The Changes In Accounting Standards Its Impact On Financial Statement

Project and Seminar Material for Accountancy / Accounting

The Changes In Accounting Standards Its Impact On Financial Statement


The project is a comprehensive study of the changes in Accounting standard, the impact on financial statement with a study of Guinness Nigeria Plc Benin Branch, Edo state. This project is aimed at determining the impact of Accounting standard on the users of financial statement and also the needs of the Accounting standard. Data were collected, through primary and secondary sources. The finding revealed that the changes in Accounting standard play a vital role of the financial statement of the companies that adopted the change. Therefore, the impact of Accounting standard cannot be over emphasized hence it depends on the conferment of a given organizaitonal setting from the conclusion of the study, it can be observed that there will be serious potentials for misunderstanding and suspicious resulting form information based on mix of conflicting accounting policies. It is therefore recommended that since international financial reporting standard has come to stay with thirteen standards already to its credit. Therefore one would except that the standard should be applied on small scale business that are not quoted, and also non-compliance with accounting standard should not be seen only as a statutory offence but also as a criminal offence which can probably lead to closure of such business.

Table of Content

Chapter One


  • 1.1 Background of the Study
  • 1.2 Statement of the Problem
  • 1.3 Objective of the Study
  • 1.5 Research Hypothesis
  • 1.6 Significance of the Study
  • 1.7 Scope / Delimitation of the Study
  • 1.8 Definition of Terms

Chapter Two

Literature Review

  • 2.1 Conceptual Perspective
  • 2.2 Theoretical Review
  • 2.3 Accounting Standards and Compliance
  • 2.4 Quality of Financial Reporting
  • 2.5 Event Accounting and Comparability of Financial Reporting
  • 2.6 Presentation of Financial Statements and Relevance of Financial Reporting
  • 2.7 Financial Disclosure and Fair Presentation.
  • 2.8 The Relationship Between Compliance with Accounting Standards and Quality of Financial Reporting

Chapter Three

Research Methodology

  • 3.1 Introduction
  • 3.2 Research Design
  • 3.3 Population of the Study
  • 3.4 Sample Size Determination
  • 3.5 Sample Size Selection Technique and Procedure
  • 3.6 Research Instrument and Administration
  • 3.7 Method of Data Collection
  • 3.8 Method of Data Analysis
  • 3.9 Validity of the Study
  • 3.10 Reliability of the Study
  • 3.11 Ethical Consideration

Chapter Four

Presentation, Analysis and Discussion of the Findings

  • 4.1 Response Rate
  • 4.2 General Information of Respondents
  • 4.3 What Impact has this Standard Made on Nigeria Economy?
  • 4.4 How Adequate is this Accounting Standard that is Been Applied in the Financial Statement Helping to Provide Information to its Users?
  • 4.5 How Necessary is the Adopting of the Accounting Standard in the Preparation of Financial Statement?
  • 4.6 Of What Importance is the Extent of Compliance in the Preparation of the Financial Statement of an Organization
  • 4.7 To What Extent has the Change in the Accounting Standard Help to Harmonize and Improve the Accounting Standard?
  • 4.8 Test of Hypothesis

Chapter Five

Conclusion and Recommendation

  • 5.1 Conclusions
  • 5.2 Recommendations

Chapter One


1.1 Background of the Study

In recent years, there has been a lot of criticism about accounting standard and the impact of the recent changes in financial report they prepare. A lot of people have led to question the validity of the profit measuring procedures applied in arising at the profit disclosed in published accounting. Quite a number of proposal have been made in an attempt to reform the methods generally in used.

This has resulted in coming together of different countries with a view to working out modalities for the standardization of these profit measuring and reporting procedures.

The international accounting standard committee (IASC) produces international accounting standards (IAS) to be followed by all member countries, of which Nigeria is one of them. Also they also produce additional statement to accounting standard (SAS) in an attempt to make the international standard meet with the local condition with the aid of globalization and increasing demand for transparency. The (IASC) as reconstructed in 2001 by creating the international accounting standard board (IASB) among other changes.

A new set of rules, which would align Nigeria with other countries and also improve investors confidence was formed in May 2011 known as international financial reporting standards (IFRS) which was issued out by international accounting standard boards which is globally accepted specially IFRS are defined in comprise

  • 13 in issue of the international financial reporting standard (IFRS) issued by IASB from 2001
  • 29 is issue of international accounting standard (IAS) issued by IAS before April 2001.
  • 15 in issue of interpretations originated from the internation financial reporting standard international committee (IFRSIC)
  • 11 in issue of the standard interpretation committee (SIC) statement, issued before April 2001.

The 13 IFRS in issue are:

  • IFRS 1 โ€“ First time adoption of IFRS
  • IFRS 2 โ€“ Share based payment
  • IFRS 3 โ€“ Business combination
  • IFRS 4 โ€“ Insurance contract
  • IFRS 5 โ€“ Non-current asset held for sale and discontinued operation.
  • IFRS 6 โ€“ Exploitation for and evaluation of mineral resources
  • IFRS 7 โ€“ Financial instruments disclosure
  • IFRS 8 โ€“ operating segments
  • IFRS 9 โ€“ Financial instrument
  • IFRS 10 โ€“ Consolidated financial statement
  • IFRS 11 โ€“ Joint arrangements
  • IFRS 12 โ€“ Disclosure of interest in other entities
  • IFRS 13 โ€“ Fair value measurement.

This work intends to analyze and examine the impact of these standards, the financial statement with particular emphasis on Guinness Nigeria Plc Benin, Edo state.

1.2 Statement of the Problem

Good accounting practice means that the account must be in accordance with the international financial reporting standard (IFRS), and the international accounting standard (IAS). The impact of accounting standard in the finance statement of an organization cannot be over emphasizes.

