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

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CHAPTER ONE

INTRODUCTION

1.1Background of the study

The return of Nigeria to democratic governance in 1999 has been accompanied by various reforms to facilitate transparency and accountability in the governance of government activities and to improve the quality of financial information produced in public financial reporting. The decision of the Federal Executive Council to adopt IPSAS (International Public Sector Accounting Standards) of the three levels of government of Nigeria by January 1, 2016 is an important initiative that should include reporting on financial reporting. in Nigeria, the public sector is improving. IPSAS has become the cornerstone of the global public accounting revolution in response to calls for greater fiscal accountability and greater government transparency (1). IPSAS addresses issues related to the preparation of general purpose financial statements for public sector enterprises that do not refer to SOEs. Barrett (2001) described accountability as 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, the government must be accountable when it conducts its activities in an open, transparent and engaging manner (John 2011).

IPSAS has two accounting bases: cash accounting and the provisioning basis. 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). NPM is committed to applying private sector management approaches and techniques to the public sector.

The introduction of IPSAS, including accrual accounting, should serve a number of useful purposes, such as:

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

(3) Provide comprehensive information on expenditures that help to understand the impact of the policy on costs and allow comparison with other policies;

(4) determine the future viability of the programs, the liquidity situation and complete information on the government’s financial position or assets and liabilities at the end of the year; and

(5) Improve good governance (Benice, 2014).

However, the achievement of the above objectives is doubtful, as several attempts have been made in the past to improve the public sector accounting system in Nigeria. Among these attempts, the federal government’s efforts to standardize federal, state and local government degrees, where a committee had been created in 1984 to harmonize the presentation of diplomas in the public sector, were important. The Committee noted the differences in explanations and formats of presentation between the reports of federal, state and local authorities and recommended 16 statements adopted by the three levels of government. Key recommendations have been adopted and implemented, but standard reporting formats have not been adopted consistently (Fedric et al., 2005).

1.2 Problem statement

The purpose of government accounting is to determine how much money has been deposited and where it comes from, how much has been spent and for what purposes and what financial obligations have been incurred. Profit is not the objective, unlike the private sector, whose main purpose is profit and determines the profits of the enterprise over a given period. As a result, many factors influence the government’s accounting, for example: For example, the role of the government in various areas such as the armed forces, health and education, and policies mandated by the government to achieve its goals and goals. As a result, public accounting is interested in gathering information that will enable it to generate revenue and payment accounts (Ntowole, 2008). According to Smith (1999), although the operations and public accounts in Nigeria were conducted within the general framework of fund accounting rules, the absolute application of accounting principles is a major problem. Mckane (1999) proposed the use of accounting information as an additional control mechanism because of its impact on economic performance and corporate governance. Meelna (2003) estimated that the state budget and the contribution of public spending to gross domestic product are very high, especially in emerging economies. When considering the concepts and techniques used, there is a close link between the public and private sectors. In addition, emerging needs and the use of information technology in the public and private sectors have made public sector accounting an important part of accounting studies around the world. Jolena (2016) reported the impact of the level of corruption in Nigeria, that corrupt tendencies so pervaded the strata of Nigerian society that the young people who are supposed to be the leaders of tomorrow are being investigated and that Internet fraud, above all the Lagos State Commission.

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