It is not totally easy to narrate the historical development of accounting in Nigeria without including foreign development. Further, accounting as used by merchants is perhaps as old as man. However, the popular double entry system of recording was first called the Italian method before it was written in a book by an Italian monk Luca Pacioli in 1476. Luca Pacioli became known as the father of accounting.
To simplify it, accounting history can be categorized into the pre-colonial period, colonial period, postcolonial period, and modern times. Let’s begins.
Pre-colonial period of accounting history in Nigeria
Before, colonial masters of Britain take over Nigeria, the people of the country were known for the use of the barter system for the exchange of goods. Also, slaves (that is, fellow Nigerians) were traded in exchange for guns, books, gold, and more.
There is no mention of how trades are recorded for the purpose of ascertaining profits. However, the village heads were known to collect taxes from indigenes of the land.
In the Yoruba kingdom, record keeping was well known. Records were preserved on stones. However, the Igbo was known to use cowries as a medium of exchange.
The Emirates of the Fulani kingdoms were more organized. The Emir appoints village heads to collect taxes from individuals and send the same to the treasurer who is also appointed by the Emir to manage the Emirate’s money resources. No wonder, when Lord Lugard captured the northern part of Nigeria, it was easy to implement an indirect tax system.
The colonial period of accounting history in Nigeria
During the colonial period, it was easy for the colonial master of Britain to collect taxes in Nigeria because of the well-organized structure in place. The establishment of the Royal Niger Company in Nigeria and other oil companies that came to explore and exploit crude oil before the independent period introduced a formalized accounting system used by the European nations.
Also, many Nigerians whose parents were wealthy went to Europe for educational purposes. And these individuals must have brought to Nigerian accounting knowledge they have acquired. We can not quickly forget the impact of Frank Woods and Joshua Omoya, if I spell the names correctly, how they impacted accounting education from those times till the present time.
Post Colonial or Independent Period accounting history in Nigeria
The postcolonial period saw the establishment of accounting professional bodies in Nigeria. With the discovery of oil in commercial quantities and the economic boom after independence, the organized accounting body becomes paramount. This may have lead to the establishment of the Institute of Chartered Accountant of Nigeria (ICAN) in 1965. This nonprofit organization proved to be the foremost accounting professional body in modern times.
During the military regime in Nigeria, 1979 to be precise, saw the establishment of a rival accounting body. Association of National Accountants of Nigeria (ANAN) was formed. It was recognized as a legal professional body through degree 76 of 1993.
Another professional body that was formed during this period was the Chartered Institute of Taxation of Nigeria (CITN) and a regulatory body known as the Nigeria Accounting Standards Board (NASB).
CITN was established by decree No. 76 of 1992 under the military government. But was later reenacted under the civilian government of 1999 and is now called the CITN Act, CAP C10, Vol. 2, Laws of the Federation of Nigeria (LFN), 2000.
The NASB was inaugurated through an enabling law in 2003. This body was vested with the responsibility of creating accounting standards used by Nigeria entities. We cannot conclude this period without mentioning Akintola Williams. His contribution to the accounting profession in Nigeria is insurmountable.
The modern period of accounting history in Nigeria
As a result of globalization and various trade agreements, there was a need to prepare and present financial statements that are comparable across borders. Therefore, it was imperative to adopt the International Financial Reporting Standards (IFRS) prepared by the International Accounting Standard Board (IASB).
To achieve this, there was a need for convergence of local accounting standards to international counterparts. This lead to a roadmap in the adoption of IFRS in Nigeria and the other formation of the Financial Reporting Council of Nigeria (FRCN).
The roadmap as published by FRC stated that public entities quoted in the Nigerian Stock Exchange must adopt the use of IFRS on 1st January 2012. The second phase of the roadmap was for other public entities to adopt IFRS on 1st January 2013 while small and medium scale enterprises were mandated to comply with the International Financial Reporting Standard in 2014.
The financial reporting council of Nigeria FRCN was established by Act, No. 6, 2011. This lead to this dissolution of NASB. FRCN became the body responsible for setting accounting, auditing, and other related standards in Nigeria.
The development of an organized accounting field of study began in the nineteenth century during the industrial revolution in Great Britain. This lead to the preparation of trading profit and loss account and the Balance Sheet. This knowledge-based was spread to all countries colonized by Europian countries. Nigeria became a beneficiary of this during colonized the country.
This brings to an end to the introduction to financial accounting. Next, various documents used in businesses as source documents for accounting entries will be discussed.