Abstract
This study evaluated the impact of
International Public Sector Accounting Standard (IPSAS) on the accountability
of public fund in Nigeria which results in reliability, credibility and
integrity of financial reporting in public sector organization in Nigeria. The
purpose of this study is to ascertain the impact of IPSAS on reliability,
credibility, and integrity of financial reporting. The findings or result of
the study showed that the implementation or adoption of IPSAS will improve the
reliability, credibility and integrity of financial reporting in federal
Government administration in Nigeria. Also, it was observed that implementation
of IPSAS based standards can facilitate efficient internal control and result
based financial management in the public sector of Nigeria. Equally, it was
found that implementation of IPSAS can enhance Federal Government’s goal to
significantly deliver services more effectively and efficiently
TABLE
OF CONTENTS
chapter
one
INTRODUCTION
1.1 Background of the
study
1.2 Statement of problem
1.3 Objective of the study
1.4 Research Hypotheses
1.5 Significance of the
study
1.6 Scope and limitation
of the study
1.7 Definition of terms
1.8 Organization of the study
CHAPTER TWO
2.0
LITERATURE REVIEW
CHAPTER THREE
3.0 Research methodology
3.1
sources of data collection
3.3 Population of the
study
3.4 Sampling and sampling
distribution
3.5 Validation of research
instrument
3.6 Method of data
analysis
CHAPTER FOUR
DATA PRESENTATION AND
ANALYSIS AND INTERPRETATION
4.1 Introductions
4.2 Data analysis
CHAPTER FIVE
5.1 Introduction
5.2 Summary
5.3 Conclusion
5.4 Recommendation
Appendix
CHAPTER ONE
INTRODUCTION
1.1
Background
of the study
The International Public
Sector Accounting Standards Board (IPSASB) develops accounting standards for
public sector entities referred to as International Public Sector Accounting
Standards (IPSASs). The IPSASB is among the four independent standard-setting
boards of International Federation of Accountants (IFAC). IFAC is the global
organization for the accountancy profession dedicated to serving the public
interest by strengthening the profession and contribution to the development of
strong international economies. It was founded in 1977; IFAC is comprised of
173 members and as-societies in 129 countries and jurisdictions which include
Nigeria. IFAC is expected to serve the public interest by: (a) con-attributing
to the development, adoption and implementation of high quality international
standards and guidance; (b) contributing to the development of strong
professional accountants; (c) promoting the value of professional accountants;
(d) speaking out on accounting public issues. The IPSAB an independent
standard-setting organ of IFAC responsible for developing accounting standards
for public sector entities is focused on ensuring consistent and comparable
financial information across jurisdiction. The IPSASB recognizes the
significant benefits of achieving consistent and comparable financial
in-formation across jurisdictions and it believes that the IPSASs will play a
key role in enabling these benefits to be realized. The IPSASB issues IPSASs
dealing with financial reporting under the cash basis of accounting and the
accrual basis of accounting. The accrual IPSASs are based on the International
Financial Reporting Standards (IFRSs), issued by the International Accounting
Standards Board (IASB), where the requirements of those Standards are
applicable to the public sector. They also deal with public sector specific
financial re-porting issues that are not dealt with in IFRSs. IPSAS refers to
the recommendations made by the IPSAS Board under the auspices of the
International Federation of Accountants. T IPSASB strongly encourages
governments and national standard-setters to engage in the development of its
standards by commenting on the proposals set out in its exposure drafts and
consultation papers. The members of the IPSASB are appointed by the IFAC Board.
