ABSTRACT

This study evaluated the effect of International Public Sector Accounting Standards (IPSAS) on transparency and accountability in government ministries in Rivers State, Nigeria. Specifically, the research examined how IPSAS adoption influences transparency, accountability, and good governance in selected ministries. To achieve this, a survey design was adopted, and data were collected using a five-point Likert-scale questionnaire administered to a sample of 100 participants, including junior, intermediate, senior, and professional accountants, auditors (internal and external), and cash officers in the selected ministries. The collected data were analyzed using descriptive statistics, while the formulated hypotheses were tested using regression analysis at a 5% level of significance.

The results indicated that IPSAS adoption significantly enhances accountability, transparency, and good governance in the ministries studied. Consequently, it implies that full implementation of IPSAS can strengthen the financial management and governance structures of the state economy. Based on these findings, the study recommends that the Nigerian government enact enabling legislation to support IPSAS adoption and implementation, while also instituting appropriate sanctions to ensure full compliance.

CHAPTER ONE

INTRODUCTION

This chapter introduces the adoption of International Public Sector Accounting Standards (IPSAS) and examines their effects on transparency and accountability. It also highlights the research objectives, questions, and hypotheses. Finally, the chapter discusses the significance, scope, and definition of terms.

1.1 Background to the Study

The Nigerian public sector has long struggled with mistrust, dishonesty, and mismanagement of public funds. Consequently, successive administrations at the federal, state, and local government levels have prioritized combating corruption, misappropriation, and lack of accountability. However, despite various regulatory frameworks and oversight organizations, reports of mismanagement and misuse of public resources continue to grow.

In response to these challenges, many governments worldwide have sought to strengthen financial management systems and processes to improve transparency and accountability. As part of this effort, the International Federation of Accountants (IFAC), through the International Public Sector Accounting Standards Board (IPSASB), developed the International Public Sector Accounting Standards (IPSAS) to guide public sector accounting practices globally.

The public sector comprises national and local government entities, agencies, and chartered bodies that provide essential services often not supplied by the private sector. Notably, it represents one of the largest sectors of any economy. Public sector accounting is the systematic recording, summarizing, analyzing, and reporting of government financial transactions. It involves managing receipts, disbursements, and ensuring stewardship of public funds (Adams, 2004). Unlike the private sector, the government aims not to make a profit but to provide essential services to citizens.

IPSAS represents a set of accounting principles issued by IPSASB for public sector entities to follow when preparing financial statements (IPSAS Handbook, 2015). Furthermore, IPSASB promotes high-quality financial reporting by developing accrual-based international accounting standards for government and public sector entities worldwide. The implementation of IPSAS in Nigeria was officially set for January 2nd, 2016, as stated by the Accountant-General of the Federation, General Ahmed Idris. He emphasized that adopting IPSAS would enable Nigeria to operate on par with advanced global economies, improve transparency, and provide open and reliable financial information.

Additionally, globalization and increased cross-border transactions have created a pressing need for uniform, comparable, and transparent public sector financial reporting standards, ensuring consistency of information across countries (Ijeoma & Oghogbomeh, 2014).

1.2 Statement of the Problem

Differences in financial reporting formats and the traditional cash basis of accounting have historically limited comparability, hindered budget implementation, and facilitated poor management of public funds. Consequently, accountability and transparency in government financial reporting have been compromised (Ibanichuka & Oyadonghan, 2014).

To address these issues, IPSAS was introduced by IFAC through IPSASB to enhance transparency and accountability in public sector financial management, particularly following the global financial crises. Moreover, adopting IPSAS helps transition from cash-based accounting to accrual-based reporting, aligning with international accounting standards.

The adoption of IPSAS aims to improve the integrity of general-purpose financial reports by public sector entities. This, in turn, allows for better-informed assessments of government resource allocation decisions and highlights financial mismanagement (Ademola, Adegoke & Oyeleye, 2017).

1.3 Objectives of the Study

The main objective of the study is to examine the effect of IPSAS adoption on transparency and accountability in government ministries in Rivers State, Nigeria.

Specifically, the study seeks to:

1. Assess whether IPSAS adoption increases uniformity in government financial reporting.

2. Examine the level of accountability in government financial statements.

3. Evaluate the extent to which IPSAS adoption enhances good governance and management of public funds.

1.4 Research Questions

The study addresses the following research questions:

1. How has IPSAS adoption increased uniformity in government financial statements?

2. To what extent has IPSAS adoption improved accountability in financial reporting?

3. How has IPSAS adoption enhanced good governance and the management of public funds in Nigeria?

1.5 Research Hypotheses

The study is guided by the following hypotheses:

Ho1: IPSAS adoption has not increased uniformity in government financial reporting.
Ho2: IPSAS adoption has not improved accountability in government financial statements.
Ho3: IPSAS adoption has not enhanced good governance and management of public finance in Nigeria.

1.6 Significance of the Study

The findings of this study are crucial for government authorities in Rivers State, Nigeria. Specifically, the study highlights the financial and administrative benefits of adopting IPSAS, including improved transparency, accountability, and comprehensiveness of financial reporting. Furthermore, the research will inform policymakers about the need for full IPSAS implementation and the potential for better governance outcomes.

1.7 Scope and Limitations of the Study

The study focuses on the impact of IPSAS on transparency and accountability in the Nigerian public sector, with emphasis on ministries and agencies of the Rivers State government. However, limitations include incomplete database management related to IPSAS implementation in the state. Additionally, while broader representation across the South-South region would be ideal, financial and time constraints restricted the research to selected ministries and agencies.

The study uses a quantitative approach, employing a five-point Likert-scale questionnaire administered to accountants and internal auditors in selected ministries and agencies in Rivers State.

1.8 Definition of Terms

Adoption: The act of choosing to take up, follow, or implement a policy or standard.

Transparency: The practice of openly communicating essential information. In finance, it refers to the clarity and openness of information shared with stakeholders, including investors and the public.

Accountability: The obligation to accept responsibility and provide explanations for actions, particularly regarding ethical governance and management of public resources.