The International Financial Reporting Standards (IFRS) and International Public Sector Accounting Standards (IPSAS) were adopted as the official accounting standards for Nigeria in 2010, under Goodluck Jonathan’s administration, based on the recommendations of the IMF and the World Bank. The exercise took off with earnest determination across the country. When Buhari’s administration came in on the wings of the slogan, “If Nigeria does not kill corruption, corruption will kill Nigeria” in 2015, some of us had expected that IPSAS would be one of his strategic tools for fighting corruption. Sadly, that did not happen. Buhari left office as an anti-corruption crusader without a strategy or method. Then, in 2023, Bola Ahmed Tinubu came in with the mien of a financial guru. However, so far, his administration has not made any effort toward enforcing compliance with IPSAS, despite the huge leverage this could offer him in managing public finances. Let me hope that President Bola Ahmed Tinubu will not end up as a “Finance Wizkid” without a conceptual framework for financial management.  

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Nigeria’s Federal Executive Council (FEC) approved the adoption of the International Public Sector Accounting Standards (IPSAS) on July 28, 2010, for all three tiers of the public sector in the country. Also approved for adoption on the same date were the International Financial Reporting Standards (IFRS) for the private sector. The implementation of IFRS for private sector entities took off in a frenzy from 2011 to 2013 and was completed with minimum chaos. IPSAS implementation for the public sector was scheduled in two phases. The first phase, which commenced in 2013, was the adoption of the Cash-based IPSAS Standard. The full accrual Standards were slated for commencement in 2016.

IPSAS was expected to provide uniform accounting and reporting templates for financial classification, recognition, measurement, and presentation for all three tiers of government in Nigeria, based on the IPSAS framework and policies. Following Nigeria’s decision to adopt the Standards, the Federal Account Allocation Committee (FAAC), under the Office of the Accountant-General of the Federation (OAGF), on the 13^th of June 2011, set up a subcommittee to provide a roadmap for the adoption of IPSAS in the three tiers of government in Nigeria. The subcommittee was given the responsibility for setting up the timetable for a phased adoption of IPSAS and domesticating the Standards for Nigeria’s public sectors.

IFRS adoption, implementation, and compliance by private sector entities were swift and comprehensive, especially for the NSE-listed entities, due to the presence of regulators to enforce compliance with the Standards. Everything was completed within three years. However, the level of public sector compliance with IPSAS has remained abysmally low, more than ten years after its adoption, due to the absence of enabling legislation and regulators to enforce compliance.

Nigeria began the implementation of cash-based IPSAS in 2013, while the full accrual IPSAS commenced in 2016, as scheduled. About twelve years after Nigeria adopted IPSAS, there has been no significant change in public sector accounting in the country. A considerable percentage of MDAs still rely on manual bookkeeping, operating solely on a cash basis, even though computers are everywhere. Others who claim to have computerised their accounting are using Microsoft Excel or a combination of Excel and some off-the-shelf or proprietary accounting software that do not comply with Nigeria’s IPSAS domestic requirements.

Currently, more than 90% of public sector entities in Nigeria operate on a Cash basis. I have had the opportunity to implement IPSAS for public sector entities at the Federal, State, and Local government levels in Nigeria, and I can confirm that none of these entities even attempted to operate on an accrual basis. Besides, it is impossible to operate accrual accounting without an automated solution.

When Nigeria announced the adoption of IPSAS, the first set of activities was the sensitisation of stakeholders. Workshops and seminars were organised across the country. However, the various seminars and workshops did not address the technical issues of implementation, especially in the area of the system solution. In all fairness, the Sub-Committee did an excellent job in producing the National IPSAS Chart of Accounts, Accounting Manual, and the template for the General-Purpose Financial Statements (GPFS) for the three tiers of government. But most of the public sector entities that claim to have implemented IPSAS have either ignored or flouted the guidelines provided by the IPSAS Sub-committee.

While Jonathan’s administration was faithfully committed to IPSAS implementation and compliance throughout the three tiers of government, he did not stay in office long enough to embed IPSAS in the system. The lethargy of his successors towards holistic standards and tech-driven financial management is responsible for the current abysmal state of IPSAS implementation and compliance by public sector entities in Nigeria.

Mohammadu Buhari: The Anti-Corruption Czar Without Strategy or Method

President Muhammadu Buhari inherited IPSAS from Goodluck Jonathan’s administration in 2015. When Buhari’s Administration came in with its avowed commitment to fight corruption, many of us were elated and optimistic. We had hoped that any serious war against corruption would begin with the administration giving strong backing to IPSAS and making it mandatory for all public sector entities to comply with the requirements. At a personal level, President Buhari’s anti-corruption credentials inspired me and colleagues to commit all our resources to developing an indigenous IPSAS-compliant accounting software, fully customised to meet Nigeria’s national IPSAS domestication requirements.

We spent time with some members of the FAAC Sub-committee on IPSAS to review the features of the software after a presentation in 2015-2016. Based on our experience with IFRS, we used the opportunity of our interaction with them to point out the challenge that might arise because of the absence of a regulatory body to enforce uniform compliance with IPSAS and Nigeria’s domestication requirements. We were surprised by how this did not bother them the way it bothered us. But it is fair to say that the FAAC Sub-Committee operated within its scope. The Sub-Committee had neither a legislative nor an executive mandate to enforce compliance with IPSAS.

