The need for comparable financial statements has never been greater. The Nigerian economy though structurally fluid is basically petroleum based with Nigeria being considered the sixth largest oil producer in the world. This globalization has encouraged foreign investors to examine the accounting environment in Nigeria with special emphasis on the method and kind of accounting standards used. This paper addresses the history of the accounting environment in Nigeria with special focus on the factors that affect and influence both the accounting system and resulting output in Nigeria.


The federal republic of Nigeria is a federal constitutional republic consisting of thirty six states and one federal capital territory. Being earlier colonized by the British, The British parliament in 1844 introduced legal regulations for accounting and its reporting in their company law. Members of the common wealth adopted and modeled their company to those in Britain example Nigeria companies act 1968 and Nigeria companies and allied act 1980 and similar status contain regulation for accounting and reporting.

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The statements of accounting standards [SAS] formulated and issued by the Nigerian accounting standard board[NASB] which is the main accounting body in Nigeria and also the accounting and auditing guidelines for rudimentary and routine professional services are mainly issued by the institute of chattered accountants in Nigeria[ICAN]

Nigerian has a population of above 140 million people, has 20% of GDP, 95% of foreign exchange earnings and about 80% of budgetary earnings. The currency used is called the naira. There are also 283 listed companies and a market capitalization of about 15 trillion naira[$125 billion][] Nigeria gives preference to government and investors via the stock exchange unlike other countries like United States of America which considers investors and creditors first or the United Kingdom which considers labor[]

Generally, the main institutional influences that affect the accounting environment as well as its output in Nigeria includes-:


Nigeria legal system operates under the common law with Nigeria being a member of the IASC and IFAC. The statements of accounting standards are issued by the four main regulatory bodies[]-:

1) Nigerian accounting standard body[NASB].

2)Chattered institute of bankers in Nigeria (CIBN)

3) Institute of chattered accountants in Nigeria(ICAN)

4)Office of the auditors general of the federation.

The accounting environment regulates through various forms of legal enactment some of which include constitutional provisions, decrees and enabling acts, administrative actions and regulatory bodies example Nigerian stock exchange, securities and exchange commission(SEC), central bank of Nigeria[CBN] etc. thus in Nigeria the companies and allied matter act 1990, banks and other financial institutions act no 25 of 1991,insurance decree no 58 of 1991 and other amended finance acts which contain the required provisions and requirements on accounting.


In Nigeria, Banks are considered the most important source of financing. With the merger of the Nigerian banks for commerce and industry, Nigerian industrial development bank and the national reconstruction fund, the banking industry offered adequate financial, cheap, business support services and were expected to be made available for small and medium sized.

Nigeria legal system operates under the common law with Nigeria being a member of the IASC and IFAC. The statements of accounting standards are issued by the four main regulatory bodies[


While Nigeria is considered to be a democratic nation that welcomes economic views and policies, its development has been affected constantly by petroleum and the overdependence on this has distorted healthy economic development. also Nigeria has experienced numerous political disruptions e.g. military coups, ethnic violence, religious divisions etc. Inflation is also a persistent unending problem which is aggravated by this political disruptions but despite these challenges, Nigeria has unquestioned business potential and has a strong financial future.


Nigeria tax system is organized to improve the collection of tax, reduce tax evasions and subsequent loss of revenue to the government. The income tax is got under the provision of the law by deduction from payments made to a person/company and is usually the tax charged on the person/company by an assessment but only if the total of the deduction does not exceed the assessment limited to the period of payments[CITA,1994].

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The peculiar aspect in the taxation of banks is that in addition to company tax payable at the normal rate of 30%,banks are required to pay excess tax on excess profit which has been recently increased to 15%.This is created to reflect the true nature of the business and is levied on an annual basis.


With over 250 ethnic groups in Nigeria and a large variety of languages spoken, the Nigerian culture is so difficult to determine. Nigerians are considered to be very extravagant and find it easier taking out loans to solve financial debts. Loans [3] are given on the basis of political or family ties instead of those that should bring a profit. With the recent crash of the stock market and other severe economic factors as well as lack of education ,Nigerians find it difficult to trust the accounting[banking culture].


Influence of factors on accounting practices in Nigeria is not static but changes with time. With a deadline on all banks by the central bank of Nigeria[CBN] to convert to IFRS by 2010, there will be an increase of foreign direct investment inflow and the global business will begin to have more confidence in Nigerian accounting environment.

The banking sector reforms have encouraged a boom in Nigeria capital markets but this has exposed banks to a global economic slowdown[]. On the other hand, the price of oil has increased and without the oil revenue income as well as reduced foreign investment, the accounting sector is struggling to consolidate.