On July 28, 2010, the Federal Executive Council (FEC) gave its approval to Nigeria’s adoption of both the International Financial Reporting Standards (IFRS) and International Public Sector Accounting Standards (IPSAS). In response to that development, the Federal Account Allocation Committee (FAAC) on June 13, 2011, set up a sub-committee to sensitize the stakeholders and provide a roadmap for the take-off of IPSAS in all the three tiers of government in Nigeria. Based on the roadmap, Nigeria commenced the implementation of the Cash-based IPSAS from 2014, while the Accrual Standards were slated for 2016.
The International Public Sector Accounting Standards (IPSAS) are a set of standards administered by the International Public Sector Accounting Board (IPSAB)—an independent standard-setting body established by the International Federation of Accountants (IFAC). The primary objective of IPSAB is the development of high-quality global standards for accounting treatment and presentation of financial information in the public sector to serve the interest of the general public. In developing these standards, IPSAB aims to improve the quality of public sector financial reporting and provide the basis for consistency and comparability of financial information presented by public sector entities.
International Public Sector Accounting Standards (IPSASs) are designed to meet the goal of preparing and presenting high-quality transparent, consistent and comparable financial information by public sector entities. But when it comes to the issue of accountability, there is a caveat: mere adoption of IPSAS will not translate into accountability automatically without holistic implementation and faithful compliance with the requirements of the Standards.
As part of preparations for the effective take-off of IPSAS implementation nationwide, and in line with IPSAS requirement of uniform reporting, the Office Accountant-General of the Federation has released the National IPSAS Chart of Accounts and the formats for Financial Statements and Budgets presentation to be used by all tiers of government. In spite of all these, the question right now is “how prepared is Nigeria for the full implementation of IPSAS which is deemed to have commenced January 2016?”
Under IPSAS, governments at the Federal, State and Local levels are expected to prepare and present their financial statements and budgets presentations based on approved uniform template. Also, each Ministry, Department and Agency (MDA) is required to prepare independent but uniform financial statements and budgets reports based on the same common templates.
True accountability and transparency require faithful implementation of IPSAS, and faithful implementation of IPSAS cannot be complete without holistic compliance with the National IPSAS Chart of Accounts and the prescribed uniform reporting formats for both the Financial Statements and Budgets. Some of the common issues to be addressed include:
- Uniform classification and reporting for Budget and Financial Statements across all the three tiers of government;
- Uniform and consistent recognition and measurement policies;
- Mandatory and holistic compliance with the National IPSAS Charts of Accounts;
- Real-time monitoring and effective enforcement of compliance with the Budget;
However, without a common solution platform, regulatory framework or enabling legislation, it remains to be seen how the objectives of IPSAS can be achieved. Despite the present government’s celebrated “war against corruption” nobody has yet seen the need to harness IPSAS objectives as part of the strategy in the war. Let us pray (as is usually the case with everything Nigeria) and hope that IPSAS will not end up as one of those slogans meant to impress the world while we continue our business as usual.
Our ExpressBook PSA—IPSAS-Compliant Accounting and Budgeting sofware for public sector is fully integrated with the National Chart of Accounts to automate IPSAS implementation in all the three tiers of government.