COLLEGE OF BUSINESS

MSC IN DEVELOPMENT FINANCE

COURSE TITLE: MFD 012- FINANCIAL REPORTING & ACCOUNTABILITY

NAME: PETER MUTUI REG.NO: 21/08121

ASSIGNMENT: TERM PAPER

A Critique of an already Published Paper (in a Reputable Journal) in our Current

Specialization of Financial Reporting and Accountability

SUBMISSION DATE: 25TH JULY 2022

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TABLE OF CONTENTS

1. TITLE OF THE PAPER, AUTHOR, AND SOURCE OF PAPER...................................2

2. EXECUTIVE SUMMARY AND INTRODUCTION OF PAPER....................................2

3. CRITIQUES OF THE PAPER WITH SUPPORTING REFERENCES..........................3

4. CONCLUSIONS.....................................................................................................................7

5. RECOMMENDATIONS.......................................................................................................9

REFERENCES............................................................................................................................10

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1. TITLE OF THE PAPER, AUTHOR, AND SOURCE OF PAPER
Effects of COVID-19 Pandemic on Accounting and Financial Reporting in Nigeria, Anisere-
Hameed, R. A., European Journal of Accounting, Auditing, and Finance Research, 9(6), 50-63.

2. EXECUTIVE SUMMARY AND INTRODUCTION OF PAPER

A new disease-causing severe respiratory complication was identified in China towards the end
of December 2019. The disease was initially named by the World Health Organization (WHO)
Novel Coronavirus and its disease-causing virus was known as Severe Acute Respiratory
Syndrome Coronavirus 2 (SARS-CoV-2). On 11-02-2020, WHO renamed the disease COVID-
19 following the advice from Food and Agriculture Organization (FAO) and World Organization
for Animal Health (WOIE).

The disease was spreading like a wildfire, creating unheard-before levels of anxiety and
unpredictability, and upsetting both businesses and health care systems. This led WHO to declare
the Covid-19 outbreak a global pandemic on March 11, 2020. On February 27, 2020, Nigerian
Authorities reported the first case of Covid-19 (NCDC,2020). Before that, on January 31, 2020, a
Coronavirus Preparedness Group (CPG) was established to address the pandemic.

Similar to the rest of the globe, Nigeria faced an unprecedented threat from Covid-19, which had
a big impact on the regulations governing accounting and financial reporting. However, not all
corporate entities in Nigeria saw the same impact on financial reporting, which made it necessary
to determine how the Covid-19 pandemic influenced the handling of accounting transactions and
financial reporting.

De Vito & Gómez (2020) established that the Covid-19 epidemic will cause many firms to run
out of money within two years based on the body of existing literature. Additionally, the
interruptions affected not just enterprises but also all aspects of life, including economics,
education, and health, with consequent social upheavals (Theophilus, et al.2020)

The relationship between the Covid-19 pandemic and the financial reporting structure in Nigeria
was explained in this paper using the Attribution Theory (AT) and Economic Power Theory
(EPT). When a negative event occurs, the AT explains how people behave and think, whereas
the EPT discusses the supremacy and influence of strong economies during a crisis (Rego, 2003).

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Following the Covid-19 outbreak, numerous countries implemented a wide range of containment
measures, including restricting social interactions and rerouting the movement of people and
goods. This had detrimental repercussions on the global supply chain networks in all economic
sectors (Rephann,2020). Nigeria's Financial Reporting Council (FRC) intervened to direct the
requirements for financial reporting due to the issue's emergence (PwC, 2020).

The cross-sectional technique was used as the study strategy in this paper. This research
methodology was chosen because it allowed for quantitative analysis of the Covid-19 epidemic.
To achieve equitable representation, the study used secondary financial data from diverse
economic sectors.

The reporting of events that occurred after the reporting period, interim financial reporting, going
concern, and changes in Expected Credit Losses (ECL) were the study's dependent variables, and
they were evaluated before and after the Covid-19 era according to FRC rules. The data analysis
employed both the Independent t-test and the Logit Binary Regression Model (LBRM).

The research showed that all dependent variables were significantly and adversely affected by
Covid-19. Furthermore, the Covid-19 epidemic had an impact on those who prepared financial
statements and reports. In light of the uncertainties surrounding the Covid-19 epidemic, this led
to doubt and a decline in the quality of financial reporting.

The pandemic was still ongoing when this study was conducted, and it made recommendations
for additional research to determine the correlation between financial reporting and the
pandemic.

3. CRITIQUES OF THE PAPER WITH SUPPORTING REFERENCES

The impact of Covid-19 on financial reporting and disclosures has been the subject of numerous
research. Italy's financial accounts were the subject of a study on Covid-19 by Tibiletti et al.
(2021). They backed Anisere-(2021) Hameed's conclusion that the Covid-19 pandemic had
negative effects on all economic sectors.

