INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS (IPSAS) AND ITS IMPLEMENTATION IN MINISTRIES, DEPARTMENTS AND AGENCIES (MDAs). A STUDY OF MINISTRY OF FINANCE, UYO, AKWA IBOM STATE.

INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS (IPSAS) AND ITS IMPLEMENTATION IN MINISTRIES, DEPARTMENTS AND AGENCIES (MDAs). A STUDY OF MINISTRY OF FINANCE, UYO, AKWA IBOM STATE.

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1.1       Background to the Study

The International Federation of Accountants (IFAC) has made it a precondition and directive that the public sector of any given country should endeavor to prepare its General Purpose Financial Reports (GPFRs) using Accrual Basis and Cash Basis International Public Sector Accounting Standards (IPSAS) for transparency, accountability and probity with the aim of meeting global requirements and uniformity of accounting standards the world over. This directive, many countries of the world are trying to adhere to.

Prior to the coming of IPSAS in public sector, each country of the world had its own set of accounting standards employed in the preparation and presentation of the GPFRs as issued by its own standards setting body which negates the principle of uniformity and harmonization globally. These were the seeming monumental malaise faced by the accounting profession the world over. The coming of IPSAS has addressed such.

On 28th of July, 2010, the Federal Executive Council (FEC) at its meeting approved that Nigeria should adopt the provisions of International Financial Reporting Standards (IFRS) and International Public Sector Accounting Standards (IPSAS) for private and public sector respectful.

Consequently, the Federation Account Allocation Committee (FAAC) at its meeting held on 13th June, 2011, set up a sub-committee (which is responsible for the adoption and implementation of IPSAS) to provide a roadmap for the implementation of International Public Sector Accounting Standards (IPSAS) in the three tiers of government in Nigeria.

The International Public Sector Accounting Standards (IPSAS) is a set of accounting standards issued by the International Public Sector Accounting Standards Board (IPSASB), an independent organ of the International Federation of Accountants (IFAC), for use by public sector entities around the world in preparation of financial statements. International Public Sector Accounting Standards (IPSASs) are a set of professionally developed, high quality, global accounting standards that require accounting on cash basis or accrual basis.

It aims at harmonization and comparability of public sector financial accounting information through global best practices which encourage comprehensive reporting, due full disclosure and transparency. It provides for high-quality, robust and full disclosure of all assets and liabilities and contingent liabilities which are very essential for assessing the true economic implications of public sector financial management.

It is pertinent to note that the International Public Sector Accounting Standards (IPSAS) are issued by the International Public Sector Accounting Standards Board (IPSASB) which is an independent organ of the International Federation of Accountants (IFAC). It is composed of eighteen (18) volunteer members, fifteen (15) of which are from the International Federation of Accountants (IFAC) and the other three members are from either the Ministry of Finance (MoF), government audit institutions or public practice academia. To date, it has issued about 32 standards on Accrual Basis and one standard on Cash Basis of accounting.

1.2       Statement of the Problem

Ideally, the International Public Sector Accounting Standards (IPSASs) are meant to be adopted and implemented by governments of various interested countries smoothly. But this is not the case as the adoption and implementation of International Public Sector Accounting Standards (IPSAS) has been greeted with some challenges. Some of them, as spotted out by the researcher, are:

i.              The conversion and implementation of IPSAS proves expensive which may stall the process of adopting and implementation of IPSAS.

ii.            Accounting personnel and government employees are not properly trained on the Accrual accounting and IPSAS, hence may be a militating factor towards the adoption and implementation of IPSAS.

iii.          Government employees in various Ministries, Departments and Agencies (MDAs) lack the required Information and Communication Technology (ICT) skills with regards to IPSAS which may hamper the adoption and implementation process.

1.3       Objectives of the Study

The broad objective of the study is to examine the challenges and possible prospects of the implementation of IPSAS in MDAs in Nigeria.

Specific objectives are:

i.              To check if the conversion and implementation of IPSAS is expensive at Ministry of Finance, Uyo.

ii.            To find out whether the training of accounting personnel and government employees would have a significant influence on the adoption and implementation of IPSAS at Ministry of Finance, Uyo.

iii.          To ascertain if ICT capacity development of government employees in MDAs has a significant influence on the adoption and implementation of IPSAS at Ministry of Finance, Uyo.

