IPSAS: Issues, Challenges and Implementation

By
Ahmad Bello (PhD)*

Being a paper presented at MCPD organised by Institute

of Certified Public Accountants of Nigeria (ICPAN).

December, 2013

*Dr. Ahmad Bello is Faculty member Department of

Accounting Ahmadu Bello University, Zaria

There is nothing more difficult to carry out, nor more doubtful of

success, nor more dangerous to handle, than to initiate a new order of
things. For the reformer has enemies in all who profit by the old order,
and only lukewarm defenders in all those who would profit by the new
order. This lukewarmness arises partly from fear of their adversaries,
who have the law in their favor, and partly from the incredulity of
mankind, who do not truly believe in anything new until they have to
have actual experience of it. (Machivelle, n.d.)

1. Introduction:
The global wind of economic integration has now reached the doorstep of
accounting profession with intense pressure on nations state to apply
unified accounting Standards in government undertakings. This effort could
be seen as a centaury reform to the profession. The reform agenda was
perceived as way forward towards harmonizing public sector with private
sector liked system and principle of financial reporting, which for long
experts had been advocating on the believed that both sectors should
operate at the same level of efficiency. The need for high quality standards
to enhance sound and consistent financial reporting and the fact that the
inefficiency and ineffectiveness of public sector extended to a belief that
public and private sectors did not have to be managed in fundamentally
different ways, fostered a wide-ranging discussion about the harmonization
of public sector accounting systems and their convergence towards the
private sector financial reporting standards (Gorana, et al, 2013).
There is no doubt that applying universal high quality standards can
promote efficiency, transparency which in long run may promote public
accountability. However, The process of adopting a uniform set of
accounting standards, as a part of the international convergence of financial
reporting systems, is perceived as a very complex, time consuming and
difficult task. The trend of international convergence and harmonisation
policy of private sector accounting and financial reporting standards has

also made the influence on the process of entire public sector reform that
has been progressing worldwide.
Joining the league of adopting nations, the federal executive council in
2010 announced Nigerias commitment to adopt IPSAS and the committee
on the road map set deadlines for the adoption of cash base and accrual
base IPSAS by 2014 and 2016 respectively. However, the pertinent
question remains of the viability of the deadlines. The paper explores the
issues surrounding IPSAS adoption, extent of challenges as well as
implementation issues.

The rest of the paper proceeds as thus:

conceptualization, government reform agenda, issues on the reform,

challenges, implementation and summary and concluding remarks each
occupying a segment.
2. Conceptualization:
A distinction may be made between lower-case ipsas international
public sector accounting standards and upper-case IPSAS, i.e.
International Public Sector Accounting Standards. The ipsas refers to the
norms for reporting government finance required or recommended by (1)
international treaties, agreements, and contracts; and (2) international
organizations of an official nature. The first category includes, for example,
the definitions of deficit and debt used in calculating the financial
ratios under the Maastricht Treaty, and in meeting the conditionality
requirements of the International Monetary Fund (IMF). The second
category includes the government financial reporting requirements in the
United Nations (UN) and European System of National Accounts (SNA),
the IMFs Government Finance Statistics (GFS) and Fiscal Transparency
(FT), the Organization for Economic Cooperation and Development
(OECD) Budget Transparency projects. Due to the close relationships
between these ipsas and IPSAS, the organizations concerned have worked

on their harmonization.

3. Objectives of IPSAS:
The initial goals of IPSAS were to promote greater government
accountability in all countries, improved quality and reliability in
accounting and financial reporting, better financial and economic
performance,betterfinancialmanagementanddiscipline,andinternational
harmonizationofreportingrequirements(IFAC,1996,p.2).Havethese
laudableobjectivesledtothedevelopmentofIPSASthatarerelevantto
developing countries? The approach of coming with IPSAS is two:
AdoptionfromIFRSandFormulationofnewstandardsbasedonpublic
sectorpeculiarities.