Tibiletti et al. (2021), on the other hand, evaluated the impact of Covid-19 on financial reporting
and disclosures in five distinct areas, namely financial statements data, disclosure, policy,
corporate social responsibility, and audit. This agreement was made with Anisere-Hameed

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(2021), whose evaluation was based on the reporting of events that occurred after the reporting
period, interim financial reporting, going concern, and adjustments to Expected Credit Losses
(ECL).

Tibiletti et al. (2021) noted that various tactics and policies were developed by various nations to
lessen the effects of Covid-19 about the policy. These measures were designed to counteract the
unfavorable impacts of Covid-19 and increase liquidity through loan rescheduling and tax
deferment. From the standpoint of Corporate Social Responsibility (CSR), Ekren et al. (2021)
investigated sustainability throughout the crisis and found that workers were motivated to keep
working while ensuring social isolation Kraus et al (2020).

Tibiletti et al. (2021) analyzed the statistics on cash and cash equivalents before and after the
Covid-19 era in terms of financial statements. According to the analysis, revenues were down,
assets were depreciating, and operating costs were rising, which is in line with Anisere-findings.
Hameed's (2021). Kaka (2021) noted that there were difficulties in auditing financial statements
and that more attention was required.

There was a focus on the disclosure of quantitative and qualitative information before and after
the Covid-19 epidemic in both investigations by Anisere-Hameed (2021) and Tibiletti et al
(2021). Tibiletti et al. (2021) used financial statement content analysis in their data analysis. The
greater focus on disclosing the impact of Covid-19 in each consecutive reporting period was a
significant finding.

The Covid-19 crisis was referred to as the worst crisis since the financial crisis of 2007–2009 in
another study by Muqattash, et al. (2022), and its detrimental consequences were seen on a
global scale and in all economic sectors. As investors want more trustworthy disclosure amid a
pandemic, the accounting, and financial framework has gained attention because it is still unclear
how much the epidemic damaged the global economy. In the years to come, this uncertainty will
continue to present difficulties in various reporting areas, including fair value measures,
insurance recoveries, and going concern. The auditing procedures that have historically relied on
the physical gathering of evidence are not exempt either. The question is whether there are any
additional, effective, efficient, and risk-based auditing methods.

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As a result, Muqattash et al. (2022) set out to determine how Covid-19 will affect UAE-specific
IFRS reporting and accounting standards. The study's methodology, Principal Component
Analysis (PCA), was novel at the time. Establishing the effect of Covid-19 on market value, net
income and financial position, financial reporting disclosure, a firm's interaction with its
stakeholders, and off-balance sheet items were the main goals of the study.

The investigation found that the Covid-19 epidemic significantly adversely affected each
parameter. As a result, they suggested that the notes to the financial statements need to contain
more information. Due to the uncertainty around how Covid-19 would continue to impact
companies and reporting requirements, accounting professionals were additionally recommended
to be more attentive in their analysis of financial statements.

The Covid-19 pandemic had an impact on both financial and non-financial institutions' reporting
structures. Though other studies (Anisere-Hameed, 2021; Tibiletti et al, 2021; and Muqattash, et
al., 2022) called for modifications to the reporting rules, none of them were explicit on the
methods and accounting processes for minimizing risks during pandemics like Covid-19.

Ozili (2021) noted the paucity of research on the role of the accounting profession in times of
crisis. Laux & Leuz (2010) contend that the limited impact of accounting during the 2007–2009
financial crisis, when some assets were overvalued while they were empty cells, contributed to
the disaster. This happened as a result of the assets becoming distressed during the crisis and the
financial state of the business becoming skewed, overstating distressed assets. Ozili (2021)
argued that financial managers should be more creative without needing to loosen financial
reporting requirements at their discretion to address the issue of overstating assets during the
crisis. Fair value accounting, loss avoidance accounting, income smoothing, stimulus packages,
bailout funding, big-bath accounting, reducing expanding earnings management, and prudential
relaxation of accounting norms are the five accounting strategies that Ozili (2021) recommended
during the crisis.

Ozili (2021) stressed the necessity to reevaluate the importance of accounting practices in a crisis
as he gave his conclusion. Additionally, he suggested that additional research be done to
comprehend how pandemics like Covid-19 affect business accounting behavior.

