Disclosure of Critical Accounting Judgments and Key Sources of Estimation Uncertainty in the Financial Statements of Companies in Nigeria

Clement Chiahemba Ajekwe; Adzor Ibiamke

doi:doi:10.11648/j.jfa.20190701.14

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Disclosure of Critical Accounting Judgments and Key Sources of Estimation Uncertainty in the Financial Statements of Companies in Nigeria

Clement Chiahemba Ajekwe, Adzor Ibiamke

Published in Journal of Finance and Accounting (Volume 7, Issue 1)

Received: 17 December 2018 Accepted: 28 December 2018 Published: 11 May 2019

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Abstract

This paper performs a thematic survey of published financial statements of 17 consumer goods companies listed on the Nigerian Stock Exchange (NSE) to investigate their level of compliance with regulatory requirements regarding disclosure of critical accounting judgments and major sources of estimation uncertainties in their financial statements. High quality disclosures in this area enable users to assess the quality of managements accounting policy decisions and the likelihood of future changes in the amounts appearing in the financial statements in a way that generic disclosures do not. Data was collected from the annual reports and accounts of the sampled companies in the financial reporting year ended in 2017. Using descriptive statistics and content analysis, it was found that firms provide some disclosures, but the information is not sufficiently informative to give users meaningful insights. Overall, the level of disclosure fell short of the intentions of the relevant regulatory requirements. The findings suggest that in addition to the guidance in the IFRS illustrative examples, it may be necessary to train accountants and auditors in Nigeria on disclosing accounting critical judgments and key sources of estimation uncertainties in compliance with regulatory intentions and requirements thereby increasing the informational value of these disclosures in financial reports.

Published in	Journal of Finance and Accounting (Volume 7, Issue 1)
DOI	10.11648/j.jfa.20190701.14
Page(s)	22-31
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2019. Published by Science Publishing Group

Keywords

Disclosure, Estimates, Judgments, Nigerian Stock Exchange (NSE), Sensitivity Analysis, Uncertainty

References

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[3]	Barth, M. E. (2006). Including Estimates of the Future in Today’s Financial Statements, Accounting Horizons, 20: 271–85.
[4]	The International Financial Reporting Standards Foundation (2015). IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors in a Briefing for Chief Executives, Audit Committees & Boards of Directors. Availableathttps://circabc.europa.eu/webdav/CircaBC/ESTAT/ESTP/Library/2016%20ESTP%20PROGRAMME/05.%20Desk%20Profiling%20%E2%80%93%20Hands%20On%2C%2029%20February%20-%204%20March%202016%20-%20Organiser_%20EUROSTAT/04.2%20-%20ESTP%20-%20Desk%20prof%20-%20IFRS%20briefing%20book%20(by%20IASF)%20(2015).pdf.
[5]	Sacer, I., Malis, S. &Pavic, I. (2016) The impact of accounting estimates on financial position and business performance—Case of non-current intangible and tangible assets, Procedia Economics and Finance, 39: 399-411https://core.ac.uk/download/pdf/82820679.pdf.
[6]	The Institute of Chartered Accountants of Scotland (ICAS, 2006). Principles not Rules. A Question of Judgement, Retrieved from https://www.icas.com/__data/assets/pdf_file/0020/2288/Principles-Not-Rules-A-Question-of-Judgement-ICAS.pdf.
[7]	Pippin, R. (2009). SEC Disclosures Checklist. CCH Walters Kluwer Business.
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[13]	Mayorga, D. & Sidhu, B. (2012). Corporate Disclosure of the Major Sources of Estimation Uncertainties, Australian Accounting Review, 60(22):25-39.
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Clement Chiahemba Ajekwe, Adzor Ibiamke. (2019). Disclosure of Critical Accounting Judgments and Key Sources of Estimation Uncertainty in the Financial Statements of Companies in Nigeria. Journal of Finance and Accounting, 7(1), 22-31. https://doi.org/10.11648/j.jfa.20190701.14

