Inconsistency in the Adoption of IFRS by Nigerian Microfinance Banks

The main objective of any financial reporting is affirmatively to communicate with the users, the true financial position of an enterprise in a summarized and standard form in order to facilitate understanding for economic and related decisions making process. In Nigeria, Statement of Accounting Standard (SAS) has been the official standard in practice before it is being replaced with International Financial Reporting Standard (IFRS). From all respects, the SAS has similar objectives like the IFRS only that it operates within Nigeria. This study focuses on the Nigerian Microfinance Banks (MFBs), and the main problem is to address is whether it will be mandatory for these MFBs to adopt this new standard in preparing financial statements despite the high quality SAS, characteristics and uniqueness of these banks? The objective is to provide insights for suggested solution to this question through review of related literature. From the literatures’ findings, it can be concluded that due to the peculiarities of these banks and some challenges facing these banks, adoption of IFRS will not be feasible. This study recommends that the Central Bank of Nigeria (CBN) should include in its IFRS compliance financial reporting a special report to accommodate financial and operational activities of the MFBs and that if adoption of IFRS becomes a must for these MFBs, the Financial Reporting Council of Nigeria (FRCN) and the apex body should fully sponsor the conversion costs including the continuous training until the banks can independently apply the standard. Keywords: central bank of Nigeria (CBN), IFRS, Nigerian GAAP, Nigerian microfinance banks