The Adoption Of International Public Sector Accounting Standards In Nigeria

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This study examines the expectations, benefits and challenges of adoption of International Public Sector Accounting Standards (IPSAS) in Nigeria. The objective of this study is to determine the benefits, expectations and the challenges that Nigeria will face in her quest to adopt IPSAS.  This study is based on data obtained from literature survey and archival sources in the context of IPSAS adoption in Nigeria. Content analysis was used to analyze the relevant literatures. It was observed that adoption of IPSAS is expected to increase the level of accountability, transparency, comparability and international best practices in public sector of Nigeria. Also, it was discovered that adoption of IPSAS based standards will provide more meaningful information for decision makers and improve the quality of the financial reporting system in Nigeria. Hence, the study concludes that the adoption of IPSAS in Nigeria is expected to impact operating procedures, reporting practices thereby strengthening good governance and relations with the government and the governed. The study recommends that the government should provide the legal framework for proper and effective implementation of IPSAS accrual basis of accounting in Nigeria. Efforts should be made to enshrine the requirements of IPSAS accrual basis into the appropriate regulatory systems such as the constitution of the Federal Republic of Nigeria and the Financial Regulations and public sector accounting staff should be properly trained on IPSAS.

Chapter one


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 objective of this study is:

  1. To examine the challenges, benefits and expectations of the adoption of IPSAS in Nigeria
  2. To ascertain whether the adoption and implementation of IPSAS accrual basis of accounting will improve accountability in the Nigerian public sector financial reporting.


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 in the new date of 2016. 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 between now and 2016 when accrual basis of accounting would be put in place. 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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The Adoption Of International Public Sector Accounting Standards In Nigeria