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ACS Style

Clement Chiahemba Ajekwe; Adzor Ibiamke. Disclosure of Critical Accounting Judgments and Key Sources of Estimation Uncertainty in the Financial Statements of Companies in Nigeria. J. Finance Account. 2019, 7(1), 22-31. doi: 10.11648/j.jfa.20190701.14

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AMA Style

Clement Chiahemba Ajekwe, Adzor Ibiamke. Disclosure of Critical Accounting Judgments and Key Sources of Estimation Uncertainty in the Financial Statements of Companies in Nigeria. J Finance Account. 2019;7(1):22-31. doi: 10.11648/j.jfa.20190701.14

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@article{10.11648/j.jfa.20190701.14,
  author = {Clement Chiahemba Ajekwe and Adzor Ibiamke},
  title = {Disclosure of Critical Accounting Judgments and Key Sources of Estimation Uncertainty in the Financial Statements of Companies in Nigeria},
  journal = {Journal of Finance and Accounting},
  volume = {7},
  number = {1},
  pages = {22-31},
  doi = {10.11648/j.jfa.20190701.14},
  url = {https://doi.org/10.11648/j.jfa.20190701.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20190701.14},
  abstract = {This paper performs a thematic survey of published financial statements of 17 consumer goods companies listed on the Nigerian Stock Exchange (NSE) to investigate their level of compliance with regulatory requirements regarding disclosure of critical accounting judgments and major sources of estimation uncertainties in their financial statements. High quality disclosures in this area enable users to assess the quality of managements accounting policy decisions and the likelihood of future changes in the amounts appearing in the financial statements in a way that generic disclosures do not. Data was collected from the annual reports and accounts of the sampled companies in the financial reporting year ended in 2017. Using descriptive statistics and content analysis, it was found that firms provide some disclosures, but the information is not sufficiently informative to give users meaningful insights. Overall, the level of disclosure fell short of the intentions of the relevant regulatory requirements. The findings suggest that in addition to the guidance in the IFRS illustrative examples, it may be necessary to train accountants and auditors in Nigeria on disclosing accounting critical judgments and key sources of estimation uncertainties in compliance with regulatory intentions and requirements thereby increasing the informational value of these disclosures in financial reports.},
 year = {2019}
}

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TY  - JOUR
T1  - Disclosure of Critical Accounting Judgments and Key Sources of Estimation Uncertainty in the Financial Statements of Companies in Nigeria
AU  - Clement Chiahemba Ajekwe
AU  - Adzor Ibiamke
Y1  - 2019/05/11
PY  - 2019
N1  - https://doi.org/10.11648/j.jfa.20190701.14
DO  - 10.11648/j.jfa.20190701.14
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 22
EP  - 31
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20190701.14
AB  - This paper performs a thematic survey of published financial statements of 17 consumer goods companies listed on the Nigerian Stock Exchange (NSE) to investigate their level of compliance with regulatory requirements regarding disclosure of critical accounting judgments and major sources of estimation uncertainties in their financial statements. High quality disclosures in this area enable users to assess the quality of managements accounting policy decisions and the likelihood of future changes in the amounts appearing in the financial statements in a way that generic disclosures do not. Data was collected from the annual reports and accounts of the sampled companies in the financial reporting year ended in 2017. Using descriptive statistics and content analysis, it was found that firms provide some disclosures, but the information is not sufficiently informative to give users meaningful insights. Overall, the level of disclosure fell short of the intentions of the relevant regulatory requirements. The findings suggest that in addition to the guidance in the IFRS illustrative examples, it may be necessary to train accountants and auditors in Nigeria on disclosing accounting critical judgments and key sources of estimation uncertainties in compliance with regulatory intentions and requirements thereby increasing the informational value of these disclosures in financial reports.
VL  - 7
IS  - 1
ER  -

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Author Information

Clement Chiahemba Ajekwe

Department of Accounting, Faculty of Management Sciences, Benue State University, Makurdi, Nigeria
Adzor Ibiamke

Department of Accounting, Faculty of Management Sciences, Benue State University, Makurdi, Nigeria

