The above question becomes relevant especially now that about 100 countries from Africa, Europe and other continents have adopted and are practicing International Financial Reporting Standards (IFRS) and Nigeria is yet to have a common ground on its adoption.

The main objective of the IFRS is to set out recognition, measurement, presentation and disclosure requirements dealing with transactions and events that are important in general purpose financial statements.

International Financial Reporting Standards (IFRS) are principles-based standards, interpretations and the framework adopted by the International Accounting Standards Board (IASB).

Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS).

IAS were issued between 1973 and 2001 by the board of the International Accounting Standards Committee (IASC). On April 1, 2001, the new IASB took over from the IASC the responsibility for setting International Accounting Standards.

During its first meeting, the new board adopted existing IAS. The IASB has continued to develop standards calling the new standards IFRS.

Currently, Nigeria is practicing an accounting reporting system known as the Generally Accepted Accounting Principles (GAAP). GAAP refers to the standard framework of guidelines for financial accounting used in any given jurisdiction which are generally known as Accounting Standards.

It includes the standards, conventions and rules accountants follow in recording and summarizing transactions and in the preparation of financial statements.

While many countries have started developing roadmap for the adoption of IFRS, in Nigeria, preparation toward it is scattered and at best skeletal as the financial institutions, especially banks, seems to be lagging behind in fine-tuning modalities for the take-off of what experts describe as a unified and higher quality accounting standards.

A road map committee for the adoption of IFRS was inaugurated in October 2009 and submitted its report on January this year for the government to take decision. No action has been taken yet.

Except for a recent conference on the issue organised by Access Bank Plc, information and knowledge on the work of IFRS is still miles away from many Nigerians and customers of financial institutions.

The need for IFRS was conceived about 10 years ago with the establishment of the International Accounting Standards Board (IASB) and Nigeria has signalled intention to adopt it by 2012.

Countries like China and almost all the European countries have switched to IFRS. In Africa, South Africa, Kenya, Ghana, Sierra Leone and Zambia have adopted and are practicing a harmonised IFRS. Canada, like Nigeria would join the IFRS by 2012.

United States of America (USA) is still dragging feet on the adoption of the system, perhaps, a major reason why many countries are developing cold-feet about it.

Analysts are saying that as soon as US adopts the system many countries would quickly align because economies of many nations are linked to that of the US.

While the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC) favour the adoption of the standards starting from December 2012, experts in the Nigerian Accounting Standards Board (NASB) say there is no need to rush into it.

"We need to be a little bit patient so that you can put your acts in order", the Technical Director of NASB Obazee, Jim Osayande, said at an IFRS conference recently in Abuja.

According to him, since many financial institutions in the country are yet to commence preparations on the adoption of the new rules, few others that may attempt to practice the standards now would cause confusion.

"If you are ahead and others are still far behind, then you are not doing IFRS, it would not be comparative within the same industry", Osayande said.

However, the Group Managing Director of Access Bank Plc, Aigboje Aig-Imoukhuede, believes that it is now ripe for Nigeria to join other nations in the adoption of the IFRS.

Also, KPMG International has said that an early start is recommended for a smooth transition to IFRS.

Challenges in adopting IFRS

Some experts have argued that the adoption of the IRFS may not necessarily lead to open disclosure, citing examples of some nations that have adopted the standards but were not insulated from the current global economic and financial crisis.

Some challenges of IFRS have to do with the understanding and buying into the principles underlying accounting standards and the changes countries and reporting entities must make to be able to operate these standards.

But Aig-Imoukhuede said that as an operator who has taken far-reaching steps towards full conversation of the IFRS systems and processes, "I have been quite concerned to learn about implementation failures stemming from these challenges in various markets.

"Therefore, with the benefit of this knowledge, Nigeria need not necessarily experience such challenges which constituted hindrances to a seamless and effective transition to IRFS", he said.

IFRS is also confronted with the challenge of complexity of adoption because it is more complex to adopt than "you think because it is a principle -based standard requiring interpretation."

Furthermore, the standards would be confronted with external parties who would want to seek information about an entity's business transactions and performance in order to make decisions about providing resources to, or doing business with the entity.

Most organisations don't like disclosing information in Nigeria. Specifically, the theoretical foundations underpinning Nigerian GAAP and IFRS are not altogether similar.

Osayande said that there will be increased responsibilities in setting sound accounting policies that fit business models on the part of the professional accountant who must also be ready to explain and justify these policies in the context of the IFRS framework.

The major problem is that Nigerian stakeholders lack a common understanding and have failed to adopt a collaborative approach that is required for the successful national transition to the IFRS.

Benefits of IFRS

Even though the standards are subject to change and the propagation of best practice of IFRS is still evolving, there are some far-reaching gains in adopting it.

Adopting IFRS reduces information asymmetry which would lower costs of equity and debt financing; It smoothens the communication between operators, shareholders, lenders and other interested parties resulting in lower costs.

It offers higher comparability, lower transaction costs and greater international investment and reduces accounting manipulations and positively impacts firms' stock returns and stock related financial performance measures.

Now that many countries have adopted the IFRS and it is becoming a norm for accounting practice, Nigeria must put its house in order so that all the entire financial institutions can uniformly adopt the standards for easy comparability.

Nigeria should follow the example of Zimbia that has adopted the IFRS since 2006 and has achieved prudential financial reporting framework.

In Zambia, IFRS has resulted in higher quality reporting of the health of the financial institutions. This can serve as a lesson for Nigeria to learn from. The world is watching to see if Nigeria would adopt the standards come 2012 or not.