Transition from Cash Basis to IPSAS Accounting and Its Effect on Financial Reporting Quality in Government Corporation in Oyo State

Abstract

The transition from cash-basis accounting to the International Public Sector Accounting Standards (IPSAS) represents a significant reform aimed at improving transparency, accountability, and reliability in public financial management. In Nigeria, particularly within Oyo State, government corporations have adopted IPSAS to enhance the credibility and comparability of their financial reports. This study, therefore, examined the shift from cash-basis accounting to IPSAS and its impact on the quality of financial reporting in government corporations in Oyo State. The main objective was to determine how the adoption of IPSAS affects transparency, reliability, and overall reporting quality in the public sector. The study adopted a descriptive and explanatory research design, utilizing both primary and secondary data. A total of 98 respondents, comprising accountants, auditors, and finance officers from selected government corporations in Oyo State, participated in the study. Data were collected through structured questionnaires and analyzed using descriptive and inferential statistical tools, including regression and ANOVA tests, to evaluate the relationship between IPSAS adoption and financial reporting quality. Findings revealed that cash-basis accounting, while simple and easy to apply, fails to present a complete picture of government financial performance as it excludes accruals and non-cash transactions. Conversely, IPSAS adoption had a strong and positive influence on the quality of financial reporting by improving transparency, accountability, comparability, and stakeholder confidence. The ANOVA results confirmed that IPSAS adoption significantly enhances the completeness, reliability, and international alignment of government financial statements despite challenges such as inadequate training and technical capacity. The study concludes that the shift from cash-basis accounting to IPSAS has substantially improved financial reporting quality in Oyo State government corporations. It recommends that government entities should institutionalize IPSAS implementation through proper guidelines, continuous professional training, investment in ICT infrastructure, and strengthened regulatory oversight. These measures will ensure sustainable compliance, enhance fiscal discipline, and promote accountability and transparency in Nigeria’s public financial management system.