Adoption of international public sector accounting standards and quality of financial reporting in Lagos

Abstract

The study evaluated the adoption of International Public Sector Accounting Standards (IPSASs) and quality of financial reporting in Lagos State. The study ascertained the level of adoption of IPSASs; identified the challenges faced in the adoption of IPSASs; investigated the determinants of the level of adoption of IPSASs and examined the influence of IPSASs on quality of financial reporting in the public sector. The study employed primary and secondary data. The population consisted of all the public sector accountants and auditors working in Lagos State. The sample size selected was 300 using stratified random sampling technique. Data were collected with the aid of questionnaire and disclosure checklist sent to accountants and auditors in Accountant General Office, Auditor General Office, Ministry of Finance and Lagos Internal Revenue Service (LIRS). A total of 291 copies of questionnaire were retrieved from the subjects. Data were analyzed using descriptive and inferential statistics such as percentages, paired sampled t-test, and ordinal logistic regression technique. The results of the study revealed that for all the included standards in IPSASs, the adoption, compliance and disclosure of IPSASs was at least 68% of the expected disclosure in Lagos State. The study also showed that the major challenges confronting the adoption of IPSASs in Lagos State were the cost of implementation (57.7%) and the increased complexity of financial reporting (51.7%). Furthermore, the study revealed that Cash Accounting Based System (CABS), adequate Multidimensional Reporting Requirement (MDRR), Awareness On the Transition of IPSASs (AOT), Commitment Of Central Entities And Key officials (CCEK), Effective Project Management Structure for IPSASs (EPMS), Budget For Additional Human Resources (BAHR), adequate Technology Capacity And Information System (TCIS), regular Update Of The Governing Bodies On The Progress made in the implementation of IPSASs (UGBP), Interim Financial Statement Report (IFSR), Continuous Testing Of Internal Controls (CTIC) and Prevention Of Corrupt Practice (PCP) are the major determinants of adoption of IPSASs. An increase in this will raise the likelihood of the occurrence of higher level of adoption of IPSASs by 1.399, 1.304, 1.228, 1.418, 1.261, 1.28, 1.093, 1.128, 1.465, 1.675 and 1.111 respectively. However, Total Support and Commitment from the Political Class (TSU) decreases the likelihood of the occurrence of higher level of adoption of IPSASs by 0.71. Finally, the study unveiled that there was significant influence of the adoption of IPSASs on the quality of financial reports (t-value = 0.0327, p-value < 0.01). The study concluded that the adoption of IPSASs has positive significant effect on the quality of financial reporting in Lagos State.