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Financial disclosures are crucial since they show the true financial situation of the company,
according to Ailwan et al (2013). Another study examined the impact of Covid-19 on
Bangladesh's financial reporting and disclosure (FRD) practices using empirical evidence
Sultana, et al. (2021). The study highlighted that through FRD, it is possible to comprehend
current challenges and the risks associated with them that are influencing the business, the
macroeconomic environment in which the organization operates, and other key data for the
compilation of financial statements. As a result, even during times of crisis, disclosures are
crucial for making decisions. These crises might take the form of worldwide economic upheaval
and disruption, as was the case with the global financial crisis of 2006–2008, or they could take
the form of global pandemics, such as Covid-19. These crises cause social issues like rising
unemployment rates, worldwide corporate disruption, and slowed economic progress (McKibbin
and Fernando, 2020).

There are five components to every business endeavor, Sultana et al. (2021) noted in evaluating
the effect of Covid-19 on (FRD) practices in Bangladesh. They were employed as the
independent variables and included business operations, business value, financial aspects,
business contracts, and stakeholders.

In contrast to the studies discussed in this paper, the study evaluated the connection between
Covid-19 and financial reporting and disclosures using Legitimacy Theory (LT). This notion,
sometimes known as corporate social responsibility, contends that firms have a responsibility to
the society in which they operate (CSR). In this situation, CSR refers to an agreement between
the business and its community that requires it to develop and implement socially responsible
business practices. As a result, the business's legitimacy is determined by how the public
perceives it rather than by the actions it takes.

The theory contends that when it comes to accounting disclosure, firms function in a society with
a wide range of stakeholders, including the government, shareholders, lenders, employees, and
the general public. As a result, it is expected that corporate managers will act morally and
ethically by providing stakeholders with accurate accounting information so that they can make
educated judgments. This disclosure is crucial to prevent major scandals like the Enron and
Lehman Brothers and to make stakeholders aware of potential hazards that could affect their
decision-making.

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The relationship between Legitimacy Theory, the Covid-19 epidemic, and financial disclosure
was further explored by Sultana, et al. in 2021. The study confirmed, in line with other studies
(Anisere-Hameed, 2021; Tibiletti et al, 2021; and Muqattash, et al., 2022), that the pandemic
caused significant disruptions around the world, prompting interventions like travel bans,
economic lockdowns, social isolation, and the use of Personal Protective Equipment (PPEs) like
face masks in public places. The accounting and financial reporting procedures were also
affected, and it was growing increasingly worried that financial data would be short-term
misreported to provide a picture of financial health amid the pandemic. The stakeholders
demanded that financial information be made legitimate by disclosing the implications of the
pandemic on financial operations and reporting based on this uncertainty.

Questionnaires were used to gather primary data from professionals involved in auditing and
preparing financial information about the relationship between the pandemic and the five
constructs of business operations, business value, financial factors, business contracts, and
stakeholders using the Structural Equation Modeling (SEM) as the research design. The study
found that Bangladesh's economy had declined as a result of the pandemic. Additionally, the
majority of enterprises suffered losses as a result of lockdown measures, and extensive financial
reporting and disclosures in line with Legitimacy Theory were made. The study did not,
however, uncover any evidence of a connection between corporate value, business operations,
and FRD practices in Bangladesh brought on by the Covid-19 epidemic.

4. CONCLUSIONS
This paper aimed to critique Anisere-Hameed's work on the Effects of the Covid-19 Pandemic on
Accounting and Financial Reporting in Nigeria. The paper was obtained from the European
Journal of Accounting, Auditing, and Finance Research in Europe.

Following the review of extant literature, it was clear that the pandemic had negative effects on a
global scale and across all economic sectors. Significant disruptions in many facets of society,
such as in economics, education, and health, as well as the ensuing social upheavals, were among
these negative repercussions (Theophilus, et al.2020).

The analysis found that governments all around the world carried out several initiatives to stop
the pandemic's spread and disruption. Travel restrictions, financial assistance, social isolation,

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and the wearing of Personal Protective Equipment (PPEs) like face masks in public areas were
among the significant measures. The Coronavirus Preparedness Group (CPG) was in charge of
controlling the pandemic's consequences in Nigeria.

The Covid-19 crisis was the worst crisis since the financial crisis of 2007–2009, according to
Muqattash, et al. (2022). The pandemic brought forth a never-before-seen threat that
significantly altered the rules of accounting and financial reporting. The financial and accounting
professionals seem to have been caught off guard on how to report the pandemic's effects at this
point. Based on this, numerous investigations were carried out to determine how Covid-19
affected accounting and financial reporting.

The following differences were found in light of the numerous difficulties raised in comments
regarding how to handle the effects of COVID-19 on financial reporting. While Tibiletti et al.,
(2021) Anisere-Hameed (2021), and Muqattash, et al. (2021), urged for changes to the reporting
requirements, none of them were explicit about the techniques and accounting procedures for
reducing risks during pandemics like Covid-19. The methods of accounting during the pandemic,
namely fair value accounting, loss avoidance accounting, income smoothing, stimulus packages,
bailout funding, big-bath accounting, and lowering growing earnings management, were
advocated by Ozili (2021). But none of the research examined in this article used any of the
techniques. As a result, it is yet unknown whether or not these accounting methods are useful or
practical.

