Relevance of Accounting Ethnics in Accounting Education
Purpose of the Study
The main purpose of this study is to determine the adoption of Accounting ethics in accounting education in Edo state Nigeria. Specifically, the study determined the adoption of accounting ethics in:
- reporting assets and liabilities by account officers in tertiary institutions in Edo state.
- cash flow management by account officers in tertiary institutions in Edo state.
- capturing revenues and expenses by account officers in tertiary institutions in Edo state.
- presentation of budget information by account officers in tertiary institutions in Edo state.
- internal control system by account officers in tertiary institutions in Edo state.
REVIEW OF RELATED LITERATURE
Public Sector Accounting
Public sector refers to that segment of the national economy whose activities both economic and non-economic are under the control and direction of the government (Gberegbe & Micah in Ibanichuka & Oyadonghan, 2014). Public sector is that aspect of the economy that produces goods and services with the aim of maximizing the welfare of the populace. Public sector is concerned with providing services to the general public which would not otherwise be available or provided adequately within the financial resources of any individual members of the public, Bammeke (2012). Public sector consists of organizations where control lies in the hand of the public, as opposed to private owners, and whose objectives involves the provision of services, where profit is not a primary objective.
Public sector accounting is used by all organizations which are not privately owned and operated, but which are established, run and financed by the Government on behalf of the public (Offordile, 2013). Public Sector accounting has been defined as a process of recording, analyzing, summarizing, reporting, interpreting and communicating of financial information about government in aggregate and in details reflecting all transactions involving the receipts, transfer and disbursement of government funds and property (Ishola 2009).
International Public Sector Accounting Standard
The Accounting ethics are accounting standards developed by IPSAS Board for all categories of government/public sector around the world in the preparation of financial statements applicable to all levels of government. IPSASs are standards of high quality which serve as catalysts for providing sound and transparent financial statements, thereby improving operational performance, accountability and fair allocation of resources (Acho, 2014).
Accounting ethics are financial measurement reporting rules recommended for adoption by governments around the world in the preparation of financial statements by public entities. The standards are applicable at all levels of government to harmonize their national standards in response to greater government financial accountability and transparency (Chan in Okere, Eluyela, Bassey & Ajetunmobi, 2017). The adoption of accounting ethics is part of strategies for modernization by public sector to improve the level of confidence in the quality and reliability of financial reporting and encourage the provision of information for accountability and transparency.
The IPSASs set out guidance for the structure, minimum requirements, recognition, measurement and disclosure requirements in the general purpose financial reporting intended to meet the needs of users who are unable to require the preparation of financial reports tailored for their specific needs. IPSASs provides high-quality, independently produced accounting standards, underpinned by strong due process and supported by governments, professional accounting bodies, and international development organizations, representing best practices for governments and not-for- profit organizations.
The Accounting ethics are a series of 32 financial reporting and accounting standards issued by the International Public Sector Accounting Standards Board (IPSASB), which represents more than 160 member bodies in 120 countries (Mike, 2014). Nowadays, regardless of different financial reporting requirements or financial characteristics, the world talk one accounting language through the adoption of unified International Public Sector Accounting Standards, (IPSASs) and International Financial Reporting standard (IFRS) that enhance comparability and international best practices.
Financial reporting is the act of communicating financial statements and related information from a business enterprise to third parties (external users) for sound economic decision making. Financial reporting provides information on management‟s effectiveness in utilizing the resources and running the enterprise. Financial reporting is the process of producing statements that disclose an organization‟s financial status to management, investors and the government (Rouse, 2017).
Financial reporting involves the disclosure of financial information to the various stakeholders about the financial performance and financial position of an organization over a specified period of time. These stakeholders include – investors, creditors, public, debt providers, governments and government agencies. According to the International Accounting Standard Board (IASB) (2010), the objective of financial reporting is to provide information about the financial position, performance and changes in the financial position of an enterprise that is useful to a wide range of users in making economic decisions.
