Compliance Level with IFRS 7 by Deposit Money Banks: Whither Nigeria

Article Information

Title: Compliance Level with IFRS 7 by Deposit Money Banks: Whither Nigeria

Authors: Taophic Olarewaju Bakare, Almustapha Alhaji Aliyu, Mustapha Jibrin Abdulkadir

Journal: Journal of Accounting and Finance in Emerging Economies (JAFEE)

HEC Recognition History

Category	From	To
Y	2024-10-01	2025-12-31
Y	2023-07-01	2024-09-30
Y	2021-07-01	2022-06-30
Y	2020-07-01	2021-06-30

Publisher: Center for Sustainability Research and Consultancy Pakistan

Country: Pakistan

Year: 2022

Volume: 8

Issue: 3

Language: English

DOI: 10.26710/jafee.v8i3.2390

Keywords: IFRS 7Compliance LevelDisclosure RequirementFinancial InstrumentProprietary Cost Theory

Abstract

Purpose: The study examines the compliance level with IFRS 7 by deposit money banks in Nigeria for the period between 2017-2020.
Design/Methodology/Approach: The study adopts an un-weighted disclosure index method to test the two hypotheses and using Qualitative Grading System (QGS) to rank the level of compliance with the aid of explorative research design.
Findings: The study found that in average, the over-all compliance by DMBs at commencement year stood at 51.04% and this implies that as at the commencement year DMBs weakly complied with the requirements of IFRS 7.
Implications/Originality/Value: The study concluded that though DMBs in Nigeria do not totally comply with the provisions of IFRS 7 throughout the study period yet, there have been significant improvements in the level of compliance with the standard disclosure in the annual reports of DMBs in Nigeria. It’s therefore recommending that banks should strive to ensure full compliance with the standards as this will add more confidence in the economy. This must be done with the enforcement of regulatory bodies. The FRCN should intensify its mandate to ensure banks strictly comply with the provisions of IFRS.

Disclaimer: The following sections are produced through an intensive multi-stage analytical pipeline developed by DefinePK, utilizing advanced natural-language processing, domain-specific knowledge models, and automated cross-referencing systems. Despite the rigor and computational effort involved, the generated summary may still contain inaccuracies or incomplete interpretations. Users are strongly advised to verify all critical information against the original paper and its authoritative sources.

Research Objective

To examine the compliance level with IFRS 7 by deposit money banks in Nigeria for the period between 2017-2020 and to assess the levels of disclosure improvements by these banks.

Methodology

The study employed an explorative research design using secondary data from the financial statements of sampled deposit money banks (DMBs) in Nigeria from 2017 to 2020. An un-weighted disclosure index method was used to test hypotheses, and a Qualitative Grading System (QGS) was applied to rank compliance levels. A scoring system assigned 1 for met requirements and 0 for unmet requirements, with compliance scores calculated as a percentage of total applicable disclosure requirements.

Methodology Flowchart

                        graph TD
    A["Collect Secondary Data from DMB Financial Statements 2017-2020"] --> B["Apply Un-weighted Disclosure Index"];
    B --> C["Calculate Compliance Scores using Scoring System"];
    C --> D["Rank Compliance Levels using Qualitative Grading System"];
    D --> E["Analyze Findings and Draw Conclusions"];

Discussion

The study found that while Nigerian DMBs have not achieved total compliance with IFRS 7, there has been a notable upward trend in their disclosure practices. This improvement is attributed to the increasing global integration of financial markets and the regulatory push for greater transparency. The findings suggest that banks are increasingly recognizing the importance of comprehensive financial instrument disclosures for building confidence in the economy. However, persistent weaknesses in specific disclosure areas highlight the need for continued regulatory oversight and enforcement.

Key Findings

The overall compliance level by DMBs in Nigeria at the commencement year (2017) was 51.04%, indicating weak compliance. Significant improvements in compliance were observed over the study period, with the average compliance level reaching 70.69% by 2020. Statements of financial position (R1) and Nature and extent of risk from financial instruments (R4) were identified as areas with lower compliance, while Statements of Comprehensive Income (R2) and Other Disclosures (R3) generally showed stronger compliance, particularly in later years.

Conclusion

Deposit Money Banks in Nigeria have shown significant progress in complying with IFRS 7 over the period 2017-2020, moving from weak compliance to semi-strong compliance. Despite this improvement, full compliance has not yet been achieved. The study emphasizes the need for banks to ensure complete disclosure and for regulatory bodies to intensify their enforcement efforts to foster greater confidence in the Nigerian financial sector.

Fact Check

1. Compliance Level in 2017: The study found an average overall compliance of 51.04% by DMBs in Nigeria in 2017.
2. Number of Disclosure Items: In 2017, 154 disclosure checklists were applicable to DMBs in Nigeria, increasing to 173 in 2018 due to IASB reviews.
3. Compliance Level in 2020: The average compliance level for DMBs in Nigeria in 2020 was 70.69%.

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