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THE IMPACT OF INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARD (IPSAS) IN NIGERIA PUBLIC SERVICE (A CASE STUDY OF LAGOS STATE CIVIL SERVICE)

CHAPTER ONE

INTRODUCTION

Background of the study

Nigeria’s return to democratic administration in 1999 was accompanied by a slew of changes aimed at increasing transparency and accountability in government operations, as well as improving the quality of financial data provided in public financial reporting. The Federal Executive Council’s commitment to have all three tiers of government in Nigeria implement IPSAS (International Public Sector Accounting Standards) by January 1, 2016 is a significant endeavor that should involve financial reporting. The public sector in Nigeria is improving. In response to calls for increased fiscal accountability and government openness, IPSAS has become the cornerstone of the global public accounting revolution (1).

IPSAS addresses issues relating to the preparation of general purpose financial statements for non-SOE public sector enterprises. According to Barrett (2001), accountability is a relationship based on the obligation to provide evidence, verification, and accountability for the outcome, both in terms of the results achieved in terms of agreed expectations and in terms of the resources used. In other words, when the government conducts its actions in an open, transparent, and engaging manner, it must be held accountable (John 2011).

There are two accounting bases in IPSAS: cash accounting and provisioning accounting.

The accounting bases for accounting are practiced in the private sector, but the introduction of the New Public Management Initiative (NPM) has made it a program to improve financial management in the public sector (Lyfee, 1993). (Lyfee, 1993). NPM is committed to applying private sector management approaches and techniques to the public sector.

The implementation of IPSAS, which includes accrual accounting, should serve a number of reasons, including:

(1) providing information on whether sources of revenue are sufficient to meet short and long-term commitments, as financial statements reflect all paid and unpaid expenses as well as all revenues generated; (2) improving the assessment of financial performance, as financial statements reflect all paid and unpaid expenses as well as all revenues generated; and (3) providing information on whether sources of revenue are sufficient to meet short and long-term commitments.

(3) Provide detailed information on expenditures that may be compared to other policies and used to better understand the impact of the policy on costs.

(4) evaluate the programs’ long-term viability, liquidity, and complete information on the government’s financial condition, including assets and liabilities, at the conclusion of the fiscal year; and

(5) Improve the quality of government (Benice, 2014).

However, because various attempts have been made in the past to reform Nigeria’s public sector accounting system, the fulfillment of the above aims seems uncertain. Among these initiatives, the federal government’s efforts to standardize federal, state, and local government degrees were significant, with a commission established in 1984 to coordinate diploma presentation in the public sector. The Committee highlighted the disparities in explanations and presentation methods between federal, state, and local reports, and proposed that the three levels of government adopt 16 statements. Although key recommendations have been embraced and implemented, uniform reporting formats have not been regularly applied (Fedric et al., 2005).

Problem statement

The goal of government accounting is to figure out how much money has been deposited and where it came from, how much has been spent and for what purposes, and how much money has been borrowed. Profit is not the goal, unlike in the private sector, where profit is the primary goal and the profits of the business are determined through time. As a result, a variety of factors influence the government’s accounting, including the government’s position in many areas such as the armed services, health and education, and policies imposed by the government to achieve its objectives. As a result, public accounting is interested in obtaining data to produce revenue and payment accounts (Ntowole, 2008). Although Nigeria’s activities and public accounts were done within the basic framework of fund accounting regulations, Smith (1999) claims that the strict application of accounting principles is a serious issue. Because of its impact on economic performance and corporate governance, Mckane (1999) advocated using accounting information as an additional control tool. According to Meelna (2003), the state budget and the contribution of public spending to GDP are extremely high, particularly in rising nations. There is a strong link between the public and private sectors when it comes to the concepts and strategies used. Furthermore, new needs and the use of information technology in both the public and private sectors have made public sector accounting a significant aspect of accounting studies all over the world. Jolena (2016) reported on the impact of Nigeria’s high level of corruption, claiming that corrupt tendencies have infiltrated all levels of Nigerian society to the point where young people who are supposed to be tomorrow’s leaders are being investigated, and that Internet fraud, in particular, is being investigated by the Lagos State Commission.

Purpose of the study

The goal of this research is to look at the influence of the International Public Sector Accounting Standard (IPSAS) on the Nigerian civil service, specifically the Lagos State Service. in particular, the research:

1. Determine Lagos officials’ perspectives on the consequences of Nigeria’s adoption of IPSAS for public sector accounting.

2. Consider the impact of the introduction of IPSAS on accountability in Nigeria’s public sector accounting.

3. To highlight that accounting personnel, auditors, and academics have differing views on the impact of the deployment of IPSAS on accountability in the Lagos Public Commission.

Significance of the study

The goal of the research is to assist the public sector in developing a comprehensive approach to accounting standards. Public universities, higher education institutions, research institutes, and independent researchers interested in accounting standards will be interested in the findings and will use them to conduct additional research. Researchers will be encouraged to determine the sector’s effectiveness and efficiency as a result of this study. Individual public firms will benefit from the research by better understanding their situation in relation to the financial reporting requirement.

Study hypothesis

The following is the study hypothesis:

HO: There are no major discrepancies in accounting personnel’s, auditors’, and academics’ perspectives on the impact of IPSAS adoption on accountability in Lagos State Civil Service Financial Reporting.

Scope and Limitations of the Study

The study’s focus is on the impact of the International Public Sector Accounting Standard (IPSAS) in the Nigerian public sector, specifically in the Lagos state civil service. The research was hampered by a lack of time and financial resources.

Definition of Basic terminologies

Accountability: An individual or organization’s responsibility to account for their actions, accept responsibility for them, and reveal the outcomes in a transparent manner. It also covers the management of money and other entrusted assets.

The public sector is the segment of the economy that provides essential commodities and services that the private sector does not or cannot supply. It is made up of federal, state, and local governments, as well as their agencies and chartered organizations. The government is one of the most important sections of any economy.

An organization is a social unit of people that is organized and managed to meet a need or achieve a common goal. Every business has a management structure that establishes linkages between various activities and members, as well as divides and allocates roles, responsibilities, and authority for various tasks. Organizations are open systems that both influence and are influenced by their surroundings.

Performance: The completion of a task as judged against predetermined accuracy, completeness, cost, and speed requirements. In a contract, performance is defined as the execution of an obligation in such a way that the performer is released from all contractual obligations.

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