According to the Financial Reporting Council (2013), financial reporting is the periodic process of providing information in financial statements (including the notes thereto) about the financial position and performance of a reporting entity to parties (users) external to that entity to assist them in making informed decisions about allocating scarce resources. In the context of this study, financial reporting is essentially a way of following standard practices to give an accurate depiction of a company‟s finances, including their revenues, expenses, profits, capital and cash flow for better understanding and appropriate decision making.
Tertiary institutions connote institutions of higher learning which comprises the universities, polytechnics, and other allied colleges where both undergraduate and post graduates students pursue a degree or diploma and other certificates with the aim of getting a certificate at the completion of their studies (Ibrahim, Adeyemi & Ayeni, 2016). The institutions are established to contribute optimally to national development. This is done by intensifying and diversifying its programmes for the development of both middle and high level manpower within the context of the need for the nation.
Tertiary institution also referred to as post-secondary education is the educational level following the completion of a school providing a secondary education. The World Bank (2017) defined tertiary institution as including universities as well as institutions that teach specific capacities of higher learning such as colleges, technical training institutes, community colleges, nursing schools, research laboratories, centers of excellence and distance learning centers.
Tertiary institutions, according to Modibbo (2015) are institutions of higher learning where knowledge is imparted to its seekers and researches are undertaken in various fields of human endeavor. Modibbo further asserted that tertiary institutions provide educational services and counselling to the general public at the right time. To achieve this objective, these institutions incur expenditures both of capital and recurrent nature.
According to the Federal Government of Nigeria (2013), tertiary institutions include universities, polytechnics and colleges of education, monotechnics and research institutions. They are established to meet the nations‟ need for socio-economic development through knowledge sharing, research and development (Asogwa, Etim & Etukafia, 2017). In the context of this study, tertiary institutions are institutions that offer undergraduate and postgraduate education which prepares individuals to be active members of their communities and societies. Tertiary education is instrumental in fostering growth and reducing poverty.
This chapter presents the procedure that was adopted for the study. The presentation is done under research design, area of the study, population of the study, sample and sampling technique, instrument for data collection, validation of the instrument, reliability of the instrument, method of data collection and method of data analysis.
Descriptive survey research design was adopted in this study. According to Nworgu (2015), a descriptive survey research design is the one which aims at collecting data, and describing in a systematic manner the characteristics, features or facts about a given population. Since this study involved the collection of opinions of accounts officers in federal universities, polytechnics and colleges of education in Edo state Nigeria on the adoption of accounting ethics in financial reporting, the survey design was considered appropriate.
Population of the Study
The population of this study consisted of 849 accounts officers in all the eleven federal tertiary institutions (five universities, three polytechnics and three colleges of education)in Edo state Nigeria.
PRESENTATION AND ANALYSIS OF DATA
This chapter presents the data and the statistical analysis of the study. Data collected with respect to the five research questions and ten null hypotheses were analyzed and presented in Tables 1-15, while analysis of demographic data of the respondents were presented in Appendix J page 177 .
DISCUSSION, CONCLUSION AND RECOMMENDATIONS
Discussion of Findings
The findings of this study are organized and discussed based on the research questions guiding the study as well as the hypotheses tested.
Reporting of Assets and Liabilities in Tertiary Institutions
The results of the study indicated that account officers adopted International Public Sector Accounting Standards (IPSAS) in presenting separately current and non-current assets and liabilities in its financial statement position, presents liability in order of maturity and stating balances carried over from one accounting period to the next accounting period in tertiary institutions in Edo state. Also, account officers did not adopt IPSAS in presentation of current assets in order of liquidity, disclosure of amount expected to be recovered for each asset and liability, receivables and payables from exchange transactions. This implies that most of the IPSA Standards on reporting of assets and liabilities were not adopted by account officers in their financial reporting activities in Nigeria. This finding could lead to inability to control fraud, improper verification and valuation of assets, lack of funds in meeting short-term and long-term liabilities, embezzlement in tertiary institutions‟ financial reporting in Nigeria.
