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THE ACCOUNTING AND FINANCIAL ENVIRONMENT WITHIN NIGERIA

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The demand for comparable fiscal statements has ne’er been greater. The Nigerian economic system though structurally fluid is fundamentally crude oils based with Nigeria being considered the 6th largest oil manufacturer in the universe. This globalisation has encouraged foreign investors to analyze the accounting environment in Nigeria with particular accent on the method and sort of accounting criterions used. This paper addresses the history of the accounting environment in Nigeria with particular focal point on the factors that affect and act upon both the accounting system and ensuing end product in Nigeria.

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Introduction

The federal democracy of Nigeria is a federal constitutional democracy dwelling of 30 six provinces and one federal capital district. Bing earlier colonized by the British, The British parliament in 1844 introduced legal ordinances for accounting and its coverage in their company jurisprudence. Members of the common wealth adopted and modeled their company to those in Britain illustration Nigeria companies act 1968 and Nigeria companies and allied act 1980 and similar position contain ordinance for accounting and coverage.

The statements of accounting criterions [ SAS ] formulated and issued by the Nigerian accounting criterion board [ NASB ] which is the chief accounting organic structure in Nigeria and besides the accounting and scrutinizing guidelines for fundamental and everyday professional services are chiefly issued by the institute of chattered comptrollers in Nigeria [ ICAN ]

Nigerian has a population of above 140 million people, has 20 % of GDP, 95 % of foreign exchange net incomes and approximately 80 % of budgetary net incomes. The currency used is called the naira. There are besides 283 listed companies and a market capitalisation of about 15 trillion naira [ $ 125 billion ]

By and large, the chief institutional influences that affect the accounting environment every bit good as its end product in Nigeria includes- :

LEGAL SYSTEMS

Nigeria legal system operates under the common jurisprudence with Nigeria being a member of the IASC and IFAC. The statements of accounting criterions are issued by the four chief regulative organic structures :

1 ) Nigerian accounting standard organic structure [ NASB ] .

2 ) Chattered institute of bankers in Nigeria ( CIBN )

3 ) Institute of chattered comptrollers in Nigeria ( ICAN )

4 ) Office of the hearers general of the federation.

The accounting environment regulates through assorted signifiers of legal passage some of which include constitutional commissariats, edicts and enabling Acts of the Apostless, administrative actions and regulative organic structures illustration Nigerian stock exchange, securities and exchange committee ( SEC ) , cardinal bank of Nigeria [ CBN ] etc. therefore in Nigeria the companies and allied affair act 1990, Bankss and other fiscal establishments act no 25 of 1991, insurance edict no 58 of 1991 and other amended finance Acts of the Apostless which contain the needed commissariats and demands on accounting.

Corporate Financing SYSTEM

In Nigeria, Banks are considered the most of import beginning of funding. With the amalgamation of the Nigerian Bankss for commercialism and industry, Nigerian industrial development bank and the national Reconstruction fund, the banking industry offered equal fiscal, inexpensive, concern support services and were expected to be made available for little and average sized.

Nigeria legal system operates under the common jurisprudence with Nigeria being a member of the IASC and IFAC. The statements of accounting criterions are issued by the four chief regulative organic structures

POLITICAL AND ECONOMIC SYSTEM

While Nigeria is considered to be a democratic state that welcomes economic positions and policies, its development has been affected invariably by crude oil and the overdependence on this has distorted healthy economic development. besides Nigeria has experienced legion political breaks e.g. military putschs, cultural force, spiritual divisions etc. Inflation is besides a relentless unending job which is aggravated by this political breaks but despite these challenges, Nigeria has unquestioned concern potency and has a strong fiscal hereafter.

TAXATION

Nigeria revenue enhancement system is organized to better the aggregation of revenue enhancement, cut down revenue enhancement equivocations and subsequent loss of gross to the authorities. The income revenue enhancement is got under the proviso of the jurisprudence by tax write-off from payments made to a person/company and is normally the revenue enhancement charged on the person/company by an appraisal but merely if the sum of the tax write-off does non transcend the appraisal limited to the period of payments [ CITA,1994 ] .

The curious facet in the revenue enhancement of Bankss is that in add-on to company revenue enhancement payable at the normal rate of 30 % , Bankss are required to pay extra revenue enhancement on surplus net income which has been late increased to 15 % .This is created to reflect the true nature of the concern and is levied on an one-year footing.

CULTURE

With over 250 cultural groups in Nigeria and a big assortment of linguistic communications spoken, the Nigerian civilization is so hard to find. Nigerians are considered to be really excessive and happen it easier taking out loans to work out fiscal debts. Loans are given on the footing of political or household ties alternatively of those that should convey a net income. With the recent clang of the stock market and other terrible economic factors every bit good as deficiency of instruction, Nigerians find it hard to swear the accounting [ banking civilization ] .

SUMMARY

Influence of factors on accounting patterns in Nigeria is non inactive but alterations with clip. With a deadline on all Bankss by the cardinal bank of Nigeria [ CBN ] to change over to IFRS by 2010, there will be an addition of foreign direct investing influx and the planetary concern will get down to hold more assurance in Nigerian accounting environment.

The banking sector reforms have encouraged a roar in Nigeria capital markets but this has exposed Bankss to a planetary economic lag . On the other manus, the monetary value of oil has increased and without the oil gross income every bit good as reduced foreign investing, the accounting sector is fighting to consolidate.

Cite this THE ACCOUNTING AND FINANCIAL ENVIRONMENT WITHIN NIGERIA

THE ACCOUNTING AND FINANCIAL ENVIRONMENT WITHIN NIGERIA. (2016, Nov 15). Retrieved from https://graduateway.com/the-accounting-and-financial-environment-within-nigeria/

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