CERI 1 IPSAS Adoption in Africa and Challenges of Technical Advancement - Prof Oyedokun.pptx

Being a Paper Presented at the Centre for Economic Reform Initiative Training Held at the Kenya Institute of Monetary Studies, Nairobi on Monday, April 28, 2025

1. INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS (IPSAS) Adoption in Africa & Challenges of Technical Advancement - The Way Forward Prof. Godwin Emmanuel Oyedokun Professor of Accounting and Financial Development Department of Management & Accounting Faculty of Management and Social Sciences Lead City University, Ibadan, Nigeria Principal Partner; Oyedokun Godwin Emmanuel & Co (Accountants, Tax Practitioners & Forensic Auditors) Being a Paper Presented at the Centre for Economic Reform Initiative Training Held at the Kenya Institute of Monetary Studies, Nairobi on Monday, April 28, 2025.

2. ND (Fin), HND (Acct.), BSc. (Acct. Ed), BSc (Fin.), LLB., LLM, MBA (Acct. & Fin.), MSc. (Acct.), MSc. (Bus & Econs ), MSc. (Fin), MSc. ( Econs ), Ph.D. (Acct), Ph.D. (Fin), Ph.D. (FA), CICA, CFA, CFE, CIPFA, CPFA, CertIFR , ACS, ACIS, ACIArb , ACAMS, ABR, IPA, IFA, MNIM, FCA, FCTI, FCIB, FCNA, FCFIP, FCE, FERP, FFAR, FPD-CR, FSEAN, FNIOAIM, FCCrFA , FCCFI, FICA, FCECFI, JP Prof. Godwin Emmanuel Oyedokun Professor of Accounting and Financial Development Department of Management & Accounting Faculty of Management and Social Sciences Lead City University, Ibadan, Nigeria Principal Partner; Oyedokun Godwin Emmanuel & Co (Accountants, Tax Practitioners & Forensic Auditors)

3. INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS (IPSAS) Adoption in Africa & Challenges of Technical Advancement - The Way Forward

4. Contents

5. IPSAS Adoption in Africa: An Overview The International Public Sector Accounting Standards (IPSAS) provide a global framework designed to improve the quality, consistency, and comparability of public sector financial reporting. Across Africa, a growing number of countries recognize IPSAS as a key tool to enhance public financial management and governance. Between 2016 and 2022, IPSAS adoption increased globally by 64%, and notably, 70% of surveyed African nations plan to fully implement IPSAS by 2027. This growing commitment signals a transformative shift that promotes greater transparency and accountability in public finances on the continent.

6. Public Sector Financial Reforms in Africa Importance of Reforms Effective financial management reforms are vital for Africa’s sustainable development and economic growth. IPSAS Role IPSAS promotes transparency and accountability, essential for good governance in the public sector. Challenges and Progress While many African nations have embarked on IPSAS adoption, they continue to face implementation challenges, especially regarding technical capacity.

7. Understanding IPSAS: Standards for Public Sector Reporting What is IPSAS? IPSAS are high-quality accounting standards designed for public sector entities worldwide, issued by the IPSAS Board under IFAC. Their purpose is to enhance financial reporting quality, ensuring better comparability and credibility in governmental accounting. IPSAS Categories Cash Basis IPSAS: Simpler approach recording only cash receipts and payments. Accrual Basis IPSAS: Recognizes transactions when they occur, offering a more comprehensive financial view.

8. Benefits of Adopting IPSAS Transparency Provides clear financial information, revealing the government’s fiscal status. Accountability Enables citizens and oversight bodies to hold public officials accountable. Comparability Standardized reporting allows comparisons across regions and years. Credibility Increases investor and donor confidence in government financial management. Efficiency Improves decision-making through reliable financial information.

9. IPSAS Adoption Landscape in Africa Prominent Leaders Nigeria: Cash Basis IPSAS since 2014; transitioning to Accrual Basis. South Africa: Full accrual accounting adoption in numerous sectors. Kenya, Ghana, Tanzania: Active initiatives and reforms underway. Partial Adopters & Challenges Several countries adapting IPSAS to local standards. Challenges include capacity shortages, financial limitations, and political issues. Success Indicators Improved budgeting accuracy. Enhanced fiscal discipline. Stronger relationships with donors and international partners.

10. Main Challenges Hindering IPSAS Adoption Technical Issues Accrual accounting complexity. Shortage of IPSAS-skilled professionals. Institutional & Political Weak regulatory systems. Inconsistent or insufficient political will. Financial & Cultural High implementation costs for training and upgrades. Resistance due to fear of exposing inefficiencies or corruption.

11. Technical Challenges in Advancing IPSAS 1 Legacy Systems Many governments still rely on outdated or hybrid accounting systems, limiting seamless IPSAS integration. 2 Inadequate IT Infrastructure Insufficient financial management software and digital tools hamper accuracy and reporting. 3 Data Quality Issues Poor existing financial data complicates migration to new standards and accurate reporting. 4 Cybersecurity Risks Weak digital controls heighten risk to sensitive financial data as systems modernize. 5 Low Tech Adoption Emerging technologies like AI, cloud computing, and blockchain are rarely utilized in public finance contexts.

