A person who stays aware of the laws, rules, and regulations guiding their business, is very unlikely to be taken by surprise or penalized for wrongdoing. In Nigeria’s finance industry where rules are constantly being revised and updated, it is important to know and understand the accounting standards and tax regulations and how they affect your enterprise. These compliance updates include updates on IFRS standards, tax regulations and more have been instituted to improve transparency and support the growth of businesses across Nigeria. 

To learn about the latest compliance updates and get the knowledge that will help you know and understand the latest compliance requirements, keep reading.

1. Comply with the latest IFRS standards –

Make sure your enterprise’s financial reporting aligns with the latest International Financial Reporting Standards. By doing this, you and your team promote transparency and comparability. Some of the IFRS standards that are applicable in 2024 are as follows-

1. Amendments to IFRS 16 – Leases on Sale and Leaseback:
   • These amendments address how enterprises should account for variable lease payments in sale and leaseback transactions. 
   • Effective from January 1, 2024, the amendment clarifies the stature of lease liabilities and the recognition of gains or losses related to retained rights of use​ (Viewpoint)​​ (IAS Plus)​.
2. Amendments to IAS 1 – Classification of Liabilities:
   • These amendments clarify the classification of liabilities as current or non-current based on an entity’s right to defer settlement for at least 12 months after the reporting period. They also address how covenants affect this classification. Effective from January 1, 2024​ (Viewpoint)​​ (IAS Plus)​​ (KPMG)​.
3. Amendments to IAS 7 and IFRS 7 – Supplier Finance:
   • New disclosure requirements have been put in place to enhance transparency around supplier finance arrangements, impacting how enterprises report their liabilities, cash flows, and liquidity risks. These amendments were made effective from January 1, 2024​ (Viewpoint)​.
4. Amendments to IAS 21 – Lack of Exchangeability:
   • These amendments guide how to handle transactions in foreign currencies that are not exchangeable into another currency at the measurement date. Effective January 1, 2025, they offer a clearer framework for dealing with foreign exchange issues​ (Viewpoint)​.
5. IFRS 18 – Presentation and Disclosure in Financial Statements:
   • Effective January 1, 2027, new requirements to improve the structure and transparency of financial statements have been introduced by IFRS 18. This also includes the introduction of three defined categories for income, expenses, and enhanced disclosures for management-defined performance measures​ (IFRS)​.

How does this concern me and my organization you may wonder. Here are some of the key ways the latest IFRS amendments will impact you as a finance professional:

1. Enhanced Financial Reporting and Transparency:
   • Amendments to IFRS 16 and IAS 1: These changes will require Nigerian companies to adjust their accounting practices for lease transactions and liability classifications. As a finance professional, you have to guarantee that your financial statements accurately reflect these new amendments. (Viewpoint)​​ (IAS Plus)​​ (KPMG)​.
   • IFRS 18: This new standard will introduce more structure and transparency in financial statements by clearly defining categories for income and expense. It will also require detailed disclosures for management-defined performance measures. This will help investors analyze the financial performance of Nigerian companies better.​ (IFRS)​.
2. Improved Decision-Making and Investor Confidence:
   • With clearer and more detailed reporting standards in place, Nigerian enterprises can provide more reliable information to investors. This increase in transparency can enhance investor confidence and potentially attract more investment into Nigerian markets​ (Viewpoint)​​ (IFRS)​.
3. Compliance and Training Needs:
   • Compliance Efforts: Your organization needs to invest in compliance efforts and training to meet the updated IFRS requirements. This includes but is not limited to updating accounting systems, revising financial reporting processes, and making sure all relevant financial data is properly captured and reported.
   • Training for Finance Professionals: Your finance and non-finance professionals in Nigeria will need to be trained to understand and implement the new standards. This will involve staying updated on the latest changes, understanding their implications, and applying them correctly in financial reporting​ (Viewpoint)​​ (KPMG)​.
4. Impact on Supplier Finance and Foreign Currency Transactions:
   • Supplier Finance (IAS 7 and IFRS 7 Amendments): The recent disclosure requirements will affect how your company reports its supplier finance arrangements. Finance professionals will need to ensure that these arrangements are reported transparently, reflecting their true impact on liquidity and financial health​ (Viewpoint)​.
   • Foreign Currency Transactions (IAS 21 Amendment): Companies dealing with foreign currencies that are not easily exchangeable will need to apply the new guidance on handling such transactions. This will require careful assessment and accurate reporting to ensure compliance with the updated standards​ (Viewpoint)​.

Overall, these IFRS updates will require Nigerian finance professionals and enterprises to enhance their financial reporting processes, invest in compliance and training, and provide more transparent and reliable financial information. This will ultimately lead to improved financial management and greater trust among investors and stakeholders.

