Challenges of Implementation of International Financial Reporting Standard amongst SMES in Anambra State, Nigeria
Keywords:
IFRS, SMEs, financial reporting, implementation challenges, accounting standardsAbstract
This study investigates the challenges of implementing International Financial Reporting Standards (IFRS) among Small and Medium-sized Enterprises (SMEs) in Anambra State, Nigeria, utilizing a sample of 318 SMEs. Employing the Institutional Theory which posits that organizations are influenced by the broader institutional environment, encompassing norms, rules, and established practices that shape their behaviour and decision-making processes, we analyzed demographic profiles using simple percentages, which indicated that about 60% of respondents had less than five years of experience in accounting, highlighting a skills gap. Descriptive analysis revealed a mean score of 3.45 (SD = 0.78) for understanding IFRS complexities, indicating moderate awareness among SMEs. Factor analysis was conducted to test the hypotheses concerning the impact of regulatory frameworks, financial literacy, economic factors, and organizational resistance on IFRS adoption. Preliminary findings suggest significant correlations between inadequate regulatory support and the cost of implementation with the adoption of IFRS. The conclusion drawn is that while SMEs recognize the benefits of IFRS, substantial barriers hinder compliance. Recommendations include developing tailored training programs, enhancing regulatory frameworks, and providing financial incentives for SMEs that adopt IFRS. The implications of this study extend beyond individual enterprises to the broader economy, suggesting that improving IFRS compliance in SMEs could lead to better financial transparency, enhanced access to capital, and greater economic growth. Emphasizing better regulation and support will equip SMEs to meet international accounting standards, ultimately fostering a more robust business environment in Anambra State.
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