The IPSASB comprises a total of 18 members, 15 of whom are nominated by member
or organizations of the IFAC. The other three are public members and can be
nominated by any individual or organization. The countries represented on the
IPSASB include: Australia, Canada, China, France, Germany, Japan, Kenya,
Morocco, New Zealand, Pakistan, Romania, South Africa, United Kingdom, United States
of America and Uruguay. IPSAS are accepted for accounting for funds provided
under World Bank Programs. Developing countries are urged to adopt IPSAS by
international organizations which provide financial assistance to developing
countries. Other countries, regardless of their political and economic systems,
are encouraged to harmonize their national standards with IPSAS. Thus, IPSAS
have become de factointernational
benchmarks for evaluating Government accounting practices worldwide. For these
reasons, IPSAS deserves the attention of accounting policy-makers, practitioners
and scholars alike. IPSAS seeks to improve the quality of general purpose
financial reporting by public sector entities, leading to better informed
assessments of the resource allocation decisions made by governments, thereby
increasing transparency and accountability. IPSAS can be applied by national,
state and local governments as well as related government entities. The
adoption of IPSAS by Governments is expected to improve both the quality and
comparability of financial information reported by public sector entities
around the world. The IPSASB recognizes the right of Governments and national
standard-setters to establish accounting standards and guidelines for financial
reporting in their jurisdictions. Public sector can be described as entities or
organizations that implement public policy through the provision of ser-vices
and the redistribution of income and wealth, with both activities supported
mainly by compulsory tax or levies on other sectors. This comprises governments
and all publicly owned, controlled and or publicly funded agencies,
enterprises, and other entities of government that deliver public programs,
goods, or services. However, IPSASs do not apply to government business
enterprises. A government business enterprise within the meaning of IPSASs is
an entity that has the following characteristics:
(a) it is an entity with the
power to contract in its own name;
(b) it has been assigned the
financial and operational authority to carry on a business;
(c) it sells goods and
services, in the normal course of its business, to other entities at profit or
full cost recovery;
(d) it is not reliant on
continuing government funding to be a good concern (other than purchase of
outputs at arm’s length) and
(e) it is controlled by a
public sector entity. The IPSASB develops IPSASs for financial statements
prepared on the accrual basis of accounting as well as for financial statements
prepared on the cash basis of accounting. IPSASs govern the recognition, measurement,
presentation and disclosure requirements in relation to transactions and events
in general purpose financial statement. Such financial statements are
characterized by the fact that they are issued for users who are unable to
demand financial information to enable them meet their specific information
needs. Public sector accounting is a system or 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 institutions. It is interested in the
receipts, custody and disbursement and rendering of stewardship of public funds
en-trusted. Government accounting refers to a government’s financial
information systems and financial disclosure practices. Its state of
development results from the interaction between the supply of and demand for
Government financial accountability and transparency. Since it is costly
everywhere to produce and disseminate information, Governments in all types of
political systems lack the economic incentives to do so. However, some
political systems exert a greater demand for government accountability and
transparency than others; for example, representative democracies are more
demanding than authoritarian and totalitarian political systems. In a
democracy, the government is obliged to be more responsive to information
demands placed upon it. This would be the case in developed countries and
developing countries alike. However, the opportunity cost of resources used in
improving government financial information is higher in developing countries
than in developed countries. Therefore, even if Governments in democratic
developing countries are willing to undertake government accounting reform,
they may be unable to afford it; Governments in non-democratic developing
countries are both reluctant to undertake and unable to afford Government
accounting reforms. Local accounting standards in Nigeria were set under the
Nigerian Accounting Standards Board Act of 2003 by the Nigerian Accounting
Standards Board (NASB). Originally established in 1982 as a private sector
initiative housed in the Institute of Chartered Accountant of Nigeria (ICAN),
Nigerian Accounting Standards Board became a government agency in 1992 and
reports to the Federal Ministry of Commerce. Its membership includes
representatives of Government and relevant interests groups. The primary role
of the Board is to ensure that published financial statements are uniform in
content and in format and communicate precisely what they purport to convey.
Timely, clear and open annual financial statements play a significant role in
the accountability of governments to their citizens and their elected
representatives. These financial statements are prepared on a cash basis or
some variation of an accrual basis of accounting. However, most of these
financial statements are not prepared on a consistent or comparable basis in
developing countries. The benefits of achieving consistent and comparable
financial in-formation across jurisdictions are very important and a set of
International Public Sector Accounting Standards (IPSAS) have been established
by the IPSAS Board to assist in that Endeavour. In addition, reported that
basically, a country’s accounting and disclosure system is part of its
financial system and more generally its institutional infrastructure. This is
geared towards the informational and contracting needs of the key parties in
the economy and its role in corporate governance and the capital market. Since
the accounting system is complementary to other elements in the institutional
frame-work, a fit between them is likely what results in different ac-counting
system and infrastructural regimes across countries. The concerns for
harmonization of accounting standards and later, convergence in the 1990s with
International Reporting Standards are due to the globalization of the capital
markets. In fact, it is believed that accounting harmonization is necessary for
the globalization of capital markets. According to, the major assumptions of
IPSASs are:
1. There
are so many common transactions in the private and public sectors that it is
possible, and indeed pre-farmable to have one set of generally accepted
accounting principles for both sectors. Most IPSASs can there-fore be set by
making modest changes to the standards promulgated by the international
(Business) Ac-counting Standard Board (IASB). Additionally, the IP-SASs Board
would establish standards for transactions and events unique to the public
sector.
