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Public Sector Accounting System in Nigeria: A Comparative Study of Cash-Basis and Accrual-Basis of Reporting

  • Federal University Otuoke, Bayelsa , Nigeria

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The objective of this study is to investigate the accounting system that should be adopted in the Nigerian public sector for achieving the financial, public and growth objectives of the government. To achieve this purpose, research questions were raised, hypotheses were formulated and a critical review of extant literature was made. The population of the study consists of eighteen(18) state legislators and thirty-nine(39) Directors of Finance and Accounts of the chosen ministries and extra-ministerial departments. In order to generate the necessary data for this study, the survey method of research design was adopted in which a well structured questionnaire designed in five-point Likert-Scale was administered on the study population. The data generated for this study were analysed using mean scores while the stated hypotheses were statistically tested with Z-test. The findings generated from this study indicated that cash basis of accounting does not significantly promote effective financial reporting of public sector entities in Nigeria, since the z-test result shows that the computer z-value (1.0) is less than the critical z-value (1.96). Similarly, it was gathered in this study that accrual basis of accounting significantly promotes effective financial reporting of public sector entitles in Nigeria. In view of the above findings we recommended the adoption of accrual basis of accounting in public sector entitles in Nigeria.
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... However, literature review on existing public accounting revealed that cash accounting system provides essential information and it is simple, easier to understand, facilitate decision making, and much more objective than other alternatives (Ross, 2003). Nonetheless, the system is not planned to provide information on the cost of services, earned revenues, account receivables, account payable, long-term assets and liabilities, accrued interest on external debt and stock value (Akenbor and Oghoghomeh, 2011;Zakiah, 2007;Saleh, 2007;Jones and Pendlebury, 1984). To add, cash accounting system is not significantly effective in providing accounting information for efficient performance of public sector organization as indicated by Okoye and Oghoghameh (2011). ...
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Public sector constitutes the largest sector of the economy of all nations, employs the largest work force and controls the greatest part of nations' financial resources. The paper adopted exploratory research method through literature scrutiny and scanning for relevant facts to assist in the achievement of the paper objectives. The public sector accounting system of Ghana and Nigeria were reviewed and was found that some of the differences that exist were as a result of the governance system (unitary and federal). It was also found that Nigeria has a unique system of allocating revenue collected to its various constituencies on monthly basis. The two countries are working gradually toward the implementation and adoption of International Financial Reporting System for the public sector. Also both countries are using modified cash basis of accounting along side with fund accounting. The bases of monitoring and evaluating budget are not well defined or benchmarked thus making performance evaluation difficult. Additionally, section 26 of the Fiscal Responsibility Act is rarely complied with in Nigeria. It is recommended that Ghana can adopt or modify its system of revenue allocation to enable fair allocation of resources to the regions even though Ghana is using unitary system of governance. The paper also recommended that procedures should be put in place to facilitate the full compliance to the provision of the Fiscal Responsibility Act in Nigeria or be amended to serve its intended purpose. Again clear performance measurement standards and bases of monitoring and evaluation should be put in place for the two countries. Detailed and continuous monitoring and evaluation process throughout the year for enhancement of value for money are further recommended. Finally, it was recommended that, the Auditor-General should be solely appointed by the civil service; founded that the auditor-general is appointed by the president in consultation with council of state (in Ghana) or the Federal Civil Service Commission (in Nigeria). Probably, his appointment by the president can generate some amount of sympathy or obligation of reciprocity and thereby reducing his independence.
Conference Paper
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The objective of this study is to ascertain the level of compliance in the implementation of Cash Basis International Public Sector Accounting Standards (CBI) between Nigerian states {Edo (E) & Ondo (O) States}. A descriptive research design was adopted. The study employs a checklist as a research instrument to assess the States' compliance level of CBI format in the areas of the Main Financial Statements (MFS), Performance Report (PR), Statistical Report (SR) and Accounting Policies (AP) disclosure requirements from their annual reports. The checklist consists of one hundred and fifty nine requirement items in all. The data gathered were analysed using the SPSS statistical package with T test statistical tool. The study found that both States had strong compliance level to CBI format in the various required areas. However, on the disclosure requirements, out of the four areas tested, both states disclosure index score strong compliance in MFS; State E had weak compliance while state O had no compliance in PR disclosure requirements. Both states had no compliance level in SR disclosure requirements, and state E had strong compliance level while state O had very weak compliance level in AP 2 requirements. Based on these findings, the study recommends that preparers of CBI in the states should be trained adequately to enable them report completely on all the required areas of CBI. Accounting professionals should work closely with IPSASs review and monitoring committee so that they can enforce supervision and monitoring of the implementation of IPSASs in Nigeria.