4. Government Reform agenda:

Government accounting refers to a governments financial information
results from the interaction between the supply of and demand for
government financial accountability and transparency. Since it is costly
everywhere to produce and disseminate information, governments in all
types of political systems lack the economic incentives to do so. Moreover,
with existing democratic system of governance and yearning for public
accountability in Nigeria coupled with the bill of right to information,
IPSAS adoption becomes imperative if not necessary.
Although it will take a long way to full realization of IPSAS, moving
towards full implementation will lead to revolution in the public
accountability. A public institution is more interesting and become more
attractive if it knows how to base the budget, to substantiate the request for
funds; if it dared to request and obtain financing programs; if it offers legal

and scientific support for dimensioning and collecting its revenue from
taxes, related activities, collateral resources; if it knows how to manage
costs, properly balancing between needs and resources - and all in a context
in which efficiency and perspective are not omitted (Dragan, 2008).

5. Major issues on the reform

Starting from the considerations that cost, efficiency,
economy and effectiveness have entered the reforming
agenda of public sector organisations, and accounting still
represents a potentially biased and active technology for
social and political changes, it is of interest to understand
the intended and unintended consequences of accounting
(Hopwood, 1985).
The Nigerian Accounting Standard Board (NASB) Committee on road map
on internationalization of financial reporting in Nigeria provides a timeline
for adopting international standards in Nigeria with deadline for adopting
International Financial Reporting Standard (IFRS) by the year 2012. For
public sector entities a time line of 2014 and 2016 was set for full
implementation of cash basis international public sector Accounting
Standards (IPSAS) and accrual IPSAS respectively. With this development
the role of NASB will shift from standard setter to regulatory enforcers
under the new name and structure called Financial Reporting Council
(FRC). This major shift could be seen as revolutionary act in the financial
reporting circle, which may affect the role of several institutions:
professional bodies and even the parliament.
The reform agenda seek to address the following issues:
(1) The implementation of accruals in national public sector
accounting systems and the compliance of national accounting

solutions with IPSASs;

(2) The need and effort put into the process of information systems
convergencethe convergence of accounting and statistics systems
(3) The practice of implementing resource accounting and budgeting
in order to establish the connections between the inputs, goals and
purpose of activities undertaken by the government, and the results
(outputs) achieved;
(4) The consistency of accounting basis adopted for the budget
(budget and actual amounts comparison);
(5) The consistency of accounting basis for financial reporting with
the accounting basis for the budget.
(6) Shift in regulatory framework of public sector accounting from
parliamentary to institutional.
(7) Designing of uniform chart of accounts to be used across
governmental institutions and organization irrespective of tier.
5.1. Benefits of Adopting IPSAS:
According to the committee on road map on adoption of IPSAS in Nigeria
the followings are identifiable benefits:
(a) The alignment of local accounting with best accounting practices
through the application of credible, independent accounting standards on a
full accruals basis;
(b) Improved internal control and transparency with respect to assets and
liabilities;

(c) More comprehensive information about costs that will better support
results-based management;
(d) More comprehensive information produced and disclosed under IPSAS
facilitates improved management and stewardship of resources, the
effectiveness of operational delivery and the achievement of results; and
(e) Improved consistency and comparability of financial statements as a
result of the detailed requirements and guidance provided in each standard.
f.) Enhances the implementation of freedom of information act
g.) Promotion of cross border investment thereby enhancing the flow of
foreign Direct Investment.
h.) Promote the policy of Public Private Partnership, which depends largely
on the extent of accountability and transparency of public sector.
i.) Facilitate the flow of aid and assistance from foreign bodies
6. Challenges:
The current transformation of government accounting is likened to a global
revolution staged by accountants. Many revolutions were started with high
ideals and an incomplete conceptual design. Most failed because the
revolutionaries ignored local conditions, or did not have the patience to
prepare a blueprint on how to govern a country afterwards. It remains to be
seen whether this global revolution in government accounting is premature.
The challenges for adopting IPSAS in Nigeria are like other developing
countries. This challenges can be broadly divided into two; general
challenges and specific challenges. However a notable challenge is that of

