CHAPTER ONE
INTRODUCTION
BACKGROUND OF THE STUDY
Over the years, countries of the world have defined and set the standards of financial reporting in their individual territories. However, globalization has brought about ever increasing collaboration, international trade and commerce among the countries of the world; hence, there is a great need for increased uniformity in the standards guiding financial statements so that such statement would remain comprehensible and convene the same information to users across the world. The need for the development of unified accounting standards has been the primary driver of international Public Sector Accounting standards for public sector financial reporting. While the commercial entities across the world are moving toward International Financial Reporting Standards (IFRS) governments are harmonizing with International Public Sector Accounting Standards (IPSAS).
The International Public Sector Accounting Standards govern the accounting by public sector entities, with the exception of government business enterprises. International public Sector Accounting Standards (IPSAS) is at present the focal point of global revolution in government accounting in response to calls for greater government financial accountability and transparency.
The public sector comprises entities or organizations that implement public policy through the provision of services and the redistribution of income and wealth, with both activities supported mainly by compulsory tax or levies on other sectors. This comprises governments and all publicly owned, controlled and or publicly funded agencies, enterprises, and other entities of government that deliver public programs, goods or services.
Public sector accounting is a system or process which gathers, records, classifies and summarizes as reports the financial events existing in the public or government sector as financial statements and interprets as required by accountability and financial transparency to provide information to information users associated to public institutions. It is interested in the receipts, custody, disbursement and rendering of stewardship of public funds entrusted.
Nigeria, a leading African nation with the population of over 150 million people and a foremost organization of the petroleum exporting countries (OPEC) member, with a public sector dominated economy, has identified the need to consider the value proposition of the international public sector accounting standards and implement same in order to remain relevant.
Truly, for developing nations to achieve ambitious socio-economic goals, developing countries require public sector institutional capacity for setting and implementing public policy, which in turn necessitates government accounting reforms. The social value of government accounting reform therefore lies in its contribution to development goals. This rationale has led international and multilateral lenders and donors to endorse international Public Sector Accounting Standards (IPSAS) for adoption by developing countries. An emphasis on assuring financial integrity and a shift to accruals can make international public sector accounting standards (IPSAS) for adoption by developing countries, and also useful in College of Education Ikere-Ekiti’s accounts.
Hence, many factors influence government accounting such as the role of government in the different fields like the armed forces, health and education and the policies set by government to achieve its aspirations and goals. Thus, government accounting is interested in information gathering that will enable her to prepare receipts and payments accounts. The need for an improved and increased recognition, measurement, presentation and disclosure requirements in relation transactions and events in general purpose financial statement has led to the adoption of international public sector accounting standards (IPSAS).
Until now, as per knowledge of the researcher, very little empirical research on the adoption of International Public Sector accounting Standards has been conducted in College of Education, Ikere-Ekiti. This study makes an attempt to bridge this gap and tries to study the financial account of College of Education, Ikere-Ekiti with reference to International Public Sector accounting Standards (IPSAS) adoption, benefits of International Public sector accounting standard in College of Education Ikere-Ekiti. Challenges faced by the administrative section of the institution and the accounting section in the process of adopting the international public sector accounting standard.
STATEMENT OF PROBLEM
The preparation and presentation of financial statement at each level of government have pose series of problems worldwide. Over the years, public sector accounting has been anchored on cash basis of accounting while private sector accounting has been predicated on accrual basis. Whereas the accrual basis has been working perfectly well in the private sector, the continued application of the cash basis in the public sector appears to have thrown up a number of challenges relating to under- utilization of scarce resources, high degree of manipulating figures, lack of proper accountability and transparency, inadequate disclosure requirement due to the fact that the cash basis of accounting does not offer a realistic view of financial transaction.
International public sector accounting standard adoption is expensive that some experts have contender that it is much advertised benefits do not justify the cost of the implementation predominantly accounting or financial reporting places emphasis on accountability and transparency.
Revolution is not only accorded to government functional activities, instead revolution also exists in government accounting. Hence International Public Sector accounting standards is a new revolution in government accounting.
International public sector accounting standards are international accounting standard used as guidelines for preparation of public sector financial statements.
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