2. Implement changes in tax regulations and IFRS standards-

Keep abreast of new tax laws and incorporate them into your financial practices. Compliance avoids penalties and legal issues.

The Federal Inland Revenue Service (FIRS) has introduced significant updates in 2024, including:

1. Digital Services Tax (Effective January 1, 2024): A new tax on digital services to ensure that companies providing digital services pay their fair share of taxes in Nigeria.
2. Increased VAT rate (Effective April 1, 2024): The VAT rate has been increased from 7.5% to 10%, impacting all businesses. Companies must update their pricing and accounting systems to reflect this change.
3. Tax Incentives for SMEs (Effective March 1, 2024): New incentives have been introduced to support Small and Medium Enterprises (SMEs), including tax holidays and reduced corporate tax rates.
4. E-filing Requirements (Effective February 1, 2024): Mandatory electronic filing of tax returns has been implemented to improve efficiency and compliance. Ensure your team is trained on the new e-filing system.
5. Updated Transfer Pricing Rules (Effective May 1, 2024): The rules governing transactions between related entities have been revised to ensure fair taxation and compliance with international standards​ (Viewpoint)​​ (IAS Plus)​​ (KPMG)​​ (IFRS)​.

3. Ensure Accurate Financial Reporting

Accurate financial reporting is the cornerstone of regulatory compliance and stakeholder trust. In 2024, Nigerian companies must double-check all financial statements for errors and ensure they meet the latest standards. Implementing robust internal controls and regular audits can help identify discrepancies early and maintain the integrity of financial reports. This is particularly crucial with the increased scrutiny from regulatory bodies following the recent changes in tax and accounting standards.

4. Stay Updated on Anti-Money Laundering Laws

Nigeria has introduced several updates to its anti-money laundering (AML) laws in 2024 to combat financial crime and enhance transparency. Key updates include:

• Enhanced Due Diligence: Companies are now required to conduct enhanced due diligence on all high-risk customers and transactions. This includes more rigorous identity verification and continuous monitoring.
• Reporting Suspicious Activities: The threshold for reporting suspicious activities has been lowered, requiring companies to be more vigilant and proactive in identifying and reporting potential money laundering activities.
• Training and Awareness: Companies must regularly train their employees on the latest AML laws and best practices. This ensures that all staff members are aware of the signs of money laundering and know how to report suspicious activities.
• Strengthened Penalties: Penalties for non-compliance have been increased significantly, emphasizing the importance of adhering to AML regulations. Companies found in violation may face substantial fines and legal consequences.

Finance professionals must stay informed about these updates and implement necessary measures to ensure compliance. Regularly reviewing and updating AML policies, conducting thorough risk assessments, and leveraging technology for monitoring can help companies stay ahead of regulatory requirements.

5. Train Your Team on Compliance Requirements

With the continuous evolution of accounting and tax regulations, ongoing training for finance teams is crucial. Regular training sessions help ensure that all team members are up-to-date with the latest compliance requirements and understand how to apply them in their daily work. This can involve:

• Workshops and Seminars: Organize workshops and seminars led by industry experts to discuss the latest updates and their implications for your business.
• E-learning Modules: Provide access to e-learning modules that cover various aspects of accounting standards, tax regulations, and compliance best practices.
• Internal Knowledge Sharing: Encourage internal knowledge-sharing sessions where team members can discuss recent changes and share insights on how to address compliance challenges effectively.

By investing in continuous learning and development, companies can build a knowledgeable and compliant finance team that can adeptly navigate the complexities of modern financial regulations.

Conclusion

Navigating compliance in Nigeria’s finance industry requires vigilance and proactive measures. The updates in IFRS standards, tax regulations, and anti-money laundering laws present both challenges and opportunities for businesses. 

By staying informed on IFRS standards and tax regulations, ensuring accurate financial reporting, implementing robust AML measures, and continuously training your team, you can maintain compliance and build a solid foundation for sustainable growth. Embrace these changes as a pathway to enhanced transparency, improved investor confidence, and long-term success for your business.

To get started with Duplo’s software solutions and improve financial visibility in your enterprise, click here.

References

Here are the comprehensive citations for all the publications referenced in the content:

1. IFRS – New IFRS Accounting Standard will aid investor analysis of companies’ financial performance. Retrieved from ifrs.org​ (IFRS)​.
2. KPMG – Q2 2024 new IFRS® Accounting Standards and amendments: Are you ready? Retrieved from kpmg.com​ (KPMG)​.
3. PwC – IFRS and US GAAP: similarities and differences. Retrieved from pwc.com​ (Viewpoint)​​ (IAS Plus)​.