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APA Style

Clement Chiahemba Ajekwe, Adzor Ibiamke. (2019). Disclosure of Critical Accounting Judgments and Key Sources of Estimation Uncertainty in the Financial Statements of Companies in Nigeria. Journal of Finance and Accounting, 7(1), 22-31. https://doi.org/10.11648/j.jfa.20190701.14

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ACS Style

Clement Chiahemba Ajekwe; Adzor Ibiamke. Disclosure of Critical Accounting Judgments and Key Sources of Estimation Uncertainty in the Financial Statements of Companies in Nigeria. J. Finance Account. 2019, 7(1), 22-31. doi: 10.11648/j.jfa.20190701.14

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AMA Style

Clement Chiahemba Ajekwe, Adzor Ibiamke. Disclosure of Critical Accounting Judgments and Key Sources of Estimation Uncertainty in the Financial Statements of Companies in Nigeria. J Finance Account. 2019;7(1):22-31. doi: 10.11648/j.jfa.20190701.14

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@article{10.11648/j.jfa.20190701.14,
  author = {Clement Chiahemba Ajekwe and Adzor Ibiamke},
  title = {Disclosure of Critical Accounting Judgments and Key Sources of Estimation Uncertainty in the Financial Statements of Companies in Nigeria},
  journal = {Journal of Finance and Accounting},
  volume = {7},
  number = {1},
  pages = {22-31},
  doi = {10.11648/j.jfa.20190701.14},
  url = {https://doi.org/10.11648/j.jfa.20190701.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20190701.14},
  abstract = {This paper performs a thematic survey of published financial statements of 17 consumer goods companies listed on the Nigerian Stock Exchange (NSE) to investigate their level of compliance with regulatory requirements regarding disclosure of critical accounting judgments and major sources of estimation uncertainties in their financial statements. High quality disclosures in this area enable users to assess the quality of managements accounting policy decisions and the likelihood of future changes in the amounts appearing in the financial statements in a way that generic disclosures do not. Data was collected from the annual reports and accounts of the sampled companies in the financial reporting year ended in 2017. Using descriptive statistics and content analysis, it was found that firms provide some disclosures, but the information is not sufficiently informative to give users meaningful insights. Overall, the level of disclosure fell short of the intentions of the relevant regulatory requirements. The findings suggest that in addition to the guidance in the IFRS illustrative examples, it may be necessary to train accountants and auditors in Nigeria on disclosing accounting critical judgments and key sources of estimation uncertainties in compliance with regulatory intentions and requirements thereby increasing the informational value of these disclosures in financial reports.},
 year = {2019}
}

Copy | Download

TY  - JOUR
T1  - Disclosure of Critical Accounting Judgments and Key Sources of Estimation Uncertainty in the Financial Statements of Companies in Nigeria
AU  - Clement Chiahemba Ajekwe
AU  - Adzor Ibiamke
Y1  - 2019/05/11
PY  - 2019
N1  - https://doi.org/10.11648/j.jfa.20190701.14
DO  - 10.11648/j.jfa.20190701.14
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 22
EP  - 31
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20190701.14
AB  - This paper performs a thematic survey of published financial statements of 17 consumer goods companies listed on the Nigerian Stock Exchange (NSE) to investigate their level of compliance with regulatory requirements regarding disclosure of critical accounting judgments and major sources of estimation uncertainties in their financial statements. High quality disclosures in this area enable users to assess the quality of managements accounting policy decisions and the likelihood of future changes in the amounts appearing in the financial statements in a way that generic disclosures do not. Data was collected from the annual reports and accounts of the sampled companies in the financial reporting year ended in 2017. Using descriptive statistics and content analysis, it was found that firms provide some disclosures, but the information is not sufficiently informative to give users meaningful insights. Overall, the level of disclosure fell short of the intentions of the relevant regulatory requirements. The findings suggest that in addition to the guidance in the IFRS illustrative examples, it may be necessary to train accountants and auditors in Nigeria on disclosing accounting critical judgments and key sources of estimation uncertainties in compliance with regulatory intentions and requirements thereby increasing the informational value of these disclosures in financial reports.
VL  - 7
IS  - 1
ER  -

Copy | Download