Accounting Standards and Financial Reporting in Nigeria

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Flashcards covering key vocabulary and concepts from lecture notes on accounting standards, financial reporting, and regulatory frameworks in Nigeria.

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21 Terms

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Financial Reporting Council of Nigeria (FRCN)

An organization charged with the responsibility of setting accounting standards in Nigeria.

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Nigerian Accounting Standard Board (NASB)

Formerly known as the Nigerian Accounting Standards Board (NASB), it was established in 1982 as a private sector initiative closely associated with the Institute of Chartered Accountants of Nigeria (ICAN).

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Main objectives of the Financial Reporting Council of Nigeria (FRCN)

To protect investors and other stakeholders' interest, give guidance on issues relating to financial reporting and corporate governance, ensure good corporate governance practices, ensure accuracy and reliability of financial reports, harmonize activities of relevant bodies, promote standards among auditors, enhance credibility and improve the quality of accountancy and audit services.

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Operating Arms of the Financial Reporting Council (FRC)

Directorate of Accounting Standards (Private Sector and Public Sector), Directorate of Auditing Practice Standards, Directorate of Actuarial Standards, Directorate of Valuation Standards, Directorate of Inspection and Monitoring, and Directorate of Corporate Governance.

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Financial Reporting Council Rule 1

Requires CEOs and CFOs to certify financial statements by indicating their Financial Reporting Council (FRC) registration numbers, vouching for the integrity of the financial reports.

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Financial Reporting Council Rule 2

Requires professionals engaged in the financial reporting process to certify by indicating their name and FRC registration number, ensuring reliance on expert opinions from recognized professional bodies.

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Financial Reporting Council Rule 3

Requires disclosure of details of non-audit services provided by an audit firm to an audit client and the applicable fees paid, ensuring the audit engagement partner consents and that the services do not threaten independence and objectivity.

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Financial Reporting Council Rule 4

Requires that transactions needing approval or registration by a statutory body in Nigeria have their details disclosed in the financial statements by way of a note, once the required act is performed or registration obtained.

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Financial Reporting Council Rule 5

Clarifies that all reports other than unqualified reports issued by External Auditors on financial statements must be submitted to the Council with detailed explanations for the qualifications.

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Financial Reporting Council Rule 7

States that Financial Statements of Public Interest Entities should be prepared following IFRS, and directs that Statements of Value Added and Five-year Financial Summary should be included as supplementary information to the financial statements.

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Financial Reporting Council Rule 8

Specifies that the presentation currency for all general-purpose financial statements in Nigeria is the Nigerian Naira.

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Acts relevant to financial statement preparation

Consists of Banks and other Financial Institutions (Amendment) Act, Companies and Allied Matters Act, Investments and Securities Act, Nigerian Investment Promotion Commission Act, Insurance Act, Pensions Reform Act, and Federal Mortgage Bank of Nigeria Act.

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International Accounting Standards Committee (IASC)

An independent accounting body with a close relationship with the International Federation of Accountants (IFAC); its main objective is to formulate and publish accounting standards to be observed in the presentation of financial statements and to promote their worldwide acceptance.

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Accounting Standard (as defined by Izedonmi, 2001)

An information system through which financial and monetized information is generated for economic, social, and political decisions.

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Components of Financial Statements under IAS

The Statements of Financial Position, Statement of Comprehensive Income, Statement of Cash Flow, and Notes to Accounts.

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User groups in Accounting standards

Accounting standards are as much a product of political action as they are of careful logic or empirical findings.

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Expectation gap

The public thinks accountants should be doing and what accountants think they can do

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International Accounting Standards Committee (IASC)

The International Accounting Standards Committee (IASC) was formed to attempt to narrow the areas of divergence.

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The objective of the IASC in terms of standard setting

To work generally for the improvement and harmonization of regulations, accounting standards and procedures relating to the presentation of financial statements.

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Generally Accepted Accounting Principles (GAAP)

Standards, and procedures that companies must follow when they are preparing their financial statements

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Generally Accepted Accounting Principles (GAAP)

Financial regulatory Council (FRC) of Nigeria issues