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PROJECT TOPIC AND MATERIAL ON SOCIAL PREDICTORS OF COMPLIANCE WITH INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS AMONG EMPLOYEES IN LAGOS STATE
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- Name: Social Predictors Of Compliance With International Public Sector Accounting Standards Among Employees In Lagos State
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This study sought to investigate the social predictors of compliance with International Public Sector Accounting Standards among employees in Lagos State, Nigeria. Field survey design was employed. The sample size was 200 selected from the workers of KPMG and Deloitte both in Lagos State. Data collected using questionnaire were analyzed using Statistical Package for the Social Scientists (SPSS). The followings were the objectives of the study: to determine the social factors responsible for compliance with International Public Sector Accounting Standards among employees in Lagos State, to evaluate the effects of compliance with International Public Sector Accounting Standards among employees in Lagos State and to investigate the prevalence of compliance with International Public Sector Accounting Standards among employees in Lagos State.
1.1 Background to the Study
The global anxiety for better public financial management that guarantees more accountability and transparency is the concern of both developed and developing countries. In view of this, the International Federation of Accountants (IFAC) establishes and promotes the application of International Public Sector Accounting Standards (IPSAS) by public sector entities around the world when preparing their General Purpose Financial Reports (GPFR). The objective of IPSAS is to improve the quality of GPFR by public sector entities so as to have a better informed assessment of the decisions governments take to allocate resources. Compliance with IPSAS guarantees that financial reporting by public entities conveys a “true and fair view” of the financial situation. The adoption of IPSAS therefore, enhances transparency and accountability by governments in the management of public resources. It raises the quality of financial management, facilitates transactions with financiers and simplifies communication with the general public. IPSAS assure comparability of financial reporting with other countries, motivation of foreign investors to make investment in the country, and very helpful in raising capital from the international markets (International Public Sector Accounting Standards Board, 2013; South Asian Federation of Accountants, 2006). Consequently, public sector accounting carries out a basic purpose of safeguarding the public treasury by timely preventing and detecting corruption (Chan, 2003). This basic purpose of government accounting meets enormous challenges. According to the report of the High Level Panel on Illicit Financial Flows from Africa commissioned by the African Union (AU) and United Nations Economic Commission for Africa (UNECA) Conference of Ministers of Finance, Planning and Economic Development, over the period 1970 and 2008 Africa lost about $850 billion. Nigeria lost about $217.7 billion, Egypt $105.2 billion and South Africa more than $81.8 billion in illicit financial outflows (African Union and United Nations economic commission for Africa, 2015).
One major reason that makes high quality public sector reporting necessary in many countries is that government issued financial instruments are a very important part of their financial markets, there exist various crisis in many developing countries especially in Africa, with government debt level sitting at very precarious levels and it is no news that government finances need to be managed properly in any nation. Annual financial statements play an essential role in the accountability of government to their citizens. However, most of these financial statements are not prepared on consistent and comparable basis in developing countries. The benefits of achieving consistent and comparable financial information across jurisdictions are very important and a set of IPSAS have been established by the IPSASB to assist in that endeavour (Stephen, Mercy & Andy, 2012).
It has been observed that one of the social predictors for compliance in the use of the International Public Sector Accounting Standards among employees in Lagos State is its reliability. Consistent and uniform financial systems provide cost-efficiencies to business and greater safeguards to the employees. The employees are entitled to have confidence that, regardless of where a business activity occurs, the same high quality standards were applied. It is widely known that investors will be more opened to diversify their investments internationally if they are able to rely on financial information based on a similar set of standards. Hence, compliance with international standards, like those developed by the International Accounting Standards Board (IASB) and the International Auditing and Assurance Standards Board (IAASB), can undoubtedly lead to greater economic groth.
Additionally, government policy is another social predictors for compliance in the use of the International Public Sector Accounting Standards among employees in Lagos State. The political and economic systems in a country, not only affects managerial rewards but they also form part of the accounting standards and impact their implementation and use. For example in economies that encourage investor protection, the accounting and reporting standards apply force for managers to authentically report their performance, and as such to produce high-quality financial reports. With increased familiarity of investors with IFRS, the publication of accounts enables stakeholders to monitor management activity and auditors to implement and enforce IFRS, because accounting profession is generally supporting a single set of accounting.
