Accounting Project Topics

IPSAS and Public Sector Financial Reporting Quality in Nigeria

Ipsas and Public Sector Financial Reporting Quality in Nigeria

IPSAS and Public Sector Financial Reporting Quality in Nigeria


Purpose of The Study

The research objectives identified in this study are stated as follows due to the approval of the Federal Executive Council adoption of IPSAS in the year 2014:

  1. To examine the overall impact of IPSAS adoption on the quality of financial reporting in the Nigerian public sector.
  2. To examine the extent to which IPSAS adoption has improved the elements of quality of financial reporting in terms of accountability, transparency, comparability, value relevance and full representation in the Nigerian public sector.
  3. To ascertain the extent to which IPSAS-based accrual basis promotes efficient and effective financial reporting of public sector organizations compared to cash basis.



Conceptual Review

International Public Sector Accounting Standards (IPSAS)

International Public Sector Accounting Standards (IPSAS) are a set of international accounting standards established to govern the financial reporting of public sector entities (Erin et al., 2016; Heald, 2003). IPSAS was introduced by the International Federation of Accountants (IFAC) in 1997 with the primary purpose of promoting high-quality financial reporting and accounting standards in the public sector (Ijeoma & Oghoghomeh, 2022). These standards provide a consistent, transparent, and comprehensive framework for governments to prepare their financial statements, thereby enhancing accountability, transparency, and the value relevance of financial information disclosed by government entities.

IPSAS encompasses several fundamental elements, including accrual-based accounting, which emphasizes recording economic events when they occur, rather than when cash is received or disbursed (Aduwo, 2019). It also outlines the requirement for the fair presentation of financial statements, ensuring that they faithfully represent the financial position and performance of the public sector entity (Ijeoma, 2022). Additionally, IPSAS mandates the disclosure of information that is essential for understanding the financial statements, providing transparency and accountability. Furthermore, IPSAS adheres to the principle of consistency, requiring that accounting policies be applied consistently over time to maintain comparability.

The adoption of IPSAS has extended its reach worldwide, with many countries adopting these standards to improve their public sector financial reporting (Ezekwere & Onuora, 2021). The significance of IPSAS adoption lies in its potential to foster international comparability, which aids in the evaluation of a country’s fiscal position and performance. The adoption of these standards promotes consistency in financial reporting practices across nations, making cross-border comparisons more accurate and meaningful (Ijeoma & Oghoghomeh, 2022).

In Nigeria, the adoption of IPSAS in 2012, starting with the cash basis and for the lowed by accrual basis IPSAS in 2016, was a major stride in enhancing transparency and accountability in the public sector’s financial reporting (Erin et al., 2016). The significance of this adoption is reflected in the improved quality of financial information, which has enabled stakeholders to make informed decisions regarding government finances. It has also strengthened the country’s financial reporting practices, aligning them with international best practices (Nkwagu et al., 2016).

IPSAS adoption has not been without its challenges, including the cost and capacity issues related to implementation (Ijeoma & Oghoghomeh, 2022). However, the overall benefits of IPSAS adoption in Nigeria have been notable, as it has paved the way for a more transparent and accountable public sector financial reporting system. The adoption of these standards in Nigeria represents a crucial step towards achieving the principles of IPSAS, including enhanced financial transparency, accountability, and value relevance (Ezekwere & Onuora, 2021).

In summary, International Public Sector Accounting Standards (IPSAS) serve as a global framework for public sector financial reporting. IPSAS is rooted in the principles of transparency, accountability, and value relevance. Its adoption worldwide, including Nigeria, has played a significant role in aligning government financial reporting with international best practices. This, in turn, has improved the quality of financial information available to stakeholders and allowed for more meaningful cross-border comparisons. While challenges persist, the benefits of IPSAS adoption are undeniable, making it a vital tool for fostering transparency and accountability in the public sector.





This chapter outlines the research methodology used in this study, which aims to investigate the impact of International Public Sector Accounting Standards (IPSAS) adoption on the financial reporting quality of public sector entities in Nigeria. The chapter discusses the research design, population, sampling technique and sample size, sources and methods of data collection, data analysis method, as well as the validity, reliability, and ethical considerations associated with the study.

Research Design

In this research, a quantitative research design is the chosen methodology. The decision to employ a quantitative approach is based on its suitability for the study’s objectives, as it allows for the collection of numerical data that can be statistically analyzed (Saunders et al., 2019). The primary aim of this research design is to investigate the impact of International Public Sector Accounting Standards (IPSAS) adoption on the quality of financial reporting within Nigerian public sector entities. This approach is justified by the ability of a quantitative survey research design to systematically gather structured data from a large sample of respondents and subsequently apply statistical techniques to draw meaningful conclusions (Anderson, Fontinha, & Robson, 2020).

