Comparison of Public Financial Reporting in Nigeria With Good Practice
Comparison of Public Financial Reporting in Nigeria With Good Practice
Comparison of Public Financial Reporting in Nigeria With Good Practice
Table of Contents
EXECUTIVE SUMMARY.................................................................1
1. INTRODUCTION......................................................................3
Background......................................................................................3
Roles of the FAAC and the Financial Reporting Council........................3
ICGFM Compilation Guide..................................................................5
Purpose of this Report.......................................................................5
Annex A...................................................................................26
Recommendations to the Financial Reporting Council on Key
Requirements to be Included in Public Sector Financial Reporting
Standards in Addition to the FAAC Requirements..............................26
Annex B...................................................................................29
Financial Statements Required by the 2012 FAAC Guidance...............29
Annex C.................................................................................... 31
Checklists to Certify Conformance with ICGFM Compilation Guide......31
Annex D...................................................................................33
Good Practice with Financial Reporting by the Federal Republic of
Nigeria...........................................................................................33
Annex E.................................................................................... 37
Financial Reporting by the State Governments of Nigeria..................37
Appendix F............................................................................... 38
Terms of Reference..........................................................................38
EXECUTIVE SUMMARY
A governments financial statements (and associated report of the Auditor
General) should indicate how it has managed its financial resources in
compliance with the annual budget, authorised by Parliament, relevant laws
and financial regulations. Demonstrating accountability for compliance with
budgetary authority is a distinguishing objective of governmental financial
reporting. Many of the key users of government financial statements
(citizens and their political representatives) are not financially literate and
so extra effort is needed to make sure the financial statements are
accessible, clear and understandable.
In 2012, the Federation Account Allocation Committee (FAAC) established a
Sub-Committee on the Roadmap for the Adoption of IPSAS. This committee
recommended the retention of the main financial statements then in use,
with some minor amendments, to be supplemented with additional
performance and statistical reports. This guidance is to be implemented
with respect to the financial statements for the 2014 financial year for
governments at the Federal, state and local level in Nigeria.
Under the Financial Reporting Council of Nigeria Act, No. 6 of 2011, the
Financial Reporting Council is required to: develop accounting and financial
reporting standards for the public sector, including detailed reporting and
disclosure requirements for all public sector entities in Nigeria. Within this
context the FAAC Guidance can provide professional guidance on the
format which the financial statements may take.
The International Consortium on Governmental Financial Management
(ICGFM) has produced a Compilation Guide for annual public sector
financial statements. The purpose of the ICGFM Compilation Guide is to
describe the manner in which the annual general purpose financial
statements for governments should be presented to their legislative bodies
and citizens. The ICGFM Compilation Guide provides a practical, step by
step guide towards adoption of the IPSAS and other international good
practice.
The purpose of this report is to assess the requirements of the guidance
issued by the FAAC Sub-Committee on the Roadmap for the Adoption of
IPSAS (2012) against the ICGFM Compilation Guide. It assesses the stage in
the ICGFM Compilation Guide that financial statements produced in line
with the FAAC Roadmap should achieve. The FAAC Roadmap scored as
follows against the first four stages outlined in the ICGFM Compilation
Guide:
ICGFM
Requirements
Green
(met)
Yellow
General
Stage One
Considerations
Stage Two
Stage Three
6
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(partially
met)
Red
(not
met)
Largely
achieved
Fully achieved
Partially
achieved
Partially
achieved
Thus the FAAC Roadmap for the Adoption of IPSAS (2012) largely meets the
General Requirements of the ICGFM Compilation Guide and Stage One is
fully complied with. However, Stages Two and Three are only partially
achieved.
Detailed recommendations for additional guidance and requirements to be
produced by the Financial Reporting Council are included as Annex A. In
addition, care needs to be taken to ensure that current good practice
(identified in Annex D) is maintained. If appropriate accounting standards
are developed and agreed by the Financial Reporting Council, it should be
possible for governments, at all levels within Nigeria, to fully comply with
Stages Two and Three of the ICGFM Compilation Guide at relatively little
cost.
