International Public Sector Accounting standards (IPSAS) is the hub of global revolution in government accounting, in response to calls for greater government financial accountability and transparency (Heald, 2003). IPSAS refers to the recommendations made by the IPSAS Board under the auspices of the International Federation of Accountants. The International Public Sector accounting Standard Board (IPSASB) develops accounting standards for public sector entities referred to as International Public Sector Accounting Standards (IPSAS). The IPSASB is among the four independent standard – setting board of international Federation of Accountants (IFAC). The International Public Sector Accounting Standards govern the accounting by public sector entities, with the exception of Government Business Enterprise. The public sector comprises entities or organizations that implement public policy through the provision of services and the redistribution of income and wealth with both activities supported mainly by compulsory tax or levies on other sectors. This comprises government and all publicly owned, controlled and or publicly funded agencies, enterprises and other entities of government that deliver public programmes, goods or services (Kara, 2012).
Public sector accounting is a system or a process which gathers, records, classifies and summarizes as reports the financial events existing in the public or government sector as financial statements and interprets as required by accountability and financial transparency to provide information to information users associated to public institution. It is interested in the receipt, custody; disbursement and rendering of stewardship of public fund entrusted (Institute of Chartered Accountants – Ghana, 2010).
Over the years, countries of the world have defined and set standards of financial reporting in their individual territories. However, globalization has brought about ever increasing collaboration, international trade and commerce among the countries of the world, hence, there is great need for increased uniformity in standards guiding financial statements so that such statements would remain comprehensible and convene the same information to users across the world (Kara, 2012). It is observed that Nigeria Public Sector have often time intensified effort to ensure that the available financial reporting system should not be deficient and proper attention paid to variances from plans thereby indicating the need for financial reports to be available on time as well as meet the reliability test when produced. But unfortunately not much has been achieved through these efforts. Many countries of the world have adopted IPSAS and have standards in preparing their financial statements in line with the standards.
Developing countries like Nigeria, a leading African Nation with the population of over 170million people foremost member of organization of Petroleum Exporting Countries (OPEC) with a public sector dominated economy, has identified the need to consider the value proposition of IPSAS and implement same in order to remain relevant regardless of their political and economic system are urged by international organizations to adopt IPSAS as it would help the international organizations to provide them the financial assistance that they need (Chan,2008). Adopting IPSAS by developing countries would also help in reducing the corrupt practices that is paramount in developing countries. Due to the significance of IPSAS, Nigeria government have been making serious effort so that the public entities in Nigeria fully adopts the IPSAS which according to the earlier arrangement was suppose to be effective from January,2013 for the cash basis and January 2015 for the accrual basis. Unfortunately this was not possible due to some inherent challenges which the country has to overcome. Some of these challenges are lack of professionals in the public sector to carry out the process, inadequate information and communication facilities, amendment of Nigeria constitution so as to make provision of the accounting standard that should be used in preparing financial statements. The adoption date is now January 2014 for the cash basis and January 2016 for the accrual basis. One of the reason that makes high quality public sector reporting necessary in many countries is that government issued financial instruments are a very important part of their financial markets, there exist various crisis in many developing countries especially in Africa, with government debt level sitting at very precarious levels and it is no news that government finances need to be managed properly in any nation. Achieving these requires high quality information on which to base decisions. Timely, clear and open annual financial statements play a significant role in the accountability of government to their citizens and their elected representatives. These financial statements are prepared on a cash basis or some variations of an accrual basis of accounting. However, most of these financial statements are not prepared on consistent and comparable basis in developing countries. The benefits of achieving consistent and comparable financial information across jurisdictions are very important and a set of IPSAS have been established by the IPSASB to assist in that endeavour (Stephen, Mercy & Andy, 2012).
The slow implementation of IPSAS since it was adopted in Nigeria in 2010 may imply nonconformity with the trend in globalisation. It also portrays noncompliance with IFAC public sector reform strategy as it relates to IPSAS. IPSAS reform is about transparency and accountability in the management of public resources. This problem of slow implementation can cause the nation to be less attractive to foreign direct investment because of poor transparency in the affairs of government, lack of comparison of financial reports of home and foreign operations due to different reporting format. Donor agencies and other funding agencies may not be attracted to Nigeria since it is slow in complying with the new public management reforms as established by the IFAC which is the global umbrella body of accountancy, to the detriment of a nation with poor transparency perception index. Transparency International (2016) corruption perception index ranks Nigeria 136th out of 176 countries surveyed. Also United Nations economic commission for Africa (2015) finds that there are illicit monies with some Nigerians.
Some factors have been identified by scholars to have contributed to the slow implementation of IPSAS. These factors have been identified to include cultural, expertise, political-buy- in and accountability. For instance, the literature has identified political buy-in of top government at the different levels of governance as an issue of concern in the implementation of IPSASs (Atuilik, Adafula, and Asare, 2016; Tikk, 2010 and Tickell, 2010). Ijeoma and Oghoghomeh (2014), Aboagye (nd). Nurunnabi (2012) joined the debate on the implementation of IPSASs and argue that there is the problem of Sociological factors. Omolehinwa and Naiyeju (2015) and Hamisi (2012) identifies the cost of implementation as a problem. Accountability is a factor affecting the implementation of IPSAS (Alshujairi, (2014).
Poor governance characterized by corruption, embezzlement, wastage of government resources, lack of transparency and accountability in government business transactions ravaged the Nigerian public sector for many decades. The financial reporting system was based on local laws thus the constitution of the Federal Republic of Nigeria and the Financial Regulations. The financial reports produced during the period never achieved the government objectives of measuring performance and exhibiting accountability, transparency and comparability in management of government funds at all levels. Reforms introduced by the government in 2003 came as a result of the world-wide pressure to introduce private sector style of management to the public sector otherwise known as New Public Management (NPM). The zeal to reform the government financial reporting system really came on board in 2009 when a gap analysis was conducted to identify the differences between the IPSAS cash basis accounting and the existing reporting practice. Several differences discovered prompted the setting up of a sub-committee by the Federation Accounts Allocation Committee to work out the roadmap for the adoption of IPSAS in the 3 ties of government thus federal, states and local governments. Nigeria has adopted IPSAS cash and accrual bases of accounting. Cash basis is assumed to have started in January 2014 and accrual basis to start in January 2016. A lot of people still doubt whether the practice of accrual accounting in the Nigerian public sector will ensure accountability, transparency and improvement in our reporting system
The significance of this study lies on the fact that the result will assist to build government confidence in the action taken to adopt IPSAS accrual basis of accounting thereby encouraging the preparers of public financial report to support the implementation of IPSAS.
It is also significant in the sense that the government will be encouraged by its outcome to do everything possible to ensure that adequate preparation is made . Moreover, this study is significant in the sense that it will help to build literature on the assessment of the ability of IPSAS accrual accounting implementation in Nigeria to achieve transparency, accountability and comparability of financial reporting by government.
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