General challenges: this is inherent to the IPSAS themselves; as viewed by

chan, 2010:
E

- No clear road map for reverse engineering from financial

statements to accounting systems;

- Capacity to decide the future (budgeting) is a higher priority than

to look back at the past (financial accounting);

- Capacity to manage parts of a government throughout the year

(special purpose reports) is more urgent than to monitor the whole
government at year-end (annual consolidated financial statements).
Specific challenges: this are peculiar to Nigeria as a polity and ranges from
institutional,

organizational,

political,

principle,

conceptual

professionals challenges as discussed below:

1) Institutional Challenges: IPSAS is a venturesome enterprise in
several aspects. At first, it intends to transcend national jurisdictions,
ignoring or overlooking the national diversity in political, cultural,
traditional, legal and economic sectors. Furthermore, it elevates
professional despotism above governmental authority while it expects
the Anglo-American model of government accounting to have global
appeal. There are important issues awaiting resolution. Even in the
absence of the conceptual challenges, some legitimate institutional
issues about the standard-setting structure and its oversight still remain.
2) Organizational Challenges: IPSAS adoption is a complex and
comprehensive change management process. While it offers numerous
benefitsoverthemediumandlongterm,italsoentailsshorttermcosts
andchallengesthatneedtobeseriouslyaddressedbytheexecutiveheads
ofalltheorganizationsconcerned.InfactIPSASadoptionisacomplete
change that may face vigorous resistance. Therefore without total
9

and

organizational transformation and leaders commitment, realization will

endupasamyth.

3) Political Challenges: The full potential of using accrualbased

informationcanberealizedonlyifpoliticalofficeholdersareconvinced
ofthevalueofaccrualbaseddataandareabletoactonitsoastoimprove
reportingprocesses.Howeverthosethatarebenefittingfromoldsystem
will sabotage the successful implementation of IPSAS. Unless there is
politicalcommitmentandhonestyfromtheelectedofficialswhovirtually
powerliesintheirhands,theexercisewillendinpaper.

4) Principle Challenges: IPSAS still lack of guidance from a sound

conceptual framework. A conceptual framework is expected to specify the
objectives, scope, recognition criteria, definitions and qualitative
characteristics of financial information, providing the basement and
justification for standards. Up to this time, IPSAS are characterized by
numerous detailed rules and only few general principles regarding
financial statements.
5) Professional Challenges: presentationoffinancialstatementsaccording
to IPSAS claims professional expertise as accountants and auditors, it
requirestheavailabilityofprofessionalaccountingskillsframework.
AlthoughthenumberofprofessionalaccountantsinNigeriahasincreased
tremendouslyintwodecadeswithcomingofANAN,IPSASisanew
concept, which is not understood by many. The Government as the
leadinguserofthesestandardswillthereforerequireundertakingmassive
capacitybuildingtoenlightenitsaccountantsonIPSAS.Thisisgoingto
beachallengebothintermsofcapacitybuildingcostsandtherequired
changemanagementissuesfromthetraditionalcashaccountingtoamore
businesslikeaccountingunderaccrualbasisIPSAS.

10

Furthermoreapartfromtrainingatgrassrooteducationserveasagood
sourceformanpower.Introducingandmodifyingaccountingcoursesin
tertiaryinstitutionbecomesimperative.

