Nigerian small and medium sized enterprises (SMEs) can ease the process of complying with International Financial Reporting Standards (IFRS) by putting in place a robust accounting software package designed for today’s demanding regulatory environment. That’s according to Blessing Mate, regional manager for West Africa at Sage Pastel International, who says that automation of accounting processes through a compliant software package can help businesses to more easily produce the new reports that IFRS requires from them.
IFRS is a set of international accounting standards that defines how particular transactions and events should be reported in financial statements. Publicly Listed and Significant Public Interest Entities in Nigeria were meant to comply by 1 January 2012, while other public interest entities were given a deadline of 1 January 2013.
Nigeria’s government has mandated that all Nigerian businesses comply with the global standard, with SMEs given until 1 January 2014 to comply. This essentially means SMEs must produce IFRS based financial statements for the year ending 31 December 2014.
IFRS makes a global comparison of financial statements for companies easier, bringing more transparency, more reliable disclosure and a better quality of financial reporting to the market. It also reduces accounting complexity and offers a range of processes and cost efficiencies to businesses.
Says Mate: “Nigeria is the second country in Africa to adopt IFRS, behind South Africa. It is a great move for the country since it will enhance international perceptions of financial reporting in Nigeria and grow investor confidence in Nigerian companies. However, the standard does demand a range of changes to companies’ accounting processes and systems if they are to comply.”
“To comply with IFRS, companies will need to capture data and information that were not required for statutory reporting in the past. Some of this information will then also be processed and reported differently. As such, companies may need to do calculations, consolidations and reports they did not do in the past,” says Mate.
“The need for additional disclosure information will drive changes to many existing reports,” Mate adds. “This will be particularly burdensome for companies that do not have a proper accounting system in place, and instead rely on spreadsheets and manual methods to keep track of their financials.”
Mate says that Sage Pastel’s product range has features and functionality to help ease the transition to IFRS. It is also kept up to date with the latest relevant local laws and regulations in Nigeria to help businesses become and remain compliant.
“Companies will face many challenges as they switch over to IFRS—including training staff and coming to grips with new definitions,” says Mate. “But our software is already prepared for the switch and includes a range of configuration options for IFRS. It can help any organisation to save time and money in facing what is the biggest change in Nigeria’s accounting landscape for years.”