12. Current Status of IPSAS Implementation in Africa 15 Countries Fully Adopting IPSAS Including leaders like South Africa and Ghana with advanced accrual systems. 25 Partial Adopters Countries implementing hybrid or customized IPSAS frameworks. 10 Countries Yet to Adopt Facing resource or structural constraints delaying progress. Comparatively, Africa's IPSAS adoption rate lags behind Asia and Latin America, but targeted initiatives are accelerating progress across the continent.

13. Case Studies: Insights from Nigeria, Kenya, South Africa & Ghana Nigeria Early adopter of Cash Basis IPSAS since 2014. Transitioning to Accrual IPSAS faces challenges in workforce training and system overhaul costs. Kenya Implemented IPSAS adoption aligned with Public Finance Management Act. Steadily moving towards full accrual accounting. South Africa Uses GRAP aligned with IPSAS for comprehensive financial reporting. Strong auditing culture supports transparency and compliance. Ghana Implementation of IPSAS contributed to Ghana’s improved credit rating, opening doors for greater international financing and partnerships.

14. The Case for IPSAS in African Public Sector Strengthening Governance IPSAS enhances the transparency and reliability of public financial information, which strengthens financial management and governance across governmental institutions. Attracting Foreign Investment By adhering to internationally recognized standards, countries improve their credibility, making them more attractive to foreign investors seeking stable environments. Resource Allocation Better financial reporting enables informed decision-making, ensuring resources are efficiently allocated to meet development priorities.

15. Way Forward - Building Capacity Comprehensive Training Programs Develop targeted IPSAS training for public sector staff, covering practical applications and updates on evolving standards. Academic Collaboration Partner with universities and specialized institutions to introduce IPSAS certification programs, fostering a pipeline of skilled professionals. Knowledge Hubs Create IPSAS resource centers within ministries and agencies to serve as ongoing support and reference points for staff. Role of Professional Bodies Leverage organizations like the Pan-African Federation of Accountants (PAFA) to champion standards adoption and continuous professional development.

16. Way Forward - Investing in Technology Modern PFM Systems Upgrade Public Financial Management infrastructure to support real-time and accurate IPSAS-compliant reporting. ERP Solutions Implement integrated Enterprise Resource Planning systems tailored for public sector complexities and IPSAS requirements. Cloud Computing Adopt cloud technologies to enhance data accessibility and secure collaboration across geographic locations. Blockchain and Cybersecurity Explore blockchain to reinforce audit trails and prioritize cybersecurity to protect public financial data within national digital frameworks.

17. Way Forward - Strengthening Policies and Collaboration Legislative Frameworks Enact laws making IPSAS compliance mandatory for all public entities to institutionalize standards adoption. Empower Supreme Audit Institutions Enhance the authority and resources of SAIs to monitor, enforce, and report on IPSAS compliance rigorously. Regional Peer Learning Foster knowledge exchange through bodies like the African Union and African Development Bank to share best practices. International Partnerships Work with global organizations for technical support, capacity building, and funding to accelerate IPSAS implementation.

18. Sustainability and Change Management Embed within PFM Reforms Integrate IPSAS adoption as a core component of broader Public Financial Management reforms to ensure systemic change. Dedicated Budgets Secure annual funding allocations specifically earmarked for IPSAS training, technology investment, and compliance activities. High-Level Champions Appoint senior leaders to drive IPSAS initiatives and ensure ownership at the highest government levels. Stakeholder Engagement Conduct regular consultations and public reporting to maintain transparency and buy-in from all stakeholders. Monitoring and Evaluation Implement robust progress tracking mechanisms to assess adoption status and guide continuous improvement.

19. Conclusion Commitment to Good Governance IPSAS adoption underscores Africa’s dedication to fiscal responsibility, accountability, and transparency in the public sector. Coupling Adoption with Technology Technical advances must be synchronized with IPSAS implementation to fully realize benefits of efficiency and transparency. Holistic Approach Required Success depends on a coordinated effort across governments, professionals, and development partners working together. Transparent and Empowered Future Building a digitally empowered public sector will support improved service delivery and sustainable development goals.

20. Recommendations and Actionable Steps Government Commitment Strong political will is essential to prioritize IPSAS adoption and allocate necessary resources. Public-Private Partnerships Leverage collaborations with private sector and development agencies to enhance capacity building and technology access. Tailored Training Design customized training programs for accountants and auditors that consider local challenges and needs. Simplified Guidance Create clear, easy-to-follow implementation manuals and toolkits to support diverse users. Example Funding Programs like the World Bank’s grants of up to $5 million provide critical support for IPSAS training and capacity development.

21. Prof. Godwin Emmanuel Oyedokun Professor of Accounting & Financial Development Lead City University, Ibadan, Nigeria Principal Partner; Oyedokun Godwin Emmanuel & Co (Accountants, Tax Practitioners & Forensic Auditors) [email protected]; [email protected] [phone] & 2348055863944