Fair Value Accounting & Challenges of Audit Practice in Nigeria

Fair value is the amount at which an asset can be bought or sold in a current transaction between willing parties, or transferred to an equivalent party, other than in a liquidation sale. This study evaluated fair value accounting and challenges of audit practice in Nigeria. This study is anchored on inspired confidence theory. The research design used in this study was expost factor design. The study employed structured questionnaire for data collection and the method of data analysis utilized was spearman rank order correlation. The findings of this study showed that fair value accounting poses greater technical challenges for auditors than historical cost accounting. In conclusion, auditors face extensive difficulties in the audit of fair value accounting estimates reported by their clients due to the lack of sufficient reliable information. We therefore recommended among others that The Institute of Chartered Accountants of Nigeria (ICAN) and Financial Reporting Council of Nigeria (FRCN) should improve the scrutiny of external auditors and companies financial reports; auditors should be given adequate training and retraining through the Mandatory Continuous Professional Education Programme (MCPE) of ICAN for them to be abreast on current issues relating to fair value accounting measurements and the regulatory authorities should monitor the performance of specialist involved in the evaluation of companies and their assets, including implementing some procedures to license these individuals and the check on their qualifications and experiences. Keywords: Fair Value Accounting, Audit Practice, Fair Value Estimates.