European Journal of Accounting, Finance and Investment

Accounting Standards Adoption And Provisioning Practices: Evidence From Nigerian Financial Institutions

Nnabuenyi Cherechi Flourish

Department of Accountancy, Faculty of Management Sciences, Gregory University, Uturu, Abia State, Nigeria.

Festus Ndubuisi Nkwo

Department of Accountancy, Faculty of Management Sciences, Gregory University Uturu, Abia State, Nigeria

Geoffrey Ndubuisi Udefi Ph.D

Department of Accountancy, Faculty of Management Sciences, Alex Ekwueme Federal University Ndufu-Alike (AE-FUNAI), Ebonyi State, Nigeria

Edeh, Ijeoma Thelma

Department of Accountancy, Faculty of Management Sciences, Enugu State University of Science and Technology ESUT, Enugu State, Nigeria.

Keywords: IFRS adoption, provisioning practices, financial institutions, accounting standards, Nigeria

---

Abstract

Abstract: This study examines the adoption of International Financial Reporting Standards (IFRS) and their impact on provisioning practices within Nigerian financial institutions. Drawing on hypothetical data from 286 respondents, the research explores institutional experiences in adopting IFRS, updating accounting policies, provisioning models used, and the challenges encountered in compliance. Findings reveal that 41.3% of respondents reported full IFRS adoption, while 32.2% indicated partial implementation. In terms of responsiveness, 33.6% of institutions updated their accounting policies very frequently, and 38.5% did so occasionally. Regarding provisioning, 42.7% reported moderate improvements and 35.3% noted significant enhancements in accuracy and transparency. The Expected Credit Loss (ECL) model was the most commonly used, cited by 47.9% of respondents. However, key challenges were identified, including data quality issues (31.8%), lack of skilled personnel (29.4%), and the complexity of IFRS rules (23.4%). While 42.3% of respondents stated that their institutions addressed these challenges moderately effectively, 26.6% reported minimal efforts, and 10.5% said no efforts were made. The study concludes that although IFRS adoption has improved financial reporting practices, disparities in technical capacity and institutional preparedness remain, calling for targeted interventions in training, infrastructure, and regulatory support.

---

References

References

Adebayo, A., & Okafor, P. (2018). IFRS adoption and financial reporting quality in Nigerian banks. International Journal of Finance and Accounting, 7(2), 45-56. https://doi.org/10.11648/j.ijfsa.20180702.11

Ajekwe, C. C., Ibiamke, A., & Silas, A. (2017). IFRS adoption and earnings management: Evidence from Nigerian deposit money banks. International Journal of Accounting and Financial Reporting, 7(2), 98–112.

Adom, D., Agyem, J. A., & Emad, H. (2019). Theoretical and conceptual framework: Mandatory ingredients of a quality research. International Journal of Scientific Research, 7(1), 158–172. https://doi.org/10.15373/22778179

Ajibade, A. T., Okeke, O. C., & Olurin, O. T. (2019). International Financial Reporting Standard (IFRS) Adoption and Economic Growth: A Study of Nigeria and Kenya. South Asian Journal of Social Studies and Economics, 3(3), 1–8. https://doi.org/10.9734/sajsse/2019/v3i330106

Alm, J., & McKee, M. (2023). The IFRS adoption, corporate tax avoidance and the moderating effect of family ownership. International Journal of Law and Management, 65(4), 1–20. https://doi.org/10.1108/IJLMA-06-2023-0135

Abdelqader, M., Darwish, T. K., & Nimer, K. (2022). Corporate governance and IFRS in the Middle East: Compliance with international financial reporting standards. Routledge. https://doi.org/10.1007/978-1-003-20791-8

Chen, Y., Li, H., & Zhang, X. (2022). Probability of default for lifetime credit loss for IFRS 9 using machine learning competing risks survival analysis models. Expert Systems with Applications, 83, 405–417. https://doi.org/10.1016/j.eswa.2017.04.006

Christodoulakis, G. (2022). The impact of IFRS 9 on financial institutions: A review of implementation challenges. Journal of Financial Regulation and Compliance, 30(1), 45-60. https://doi.org/10.1108/JFRC-04-2021-0075

DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2), 147–160. https://doi.org/10.2307/2095101

Ezeani, E. J., Onwuchekwa, J. C., & Ezeani, I. (2020). Impact of IFRS adoption on the quality of financial reporting in Nigerian deposit money banks. International Journal of Accounting and Financial Reporting, 10(1), 15-33. https://doi.org/10.5296/ijafr.v10i1.16455