In conclusion, the adoption of IPSASs by public sector entities is driven by the need to strengthen efficiency, accountability and professionalism in management of public resources (Aggestam, 2010). Accrual accounting improves decision making through comprehensive reporting of assets and liabilities and increased financial control as it provides a representation of the entity’s overall financial position by providing a snapshot comparison between financial periods while enhancing strategic planning (Aggestam, 2010). IPSASs also improve comparability, harmonization, transparency and accountability in financial reporting by public entities as they provide more relevant, reliable and timely financial information for decision making (IFAC Public Services Committee, 2002). Other benefits attributed to accrual accounting include: identification of total cost of government programs and activities through better measurement of costs and revenues; greater focus on outputs; more efficient and effective use of resources and greater accountability, better presentation of financial position of the public sector organizations and greater attention to assets and more complete information on liabilities through better assets and liabilities management (Mellet, 2002; Olsen, 2001). This study seeks to critically examine the social predictors of compliance with International Public Sector Accounting Standards among employees in Lagos State, Nigeria.
1.2 Statement of the Problem
A big challenge to the adoption of International Public Sector Accounting Standards (IPSAS) is resistance as it is obvious that not all government administrative machineries such as ministries, parastatals and extra ministerial departments are supporting IPSAS adoption in Nigeria. Without second thought, this resistance is due to the obvious fact that IPSAS being a principle based standard which will help to unravel all forms of financial malpractices existing in the public sector, hence it’s a treat to these stakeholder in the public sectors. Another challenge is the implementation cost and this is due to the fact that part of the effort toward IPSAS adoption, accounting manual need to written to be able to incorporate IPSAS terminologies and other finance officers in the public sector need to be educated and trained on the application of IPSAS. All these will require huge sum of money which may not be readily available to public officers. Lack of Qualified Accountant in the Public Sector is another problem confronting the adoption of International Public Sector Accounting Standards (IPSAS) as most of the organizations in the country and government agencies lack the necessary accounting personnel to effectively carryout the changes in IPSAS as opposed to the financial reporting frame work that currently exist in Nigeria.
1.3 Research Questions
This research will be carried out to answer the following research questions:
i) what are the social factors responsible for compliance with International Public Sector Accounting Standards among employees in Lagos State?
ii) what are the effects of compliance with International Public Sector Accounting Standards among employees in Lagos State?
iii) what is the prevalence of compliance with International Public Sector Accounting Standards among employees in Lagos State?
1.4 Objectives of the Study
The broad objective of this study is to investigate the social predictors of compliance with International Public Sector Accounting Standards among employees in Lagos State, Nigeria. The specific objectives include:
i) to determine the social factors responsible for compliance with International Public Sector Accounting Standards among employees in Lagos State
ii) to evaluate the effects of compliance with International Public Sector Accounting Standards among employees in Lagos State
iii) to investigate the prevalence of compliance with International Public Sector Accounting Standards among employees in Lagos State
1.5 Research Hypothesis
Ho1: There is no significant social factors responsible for compliance with International public sector accounting standard among employees in Lagos state.
1.6 Significance of the Study
The study will add value to accounting theory, considering that accounting theory is dynamic and the accounting principles evolve based on practice. Thus the findings from this study will contribute in the development of International Public Sector Accounting Standards and the conceptual framework for the public sector entities. The study will also benefit the stakeholders’ theory whereby the users of financial information provided through general purpose financial statements would have relevant and reliable information for decision making. The study will be beneficial to the Public Sector Accounting Standards Board as this would inform on the level of adoption of the accrual based IPSASs by the public sector institutions, the challenges faced, the applicability of the IPSASs in Nigeria context, any changes to be made locally to fit the Nigeria Context. Scholars would also benefit from the study as it would add to the body of knowledge on the adoption of IPSASs by the employees both in the private and public sector. The research findings would be used for further research work to fill identified gaps.
1.7 Scope of the Study
This study will be carried out among the staff of KPMG and Deloitte in Lagos State, Nigeria. Information collected from these workers shall be subjected to further analysis and the results got from it shall be final.
1.8 Limitation of the study
The study will be faced with a lot of challenges and one it the problem of finance. There is not going to be enough funds to print questionnaires and to also transport the researcher to meet the desired respondents. Another one is time; the researcher is currently busy with the demand of his academics. A lot of assignments are available for the researcher to do and coupled with his desire to read and learn at the same time. These are the major challenges of this study.
1.9 Definitions of Terms
The following terms were used in the course of this study:
Compliance: the action or fact of complying with a wish or command.
Employees: persons employed for wages or salary, especially at nonexecutive level.
International Public Sector Accounting Standards: set of accounting standards issued by the IPSAS Board for use by public sector entities around the world in the preparation of financial statements.