Quantitative research offers several advantages for this study. It allows for the quantification of data, making it feasible to analyze and interpret statistical patterns and relationships systematically and objectively. Given the scale of the investigation and the need for empirical evidence to address the research objectives, a quantitative approach is particularly well-suited. This method provides the means to collect data from a wide array of public sector employees and organizations, thereby offering a comprehensive view of the impact of IPSAS adoption on financial reporting quality in Nigeria. By utilizing a structured questionnaire and employing statistical analysis, this research will facilitate the systematic assessment of the relationships and correlations between IPSAS adoption and financial reporting quality within the Nigerian public sector.



Data Presentation



Summary of Findings

The study delved into various aspects of International Public Sector Accounting Standards (IPSAS) adoption in the Nigerian public sector, aiming to assess its impact on financial reporting, comparability, budget implementation, fund management, and cost-effectiveness. The findings from this comprehensive analysis provide valuable insights into how stakeholders perceive IPSAS adoption’s influence on the public sector in Nigeria.

One key area of investigation was the credibility of financial statements in the Nigerian public sector. The results, as presented in Table 4.20, indicate that stakeholders believe that IPSAS adoption has positively impacted the quality of financial reporting. A substantial percentage of respondents expressed a positive view, with a mean rating of 95, which suggests strong agreement with the idea that IPSAS has enhanced the credibility of financial statements. This finding aligns with the overarching objective of IPSAS, which seeks to improve the quality and reliability of financial reporting in the public sector.

Another crucial dimension explored was the comparability of financial information across public sector entities following IPSAS adoption. Tables 4.21 and 4.22 provide insights into this aspect. In Table 4.21, respondents indicated a mean rating of 92.67 regarding the extent to which IPSAS improved comparability. While the majority held a positive view, there were some uncertainties expressed. In Table 4.22, which evaluated the impact of IPSAS-based accrual basis on financial reporting, the findings showed a mean rating of 82, suggesting that respondents perceive IPSAS to have improved comparability between cash and accrual basis reporting. These findings collectively indicate that IPSAS has indeed promoted comparability in financial information within the Nigerian public sector, which is a crucial element for stakeholders and decision-makers.

The impact of IPSAS on budget implementation and fund management was another vital dimension assessed. Tables 4.23 and 4.24 delved into this aspect. In Table 4.23, stakeholders’ perceptions regarding the effect of IPSAS on efficient budget implementation were assessed. The results showed a mean rating of 83.33, indicating a positive perception among respondents. This suggests that IPSAS adoption has the potential to lead to efficient budget implementation in the Nigerian public sector. In Table 4.24, stakeholders’ views on the efficient management of public funds following IPSAS adoption were examined. The mean rating of 81.67 suggests that respondents see IPSAS as having a positive influence on efficient fund management.

Lastly, the study explored whether IPSAS encourages cost-effective practices in public financial management. Table 4.25 demonstrated a positive perception among respondents, with a mean rating of 83.33. This result suggests that IPSAS has the potential to drive cost-effective practices within the Nigerian public sector, aligning with the principles of efficient resource utilization.

In summary, the findings from this study indicate that stakeholders in the Nigerian public sector perceive IPSAS adoption as having a positive impact on various critical aspects of financial management. This includes enhancing the credibility of financial statements, promoting comparability of financial information, improving budget implementation, efficient fund management, and encouraging cost-effective practices. These positive perceptions align with the goals of IPSAS to enhance transparency, accountability, and financial management practices in the public sector.

The study’s results can be valuable for policymakers, public sector entities, and other stakeholders seeking to understand the effects of IPSAS adoption in Nigeria. It underscores the potential benefits of adhering to international accounting standards and the positive impact it can have on various financial management aspects within the public sector. These findings provide a strong foundation for further exploration and implementation of IPSAS standards to improve financial reporting and management practices in Nigeria’s public sector.


In conclusion, the findings of this study have shed light on the perceptions of stakeholders within the Nigerian public sector regarding the adoption of International Public Sector Accounting Standards (IPSAS). The study assessed the impact of IPSAS adoption on various facets of financial management, including the credibility of financial statements, comparability of financial information, budget implementation, fund management, and cost-effectiveness practices.

The results provide compelling evidence that stakeholders view IPSAS adoption in a positive light. The study revealed that IPSAS has significantly enhanced the credibility of financial statements, as reflected in Table 4.20. It has also promoted comparability of financial information, a crucial element for informed decision-making, as indicated in Tables 4.21 and 4.22.

Moreover, stakeholders perceive IPSAS adoption as contributing to more efficient budget implementation, as evidenced by the findings in Table 4.23, and enhancing fund management practices, as demonstrated in Table 4.24. Additionally, the study revealed that IPSAS encourages cost-effective financial management practices within the Nigerian public sector, which is crucial for optimizing resource utilization.

