IMPACT OF INTERNATIONAL FINANCIAL REPORTING STANDARDS IFRS ON SMALL AND MEDIUM SCALE ENTERPRISES IN NIGERIA

ABSTRACT
This study is to examine the impact of international financial reporting standards IFRS on small and medium scale enterprises in Plateau state. This study was guided by the following objectives; to ascertain whether SMEs in Nigeria are aware of the introduction of IFRS for SMEs, to determine whether SMEs in Nigeria have already adopted 1FRS for SMEs and to investigate if IFRS for SMEs are relevant to Small and Medium Enterprises in Nigeria. The study employed the descriptive and explanatory design; questionnaires in addition to library research were applied in order to collect data. Primary and secondary data sources were used and data was analyzed using the chi square statistical tool at 5% level of significance which was presented in frequency tables and percentage. The respondents under the study were 100 SMEs in Jos, Plateau State. The study findings revealed that SMEs in Nigeria are not aware of the introduction of IFRS for SMEs; based on the findings from the study, SMEs should be encouraged to adopt a globally recognized and accepted accounting standard (IFRS for SMEs) due to its attendant positive effects on the firms and the economy at large.
 
CHAPTER ONE
INTRODUCTION
1.1   Background to the Study
Government at all levels in Nigeria have in recent times emphasized on the diversification of the economy through the promotion of small and medium scale enterprises.The importance of small and medium scale enterprises to the economic development of any country whether developed or developing cannot be over-emphasized.
They are the driving forces of economic and industrial development. To a large extent, small and medium scale enterprises play significant role in improving the living standard of the citizens of any nation by creating goods and services, stimulating private ownership and entrepreneurial skills, creating sources of revenue to both individuals and government developmental purposes, creating employment opportunities and aiding the development of indigenous technology.
According to Adelaja (2014) SMEs are generally seen as labour intensive, capital saving and capable of helping create most of the one million new jobs the world will need by the end of the century.Owing to the enormous benefits inherent in the development and sustainability of small and medium enterprises, government through the Small and Medium Scale Enterprises Development Agency of Nigeria (SMEDAN), Manufacturers Association of Nigeria (MAN), and other organizations such as the International Accounting Standards Board (IASB) have been on the vanguard of exploring possible means of promoting the activities of SMEs. According to Osotimehin (2012), no other development strategy has enjoyed as much prominence in Nigeria’s development plans as the Small and Medium Scale Enterprises (SMEs) development strategy.The international Accounting Standards Board (IASB) in July, 2009 introduced the International Financial Reporting Standards (IFRS) for Small and Medium Scale Enterprises (SMEs) as a way of enhancing the activities of small and medium scale enterprises through improved accounting and reporting practices. IFRS for SMEs is a self-contained set of accounting principles that is based on full IFRS but has been simplified for SMEs (Deloitte, 2010).Accounting and reporting information is a critical component of an enterprise business decision-making strategy.
Accounting and reporting information enables an enterprise to perform the function of measuring its financial standing, assessing profitability and cash flow. Good accounting and reporting information can also help an enterprise in accessing funds both locally and internationally. As a result of the importance of SMEs to the economic and industrial development of Nigeria and the role of accounting and reporting information in enhancing the activities and growth of any enterprise, it becomes very pertinent to examine the relevance of IFRS for SMEs to Small and Medium Scale Enterprises in Nigeria, using selected enterprises in Benin, Edo State as case study.
1.2   Statement of Problem
All over the world, including Nigeria, greater emphasis have been on the growth and development o SMEs due to their contributions to economic, industrial and infrastructural development of any country.However, according to Deloitte (2012), Nigeria has joined the league of Nations reporting IFRS and currently in her second phase of IFRS  implementation with first phase drawing to a close on 31st December, 2012 when all listed and significant public entities are expected to produce first IFRS financial statements.
