STATE AGENCIES, INDUSTRIES REGULATIONS AND THE QUALITY OF ACCOUNTING PRACTICE IN NIGERIA

This study empirically investigates the impact of state agencies and industry regulations on the quality of accounting practice in Nigeria. A two stage approach in which the first stage was complemented by the second stage was adopted in carrying out the study. First, the study adopted a survey approach in which data were collected from users and compilers of  accounting information through questionnaire. Secondly, secondary data were collected and analyzed. The data were analyzed and results estimated using student’s t-test, Analysis of Variance (ANOVA), Ordinary Least Square Regression as well as Panel Data Estimation technique. For the t -test, the four-year period before and after the enactment of the Nigeria  Accounting Standards Board Act, 2003 (1999-2002) and (2004-2007) were compared. The ANOVA was used for the multiple comparisons of the industrial sectors included in the study. Multiple regression analysis was used to analyze the impact of stage agencies and industry regulation as well as the influence of industry attributes on the quality of accounting practice.  The panel data estimation was used to enhance the results obtained from the multiple regression analysis. Though results showed that the impact of state agencies and industry regulations was fairly significant and positive for five of the seven agencies and regulations tested, however, significant dysfunctional behaviour was observed in the quality of accounting practice.  The findings also showed that the difference in the quality of accounting practice was significantly higher after the NASB, Act 2003 was enacted.  Similarly, significant differences were observed among the industrial sectors in terms of quality of accounting practice. The findings further revealed that the size of company and the sign of earnings were the major industry attributes that influence the overall quality of accounting practice.  The major implication of the study is that regulations are not enough to ensure that the quality of accounting practice is high in Nigeria. While strengthening existing regulations, it is recommended that  emphasis should be focused more on the qualities possessed by those who prepare financial statements and attest to them.  This has the potential of reducing  dysfunctional behaviour which is prevalent even in the presence of strict regulations and harsh penalties.

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