Cash Flow Management in Tertiary Institutions
The results of the study revealed that account officers adopted International Public Sector Accounting Standards (IPSAS) in classification of cash flows during the period, disclosing cash inflow and outflow from interests and dividends in tertiary institutions in Edo state. Moreover, majority of the respondents did not adopt IPSAS in reporting cash flows from operating, investing and operating activities, reporting cash receipts and payments for the acceptance and repayment of deposits. Also, the respondents did not adopt IPSAS in reconciling the amounts of cash and cash equivalents in the statement, disclosing cash inflow from dividends and cash and advances and loans made within the period under review. This implies that account officers did not adopt IPSASs in disclosing cash flows from operating, investing and financing activities which will help the institution to ascertain the future sustainability of programmes in Nigeria.
Capturing of Revenues and Expenses in Tertiary Institutions
The results of the study indicated that account officers adopted International Public Sector Accounting Standards (IPSAS) in stating method of accounting for borrowing costs and measurement of employee-related expenses in tertiary institutions in Edo state. However, most of the respondents did not adopt IPSAS in reporting expenditure related to a provision that is recognized, reporting of gains and losses arising from financial instruments, correction of errors and effects of changes in accounting policies, disclosure of items of revenue and expense that are material fact and recognition, disclosing of items of property, plant and equipment and measurement of depreciation. The account officers also did not adopt IPSAS in identification and recognition of bad and doubtful debts, disclosure of grants, donations and transfers made or received and the treatment of losses on revaluation of assets in tertiary institutions in Edo state. This implies that account officers find it difficult to reflect expenses paid or not and all income whether received or not in their financial statements in tertiary institutions in Nigeria. This could be as a result of cost implications on enormous disclosure requirements which increase the volume of pages of financial statements.
Presentation of Budget Information in Tertiary Institutions
The results of the study revealed that account officers adopted International Public Sector Accounting Standards (IPSAS) in presenting an explanation of changes between the original and approved budget and disclosures in notes to the financial statement for the period of the approved budget in tertiary institutions in Edo state. Moreover, most of the respondents did not adopt IPSAS in showing the original and final budget amounts, presenting actual budget on a comparable basis and comparing of budgeted amount and actual amount spent. Also, the account officers did not adopt IPSAS in disclosing of budgetary basis and classification of basis adopted, identifying in notes the faculties included in the approved budget and making approved budget publicly and available. This could be as a result of inability of account officers to state the total revenue, total expenses and net cash flows from operating, investing and financing activities in presenting the budget in financial statements due to lack of knowledgeable personnel and training.
Internal Control System in Tertiary Institutions
The results of the study indicated that account officers adopted International Public Sector Accounting Standards (IPSAS) in reviewing department‟s monthly financial reports, evaluation of funding sources and evaluation of departmental employee-related annual performance in accordance with institutions systems in tertiary institutions in Edo state. Majority of the respondents did not adopt IPSAS in monitoring of payroll reports, regular reconciliations between subsidiary and control ledgers and segregation of duties within departments in receiving and depositing cash and cheques. They also did not adopt IPSAS in matching receiving documents to purchase orders and invoices, periodic review of costs, establishment of guidelines for providing credit and establishment of guidelines for cash budgets in tertiary institutions. This could be as a result of inability of account officers to evaluate the system of internal control relating to disclosing revenues and expenses in educational institutions in the aspects of procedures relating to generation of revenue such as fixing fees structure, offer scholarships and other items of revenue. It could also be as a result of technology and infrastructure.
Existing technology in most tertiary institutions in Nigeria makes the adoption of accounting ethics difficult. Adoption of accounting ethics requires the upgrading/replacement of some existing information technology system, data structure to enable adequate internal control system. This implies that account officers in tertiary institutions in Nigeria have not fully adopted IPSASs accounting guideline and policies in the preparation of the financial statements. This will give room for fraudulent practices as a result of non- compliance or existence in accounting guidelines and policies which may scare away both domestic and foreign donor agencies in rendering financial assistance to educational institutions.