2. Since
business firms annually prepare consolidated financial statement under the
accrual basis, it is expected that governments should do the same. Consolidated
financial statements cover a primary organization and its subsidiaries in which
the primary organization has a majority ownership interest. The accrual basis
used by business firms regards sale (not production) of goods and services as
the criterion for judging financial performance.
3. Accounting
standards are more objective and of a higher quality if they are set by an
expert group independent of the organizations, obliged to follow the standards.
For the public sector, independence can be achieved or at least enhanced by
giving the task to a private sector body, an advisory board, or increase the
number of public (non-government) members.
4. Accounting
standard should be produced through due process. Due process means that
research and deliberation should precede decisions. Furthermore, adequate
opportunities are provided for interested parties to provide input before
standards are finalized.
1.2 STATEMENT OF THE PROBLEM
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).
1.3 OBJECTIVE
OF THE STUDY
The objectives of the study are;
1. To
ascertain the impact of IPSAS on the accountability of public fund in Nigeria
2. To
ascertain the effectiveness of IPSAS to Nigeria government
3. To
ascertain the relationship between IPSAS and public fund accountability
1.4 RESEARCH
HYPOTHESES
For the successful completion of the study, the following
research hypotheses were formulated by the researcher;
H0: there is no impact of IPSAS
on the accountability of public fund in Nigeria
H1: there
is impact of IPSAS on the accountability of public fund in Nigeria
H02: there
is no effectiveness of IPSAS to Nigeria government
H2: there
is effectiveness of IPSAS to Nigeria government
1.5 SIGNIFICANCE
OF THE STUDY
The findings of this study are to restore the hope of
citizens considering improved government role playing in peoples’ welfare. The
study is of benefit to the society because it will promote transparency and
accountability as a life changing approach to governance. The study will also
serve as reference to other researchers who will embark on this study.
1.6 SCOPE
AND LIMITATION OF THE STUDY
The
scope of the study covers impact of the adoption of IPSAS on the accountability
of public fund in Nigeria. The researcher encounters some constrain which
limited the scope of the study;
a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher
is insufficient, thereby limiting the study
b) TIME:
The time frame allocated to the study does not enhance wider coverage as the
researcher has to combine other academic activities and examinations with the
study.
c)
Organizational privacy: Limited Access to the selected auditing
firm makes it difficult to get all the necessary and required information
concerning the activities
1.7 DEFINITION OF TERMS
ADOPTION: Adoption is a process whereby a person assumes the parenting
of another, usually a child, from that person's biological or legal parent or
parents, and, in so doing, permanently transfers all rights
IPSAS: The International Public Sector
Accounting Standards Board® (IPSASB) works to improve public
sector financial reporting worldwide through the development of IPSAS, international accrual-based accounting standards,
for use by governments and other public sector entities around the world.
ACCOUNTABILITY: In leadership roles, accountability is
the acknowledgment and assumption of responsibility for actions, products,
decisions, and policies including the administration, governance, and
implementation within the scope of the role or employment position and
encompassing the obligation to report, explain and be answerable
PUBLIC
FUND: Money that is generated by the government
to provide goods and services to the general public.
1.8 ORGANIZATION OF THE STUDY
This
research work is organized in five chapters, for easy understanding, as follows
Chapter one is concern with the introduction, which
consist of the (overview, of the study), historical background, statement of
problem, objectives of the study, research hypotheses, significance of the
study, scope and limitation of the study, definition of terms and historical
background of the study. Chapter two highlights the theoretical framework on
which the study is based, thus the review of related literature. Chapter three
deals on the research design and methodology adopted in the study. Chapter four
concentrate on the data collection and analysis and presentation of
finding. Chapter five gives summary,
conclusion, and recommendations made of the study.
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