IFRS implementation process in Nigeria.

THEORETICAL REVIEW
This study was built on Conservative Method Theory. The principle of conservatism is a pervasive concept in modern accounting theory, and is probably a carryover from the days when banks were the primary users of firm's financial statements. Conservatism reflects the idea that, given two equally likely outcomes, a firm should use accounting language that results in smaller reported income or smaller reported assets. The accounting concept of conservatism has crossed into the analysis arena. Ejike (2012) implies in his wall street journal that conservative accounting is necessary when he states that low quality means the bottom line is padded with paper gain such as the profit fattening effect of inflation on a company's reported inventory values, or gains produced by under depreciation when the company does not write off plant and equipment as their real value is falling.

EMPIRICAL REVIEW
Nigeria has since decided to adopt IFRS frameworks for private and public sectors respectively. In line with this, and as recommended by the committee on road map to adaptation of IFRS in Nigeria, all listed and significant entities are to present their financial reports using IFRS-framework by 2012. Many researchers had embarked on empirical study about IFRS adoption/implementation these includes: lyaho and Jafaru (2011), which examined the institutional infrastructure and the adoption of IFRS in Nigeria using survey method with questionnaires to elicit the perception of users and preparers of accounting information, and descriptive statistics was used in analyzing data and which showed that, only professional accounting institutions have the relevant infrastructure to cope with the adoption of IFRS in Nigeria. Kenneth (2012) investigated the effect of IFRS adoption on Foreign Direct Investment and Nigeria economy. He found out that IFRS implementation in Nigeria is significant and would promote FDI inflows and economic growth. Nonetheless, he concluded that only few have adopted the framework in Nigeria. Wong (2004) in his work suggested frequent dialogue between regulators, international standard setters, and national standard setters and that these groups continue to listen to the concerns and needs of those who will have to implement the standards. He also added that significant consideration should be given to the effect of international convergence on small and mediumsized entities and accounting firms. Most importantly, he concluded by saying that convergence to a single set of globally accepted high quality standards is ultimately in the best interests of the public, contributing to efficient capital flows within countries and across borders. In the views of the majority of participants, international convergence is vital to economic growth. Thus, while the challenges are great, the rewards are potentially even greater (Wong, 2004). A research work conducted by Nyor (2012) on the topic "Challenges of converging to IFRS in Nigeria". The study found out that Nigerians agree to adopt IFRS but in a gradual manner, in view of the anticipated problems that the adoption may create. Consequently, the study concludes that Nigerian firms should adopt IFRS hoping that it will enhance better accountability and transparency and improve quality of reporting in the country. In a more recent work

METHODOLOGY
The design used in this study is Ex Post Facto design. It is established to predict and envisage the extent to which Nigerian banks have implemented the provisions of IFRS framework and its effect on financial performance of banks. The population of the study was obtained from the quoted banks in Nigerian Stock Exchange (NSE). Since not all the listed banks on NSE make public its annual reports online, only 14 banks were selected and utilized in the data analysis.

Presentation and Analysis of Data
The study explored t-test model to test the linear relationship between dependent and independent variables. The outcome of the analysis is show on the tables below as thus:

Hypothesis one:
The return on shareholders' funds has not improved since implementation of International Financial Reporting Standards (IFRS) in Nigerian banks.  (2015) on IFRS adoption and value relevance of financial statements of Nigerian banks. They found out that equity value and earnings of banks are value relevance to share prices under IFRS than under the previous Nigerian SAS.

Conclusion
The study reveals that Nigerian listed deposit money banks have implemented the provisions of IFRS framework. The study however concludes that: 1. IFRS implementation in Nigerian banks has a significant effect on the shareholders' equity. This was based on the return on equity of banks calculated 2. IFRS has a positive effect on the reported profitability of banks. This was based on the net profit margin of banks calculated. The changes occurred as a result of the introduction of the fair value in IFRS. This concept has a significant effect on the reported profitability of banks, because with fair value, you have impairment loses both on assets and financial instruments. The loan loss provision under IFRS also contributed to changes in the profitability of banks. Under NGAAP, loan losses were provided for using cost model. This makes the managers of these banks not to engage in income smoothening. 3. IFRS has a significant effect on the earnings of banks. This was in line with the return on assets calculated. It showed a positive effect on the return on investment of banks. This will boost the level of confidence of global investors and investment analysts in the financial statements of Nigerian banks.