While it is universally acknowledged that the pandemic hurt the global economy, accounting
standards, and financial disclosure procedures, numerous theories have been put out to explain
how the epidemic and the financial reporting system are related. Anisere-Hameed (2021)
employed Attribution Theory and Economic Power Theory whereas Sultana et al. (2021) used
Legitimacy Theory. As a result, it was impossible to determine which was better because they
were used in various circumstances and for various criteria.

Each study employed several variables to determine the relationship between the pandemic and
the financial reporting structure, much like the usage of various theories. Reporting of events that
happened beyond the reporting period, interim financial reporting, going concern, and changes in
Expected Credit Losses (ECL) were employed by Anisere-Hameed (2021) as the study's
dependent variables. To determine if Covid-19 affects UAE-specific IFRS reporting and

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accounting requirements, Muqattash et al. (2022) applied market value, net income and financial
position, financial reporting disclosure, a firm's relationship with its stakeholders, and off-
balance sheet items. The impact of the (FRD) methods in Bangladesh was evaluated using five
variables by Sultana et al. in 2021: business operations, business value, financial aspects,
business contracts, and stakeholders. As a result, in the investigations under consideration, it was
not possible to synchronize and harmonize dependent variables.

In addition, many research methodologies were applied. Anisere-Hameed (2021) employed the
cross-sectional method, while Muqattash et al. (2022) used Principal Component Analysis
(PCA). Structural Equation Modeling (SEM) was employed as the research design by Sultana, et
al. in 2021.

It may be concluded that Covid-19 had negative effects on all economies as well as financial
reporting and disclosure requirements despite the use of various study approaches. Additionally,
it can be inferred from all of these studies that more study is necessary to determine the full
impact of Covid-19 on financial reporting and disclosure requirements.

5. RECOMMENDATIONS
The analysis and discussion demonstrate that the effects of the Covid-19 Pandemic on
Accounting and Financial Reporting in Nigeria study were conducted when the pandemic was
still developing. Other research that was examined while analyzing the publication showed that
this study is not an exception. Therefore, it is advised that more research be done to fully
understand the impact of COVID-19 on accounting and financial reporting.

The bulk of the research that has been examined used primary data. This might be explained by
the pandemic's ongoing evolution and the paucity of secondary evidence. Future research should
analyze data from both primary and secondary sources to see if the same conclusions will be
drawn.

Finally, there is a need to conduct a thorough analysis of the Covid-19 Pandemic's implications
on accounting and financial reporting. This analysis needs to integrate all the factors, theories,
and approaches. Understanding how different parameters were impacted by Covid-19 will help
with the examination of the accounting and financial reporting as well as disclosures that can be
used universally.

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Anisere-Hameed, R. A. (2021). Effects of Covid-19 Pandemic on Accounting and Financial

Reporting in Nigeria. European Journal of Accounting, Auditing and Finance Research, 9(6),
50-63.

De Vito, A., & Gómez, J. P. (2020). Estimating the Covid-19 cash crunch: Global evidence and
policy. Journal of Accounting and Public Policy, 39(2), 106741.

Ekren, N., Alp, E. A., Erdoğan, M. F., & Güner, Y. (2021). The impact of covid-19 on the firms:
Results of the thematic survey conducted by cscpa of Istanbul. International Journal of
Commerce and Finance, 7(1), 166-180.

Financial Reporting Council of Nigeria (2020). Covid-19 and its impact on audit reporting
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Kaka, E. J. (2021). Covid-19 and auditing. Journal of Applied Accounting and Taxation, 6(1), 1-
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Kraus, S., Clauss, T., Breier, M., Gast, J., Zardini, A., & Tiberius, V. (2020). The economics of
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Laux, C., & Leuz, C. (2010). Did fair-value accounting contribute to the financial crisis? Journal
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McKibbin, W., & Fernando, R. (2021). The global macroeconomic impacts of COVID-19:
Seven scenarios. Asian Economic Papers, 20(2), 1-30.

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Muqattash, R., Kolsi, M. C., & Al-Hiyari, A. (2022). Financial reporting considerations in
response to the COVID-19 pandemic: empirical evidence from the UAE accounting
professionals.

Nigeria Centre for Disease Control (NCDC) (2020). First Case of Coronavirus Disease
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Ozili, P. K. (2021). Accounting and financial reporting during a pandemic. In New Challenges
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