1.4       Research Questions

From the study so far, the researcher has been able to come up with some research questions. They are:

i.              Is the conversion and implementation of IPSAS expensive at Ministry of Finance, Uyo?

ii.            Does the training of accounting personnel and government employees significantly influence the adoption and implementation of IPSAS at Ministry of Finance, Uyo?

iii.          Does ICT capacity development of government employees in MDAs significantly influence IPSAS adoption and implementation at Ministry of Finance, Uyo?

1.5       Research Hypotheses

Again, from the data gathered thus far and subject to a test that would be carried out, the researcher has been able to formulate the following hypotheses which would be stated in the null form. They are:

H0:      The conversion and implementation of IPSAS is not significantly costly and expensive.

H01:     The training of accounting personnel and government employees would not significantly influence the adoption and implementation of IPSAS.

H02:     ICT capacity development of government employees in MDAs does not significantly influence the adoption and implementation of IPSAS.

1.6       Scope of the Study

The scope of this study is on the examination of the adoption and implementation of IPSAS looking at the challenges and prospects in MDAs in Nigeria with a particular reference to the Ministry of Finance, Uyo, Akwa Ibom State.

1.7       Limitations to the Study

It is an established fact that every research work is greeted by some major roadblocks. It is left to the researcher to subdue the effects of these roadblocks so as not to influence the research work a great deal. This is what the researcher of this study has done. The major limitations faced in the course of this research are those of insufficient materials, laxity on the part of the respondents, finance and the likes. But these have been subdued to a degree.

1.8       Significance of the Study

It is envisaged that this study would be beneficial to all and sundry.

To financial analysts, they would find this study as a guide towards their analysis of the public sector financial management in Nigeria.

The various employees in government's parastatals would appreciate this study as it will reminding factor towards their surge towards improving.

The accounting regulatory body would see how indispensable this study is as it will guide them towards accounting policy formulation in government's parastatals.

To present and future researchers, this study would serve as a tool towards the addition of knowledge in the field of IPSAS in public sector in Nigeria and the world over. And to the academia, this study is a compass and guide towards the teaching of public sector accounting in higher institutions of learning to both lecturers and students alike.

1.9   Definition of Terms

IPSAS: International Public Sector Accounting Standards. A set of accounting standards issued by the International Public Sector Accounting Standards Board (IPSASB) for use by public sector entities around the world in the preparation and presentation of financial statements.

IPSASB: International Public Sector Accounting Standards Board. A standard setting organ of International Federation of Accountants (IFAC) which is in charge of the development and issue of IPSAS.

FAAC: Federation Accounts and Allocation Committee. Adams (2014) has it that this was set up by the Allocation of Revenue (Federation Account) Act Cap. A15, LFN 2005 to deliberate upon and allocate funds from Federation Accounts to the three tiers of government.

MoF: Also called the Federal Ministry of Finance. It is the government body that manages the finance of the Federal Government of Nigeria, including managing, controlling and monitoring of Federal revenues and expenditures.

MDAs: Ministries, Departments and Agencies. This comprised the various parastatals of the government in charge with the day-to-day activities of the government.

Public Sector Financial Management: This is concerned with the aspects of resource mobilization and expenditure management in the public sector.

Wikipedia has it that it consist of laws, rules, systems and processes used to mobilise revenue, allocate public funds, undertake public spending, account for funds and audit results.

General Purpose Financial Reports (GPFRs): According to accountingtools.com, GPFRs are those financial statements released to a broad group of users. These statements include:

i.              Income statement

ii.            Statement of financial position

iii.          Statement of cash flow

iv.          Statement of changes in equity, and

v.            Accompanying disclosures.

These statements are used to discern the financial condition and result of an issuing entity.

IFAC: International Federation of Accountants. According to its official website, ifac.org, IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. It accommodates over 175 members and associates in more than 130 countries and jurisdiction and about three (3) million accountants globally.

1.10     Organization of the Study

This research is organized into five chapters as follows:

Chapter one gives a general understanding to readers with background information and serves as a foundation for the overall study. It gives insight to subsequent chapters to be discussed. Chapter two deals with the review of related literature. Chapter three centres on the research methods to be used and reasons for the choice of method. Chapter four presents the analysis of data and the interpretation therein. Chapter five featured summary of findings, conclusion and recommendations.





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