With the issuance of IFRS for SMEs by IASB in July, 2009, SMEs in Nigeria are also expected to adopt and implement IFRS in the preparation and presentation of their financial statements. This research work is thus intended to examine/assess the relevance of IFRS for SMEs to Small and Medium Scale Enterprises in Nigeria and to offer suggestions and recommendations on how enterprises can benefit from the adoption of IFRS for SMEs with reference to the selection and study of some SMEs in Benin metropolis. More so, this research is intended to bridge the gap in knowledge of IFRS and its importance to SMEs in Nigeria.
1.3   Research Questions
In relation to the objective of the study, the following research questions are addressed:
1.     Are Small and Medium Scale Enterprises in Nigeria aware of the introduction of IFRS for SMEs?
2.     Are accounting and reporting practices of Small and Medium Scale Enterprises in Nigeria in accordance with IFRS for SM Es?
3.     Are IFRS for SMEs adoption relevant to Small and Medium Scale Enterprises in Nigeria?
1.4   Objectives of the Study
The broad objective of the study is to examine the relevance of IFRS to Small and Medium Scale Enterprises in Nigeria with particular emphasis on Small and Medium Enterprises in Benin metropolis. Specifically, the objective of this study are to:
1.     Ascertain whether SMEs in Nigeria are aware of the introduction of IFRS for SMEs.
2.     Determine whether SMEs in Nigeria have already adopted 1FRS for SMEs.
3.     Investigate if IFRS for SMEs are relevant to Small and Medium Enterprises in Nigeria.
1.5   Statement of Hypotheses
The study seeks to test the following hypotheses:
Hypothesis One
HO:   SMEs in Nigeria are not aware of the introduction of IFRS for SMEs.
HI:    SMEs in Nigeria are aware of the introduction of IFRS for SMEs.
Hypothesis Two
HO:   SMEs in Nigeria do not carry out their accounting and reporting practices in accordance with IFRS for SMEs.
HI:    SMEs in Nigeria do carry out their accounting and reporting practices in accordance with IFRS for SMEs.
1.6   Significance of the Study
This study would be beneficial to practitioners, academicians, management of SMEs government and interested researchers in the following ways;
i.      To practitioners and academicians: this study provides useful information about the relevance of IFRS to SMEs in Nigeria.
ii.     To management of SMEs: This study provides information about the theoretical and actual benefits and challenges of adoption of IFRS for SMEs.
iii.    To government, IFRS regulatory body and management of SMEs, it helps them to be aware of the perceived and actual benefits and challenges in the adoption of IFRS by SMEs and give insights on how to benefit from IFRS not effectively.
iv.    To interested researchers, it help others that are interested in conducting detailed and comprehensive research study on the relevance of IFRS and SMEs in Nigeria to have a spring board to initiate their study on.
1.7   Scope of the Study
The topic International Financial Reporting Standard (IFRS) in SMEs in Nigeria is a wide and complex one. In this study the researcher is quite aware that the study is supposed to be a comprehensive survey of all small and medium enterprise in Nigeria but this could not be possible due to the fact that time and cost does not permit the researcher to move from one enterprise to the other.However, the study has been designed to study selected small and medium enterprises in Benin metropolis. Only companies that fall within range of small and medium scale enterprises and are located within Benin metropolis are considered in this study. That means companies that are listed on the Nigerian Stock Exchange and publish their financial statements to the public are not covered in the study. A sample size of 50 was employed for effective result.
1.8   Limitations of the Study
The demanding schedule of respondents at work made it very difficult getting the respondents to participate in the survey. As a result, retrieving copies of questionnaire in timely fashion was very challenging. Also, the researcher is a student and therefore has limited time as well as resources in covering extensive literature available in conducting this research.
Financial constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
Time constraint: The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.
Finally, the researcher is restricted only to the evidence provided by the participants in the research and therefore cannot determine the reliability and accuracy of the information provided. 
1.9   Definition of Terms
IFRS: This means International financial Reporting Standards. IFRS is used interchangeably with IFRS for SMEs which is the abridged version of the International Financial Reporting Standards for Small and Medium Scale Enterprises.
SMEs: This means Small and Medium Scale Enterprises, that is, not quoted privately owned enterprises that do not publish their financial statements to the public.
IASB: this means International Accounting Standards Board. It is the body responsible for publishing and reviewing of international accounting standards.