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.

The importance of improving diet in 'Securing Scotland's Health': exploring differences in dietary intake between Scotland and England

Background: Various factors have been investigated to account for the higher premature death rates in Scotland compared to England. Higher levels of deprivation in Scotland provide a partial explanation for these differences but recent work comparing areas of the UK with similar deprivation profiles and low life expectancy has shown that this is not the only reason. One hypothesis yet to be tested adequately is differences in diet and nutrition. Objective: To conduct a comparative analysis of dietary intake between Scotland and England using pooled food purchase data from the Living Costs and Food Survey (LCFS) from 2001 to 2012 and to assess differences in equivalised income quintiles (controlling for survey year, age of household reference person, and age household reference person left full-time education). Results: Lower intakes of fruit and vegetables, oil rich fish, fibre, vitamin A, folate, vitamin C and vitamin D and higher intakes of red and processed meat, whole milk, butter, savoury snacks, confectionary, soft drinks, saturated fat and NMES (added sugar and sugar in fruit juice), sodium and alcohol were found for Scotland compared to England. Differences between Scotland and England were higher for those on lower incomes for dietary components known to be related to health outcomes. For example fruit consumption was 14g/day lower for the lowest income quintile compared to 4 g/day lower in the highest quintile for Scotland versus England. Conclusions: A poorer diet in Scotland compared to England, particularly among disadvantaged groups, is likely to be one of the reasons for excess mortality. The current evidence on the continued poor diet in Scotland, particularly in disadvantaged groups, should not be ignored. Identifying effective, culturally appropriate approaches to improve diet across the population and notably in the most deprived areas needs further investment. Funded by NHS Health Scotland. Data provided by DEFRA, ONS and the UK Data Archive.