Moreover, the problem can be summarized below:

  1. Lack of personnel with adequate knowledge of accounting standard is a major issues affecting the changes.
  2. Lack of infrastructures and equipment which help to obtain most accurate information and report.
  3. Inadequate accounting standard applied on financial statement to provide information for its users.
  4. The problem of poorly designed accounting system in organization
  5. The effect if faulty financial statement and report and the analysis produced by the management towards the achievement of the organizational goal.
  6. The effect of financial statement and report which are not prepared at the appropriate tine.
  7. Ineffectiveness of financial statement due to its improper application.

1.3 Objective of the Study

The objective of this research work is intended to do the following:

  1. To revealed that the changes in accounting standard play a vital role on the financial statement of the companies that adopted the changed.
  2. To determine information about the changes in the net resources of the business organization
  3. To find out if accounting standard is cumbersome and create problem.
  4. To determine whether accounting and financial statement enhance accountability, transparency and improve quality to financial results of the organization.

1.4 Research Question

The following are research questions postulates to guide the study.

  1. What impact has this standard made on Nigeria economy?
  2. How adequate is this accounting standard that is been applied in the financial statement helping to provide information to its users?
  3. How necessary is the adopting of the accounting standard in the preparation of financial statement?
  4. Of what importance is the extent of compliance in the preparation of the financial statement of an organization
  5. To what extent has the change in the accounting standard help to harmonize and improve the accounting standard?

1.5 Research Hypothesis

The following hypothesis were formulated in order to determine the validity and reliability of the study.

  1. HO: The changes in accounting has no impact on the financial statement.
    Hi: The changes in accounting has impact on the financial statement.
  2. Ho: Adoption of the accounting standards does not help in the standardization are harmonization of financial statement
    Hi: Adoption of the accounting standards help in the standardization are harmonization of financial statement
  3. Ho: It is of no importance to determine the extent of compliance of some organization in the preparation of the financial statement.

1.6 Significance of the Study

The accounting standards are developed to ensure higher degree of standardization in the published of financial statement. They provide the necessary information about how accounting information should be presented in order to enhance the value of its content and facilitated through understanding.

The significance of this study to the academic world cannot be over emphasized. It is of benefit to all users of accounting information who need to interprets and use proper understanding of the financial standard and the information so derived in making management decision for the interest of the organization.

Another most importance of the study is to reveal to the management of (Guinness Nigeria Plc Benin, Edo state) on the standards in financial statement and also an accounting guides to staff of the organization

Lastly, this study would also serve as reference literature to further researchers on the changes and impact of accounting standards.

1.7 Scope / Delimitation of the Study

Despite the fact that the study is based on the impact of accounting standards in financial statement. It also covers the importance of the standard, application, compliance thus the need for the standards and also the main aim of this standardization.

The limitation is as a result of limited time, insufficient fund available with the researcher and limited source of material. Restriction of some vital information about the company with a response of confidential issue.

1.8 Definition of Terms

A Standards:

The simply means the regulations governing the use of financial statements.

B Changes:

This simply means the process of becoming different form he former state.

C Fair values:

The price that would be received to see and asset or paid to transfer a liability in an orderly transaction between market participants at the measurement data

D Financial statements:

These are statements used in recording financial transaction of any balance sheet of business.

E Joint Arrangement:

An arrangement of which two or more parties have joint control.

F Financial instrument:

A document that has a monetary value or represents a legally enforceable agreement between two parties e.g shares.

G Accounting:

The development and use of a system for recording and analyzing the financial transactions and financial status of a business or other organization.

Chapter Five

Conclusion and Recommendation

This chapter presents the summary of the major findings in line with the study objectives and also presents the conclusion plus recommendations and area for further research.

5.1 Conclusions

The study revealed that Organizations to disclose an accounting change or error in its financial statements which include retrospective application of a new accounting principle (restate the financial statements of prior years, sometimes referred to as a retroactive adjustment or a restatement), this can be adjusted for the change prospectively to meet the ever increasing demands of a complex society without reference to a coherent underlying theory for true income determination.

Also, Organization have to use financial statements because they will provide various financial information that investors and creditors use to evaluate the organizationโ€™s financial performance. Because financial statements are important to companyโ€™s managers publishing financial statements, help management to communicate with interested outside parties about its accomplishment running the organization.

In Guinness Nigeria Plc Benin, Edo state accounting policy have to be disclosed, management as well have to consider whether disclosure can assist users in understanding how transactions, other events and conditions are reflected in reported financial performance and financial position. Because disclosure of particular accounting policies is useful to users when the policies are selected from alternatives as allowed in (IFRSs).

5.2 Recommendations

Guinness Nigeria Plc, there are no procedures that provides necessary guides on how accounting information should be prepared and presented in order to enhance the value of its contents and facilitate thorough understanding. Statements of accounting standards should be developed to ensure a high degree of standardization in publishing financial statements.

At any time, a corporation should provide accurate information about its accounts to its shareholders or to regulating authorities. Because the purpose of GAAP is to ensure that financial reporting is transparent and consistent from one organization to another.

The reporting entity has complied with all externally-imposed requirements in respect of which non-compliance which is relevant to assessments of the reporting entity’s performance, financial position, or financing and investing. Users should also comply with externally-imposed requirements in respect of which non-compliance be able to presume the absence of disclosures.

Information should be relevant to the users. Information is relevant if it helps users of the financial statements in predicting future trends of the business (predictive value) or confirming or correcting any past predictions they have made (confirmatory value).

Guinness Nigeria Plc, is not considering the term accounting event due to changes in an item as reflected in the company’s financial statements. Accounting events should be determined by the organization to ensure liability of assets, revenues, expenses or owner’s equity.

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