Page 2
1. INTRODUCTION
Background
Along with the auditors report, a governments annual financial statements
provide the essential financial data necessary for accountability purposes.
In a parliamentary democracy, parliament sets the annual budget and so
authorises the government to raise taxes and to spend money as indicated.
For governments, a budget takes on a special legal significance.
Governmental budgets are expressions of public policy priorities and legally
authorize the purposes for which public resources may be raised and spent.
The publication of government budgets and then the reporting of actual
results against them are the primary method by which citizens and their
elected representatives hold governments to account for their financial
management. The annual financial statements are the key way in which
the government accounts to parliament and its citizens for the taxes raised,
loans contracted, grants received and the money spent on the provision of
public services.
A governments financial statements (and the associated report from the
Auditor General) should indicate how financial resources were managed in
compliance with the annual budget, authorised by Parliament, relevant laws
and financial regulations. Citizens and their elected representatives have
the right to know whether the government actually used funds and
resources in accordance with the approved budget and relevant financial
regulations. Demonstrating accountability for compliance with budgetary
authority is a distinguishing objective of governmental financial reporting.
The aim is to facilitate control by parliament to ensure that all public
expenditure is within the limits set by parliament.
Because revenues raised through governments power to tax are expected
to be used to advance the public interest, the public is entitled to hold
governments to a standard of financial accountability that is wider in scope
than for private sector companies. Accountability to parliament is the
cornerstone of all financial reporting in a representative democracy.
Government accountability is based on the belief that citizens and their
Parliament have a right to know, a right to openly receive financial
information that may lead to public debate by the citizens and their elected
representatives.
Many of the key users of government financial statements (citizens and
their political representatives) are not financially literate and so extra effort
is needed to make sure the financial statements are accessible, clear and
understandable.
Statement
Statement
Statement
Statement
Statement
Statement
Statement
No.1:
No.2:
No.3:
No.4:
No.5:
No.6:
No.7:
These statements and the recommended format and contents were widely
adopted by the Federal Government, the State Governments and Local
Governments across Nigeria (see, for example, Annex E to this report).
In 2012, another FAAC Sub-Committee was established on the Roadmap for
the Adoption of IPSAS. This committee recommended the retention of the
above main statements with some minor amendments to be supplemented
with additional performance and statistical reports. This guidance is to be
implemented with respect to the financial statements for the 2014 financial
year (see Annex 1 for more detail on the statements recommended by the
2012 FAAC Sub-Committee).
This FAAC Guidance provides guidance to Accountants General of the
Federation and the states, and to local government treasurers on the
format and content of the annual financial statements that they are
required to produce. However, it does not provide detailed guidance on the
accounting standards and policies which are to be applied. In addition, the
amount of guidance provided on how these financial statements are to be
produced is relatively limited and extensive reliance will be placed on the
professional competence and knowledge of the staff undertaking this task.
Under the Financial Reporting Council of Nigeria Act, No. 6 of 2011, the
Financial Reporting Councils Directorate of Accounting Standards - Public
Sector is required to:
(a) develop accounting and financial reporting standards for the public
sector
(b) consider significant areas of accounting and financial reporting that can
be improved through the standard-setting process
(c) promote the general acceptance and adoption of such standards by
preparers and users of financial statements in the public sector
(d) promote compliance with the accounting standards developed or
reviewed by the Directorate
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(e) review from time to time the accounting standards developed in line
with the prevalent social, economic and political environment
(f ) perform such other duties which in the opinion of the Board are
necessary or expedient to ensure the efficient performance of the functions
of the Council.
Thus the Financial Reporting Council has a legal requirement to develop,
produce and publish accounting standards including detailed reporting and
disclosure requirements for all public sector entities in Nigeria. Within this
context the FAAC Guidance provides professional guidance on the format
which the financial statements may take.