6) Conceptual Challenges: IPSAS lacks basic and clear conceptual

framework rather an assumed IFRS framework is to be used. These
pause a lot of impediments in comprehending and certain treatment
of items. Furthermore the conceptual issues aggravate the
followings:
a) Neglect of system capability and internal accountability
b) Setting standards before agreement on a conceptual framework
c) Starting IPSAS with
accounting standards

modified

international

business

d) Ambiguous stance on the basis of accounting

e) High aggregation level in financial reporting

7) Specific Challenges (REF to Appendix A)

7. Implementation:
The success of IPSAS adoption in Nigeria depends largely on the ability to
identify and measure the governments assets and liabilities. Corruption
tends to result in the understatement of governments assets or the
overstatement of governments liabilities. Unless financial integrity is
assured, the credibility of governments financial information suffers. Thus
both financial integrity assurance and accurate accrual accounting are

11

accountants professional contribution to developing countries.

7.1. Indices for implementation:

The implementation of IPSAS is a process that entails different stages form
mild to full/strong accrual. While there are different approaches and
choices the final journey is full accrual IPSAS adoption. The technical
committee on road map envisage to first go to cash basis IPSAS before
accrual IPSAS. Table 7.1. Shows the adoption degree.
Table 7.1. Degrees of Accrual
Degree

Assets

Liabilities Recognized

Recognized
Mild accrual

Current

Current liabilities

financial
resources
Moderate

Long-term

Long-term liabilities in addition to current

accrual

financial

liabilities

resources in
addition to
current financial
resources
Strong accrual

Capital
resources in

Contingent liabilities in addition to current

addition to

and long-term liabilities

current and
long-term

12

financial
resource

7.2. Key drivers to successful Implementation

WhileintroductionofIPSAScanprovideimmensebenefitinachievingfair
andtransparentfinancialreportingwhichwillprovidepublicaccountability
andprobity,thesuccessfulapplicationwoulddefendonthefollowingkey
drivers.Thesearediscussedbelow:
1) ICT Infrastructure: for a successful implementation of IPSAS huge
infrastructural resources are needed. Even with this investment
power is also needed to support this ICT. Developing world would
find this as key challenging area.
2) Human Capabilities and commitment: IPSAS are a complete
transformation/revolution

in

government

accounting;

full

implementation may require capable manpower at top and

operational. Currently this is lacking in public sector. Professional
accountants are not keen to work in the sector because of poor pay
and bureaucrative bottlenecks.
3) Finance: Migrating from cash to full IPSAS accrual requires
substantial financial investment in material and human resources.
Such huge expenditure may be a burden to developing world that is
fighting poverty, corruption and unemployment.
4) System Capability and Internal Accountability: System capability
refers to the infrastructure for collecting, recording, and summarizing
financial data. Financial statements on the accrual basis can be
produced only by an accounting system with sophisticated features.
These features include:

13

a) The accounting equation, assets = liabilities + net assets, as its

conceptual foundation.
b) A detailed chart of accounts for the elements of the accounting
equation, as well as revenues, expenses and changes in net
assets.
c) A double-entry recording system.
d) The ability to translate standards (such as IPSAS) into specific
policies and procedures applicable to the organization
concerned.
These above mentioned features have to be incorporated in the hardware
and software of the accounting system, along with human resources and
financial resources made possible by political support and managerial
leadership.

8. Summary & Conclusion:

Developing IPSAS is similar to formulating a universal building code. One
may raise questions about the feasibility and desirability of having such a
code. Taking cognizance of the cost involved, capacity building, ICT
infrastructure and famous among all political commitment of elected
officials. While there is no gain saying that effective government
accounting makes it possible to manage the governments finances
smoothly and provides audit trails to prevent and detect financial
misconduct, implementing IPSAS given cognizance to duo time dead lines
will not be as easy as initially thought.
Two of the most substantial challenges, for most public sector entities,
seeking to adopt accrual-based IPSAS are those of keeping the
implementation process within a reasonable timeline and, relatedly,
adopting the standards in a cost-effective manner. It is crucial that the

14

change process entails senior management support, risk management,

quality assurance, communication, internal and external stakeholder
involvement and support.
In conclusion it takes a certain amount of foresight and insight to make
investments in government accounting reform; the foresight to anticipate
the consequences of bad or no accounting and the insight to link accounting
to government performance and eventually the achievement of societal
goals. Adopting IPSAS will make accounting and its allied functions including information system design, internal control, pre- and post-audit,
revenue administration, and public expenditure management more
transparent and efficient thus ensuring public resources are used for their
intended purposes.