About a year into the life of Buhari’s administration, there was no official pronouncement on IPSAS. Despite Buhari’s avowed commitment to the War Against Corruption, he failed to see the need to deploy IPSAS to leverage his anti-corruption crusade. He chose, instead, to deploy guns, boots, and brawn. The administration had put the cart before the horse in its approach to the war against corruption by ignoring IPSAS as a mechanism for entrenching accountability and transparency in the management and reporting of public finance. Fighting corruption with guns and boots in this present technology-driven age is like trying to close the stable after the horse has bolted.

With less than nine months left for Buhari’s administration to fold up, the Office of the Accountant-General of the Federation issued a terse statement on September 8, 2022, through Mr. Abubakar Sadiq Velkuk, the Director of the Consolidated Account Department, delivered by the Director of Audit Monitoring, Mr. Chizea Onochie Peter, ordering all federal MDAs to implement IPSAS or face sanctions. There was no action thereafter to back up that order, as Buhari’s administration staggered out.

Bola Ahmed Tinubu: The Finance Wizkid Without a Conceptual Framework?

When President Bola Ahmed Tinubu came into office with the mien of an astute financial manager, I had expected him to build on this foundation of Buhari’s last-ditch effort to shore up IPSAS. Sadly, it is now more than two years since the takeoff of this administration and nothing significant has taken place concerning the implementation and enforcement of IPSAS compliance in the public sector. It appears President Tinubu has chosen to ignore the sound accountability framework IPSAS offers, for enforcing transparency and uniform accounting measurement and reporting across public sector entities throughout Nigeria.

President Tinubu still has enough time to put things right and leave a legacy of accountability and transparency in the management of public finances in Nigeria. Let me, therefore, hope that President Bola Ahmed Tinubu will not end up as a “Finance Wizkid” without a conceptual framework for financial management.  

IPSAS Implementation Challenge

One of the numerous factors hindering IPSAS adoption and compliance is the national malaise of Nigerian government officials seeing the implementation of every government policy as an opportunity to enrich themselves. This often leads to the obvious situation where competence and excellence are sacrificed on the altar of politics. Contracts for supplying accounting software are awarded to friends and cronies without regard to standard specifications and the national IPSAS domestication requirements. Unless there is a caveat to curtail or eliminate arbitrariness and political consideration in the procurement of accounting software, IPSAS implementation will continue to suffer setbacks.

Without a compliance template and legislative mandate to compel public sector entities to comply with IPSAS, the adoption and implementation of IPSAS since 2013 has been like an uncharted journey through the labyrinth of financial chaos. The announcement giving Federal MDAs an ultimatum to comply with IPSAS by the Buhari administration in 2023 should have come seven years earlier. That should have been Buhari’s frontline fortress for the war against corruption. If the government had done this, the monumental mess we are witnessing today could have been reduced.

It is not just about corruption; it is the brazenness and the assaults on the intelligence of many Nigerians. Although an accounting system may not stop a smart criminal from stealing money. However, such a criminal will have to work harder and smarter, with full respect for the intelligence of others. A case in point is the claim made by officials of the Nigeria Social Insurance Trust Fund (NSITF) on August 16, 2022, that all the vouchers for the agency’s expenditure, totalling more than 17 billion Naira, were eaten up by termites. The bizarre and ridiculous disclosure was made during a probe hearing by the Senate Committee on Finance.

An intelligent thief would have found it too ludicrous to tell Nigerians that termites ate payment vouchers or that some baboon carted away millions of Naira. That would have, at least, spared Nigeria and her citizens such a monumental embarrassment and opprobrium. Stealing money in Nigeria has become so cheap and banal that the thieves no longer think Nigerians have brains.

IPSAS Compliance and Enforcement Template

It may not be enough to give federal MDAs an ultimatum to comply with IPSAS, knowing the depth of chaos and lethargy in the public sector finance (I know what I am talking about because I have been there). Such an ultimatum must be followed by relevant and clearly stated compliance requirements.

For the avoidance of doubt, the minimum requirements for IPSAS compliance are as follows:

These should form the basic minimum requirements for compliance with IPSAS for all public sector entities. These are the basic national requirements resulting from the domestication of IPSAS. A situation where each MDA resorts to doing whatever suits its fancy and purpose to enable it to receive its monthly allocations may create another level of chaos.

• Complying with IPSAS accounting policies in all financial measurements and recognition criteria.
• Adhering strictly to the classification and coding convention used in the six-segment National Chart of Accounts provided by the Office of the Accountant-General of the Federation (OAGF).
• Preparing and presenting the Budget based on the approved template provided by the OAGF.
• Presenting the General-Purpose Financial Statements (GPFS) based on the template provided by the OAGF.
• Making the required monthly returns, based on the format provided by the OAGF.

Perhaps, with diligent enforcement of faithful compliance with IPSAS, those who saw IPSAS as an opportunity to award software contracts to their friends and kin will realise that IPSAS implementation cannot be achieved with any off-the-shelf accounting software. IPSAS implementation requires a custom solution that satisfies IPSAS accounting policies and Nigeria’s IPSAS domestication requirements, which include implementing the six-segment National Chart of Accounts, the General-Purpose Financial Statements (GPFS), and the Treasury Single Account (TSA), among others.

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ExpressBook PSA is IPSAS-compliant accounting software, intentionally designed and built locally, to accommodate all the domestication requirements of the Federal Government of Nigeria, along with IPSAS accounting policies. We have been strongly committed to implementing and supporting this software since 2015. You can click the link to learn more about ExpressBook PSA.

A companion resource to this software is the book, IPSAS IMPLEMENTATION AND THE SYSTEM CHALLENGE: THE NIGERIAN CHALLENGE. This book documents and resolves all the practical challenges associated with the implementation of IPSAS in Nigeria, based on real-life, field experience, spanning about ten years.