Which accounting standards a Nigerian SME follows
Why Nigerian SMEs apply IFRS for SMEs while public interest entities use full IFRS, when sustainability reporting arrives, and what it means for books.
By Achekam · · 4 min read · For Running a business businesses in Nigeria
Nigerian owners rarely choose their accounting standards. The question arrives with the first set of annual accounts, when the accountant mentions IFRS for SMEs and moves on. Yet the standard matters well beyond the accountant's office. It decides how your assets, revenue and obligations are measured in the statements your bank reads, the statements behind your tax return, and the statements your auditor signs.
In Nigeria the position is unusually clear. Listed and other publicly accountable entities use full IFRS. SMEs are required to use IFRS for SMEs. This article explains who sets those requirements, what is coming on sustainability reporting, and what the requirement means for the books you keep through the year.
Full IFRS for listed and publicly accountable entities
IFRS has been mandatory for Nigerian listed and other publicly accountable entities since 1 January 2012. For a company whose shares are listed, or which holds money for the public as a bank or insurer does, full IFRS is the standard, and the accounts are correspondingly detailed.
The public sector follows a different route: accrual IPSAS under the FRC's roadmap. That matters to a private business only when it reports to, or is owned by, a government body.
IFRS for SMEs for smaller companies
Nigerian SMEs are required to apply IFRS for SMEs. Note the word "required": in Nigeria this is not simply an option a smaller company may take up, but the standard it is expected to use.
The research behind this article did not find the criteria that define an SME for this purpose. In practice, your accountant will decide which side of the line your company falls on, and should tell you why. Ask, and write the answer down, because it shapes every set of statements that follows.
The IFRS Foundation's Nigeria jurisdiction profile explains how Nigeria uses IFRS: required for public interest entities, phased in from 2012 to 2013; the IFRS for SMEs Standard required for SMEs from 2014; and the FRC's authority to set financial reporting standards.
The FRC sets the standards
The Financial Reporting Council of Nigeria sets accounting and auditing standards in Nigeria, under the FRC Act 2011 as amended in 2023. The same body keeps the register of audit and assurance firms that your auditor must appear on. If your statements will be audited, the checks to make on the firm are in checking your Nigerian auditor is on the FRC register.
Sustainability reporting on the roadmap
Under the FRC's amended roadmap, IFRS sustainability reporting becomes mandatory:
- for Nigerian public interest entities, for periods beginning on or after 1 January 2028;
- for SMEs, from 1 January 2030.
Assurance on the sustainability reports starts from the third reporting year, and governments report from 1 January 2028 under the public-sector equivalent.
For an SME, 2030 leaves time, but not unlimited time. Larger customers that report earlier may ask suppliers for information before then, and some of what a sustainability report needs (energy use, for example) is easier to collect from the start than to reconstruct. Ask your accountant whether there is anything worth recording now.
Books that support the year-end statements
Whichever standard applies, your accountant builds the statements from your books. In Achekam, a business's management accounts give an income statement for a chosen period beside the period before, and a balance sheet at period end, both added up from the business's own journals and exportable as PDF or CSV. That is a good base for the year-end work. Two features need to be understood before the handover:
| What you see in Achekam | What it means at year end |
|---|---|
| The year-to-date preset starts on 1 January | If your year ends in another month, set the dates yourself to match it |
| No year-end closing entry: profit shows as its own line on the balance sheet | Profit is not closed to retained earnings in the books; your accountant carries it into equity in the statements |
Neither is a problem if both sides know about it. Both can cause confusion if the accountant expects closed books and receives open ones.
The rest of the year-end quality comes from habits rather than settings. Reconcile the bank every month rather than once a year. Record supplier bills when they arrive, not when they are paid, so that what you owe at the year end is visible. Keep a simple register of the equipment and vehicles the business owns, with the invoices. Note anything unusual as it happens, such as a disputed invoice or a loan from a director, so that the accountant hears about it from you rather than finding it. Each of these feeds a line or a note in statements prepared under IFRS for SMEs, and each is far cheaper to keep during the year than to rebuild at the end of it.
Working with your accountant on the year-end set
If your accountant also uses Achekam, appoint the firm from inside your workspace, by its Achekam address or firm code. You choose its role (accountant, auditor, tax practitioner, payroll provider or adviser) and its access level, and the firm accepts or declines. Its people then work in your own books rather than a copy sent by e-mail.
Agree the year-end set in writing:
- The standard the statements will follow, and the reason.
- The year's exact start and end dates.
- Reconciled bank accounts to the year-end date.
- Schedules for fixed assets, loans, accruals, prepayments and stock.
- Who signs or attests the statements.
- The deadline the statements must meet, starting with the annual tax return.
That last item is often the real driver. Every Nigerian company files an annual return, and the statements go with it; see why a small Nigerian company still files a tax return.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