Material Used & References:

E

Adam B., Mussari R. and Jones R. (2011), The diversity of accrual policies in local
government financial reporting: an examination of infrastructure, art and heritage assets
in Germany, Italy and the UK, Financial Accountability & Management, 27, 107133.

Benito B., Brusca I., Montesinos V. (2007), The harmonization of government financial
information systems: The role of the IPSASs, International Review of Administrative
Sciences, 73(2), 293317.

Brusca I. and Condor V. (2002), Towards the harmonisation of local accounting systems
in the international context, Financial Accountability & Management, 18(2), 129162.

Budaus D. and Buchholtz K. (1996), Controlling local government cost and

performance: an international comparison, in: J.L. Chan, R.H. Jones and K.G. Lder
(eds), Research in Governmental and Nonprofit Accounting, Greenwich, CT: JAI
Press, , vol. 9, pp. 3357.

Carlin T.M. (2005), Debating the impact of accrual accounting and reporting in the
public sector, Financial Accountability & Management, 21(3), 309336.

Christiaens J., Reyniers B., Roll C. (2010), Impact of IPSAS on reforming

governmental financial information systems: a comparative study, International Review

15

of Administrative Sciences, 76, 537- 554.

E Chan, J. L. (2010). Government Adoption of Accounting Standards,

especially

IPSAS.

www.jameslchan.com,

Retrieved

from

http://jameslchan.com/papers/ChanPhDSem6.pdf
E Dragan, C. M. (2008). Accounting practice of public institutions,
www.conta.cafe.ro.

Retrieved

from

http://www.contacafe.ro/

topic11240.html
E
E

Groot T. and Budding T. (2008), New public managements current issues and future
prospects, Financial Accountability & Management, 24(1), 113.

Grossi G. and Soverchia M. (2011), European commission adoption of IPSAS to reform

financial reporting, Abacus, 47, 525552.

Heald D. (2003), The global revolution in government accounting, Symposium in

Public Money & Management, Vol. 23, No. 1.

Ilie E. and Miose N.-M. (2012), IPSAS and the application of these standards in the
Romania, Procedia - Social and Behavioral Sciences, 62, 3539.

International Public Sector Accounting Standards (IPSAS) Board, Handbook of

International Public Sector Accounting Pronouncements (New York: IFAC, 2008).

Luder K. (1992), A contingency model of governmental accounting innovations in the

political administrative environment, in: J. Chan and J.M. Patton (eds), Research in
Governmental and Nonprofit Accounting, Greenwich, CT: JAI Press, Vol. 7, pp. 99
127.

Luder K. (1998), Governmental accounting in west European countries: with special

reference to the federal republic of Germany, in: J.L. Chan and R.H. Jones (eds),
Governmental Accounting and Auditing: International Comparisons, New York:
Routledge, pp. 82104.
IPSAS Board (2008). Handbook of International Public Sector Accounting
Pronouncements.

Kanellos, T. , Evangelos P., & Dimitrios B. (2013). Concept, Regulations and

Institutional Issues of IPSAS: A Critical Review. European Journal of Business and

16

Social Sciences, Vol. 2, No. 1, pp 4354; URL: http://www.ejbss.com/recent.aspx

ISSN: 2235 767X

Machiavelli, Niccolo, The Prince and the Discourses (Random House,

1950).

