Draft:IPSAS Implementation in Nigeria

IPSAS is an acronym for International Public Sector Accounting Standards. It refers to a set of accounting standards to be used in the preparation and presentation of financial statements of a public sector entity. The standards are expected to be adopted by government entities and its agencies across the globe. Its adoption will enhance accountability and transparency in public sector governance. Public sector refers to all the establishments owned and operated by the government of a country. Its adoption by Nigeria government will project the country as a role model to other African countries and would have ripple effect on neighboring African countries and may facilitate bilateral trades and attract mutual aids and grants to promote economic growth and development in the South of Sahara region referred to as Global South.

Setting of IPSAS

IPSASs are set by the International Public Sector Accounting Standard Board (IPSASB) which is an arm of the International Federation of Accountancy (IFAC). IPSASB is responsible for setting IPSAS-Accrual based standards, IPSASB Sustainability Reporting Standards and other standards for use by governments and its agencies all over the world. Originally, the existing IPSASs are derived from the corresponding International Accounting Standards (IAS) or International Financial Reporting Standards (IFRS). The procedures for setting the standards include identification of new government transaction or events where new standards are needed, development of exposure drafts by experts across the globe, public consultation and release of the final standard. The Financial Reporting Council of Nigeria (FRCN) is responsible for monitoring the compliance of the governments and its agencies with the standards.

IPSAS implementation by the Federal Government of Nigeria

The road to IPSAS implementation in Nigeria began in the year 2010. Series of capacity building were conducted across the country targeting the key stakeholders at the Federal, State and Local Governments. By 2014, Cash-basis IPSAS was adopted by the Federal Government and by 2016, the Federal Government adopted full Accrual-based IPSAS. A visit to the official websites of the Auditor General of the Federation will lend credence to the fact that the Federal Government has fully adopted the standards. The annual reports of the Auditor General of the Federation are hoisted on the official website with the underlying IPSAS Accrual-based compliant financial statements of the Federal Government included as an addendum to the annual audit reports. IPSAS has a significant and positive relationship on financial reporting quality, expressed in terms of transparency, accountability and comparability, in the Nigerian public sector.

IPSAS implementation by the State and Local Governments of Nigeria

As a result of variation in the level of resources available to each state government in the federation, the implementation at the state and local government level was made flexible. Some states like Lagos have fully implemented the standards while some have partial implementation and some yet to implement the standards. Information about the implementation at the local government level is scanty. The offices of Auditor General for Local Government in the South-West Nigeria have conducted series of capacity building training for local governments in the region but the true position of the implementation at that tier of government still remains elusive in the public space.

Identified challenges of IPSAS implementation in Nigeria

Although as a result of learning curve theory, after the Federal Government has fully implemented the standards, more states governments like Lagos, Gombe and Ondo have fully adopted the standards. Nevertheless, appropriate human resource, adequate environment, stable internet services, sustainable power supply and other enabling infrastructural facilities still remain the major challenges.