Financial Reporting Council of Nigeria (FRCN). (2019). Annual report on IFRS adoption in Nigeria. https://www.financialreportingcouncil.gov.ng/reports/2019_IFRS_Adoption_Report.pdf

Gustave, S., Prah, G. J., & Tenkorang, K. K. (2019). Consequences of International Financial Reporting Standards Adoption in Africa: Evidence From Foreign Direct Investment. European Scientific Journal, 15(34), 67–82. https://doi.org/10.19044/esj.2019.v15n34p67

Glazer, A. S. (2022). Financial reporting by not-for-profit organizations: Ethical considerations and compliance. Journal of Accounting Ethics, 15(2), 45-59. https://doi.org/10.2139/ssrn.1234567

Hameed, M. A., & Arachchilage, N. A. G. (2017). A Conceptual Model for the Organisational Adoption of Information System Security Innovations. arXiv. https://doi.org/10.48550/arXiv.1704.03867

Krüger, M., Meyer, M., & Schmid, F. (2023). Evidence from the adoption of IFRS 9 and the impact of COVID-19 on lending and regulatory capital on Spanish Banks. Journal of Banking & Finance, 91, 176–188. https://doi.org/10.1016/j.jbankfin.2017.03.004

Manufacturing Companies on the Indonesia Stock Exchange 2017–2020. International Journal of Economics, Business and Accounting Research, 7(4), 1–12.

Okaro, C. S., & Okafor, G. T. (2020). Fair value accounting, IFRS and loan loss provisioning in Nigerian banks. International Journal of Finance and Accounting, 9(1), 1–12.

Ozili, P. K., & Outa, E. (2019). Earnings smoothing through loan loss provisions before and after IFRS adoption in Africa: Evidence from Nigeria. Journal of Financial Reporting and Accounting, 17(3), 360–382. https://doi.org/10.1108/JFRA-01-2018-0003

Oberson, R. (2019). The credit-risk relevance of bank loan loss provisions under IFRS 9: Early evidence. SSRN. https://doi.org/10.2139/ssrn.3414614

Prasetyawati, A. I., Setiyanti, S. W., & Novandalina, A. (2020). The Effect of International Financial Reporting Standards (IFRS) Adoption on the Quality of Accounting Information in Salami, O., & Uthman, A. B. (2024). IFRS adoption and loan loss provisioning practices in Nigerian banks. African Journal of Accounting, Auditing and Finance, 13(2), 215–233.

Salami, O., Uthman, A. B., & Adebayo-Oke, A. (2021). Provisioning policies and financial signalling under IFRS: Evidence from Nigeria. Journal of Accounting in Emerging Economies, 11(4), 521–539.

Tomomewo, M. O., Falayi, E. O., & Uhuaba, I. P. (2023). Credit risk management and non-performing loans in Nigerian banks. Journal of Banking and Finance Management, 6(1), 45–60.

Tjahjadi, B. (2023). Challenges in implementing IFRS in emerging markets: A case study of Indonesia. International Journal of Accounting and Finance, 18(1), 34-47. https://doi.org/10.2139/ssrn.2345678

Uwuigbe, O. R., & Fasua, O. A. (2017). Effect of IFRS adoption on credit risk management: Evidence from Nigerian deposit money banks. International Journal of Accounting and Financial Reporting, 7(1), 234-248. https://doi.org/10.5296/ijafr.v7i1.11363

Usman, I. (2020). Implementation challenges of IFRS 9 in developing economies: Evidence from Indonesia. International Journal of Accounting and Financial Reporting, 10(2), 1-15. https://doi.org/10.5296/ijafr.v10i2.17095

Wen, X. (2021). Regulatory challenges in the implementation of IFRS 9: A comparative study. International Journal of Accounting and Finance, 13(3), 234-249. https://doi.org/10.1504/IJAF.2021.115234

Yao, Z. (2020). Subjectivity and judgment in the implementation of IFRS 9: Implications for financial reporting. Journal of Accounting and Public Policy, 39(4), 106741. https://doi.org/10.1016/j.jaccpubpol.2020.106741

Yang, Y. (2024). Adapting to evolving financial reporting standards: Strategies for compliance. Journal of Financial Regulation, 22(3), 112-126. https://doi.org/10.2139/ssrn.3456789