APPEDICES:
Appendix A IPSAS Challenge:
IPSAS
ISSUES ADDRESSED

CHALLENGE
S
Currently PSA
are on cash basis
it would take
long time to train
qualified
personnel
to
handle accrual
accounting in PS
The operation of
PS is not well
defined likewise
its
financing
structure.
Its
going to be
difficult
to
provide structure
in place in near
time to come
PS in Nigeria

IPSAS
1.
Presentation
of
Financial Statements
.

Sets out the overall considerations

for the presentation of financial
statements, guidance for the
structure of those statements and
minimum
requirements for
their content under the accrual basis
of accounting

IPSAS 2. Cash Flow

Statements

Requires
the
provision
of
information about the changes in
cash and cash equivalents during
the period from operating, investing
and financing activities.

IPSAS 3 Net Surplus

or Deficit for the
Period, Fundamental
Errors and Changes
in
Accounting Policies

Specifies the accounting treatment

for
changes
in
accounting
estimates, changes in accounting operates
policies and the correction of
fundamental errors defines extra inefficiently and
ordinary items and requires the
separate disclosure of certain items reporters
will
in the financial statements.
face a lot of
obstacles

in

identifying what
constitute errors.
IPSAS 4 The Effects
of
Changes
in

errors
Deals with accounting for foreign The
exchange
currency transactions and foreign
17

Foreign
Rates

Exchange

operations. IPSAS 4 sets out the

requirements for determining
Which exchange rate to use for the
recognition of certain transactions
and balances and how to recognize
in the financial statements the
financial effect of changes in
exchange rates.

rate regime in
Nigeria is highly
volatile

and

adopting

this

standard

may

creates a lot of

IPSAS 5 Borrowing
Costs

Prescribes the accounting treatment

for borrowing costs and requires
either the immediate expensing of
borrowing costs or, as an allowed
alternative
treatment,
the
capitalization of borrowing costs
that are directly attributable to the
acquisition,
construction
or
production of a qualifying asset.

flexibility

in

governance

of

govt. funds.
Vast resources
accruing to PS in
Nigeria

come

from

statutory

allocation;

any

standard

that

will

aloe

borrowings to be
expensed

may

jeopardize

the

reports.
IPSAS
6
Consolidated
Financial Statements
and Accounting for
Controlled Entities

Requires all controlling entities to

prepare consolidated financial
statements, which consolidate all
controlled entities on a line by line
basis. The Standard also contains a
detailed discussion of the concept
of control as it applies in the public
sector and guidance on determining
whether control
exists for financial reporting
purposes.

Its going to
be

difficult

looking

at

existing
political

18

structure

for

FGN

to

consolidate
SGA
IPSAS 7 Accounting
for Investments in
Associates

and

LGAs.
in Consolidation

Requires all investments

associates to be
accounted for in the consolidated
is a difficult
financial statements using the
equity method of accounting,
except when the investment is task even in
acquired and held exclusively with
a view to its disposal in the near private
future in which case the cost
method is required.

settings.

IPSAS 8 Financial
Reporting
of
Interests in Joint
Ventures

Requires
proportionate
consolidation to be adopted as the
benchmark
treatment
for
accounting for such joint ventures
entered into by public sector
entities. However, IPSAS 8 also
permits as an allowed alternative
joint ventures to be accounted for
using the equity method of
accounting.

Accounting for
joint
venture
using
equity
method
will
result in given
undue advantage
to government.

IPSAS 9 Revenue
from
Exchange
Transactions

Establishes the conditions for the

recognition of revenue arising from
exchange transactions, requires
such revenue to be measured at the
fair value of the consideration
received or receivable and includes
disclosure requirements.

IPSAS 10 Financial
Reporting
in
Hyperinflationary
Economies

Describes the characteristics of a

hyperinflationary economy and
requires financial statements of
entities which operate in such
economies to be restated.