Purpose The objective of this study is to examine the perceived usefulness of accrual accounting-based financial information for accountability and for supporting decision-making in public sector organisations. Design/methodology/approach A questionnaire survey adapted from Kober et al. (2010) was used to survey Malaysian Federal Government accountants to ascertain their views on the usefulness of accrual accounting information across 12 situations regarding accountability and decision-making. Mean scores and mean score ranking were computed on a total of 165 usable responses received. The independent t -test was conducted to investigate the differences in the perception between “accountants with” and the “accountants without” prior work experience in the private sector. Findings The study provides evidence that Malaysian Federal Government accountants consider accrual accounting information as very useful for decision-making. The three most important decision-usefulness indicators in the survey are “To assist in managing the department’s assets and liabilities”, “To assess cash flow needs of a department” and “For departmental resource allocation decisions”. The least useful accrual accounting information as perceived by the Malaysian public sector accountants is “To assist in discharging the department’s accountability obligations”. Originality/value The study provides valuable insights into the extent to which accrual accounting information is considered useful for accountability and decision-making, lending support to the Malaysian Government’s reform agenda of moving towards using accrual accounting in public sector organisations at the federal level.
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The development of any accounting system requires consideration of the underlying purpose of that system. In Nigeria, government accounting processes have been conducted within the general framework of the principles of fund accounting but the application of these principles to financial reporting has been a major challenge. This study examined the implications of adoption of International Public Sector Accounting Standards (IPSAS) on the quality of financial reporting of public sector organisations in Nigeria. Primary source of data was employed. Chi-square test and Kruskal Wallis test were employed. Findings from the study showed that adoption of IPSAS would increase the level of reliance on the financial reporting of public sector organisations in Nigeria. In addition, it was found that applying IPSAS to public sector financial reporting would make the results of financial reporting of public sector organisations comparable. It was concluded that IPSASs have the potential to give a better financial integrity assurance. The study recommended reforms in public financial management and strengthening of Legislative capacity to balance the executive power. Therefore, the adoption of IPSAS is expected to influence the operating procedures and reporting practices of public sector organisations in Nigeria.
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Recent years have seen changes in governmental accounting from a cash-based accounting system to an accrual-based accounting system. According to Lüder, development in governmental accounting system is influenced by its environment. Lüder hypothesized that specific contextual variables and primary user orientation of governmental accounting and reporting could determine the design of the governmental accounting systems. These variables could indicate whether or not a particular governmental accounting system is favourable towards change. Assessment of the national context and development of the Malaysian governmental accounting shows support for Lüder's hypothesis.
In light of the worldwide economic crises, the public sector is coming under increasing financial pressure as budgets are reduced on a large scale whilst demands for public services are on the rise. In such austere times managers working in the public sector are confronted daily with targets and demands that are often set in confusing accounting and financial language. In Financial Management and Accounting in the Public Sector, Gary Bandy employs a clear and concise narrative to introduce the core concepts of accounting and financial management in the public sector and how to deliver services that are value for money. With a glossary of terms to help managers understand and be understood by accountants, as well as learning objectives and discussion questions, this 'hands-on' textbook will help students of public management and administration to understand the financial and accounting aspects of creating public value.
Financial Accounting for Management is a comprehensive textbook, with a strong focus on fundamentals, and has been specially designed to meet the needs of MBA students. It has systematically organised text that discusses the essential concepts and principles of financial accounting essential for decision making, and is highly application oriented. The book aims to develop the reader's skill for maintenance and evaluation of accounting needs for day-to-day business decision making. Oriented towards providing the reader with decision making insights, the book is likely to become popular as an independent, self-contained text for undergraduate and postgraduate students. This book would also serve as a handy reference book for entrepreneurs and practitioners to make informed and systematic business decisions.
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