Financial Reporting Under the Cash Basis of Accounting, IFAC, New York, 2003.
Page 5
Page 6
Page 7
The FAAC Roadmap for the Adoption of IPSAS (2012) scored as follows
against these stages:
General
Considerations
Stage One
Stage Two
Stage Three
Green
Yellow
Red
Largely met
Fully met
Partially met
Partially met
Thus the FAAC Roadmap for the Adoption of IPSAS (2012) largely meets the
General Requirements of the ICGFM Compilation Guide and Stage One is
fully complied with. However, Stage Two and Stage Three are only partially
achieved.
Detailed recommendations for additional guidance and requirements to be
produced by the Financial Reporting Council are included as Annex A. In
addition, care needs to be taken to ensure that current good practice
(identified in Annex D) is maintained. If appropriate accounting standards
are developed and agreed by the Financial Reporting Council, it should be
possible for governments, at all levels within Nigeria, to fully comply with
Stages Two and Three of the ICGFM Compilation Guide at relatively little
cost.
Page 8
a)
Summary
At this stage, the FAAC Roadmap for the Adoption of IPSAS (2012) scored as
follows:
General
Considerations
Green
Yellow
Red
For nine of the 16 ICGFM requirements at this stage, the FAAC requirements
will ensure full compliance with the ICGFM Compilation Guide. For a
further five requirements, the FAAC requirements will ensure partial
compliance. Two of the 16 requirements are not met by the FAAC
requirements. However, these would require only relatively minor
additional disclosures.
Thus this stage is largely met by the FAAC Roadmap for the Adoption of
IPSAS (2012).
The accounting standards issued by the Financial Reporting Council should
ensure that the following disclosures are provided by each reporting entity:
The domicile and legal form of the entity, and the jurisdiction within
which it operates;
A description of the nature of the entitys operations and principal
activities;
A reference to the relevant legislation governing the entitys financial
operations; and
The name of the controlling entity and the ultimate controlling entity
of the economic entity
Where combined or consolidated financial statements are provided
covering more than one entity, the nature of the consolidation and the
entities which are combined or consolidated should be clearly
disclosed.
Detailed analysis
In this section, each of the key requirements of the General Considerations
of the ICGFM Compilation Guide is considered. In each case the extent to
which the FAAC Roadmap for the Adoption of IPSAS (2012) complies with
this requirement is indicated.
Page 9
The following definitions from the ICGFM Compilation Guide could be added
to the FAAC Guidance and/or included in the Financial Reporting Council
accounting standards:
Accountability the obligation to demonstrate that work has been conducted in compliance with agreed rules and
standards or to report fairly and accurately on performance results against mandated roles and plans.
Accounting Officer public official with ultimate responsibility and personal accountability to the legislative
body for the control of a vote (section of the annual budget) and the financial management of the related
government entity in the developing country. May be appointed by the Treasury/Permanent Secretary in the
Ministry of Finance (most senior public official) or the President of the entity.
Materiality: information is material if its omission or misstatement could influence the assessments of users made
on the basis of the financial statements. Materiality depends on the nature or size of the item or error judged in
the particular circumstances of omission or misstatement.
The FAAC Guidance does not specify this, but it is generally complied with.
General Considerations of the ICGFM Compilation Guide require:
2.4 The financial statements should be presented for audit within six months of the end of period to which they
refer so that audited financial statements can be presented to the legislative body within nine months.
The FAAC Guidance does not specify this and practice is mixed. Some
governments have produced their financial statements well within this six
month target.
General Considerations of the ICGFM Compilation Guide require:
2.9 An entity should disclose the date when the financial statements were authorized for issue and who gave
that authorization.
The FAAC Guidance does not specify this, but this is usually included in the
covering letter for the financial statements.