Fair
value
consideration
may results in
directing
financial reports
to
preparers
interest (income
smoothing). In
governments this
allows for the
tendency
of
corruption.
Financial
restatement may
be cumbersome
and difficult. A
lot
of

19

IPSAS
Construction
Contracts

11 Defines construction contracts,

establishes requirements for the
recognition of revenues and
expenses arising from such
contracts and identifies certain
disclosure requirements.

IPSAS
Inventories

12 Defines inventories, establishes

measurement requirements for
inventories
(Including those inventories which
are held for distribution at no or
nominal
charge)
under
the
historical cost system and includes
disclosure requirements.

IPSAS 13 Leases

Establishes requirements for the

accounting treatment of operating
and finance leasing transactions by
lessees and lessors.

IPSAS 14 Events
After the Reporting
Date

Establishes requirements for the

treatment of certain events that
occur after the reporting date, and
distinguishes between adjusting and
non-adjusting events.

IPSAS 15 Financial
Instruments:
Disclosure
and
Presentation

Establishes requirements for the

presentation of on-balance-sheet
financial instruments and identifies
the information that should be
disclosed about both on-balancesheet (recognized) and off-balancesheet (unrecognized) financial
instruments.

assumption and
value judgment
may
cause
subjectivity.
Due
to
inflationary
forces
full
application may
be
difficult.
Likewise,
abandoned
projects and lack
of enforcement
rules could be a
factor
to
successful
application.
Currently
government
inventories are
not
fully
accounted
for,
data on them is
also scarce. It
will take long
time before such
can be achieved.
Improper
documentations
of
agreements
may
hamper
application
of
this provision
Budget
delays
and
variations
are
major
challenges.
Stocks
in
Nigeria
are
highly volatile
and some are
stagnant.
Volatility factor
could
be
a
potential
problem in fair
value treatment
of
financial
20

IPSAS
16 Establishes
the
accounting
Investment Property
treatment, and related disclosures,
for investment property. It provides
for application of either a fair value
or historical cost model.
IPSAS 17 Property,
Plant and Equipment

Establishes
the
accounting
treatment for property, plant and
equipment, including the basis and
timing of their initial recognition,
and the determination of their
ongoing carrying amounts and
related depreciation. It does not
require or prohibit the recognition
of heritage assets.

IPSAS 18 Segment
Reporting

Establishes requirements for the

disclosure of financial statement
information about distinguishable
activities of reporting entities.

instruments.
Lack of adequate
statistical data of
government
owned properties
and estate is a
big challenge.
Inadequate
statistical data
on government
assets
and
difficulty
in
classification.

This requirement
is
full
of
ambiguities,
which is difficult
even in private
sector.
Establishes requirements for the Its difficult to
IPSAS
19 recognition of provisions, and the ascertain
and
Provisions,
disclosure of contingent liabilities value contingent
Contingent
and contingent assets.
liabilities
talk
Liabilities
and
less of assets.
Contingent Assets
IPSAS 20 Related Establishes requirements for the Corruptions and
Party Disclosures
disclosure of transactions with graft
related
parties that are related to the offenses
are
reporting
entity
including major
Ministers, senior management, and impediments to
their close family members.
the realization of
this standard.
IPSAS21
Ensure that non-cash-generating This standard is
Impairment of Non- assets are carried at no more redundant as par
Cash-Generating
than their recoverable service as public entities
Assets
amount, and to prescribe how are concerned.
recoverable service amount is
calculated.
IPSAS 22
Sets the disclosure requirements A
lot
of
Disclosure of
for governments that elect to statistical data
Financial
present information about the are needed to
Information About
general government sector (GGS) realize
the
the General
in their consolidated financial provisional
Government Sector
statements.
requirements of
The disclosure of appropriate the standard.
information about the GGS of a
21

IPSAS 23.
Revenue from NonExchange
Transactions (Taxes
and Transfers)

