The Impact of Adopting International Public Sector Accounting Standards (IPSAS) on Accounting for Local Governments
Chapter One
OBJECTIVE OF THE STUDY
The objectives of the study are;
- To ascertain the role of IPSAS on local government accounting
- To assess the impact of the adoption of the IPSASs on the financial reporting in local government.
- To identify the challenges of IPSAS in local government accounting
- To determine how IPSAS improve the quality of general purpose financial reporting in local government
CHAPTER TWO
REVIEW OF RELATED LITERATURE
INTRODUCTON
The aim of IPSAS is to enhance the quality of general purpose financial reporting by public sector which provides better means of assessing the resource allocation function of government and also to increased transparency and accountability in the financial management duties of both bureaucrats and political office holders. According to Adoagye (2012), IPSASs are high quality reporting standards for the public sector and government business enterprises (GBEs), state owned enterprises (SOEs). IPSAS board is a body of international federation of accounting (IFAC) with autonomy to develop and issue IPSASs. John (2011), stated that IPSAS board is comprised of 18 members, out of which 15 are nominated by the member bodies of IFAC while the other three are appointed by any individual or organization. Since the standard is believed to be high, and capable of improving transparency in government receipt and expenditure management, it could definitely improve the reporting system in both ministries, departments and agencies (MDAs) of government and other parastatals. According to Aganga (2011), the main objective of IPSASB is to serve the public interest by developing standards and facilitating the convergence of international and national standards which will enhance the quality and uniformity of financial reporting throughout the world. The effectiveness of the financial function is an inextricable determinant of the survival of any institution: public or private. It determines the level of cash flow, the magnitude of capital projects, the quality of reward received, and the expected growth of the institution, among other variables. Local government is a public sector organization with assigned functions and responsibilities, administrative structure and financial arrangement for both maintaining itself and rendering its statutorily assigned functions to its citizens. This way, generic centrality of finance to organizational performances also applies to local government. (Bello-Imam, 2010). The 1976 reform was designed to strengthen the local government system, stimulate self- democratic government, encourage initiative and leadership potentials at grass root, ensure the availability of amenities, indeed necessities, such as electricity, adequate water supply, improved transportation, health facilities and so on, and firmly entrenched local government as the third tier of government activity in Nigeria. The reform was designed to endow local government with human, financial and material resources that would enable them to competently complement the activities of states and federal governments in their areas. Statutory allocations to Nigerian local governments have enhanced their economic fortunes and improved their efficiency in service delivery. On the other hand, Bello-Imam (2010), stated that the financial solvency of Nigerian local governments due to the incidence of statutory allocation has conditioned a systematic decline in their internally generated revenue. Yet, it is of immense significance that there is a virtual dominance of externally sourced revenue in the finances of local governments (with the exception of a few urban areas with plausible number of internal revenue sources). With as much as three quarters of their total revenue coming from external sources, the objective of local autonomy was apparently compromised.
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought to the role of adoption of international public sector accounting standard on accounting for local government
Sources of data collection
Data were collected from two main sources namely:
(i)Primary source and
(ii)Secondary source
Primary source:
These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment; the researcher has adopted the questionnaire method for this study.
Secondary source:
These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.
Population of the study
Population of a study is a group of persons or aggregate items, things the researcher is interested in getting information on the role of adoption of international public sector accounting standard on accounting for local government. 200 staff of selected local government in Akwa Ibom state was selected randomly by the researcher as the population of the study.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was on the role of adoption of international public sector accounting standard on accounting for local government. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of international public sector accounting standard on accounting for local government
Summary
This study was on the role of adoption of international public sector accounting standard on accounting for local government. Four objectives were raised which included: To ascertain the role of IPSAS on local government accounting, to assess the impact of the adoption of the IPSASs on the financial reporting in local government, to identify the challenges of IPSAS in local government accounting, to determine how IPSAS improve the quality of general purpose financial reporting in local government. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of selected local government in Akwa Ibom state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up directors, cashiers, administrative staff and junior staff was used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Conclusion
This study has shown that the adoption and implementation of IPSAS in Nigeria will help in the harmonization of financial operations and uniformity in the reporting of public sector accounting information and disclosure. The study also revealed at a glance that IPSAS adoption will help to ensure better financial information disclosure and supports, improvement to accountability, transparency better financial management, better information to donor and countries providing external assistance, better quality and credibility of financial report. This will enhance local governments‟ sources, allocation and utilisation financial resources optimally. Conclusively, IPSAS adoption will significantly improve local governments‟ accountability and transparency in financial reporting and information to all stakeholder. To achieve this, however, we must all be prepared to face the challenges this constrains will introduce at the early stages of adoption.
Recommendation
The following recommendations arise from the study: First, honest and credible leadership should be engages with the economic and political will to implement all the facets of IPSAS. Without this corruption will be unabated and the feeling of sabotage will be strong enough to derail the process of implementation. Second, financial autonomy of local government must be guaranteed by the provisions of the constitution. Third, joint state-local government accounts must be abrogated immediately in line with the present thinking of the national assembly. Local governments must be given all the political powers to enable them formulate and implement programmes of socioeconomic and political relevance to the area. Forth, qualified accounting personnel should be appointed into local government councils. The politics of clientelism and prebendalism should be discouraged. Staff should be appointed on the basis of knowledge and experience (merit), and hard work should be reward Fifth, audit alarm should be given its proper place in the local government settings. Any act or commission of fraud should be exposed. Anticorruption and related agencies must be kept informed of such development. Periodic internal and external audit programmes should be carried out annually in order to ascertain the state of finances within the local government. Sixth, accounts books must be well secured and properly kept. Any attempt to print and issue fake receipts should be nipped in the bud. Any local government official in any attempt to shortchange the council by declaring incomplete account should be arrested and summarily dealt with in accordance to the law. Seventh, all sources of internally generated revenue should be properly identified, and sound methods of revenue collection, guided by financial regulation and general orders should be handled by local government pensionable staff. A situation where „touts‟ are recruited by political “god-fathers” to man their “Cash Points” and where these touts remit insignificant revenues to the local authorities must be stopped. Finally the budgetary process must be strictly followed and efforts should be made to faithfully implement the provisions of the budgets. In addition, adequate accounting learning manual from other countries that have adopted the standards should be made available, too.
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