These findings collectively emphasize the positive impact of IPSAS adoption on financial management practices in the Nigerian public sector. They suggest that the adoption of international accounting standards can lead to improved transparency, accountability, and effective resource management. Therefore, the implementation of IPSAS in the Nigerian public sector is not merely a compliance requirement but a transformational step toward enhancing financial reporting, decision-making, and resource allocation.

The implications of these findings are significant, not only for Nigeria but also for other countries considering or undergoing similar accounting standard transitions. The positive perceptions of stakeholders regarding IPSAS adoption highlight the potential benefits of aligning with international accounting standards. Policymakers, public sector entities, and relevant authorities should consider these results when making decisions about the adoption and implementation of IPSAS. Furthermore, these findings provide a foundation for future research and policy development aimed at refining and advancing financial management practices in the public sector. Overall, the study’s results underscore the importance of IPSAS adoption in improving financial management practices and promoting effective and efficient resource utilization within the public sector.


Based on the findings of the study, the following recommendations were made

  1. Continuous Training and Capacity Building: Public sector entities should prioritize ongoing training and capacity building programs for their staff to ensure a thorough understanding of IPSAS requirements and principles. This will enable them to apply the standards effectively in their financial reporting and management.
  2. Enhanced Stakeholder Engagement: Public sector entities should actively engage with stakeholders, including government agencies, auditors, and the public, to ensure transparency and accountability in financial reporting. This engagement will foster trust and confidence in the financial statements prepared under IPSAS.
  3. Regular Compliance Audits: The government should conduct regular compliance audits to ensure that public sector entities are adhering to IPSAS requirements. This will help identify areas of improvement and provide a basis for corrective actions when necessary.
  4. Monitoring and Evaluation: Implement a robust system for monitoring and evaluating the impact of IPSAS adoption on financial management continually. This includes assessing its effects on the credibility of financial statements, comparability of information, and budget implementation. Regular evaluations will enable timely adjustments and improvements.
  5. Dissemination of Best Practices: Public sector entities should share success stories and best practices related to IPSAS adoption. This knowledge sharing can help other entities overcome challenges and implement IPSAS more effectively.
  6. Promotion of Research and Academic Collaboration: Encourage academic institutions and researchers to conduct further studies on the impact of IPSAS adoption in the Nigerian context. This will provide a deeper understanding of the long-term effects and contribute to continuous improvement.
  7. Stakeholder Education and Awareness: Launch comprehensive awareness campaigns to educate stakeholders about the benefits and significance of IPSAS adoption. This includes not only public sector employees but also citizens and taxpayers who have a vested interest in financial transparency.
  8. Flexibility in Implementation: Recognize that different public sector entities may face unique challenges in adopting IPSAS. Therefore, provide flexibility in the implementation process, allowing entities to tailor their approaches while still meeting IPSAS requirements.

Contribution to Knowledge

This study has made a significant contribution to the existing body of knowledge in several key areas related to International Public Sector Accounting Standards (IPSAS) adoption and its impact on financial management in the Nigerian public sector.

First and foremost, this research has contributed to the understanding of the specific effects of IPSAS adoption on the credibility of financial statements in the Nigerian public sector. By empirically testing the hypothesis related to the enhancement of financial statement credibility, this study provides concrete evidence that the adoption of IPSAS positively influences the reliability and trustworthiness of financial reports. This finding contributes to the global discourse on the benefits of IPSAS implementation in enhancing the credibility of financial information, particularly in emerging economies like Nigeria.

Secondly, this study has shed light on the comparability of financial information across different public sector entities following IPSAS. The research findings indicate that IPSAS adoption improves the comparability of financial data. This contribution is valuable not only for Nigeria but also for other countries considering or in the process of adopting IPSAS. The improved comparability enables more effective benchmarking and assessment of financial performance across public sector organizations, leading to better-informed decision-making and resource allocation.

Furthermore, this study contributes to the body of knowledge by assessing the impact of IPSAS on the efficiency of budget implementation in Nigeria. The findings suggest that IPSAS adoption does, in fact, contribute to more efficient budget implementation. This insight can assist policymakers, government agencies, and public sector managers in developing strategies to streamline budgetary processes, leading to better planning and implementation.

In addition, this research makes a unique contribution by exploring the extent to which IPSAS-based accrual basis financial reporting promotes effective financial management compared to the cash basis. The study reveals that public sector organizations following IPSAS-based accrual reporting tend to perform better in terms of financial management. This insight provides a practical perspective on the benefits of IPSAS adoption, emphasizing its role in enhancing financial efficiency and effectiveness.

Lastly, this study has made a methodological contribution to the field of public sector financial management research. By employing a one-sample t-test to analyze the data and test the hypotheses, the research provides a robust and applicable statistical approach for future studies in this area. This methodological contribution enables researchers and scholars to conduct similar assessments in the context of IPSAS adoption or related financial management reforms.


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