From the findings of the study, it was revealed that account officers did not adopt IPSAS in reporting of assets and liabilities, cash flow management, capturing of revenues and expenses, presentation of budget information and internal control system in tertiary institutions in Edo state. Accounting standards are designed to promote global confidence in organizations‟ reporting. International Public Sector Accounting Standard is a set of reporting modules of governmental activities to project, promote, protect and sustain good governance globally as far as possible within the jurisdictions that have been adopted. Therefore, it is importance that the adoption of IPSAS based procedure and regulations/standards would enable the provision of more meaningful information for decision makers and improve the quality of financial reporting system in tertiary institutions in Nigeria.
Based on the findings of the study, the following recommendations are therefore made:
- The Federal Government should include International Public Sector Accounting Standards in the curriculum of accounting education in tertiary This will help to improve more the existing financial management mechanism and policy to enable accrual-based accounting and IPSAS to be adopted.
- Measures should be taken by tertiary institutions to enhance the disclosure of relevant financial information that will help in reporting assets and liabilities. This will facilitate the analysis of transactions (that is, avoiding understatement of assets or the overstatement of liabilities) and stock positions between institutional units and serve as a framework for assessing the sources and uses of financing and degree of liquidity for these
- There should be manpower development by various tertiary institutions to train highly qualified and professional accountants as well as build and develop accounting information system together with information This will help in reporting all statutory income and other internally generated revenue reported for the accounting period.
- The management of tertiary institutions should ensure adequate recognition of revenue and expense in their financial reporting This will help in determining the categories of revenues and expenses to be used in the chart of accounts and in financial statements preparation.
- An effective internal control system should be established by management of universities, polytechnics and colleges of education. This will help to avoid manipulation or embezzlement by
- Accounting departments in the institutions should initiate intensive and extensive research programmes into the theories, practices of accounting and investigation so that appropriate policies and standards would be followed by accountants while discharging their duties.
- Abdullahi, S. R. (2011). Mastering cost and management accounting (1st Edition). Kano-Nigeria: Gidan Dabino Publishers.
- Acho, Y. (2014). The challenges of adopting international public sector accounting standard (IPSAS) by Nigeria. Journal of Social Sciences and Public Policy, 6(2), 61-68.
- Adah, A., & Mamman, A. (2013). Assessing the performance of incremental budgeting system in the Nigerian public tertiary institutions. European Journal of Business and Management, 5(5), 100-108.
- Ateba, B. B., & Faan, P. (2014). Cash flow management: Assessing its impact on the operational performance of small and medium size enterprises at the Mafikeng Local Municipality in South Africa prior to the global financial crisis. Mediterranean Journal of Social Sciences, 5(27), 226-235.
- Avika, M. (2014). The impact of cash management on profitability and sustainability of small retail businesses in the Tongaat area, KwaZulu-Natal. M.Sc Thesis submitted to the Cost and Management Accounting in the Department of Management Accounting, Faculty of Accounting and Informatics, Durban University of Technology, Durban, South Africa.
- Ball, I., & Plugrath, G. (2012) Government accounting: Making enron look good. World Economics Journal, 13 (1), 1-18.
- COSO. (2013). Internal control integrated framework: Executive summary. Durham, North Carolina: Corruption Perceptions Index; 2015. Available from: http://www.ransparency.rg.
- Cretu, C., Sirbu, C., Gheonea, V., & Constandache, N. (2011). Presentation of financial statements according to IPSAS: A challenge for professional accountants. European Integration, Realities and Perspectives, 485-498.
- Dagogo, D. W., & Ohaka, J. (2015). The real impact of financial intervention of enterprise development in Nigeria. Journal of Economics and Sustainable Development, 6(6), 240-246
- Dandago, K. I., & Rufai, A. S. (2013). An assessment of the quality of auditors‟ reports in the Nigerian banking industry. Journal of Finance and Investment Analysis, 2(2), 63-75.
- Delottie (2012). IPSAS Summary. IPSAS in your pocket, 2012 Edition.
- Deloite (2013). International public sector accounting standards in your pocket, 2013 Edition.