General Considerations of the ICGFM Compilation Guide require:
2.11 An entity should disclose the following, as notes to the financial statements, if not disclosed elsewhere in
information published with the financial statements:
(a) The domicile and legal form of the entity, and the jurisdiction within which it operates;
(b) A description of the nature of the entitys operations and principal activities;
(c) A reference to the relevant legislation governing the entitys financial operations; and
(d) The name of the controlling entity and the ultimate controlling entity of the economic entity.
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The FAAC Guidance does not specify this and this information will be
particularly significant for agencies. For Federal and state ministries the
information is less relevant, but could be provided for completeness.
General Considerations of the ICGFM Compilation Guide require:
2.13 Where combined or consolidated financial statements are provided covering more than one entity, the
nature of the consolidation and the entities which are combined or consolidated should be clearly disclosed.
This has been largely achieved since the original FAAC Guidance was
issued in 2004.
General Considerations of the ICGFM Compilation Guide require:
2.23 Comparative information should be disclosed in respect of the previous period for all numerical
information required by this Guide to be disclosed in the financial statements. Comparative information should
be included in narrative and descriptive information when it is relevant to an understanding of the current
periods financial statements.
Comparative information for the previous year is required for the four main
financial statements, but not necessarily in the notes to these accounts or
for the performance or statistics reports.
General Considerations of the ICGFM Compilation Guide require:
2.28 When the presentation or classification of items required to be disclosed in the financial statements is
amended, comparative amounts should be reclassified, unless it is impracticable to do so, to ensure
comparability with the current period, and the nature, amount of, and reason for any reclassification should be
disclosed. When it is impracticable to reclassify comparative amounts, an entity should disclose the reason for
not reclassifying and the nature of the changes that would have been made if amounts were reclassified.
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The FAAC Guidance is explicit on the revenue and the expenditure that
is to be disclosed in the financial statements so this requirement will be
achieved in practice.
General Considerations of the ICGFM Compilation Guide require:
2.45 The Accountant General should provide a commentary with the financial statements to explain the
context for any significant developments and set the financial results for the year within the context of trends
over the last few years.
with in practice.
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Yellow
Red
Parts (a) and (b) of this requirement are not specified by the FAAC
Guidance, but are generally complied with in practice. Accounting
Standards from the Financial Reporting Council should provide more
guidance, especially on the discussion and analysis.
Stage One of the ICGFM Compilation Guide requires:
3.4 An entity will generally prepare general purpose financial statements which include the following
components:
(a) A Statement of Cash Position; and
(b) A Comparative Statement of Budget and Actual Amounts.
Page 14
Page 15
Yellow
Red
For nine of the 21 ICGFM requirements at this stage, the FAAC requirements
will ensure full compliance with the ICGFM Compilation Guide. For a
further three requirements, the FAAC requirements will ensure partial
compliance. Nine of the 21 requirements are not met by the FAAC
requirements.
Thus Stage Two of the ICGFM Compilation Guide is only partially met by
the FAAC Roadmap for the Adoption of IPSAS (2012).
The accounting standards issued by the Financial Reporting Council should
ensure that the following requirements are met by each reporting entity to
achieve State Two of the ICGFM Compilation Guide:
1.
An entity should disclose in the notes to the financial statements, together with a
commentary, the nature and amount of:
(a) Significant cash balances that are not available for use by the entity;
(b) Significant cash balances that are subject to external restrictions; and
(c) Undrawn borrowing facilities that may be available for future operating activities and to
settle capital commitments, indicating any restrictions on the use of these facilities.
2.
Details of the payments and receipts of primary service delivery units should be made
public.
3.
Details of secret payments may not be provided in full in the financial statements or not
in the level of detail provided for other payments. Where this is the case, summary details
should be provided with a brief explanation of why such information is not being provided.
4.