IPSAS 24
Presentation of
Budget Information
in Financial
Statements

IPSAS 25
Employee Benefit

government can provide a better

understanding of the relationship
between the market and nonmarket
activities
of
the
government
and
between
financial
statements
and
statistical bases of financial
reporting
Prescribes requirements for the
financial reporting of revenue
arising
from
non-exchange
transactions, other than nonexchange transactions that give
rise to an entity combination.
In a non-exchange transaction,
an entity either receives value
from another entity without
directly giving approximately
equal value in exchange, or gives
value to another entity without
directly receiving approximately
equal value in exchange
Ensures that public sector entities
discharge their accountability
obligations and enhance the
transparency of their financial
statements by demonstrating
compliance with the approved
budget for which they are held
publicly accountable and, where
the budget and the financial
statements are prepared on the
same basis, their financial
performance in achieving the
budgeted results.
Prescribes the accounting and
disclosure for employee benefits.
This includes: short-term benefits
(wages, annual leave, sick leave,
bonuses, profit-sharing and nonmonetary benefits); pensions;
post-employment life insurance
and medical benefits; termination
benefits and other longterm
employee benefits (long-service
leave,
disability,
deferred
compensation, and bonuses and
longterm profit-sharing), except
for share based transactions and
employee retirement benefit

Less challenge
in application.
Government
grants aid form a
substantial part
of revenue at
state and LGAs
so its not a new
thing.

Large history of
variation
may
hamper honest
presentation.
Also
poor
budget
performance
history.

The
standard
requires a lot of
actuarial
information,
which
is
currently
not
available.

22

IPSAS 26
Impairment of
Cash-Generating
Assets

IPSAS27
Agriculture

IPSAS 28
Financial
Instruments:
Presentation
IPSAS 29
Financial
Instruments:
Recognition and
Measurement

IPSAS 30 Financial
Instruments:
Disclosures

plans.
Prescribes the procedures that an
entity applies to determine
whether a cash-generating asset
is impaired and to ensure that
impairment losses are recognized.
This standard also specifies when
an entity shall reverse an
impairment loss and prescribes
disclosures.
Sets the accounting treatment
and disclosures for agricultural
activity.
Agricultural activity is the
management by an entity of the
biological
transformation
of
living
animals
or
plants
(biological assets) for sale, or for
distribution at no charge or for a
nominal charge or for conversion
into agricultural produce or into
additional biological assets.
This standard sets the principles
for classifying and presenting
financial instruments as liabilities
or net assets/ equity, and for
offsetting financial assets and
liabilities.
Establishes
principles
for
recognizing, derecognizing and
measuring financial assets and
financial liabilities.
All financial assets and financial
liabilities,
including
all
derivatives and certain embedded
derivatives, are recognized in the
statement of financial position.
Prescribes disclosures that enable
financial statement users to
evaluate the significance of
financial instruments to an entity,
the nature and extent of their
risks, and how the entity manages
those risks.

The provision of
impairments
may lead to
room
for
smoothing.

Lack of adequate
data
on
government
farms
asset,
implements and
produce.
Valuation
of
plantation farms
could also be a
big challenge.
Fair
valuation

value

Fair
value
Measurement

What constitute
risk in Govt. is
not adequately
defined and hard
to comprehend

23

IPSAS 31
Intangible Assets

Sets the accounting treatment for

intangible assets that are not
dealt with specifically in another
IPSAS.
IPSAS 31 does not apply to
intangible assets acquired in an
entity combination from a nonexchange transaction, and to
powers and rights conferred by
legislation, a constitution or by
equivalent means, such as the
power to tax.

Intangibles are
yet to be fully
conceptualized
in government.

IPSAS 32
Service Concession
Arrangement:
Grantor

Prescribes the accounting for Conceptual

service concession arrangement challenges.
by the grantor, a public sector
entity.

Cash Basis IPSAS

Prescribed the manner into Lack of qualified

which GPFS should be presented manpower
using cash basis of accounting
especially
at
LGAs level is
identified as a
major obstacle to
migration to full
cash IPSAS

24