Justification for IFRS in Sub-Sahara African Countries: A case of Multinational Corporations

Justification for IFRS in Sub-Sahara African Countries: A case of Multinational Corporations

Author by Dr. Samuel Olaoye

Journal/Publisher: Iiard International Journal Of Economics And Business Management.

Volume/Edition: 3

Language: English

Pages: 57 - 68

Abstract

This paper examined the justification for International Financial Reporting Services (IFRS) in Sub-Sahara African countries. We considered multinational corporations in Sub-Sahara African countries using Nigeria, Kenya and Ghana International Financial Reporting Standards (IFRS) adoption as our sample size among Sub-Sahara African countries. A desk review research approach was adopted in this study, as journals, articles and literature related this work was reviewed. The paper found that the adoption of IFRS by the African countries has enhancement multinational corporations operating in the region consolidation of financial statement less cumbersome, easier access to capital from the capital market, tax complications among their business operations from different geographical locations easier to manage. We found that adoption of IFRS generally makes it lot easier for financial reporting harmonization and uniformity in accounting measurement and treatments, meeting more disclosure requirements and dealing with information asymmetry problems for more reporting transparency. The paper found that most multinational corporations in an attempt to reduce their tax liabilities indulge in tax manipulations, illegal transfer pricing, export under-invoicing, export smuggling, tax-based erosion, and other practices of unrecorded outflows in form of capital flights from the natural rich African countries. The paper recommends that for easy and efficient implementation of the IFRS, African countries should carefully prepare workable regulatory environment, engage in manpower training, provision of adequate resources, provide required legal and strong institutional framework and regulatory support system to tackle pre and post IFRS adoption challenges while African governments should work in blocking leaking channel and the mechanisms that fuels capital flight.


Other Co-Authors