Effects of IFRS adoption on the financial statements of Nigerian listed entities: the case of oil and gas companies

On 28 July 2010, the Nigerian Federal Executive Council approved January 1, 2012 as the effective date for the convergence of Nigerian Statement of Accounting Standards (SAS) or Nigerian GAAP (NG-GAAP) with International Financial Reporting Standards (IFRS). By this pronouncement, all publicly listed companies and significant public interest entities in Nigeria were statutorily required to issue IFRS based financial statements for the year ended December, 2012. This study investigates the impact of the adoption of IFRS on the financial statements of Nigerian listed Oil and Gas entities using six years of data which covers three years before and three years after IFRS adoption in Nigeria and other African countries. First, the study evaluates the impact of IFRS adoption on the Exploration and Evaluation (E&E) expenditures of listed Oil and Gas companies. Second, it examines the impact of IFRS adoption on the provision for decommissioning of Oil and Gas installations and environmental rehabilitation expenditures. Third, the study analyses the impact of the adoption of IFRS on the average daily Crude Oil production cost per Barrel. Fourth, it examines the extent to which the adoption and implementation of IFRS affects the Key Performance Indicators (KPIs) of listed Oil and Gas companies. The study further explores the impact of IFRS adoption on the contractual relationships between Nigerian Government and Oil and Gas companies in terms of Joint Ventures (JVs) and Production Sharing Contracts (PSCs) as it relates to taxes, royalties, bonuses and Profit Oil Split. A Paired Samples t-test, Wilcoxon Signed Rank test and Gray’s (Gray, 1980) Index of Conservatism analyses were conducted simultaneously where the accounting numbers, financial ratios and industry specific performance measures of GAAP and IFRS were computed and analysed and the significance of the differences of the mean, median and Conservatism Index values were compared before and after IFRS adoption. Questionnaires were then administered to the key stakeholders in the adoption and implementation of IFRS and the responses collated and analysed. The results of the analyses reveal that most of the accounting numbers, financial ratios and industry specific performance measures examined changed significantly as a result of the transition from GAAP to IFRS. The E&E expenditures and the mean cost of Crude Oil production per barrel of Oil and Gas companies increased significantly. The GAAP values of inventories, GPM, ROA, Equity and TA were also significantly different from the IFRS values. However, the differences in the provision for decommissioning expenditures were not statistically significant. Gray’s (Gray, 1980) Conservatism Index shows that Oil and Gas companies were more conservative under GAAP when compared to the IFRS regime. The Questionnaire analyses reveal that IFRS based financial statements are of higher quality, easier to prepare and present to management and easier to compare among competitors across the Oil and Gas sector but slightly more difficult to audit compared to GAAP based financial statements. To my knowledge, this is the first empirical research to investigate the impact of IFRS adoption on the financial statements of listed Oil and Gas companies. The study will therefore make an enormous contribution to academic literature and body of knowledge and void the existing knowledge gap regarding the impact and implications of IFRS adoption on the financial statements of Oil and Gas companies.

Optimization of aqueous extraction conditions for the recovery of phenolic compounds and antioxidants from lemon pomace

The aim of this study was to optimize the aqueous extraction conditions for the recovery of phenolic compounds and antioxidant capacity of lemon pomace using response surface methodology. An experiment based on Box–Behnken design was conducted to analyse the effects of temperature, time and sample-to-water ratio on the extraction of total phenolic compounds, total flavonoids, proanthocyanidins and antioxidant capacity. Sample-to-solvent ratio had a negative effect on all the dependent variables, while extraction temperature and time had a positive effect only on TPC yields and ABTS antioxidant capacity. The optimal extraction conditions were 95 oC, 15 min, and a sample-to-solvent ratio of 1:100 g/ml. Under these conditions, the aqueous extracts had the same content of TPC and TF as well as antioxidant capacity in comparison with those of methanol extracts obtained by sonication. Therefore these conditions could be applied for further extraction and isolation of phenolic compounds from lemon pomace.

Impact of different solvents on the recovery of bioactive compounds and antioxidant properties from lemon (Citrus limon L.) pomace waste

The effects of different solvents on the recovery of (i) extractable solids (ES), (ii) total phenolic compounds (TPC), (iii) total flavonoid content (TFC), (iv) vitamin C, and (v) antioxidant activity from lemon pomace waste were investigated. The results revealed that solvents significantly affected the recovery of ES, TPC, TFC, and antioxidant properties. Absolute methanol and 50% acetone resulted in the highest extraction yields of TPC, whereas absolute methanol resulted in the highest extraction of TFC, and water had the highest recovery of vitamin C. 50% ethanol, and 50% acetone had higher extraction yields for TPC, and TFC, as well as higher antioxidant activity compared with their absolute solvents and water. TPC and TFC were shown to be the major components contributing to the antioxidant activity of lemon pomace.