When an error arises in relation to a cash balance reported in the financial statements,
the amount of the error that relates to prior periods should be reported by adjusting the cash at
the beginning of the period. Comparative information should be restated, unless it is
impracticable to do so.
Page 16
5.
An entity should disclose in the notes to the financial statements the following:
(a) The nature of the error;
(b) The amount of the correction; and
(c) The fact that comparative information has been restated or that it is impracticable to do
so.
6.
Cash receipts and payments arising from transactions in a foreign currency should be
recorded in an entitys reporting currency by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency at the date of each
receipt and payment.
7.
Cash balances held in a foreign currency should be reported using the closing rate at the
end of the reporting period.
8.
An entity should disclose the amount of exchange differences included as reconciling
items between opening and closing cash balances for the period.
9.
When the reporting currency is different from the currency of the country in which the
entity is domiciled, the reason for using a different currency should be disclosed. The reason
for any change in the reporting currency should also be disclosed.
Detailed analysis
In this section, each of the key requirements of the Stage Two of the ICGFM
Compilation Guide are considered. In each case the extent to which the
FAAC Roadmap for the Adoption of IPSAS (2012) is indicated.
Stage Two of the ICGFM Compilation Guide requires:
4.2 The structure for the financial reports prepared on the cash basis of accounting is as follows:
(a) Supreme Audit Institutions Opinion on Fair Presentation
(b) Financial Statement Discussion and Analysis
(c) Financial Statements
(i) Comparative Statement of Budget and Actual Amounts
(ii) Statement of Cash Receipts and Payments
(d) Notes to the Financial Statements.
Parts (a) and (b) of this requirement are not specified by the FAAC
Guidance, but are generally complied with in practice. Accounting
Standards from the Financial Reporting Council should provide more
guidance, especially on the discussion and analysis.
Stage Two of the ICGFM Compilation Guide requires:
4.6 The Statement of Cash Receipts and Payments should provide a clear comparison of actual cash receipts
and payments with the budget agreed by the legislative body and comparative figures for the previous reporting
period, it should also present the following amounts for the reporting period:
(a) Total cash receipts of the entity compared to the annual budget agreed by the legislative body, showing
separately a sub-classification of total cash receipts using a classification basis appropriate to the
entitys operations;
(b) Total cash payments of the entity compared to the annual budget agreed by the legislative body,
showing separately a sub-classification of total cash payments using a classification basis appropriate
to the entitys operations;
(c) Beginning and closing cash and bank balances of the entity; and
(d) Separately identifies payments made by third parties on behalf of the entity.
Page 17
Parts (a), (b) and (c) of this requirement are included in the cash flow
statement (Statement 1) from FAAC Guidance. Part (d) is not included
in this guidance, but is not generally accepted good practice. The ICGFM
Compilation Guide may be amended to omit this key requirement.
Stage Two of the ICGFM Compilation Guide requires:
4.7 Total cash receipts and total cash payments, and cash receipts and cash payments for each subclassification of cash receipt and payment, should be reported on a gross basis, except that cash receipts and
payments may be reported on a net basis when:
(a) They arise from transactions which the entity administers on behalf of other parties and which are
recognized in the Statement of Cash Receipts and Payments; or
(b) They are for items in which the turnover is quick, the amounts are large, and the maturities are short.
Page 19
balances held at the Central Bank as well as the total balances of accounts held at other banks.
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Page 21
Yellow
Red
2.
The notes to the financial statements should disclose the amount of any debt cancelled
during the period
3.
A summary should be provided of any arrears of revenues; further details should be
provided for the main types of taxes and non-tax revenue, with the latter detailed by ministry,
department and agency. Comparable figures should be provided for the previous financial
year.
4.
The financial statements of the common fund should include, as notes to the accounts,
summaries of reported losses and those written off or abandoned, with details by ministry,
department and agency. The financial statements of individual ministries, departments and
agencies should provide further details of losses of public money with dates, explanations of
particulars and nature of each loss and the value of the loss recovered or written off.
