Financial Expert has advised the Economic Community of West African States, ECOWAS, Parliament to adopt the International Public Sector Accounting Standards (IPSAS) to address the challenges of lack of uniformity in the accounting system as well as improve the quality of financial reporting by ECOWAS that will lead to a better informed assessments of the resource allocation decisions made by the regional body thereby increasing transparency and accountability.
The International Public Sector Accounting Standards (IPSAS) are a set of accounting standards issued by the IPSAS board for use by public sector entities around the world in the preparation of financial statements.
These standards are based on International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).
In his presentation on “Compliance with International Public Sector Accounting Standard”, before the ECOWAS Parliament’s Committee on Public Accounts, in Lome Togo, the Deputy Director, Centre for Entrepreneurship Studies, University of Abuja, Nigeria, Dr James Adefiranye, said, adopting the IPSAS would greatly help ECOWAS member states move forward in dealing with their financial statements and reports.
He said the level of adoption of the IPSAS by member states differ, explaining that, what is being experienced in the ECOWAS member states was an attempt to prepare government’s financial statements using the accrual basis.
“Cash basis entails that activities should be reported when cash is received. That means, if we have activity or function for the year 2020 and we did not release the cash until 2022, we will not talk about it until 2022, even though we have the access. It’s not ideal, that’s why IPSAS is saying no, let’s do it the way it’s done in the very sector; when we receive an item, we convert the liability, we report it that year, that is what is accrual basis”, he said.
Dr. Adefiranye stressed that by extension, lack of uniformity of IPSAS in member states would likely affect activities of the ECOWAS.
“For example, when ECOWAS report is strictly on IPSAS accrual basis, and the local communities have another system, when you send your report, government of such States will have to delay in accepting your reports, because, they are doing it according to the cash basis they are used to, then is looks strange or questionable”, Dr. Adefiranye explained.
He however, recommended that, if they must achieve a near perfect, transparency and accountability in ECOWAS states, they need to adopt and apply the use of IPSAS.
Dr. Adefiranye informed the Committee that, almost all states in ECOWAS have tilted towards IPSAS, but encountering challenges in the area of implementation.
He further urged the Members of the Parliament to do a careful study of the outcome of the audit management letters, in order to pinpoint areas and aspects that need urgent attention, and to ensure they scrutinize each item raised in every audit management.
