Published: Last Edited:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

The need for comparable financial statements has never been greater. The Nigerian economy though fluid is basically petroleum based with Nigeria being considered one of the largest African countries. This globalization has [1] 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.2Being 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.

The [2] statements of accounting standards [SAS] are issued by the Nigerian accounting standard board[NASB] which is the main accounting body in Nigeria and also provides the auditing guidelines and offers routine professional services which are mainly issued by the institute of chattered accountants in Nigeria[ICAN]

Nigeria has a population of above 140 million people and has high foreign exchange and budgetary earnings. There are about 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 or the United Kingdom which considers labor, creditors or investors.

Generally, the following important factors that affect the accounting environment as well as its output in Nigeria includes-:


Nigerian legal system operates under the common law with Nigeria being a member of the IASC and IFAC. The statements of accounting standards[SAS] are issued by 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 [3] accounting environment is managed using various rules and regulations, most 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. example of some [4] of these important finance acts include companies and allied matter act 1990, banks and other financial institutions act no 25 of 1991,insurance decree no 58 of 1991 and they all contain the required provisions and requirements on accounting.


Nigerian Banks are considered the most available source of financing to the economy. With [5] 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 but cheap business support services which were expected to be made available for small and medium sized companies.


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 [6] Nigeria has had its share of several unnecessary political disruptions e.g. [7] military coups, ethnic violence, religious wars etc. Inflation [8] is a persistent problem which is as a result of this but in spite of all these challenges, Nigeria has a high business potential and definitely a strong financial future.


Taxation main aim is to prevent tax evasions thus prevent loss of government revenue. T he 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].

The [9] interesting 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 tax on excess profit and this has been recently increased to 15%.This is intended to reflect the true financial nature of the business and is calculated 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 [10] 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].


Accounting environment in Nigeria is easily influenced by several factors and cannot be easily predicted. [11] The central bank of Nigeria[CBN]has placed a deadline on all banks to convert to IFRS by 2010, these would lead to an increase in of foreign investment and as such increase confidence in the Nigerian accounting environment.

The [12] banking sector reforms have contributed to the large growth in the Nigerian capital markets but this also has led to a global economic slowdown. On [13] the other hand, with the recent increase in the price of oil, the oil revenue income has dropped drastically and this has lowered foreign investment, thus the Nigerian accounting sector is still struggling to consolidate. [14]