5.
The proceeds received from the privatisation of individual agencies or public
enterprises should be disclosed. Any amounts outstanding, the name of the company, the
Page 22
investor, year of privatisation, cost and amounts paid with the balance outstanding at start and
end of the year with brief remarks should be disclosed.
6.
The notes to the financial statements should disclose the salaries and benefits of senior
politicians and senior public officials.
Detailed analysis
In this section, each of the key requirements of the General Considerations
of the ICGFM Compilation Guide is considered. In each case the extent to
which the FAAC Roadmap for the Adoption of IPSAS (2012) complies with
this requirement is indicated.
Stage Three of the ICGFM Compilation Guide requires:
5.3 The structure for the financial reports prepared on the modified accrual basis of accounting is as follows:
(a) Supreme Audit Institutions Opinion on Fair Presentation
(b) Financial Statement Discussion and Analysis
(c) Financial Statements
(i) Statement of Cash Receipts and Payments
(ii) Comparative Statement of Budget and Actual Amounts
(iii) Intermediate Statement of Financial Position
(iv) Intermediate Statement of Financial Performance
(v) Intermediate Statement of Changes in Net Assets
(d) Notes to the Financial Statements.
The core statements from this requirement are currently detailed in the
FAAC Guidance. However, the following two statements are not
required
Intermediate Statement of Financial Performance and Intermediate
Statement of Changes in Net Assets. These statements are not usually
provided in the public sector.
Stage Three of the ICGFM Compilation Guide requires:
5.6 An entity should prepare and present to the legislative body general purpose financial statements for
central government which include the following components:
(a) A Statement of Cash Receipts and Payments showing a comparison of budget and actual amounts
(same as those prepared in Stage 2);
(b) Comparative Statement of Budget and Actual Amounts (same as those prepared in Stage 2);
(c) An Intermediate Statement of Financial Position showing financial assets and financial liabilities
with comparative figures for the previous financial year;
(d) An Intermediate Statement of Financial Performance showing the results of financial operations
during the fiscal period with comparative figures for the previous financial year;
(e) An Intermediate Statement of Changes in Net Assets reflecting the differences in Net Assets from the
prior financial year.
The core statements from this requirement are currently detailed in the
FAAC Guidance. However, the following two statements are not required
Intermediate Statement of Financial Performance and Intermediate
Statement of Changes in Net Assets. These statements are not usually
provided in the public sector.
Stage Three of the ICGFM Compilation Guide requires:
5.9 The Intermediate Statement of Financial Position should provide a clear comparison of actual financial
assets and financial liabilities at the end of the reporting period with those of the previous period. The
Intermediate Statement of Financial Position should also present the following amounts for the reporting
Page 23
period:
(a) Total financial assets of the entity showing separately the following balances and a sub-classification
using a classification basis appropriate to the entitys operations:
(i) Cash, including cash equivalents and bank balances of the entity;
(ii) Receivables; and
(iii) Advances, loans and investments.
(b) Total financial liabilities of the entity showing separately the following balances and a subclassification using a classification basis appropriate to the entitys operations:
(i) Public debt and loans received analysed to show total domestic debt and total debt denominated in
foreign currencies; and
(ii) Sundry creditors.
(c) Net assets and the funds by which these are represented including the common fund and other funds as
appropriate.
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appropriate.
Page 25
financial statements of individual ministries, departments and agencies should provide further details of losses
of public money with dates, explanations of particulars and nature of each loss and the value of the loss
recovered or written off.
The FAAC Guidance now provides for a fairly detailed report on capital
expenditure. However, this does not provide expenditure by project,
but only for the detailed line item codes. In addition, the expenditure is
only provided for the financial year compared with the budget and not the
total budget and costs for each project.
Stage Three of the ICGFM Compilation Guide requires:
5.39 An entity should disclose in the notes to the financial statements the salaries and benefits of senior
politicians and senior public officials.
