Background of the study — Cost–Benefits of IPSAS to Financial Reporting in the Nigerian Public Sector

The International Public Sector Accounting Standards (IPSAS) are accrual-based accounting standards issued by the IPSAS Board to improve the quality, comparability and transparency of public-sector financial reporting worldwide. Many Nigerian public entities (federal and sub-national) have begun moving from cash-based reporting toward IPSAS-compatible accrual or transitional financial statements, driven by regulatory reforms and the Financial Reporting Council of Nigeria’s initiatives. IPSASB+1

For Nigeria, the promise of IPSAS is substantial: accrual accounting can improve decision-making by recognising assets and liabilities, strengthening accountability to citizens and donors, enhancing comparability across jurisdictions, and improving the credibility of budget execution and fiscal disclosures. Several Nigerian states and ministries have published transitional or IPSAS-aligned financial statements in recent years, showing early progress in recognition and disclosure of previously unreported public assets and obligations. Akwa Ibom State Government+1

However, adopting IPSAS also involves significant costs and practical challenges. Common direct costs include personnel training, systems upgrades, asset re-valuation and legacy-asset recognition, external consultancy and audit fees, and the time required to change business processes. Indirect costs and barriers—such as limited political will, weak capacity in accounting units, incomplete legal/statutory alignment, data gaps, and resistance to change—can delay or dilute expected benefits. Empirical studies in Nigeria note improvements in transparency and accountability where IPSAS elements have been implemented, but also highlight uneven implementation and substantial transitional burdens on public finance administrations. ResearchGate+2ojs.journalsdg.org+2

Because benefits (improved reporting quality, better fiscal management, investor and donor confidence) and costs (implementation, capacity building, systems change) accrue to different stakeholders and over different time horizons, a careful cost–benefit analysis is required to guide policy. Current literature for Nigeria contains many descriptive and cross-sectional studies showing likely benefits and listing implementation challenges, but there is a relative shortage of rigorous, economy-wide cost–benefit estimates that quantify net fiscal or governance gains from IPSAS adoption across federal, state and local levels. This gap makes it difficult for policymakers to prioritise resources, design phased rollout strategies, or decide the pace of full accrual adoption versus improved cash-based disclosures. EA Journals+1

This study therefore examines both the costs and the benefits of IPSAS adoption in the Nigerian public sector: it will (a) quantify major implementation cost items and the scale of investment required for representative MDAs/states, (b) measure observable benefits in financial reporting quality (transparency, comparability, accountability), and (c) assess net or payback outcomes and practical policy implications for a staged national rollout. The findings aim to provide evidence for policymakers, accountants, auditors and development partners on whether, how fast, and with what investments Nigeria should pursue IPSAS compliance to maximise public-value gains.