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Annex A
Recommendations to the Financial Reporting Council on
Key Requirements to be Included in Public Sector
Financial Reporting Standards in Addition to the FAAC
Requirements
To Comply with the General Requirements of the ICGFM
Compilation Guide:
The accounting standards issued by the Financial Reporting Council should
ensure that the following disclosures are provided by each reporting entity
to achieve the general requirements of the ICGFM Compilation Guide:
The domicile and legal form of the entity, and the jurisdiction within
which it operates;
A description of the nature of the entitys operations and principal
activities;
A reference to the relevant legislation governing the entitys financial
operations; and
The name of the controlling entity and the ultimate controlling entity
of the economic entity
Where combined or consolidated financial statements are provided
covering more than one entity, the nature of the consolidation and the
entities which are combined or consolidated should be clearly
disclosed.
To Comply with Stage Two of the ICGFM Compilation Guide:
The accounting standards issued by the Financial Reporting Council should
ensure that the following requirements are met by each reporting entity to
achieve the Stage Two of the ICGFM Compilation Guide:
1.
An entity should disclose in the notes to the financial statements, together with a
commentary, the nature and amount of:
(d) Significant cash balances that are not available for use by the entity;
(e) Significant cash balances that are subject to external restrictions; and
(f) Undrawn borrowing facilities that may be available for future operating activities and to
settle capital commitments, indicating any restrictions on the use of these facilities.
2.
Details of the payments and receipts of primary service delivery units should be made
public.
3.
Details of secret payments may not be provided in full in the financial statements or not
in the level of detail provided for other payments. Where this is the case, summary details
should be provided with a brief explanation of why such information is not being provided.
4.
When an error arises in relation to a cash balance reported in the financial statements,
the amount of the error that relates to prior periods should be reported by adjusting the cash at
the beginning of the period. Comparative information should be restated, unless it is
Page 27
impracticable to do so.
5.
An entity should disclose in the notes to the financial statements the following:
(g) The nature of the error;
(h) The amount of the correction; and
(i) The fact that comparative information has been restated or that it is impracticable to do
so.
6.
Cash receipts and payments arising from transactions in a foreign currency should be
recorded in an entitys reporting currency by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency at the date of each
receipt and payment.
7.
Cash balances held in a foreign currency should be reported using the closing rate at the
end of the reporting period.
8.
An entity should disclose the amount of exchange differences included as reconciling
items between opening and closing cash balances for the period.
9.
When the reporting currency is different from the currency of the country in which the
entity is domiciled, the reason for using a different currency should be disclosed. The reason
for any change in the reporting currency should also be disclosed.
To Comply with Stage Three of the ICGFM Compilation Guide:
The accounting standards issued by the Financial Reporting Council should
ensure that the following requirements of the ICGFM Compilation Guide are
achieved by each reporting entity to achieve Stage Three of this Guide:
1.
2.
The notes to the financial statements should disclose the amount of any debt cancelled
during the period
3.
A summary should be provided of any arrears of revenues; further details should be
provided for the main types of taxes and non-tax revenue, with the latter detailed by ministry,
department and agency. Comparable figures should be provided for the previous financial
year.
4.
The financial statements of the common fund should include, as notes to the accounts,
summaries of reported losses and those written off or abandoned, with details by ministry,
department and agency. The financial statements of individual ministries, departments and
agencies should provide further details of losses of public money with dates, explanations of
particulars and nature of each loss and the value of the loss recovered or written off.
5.
The proceeds received from the privatisation of individual agencies or public
enterprises should be disclosed. Any amounts outstanding, the name of the company, the
investor, year of privatisation, cost and amounts paid with the balance outstanding at start and
end of the year with brief remarks should be disclosed.
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6.
The notes to the financial statements should disclose the salaries and benefits of senior
politicians and senior public officials.
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Annex B
Financial Statements Required by the 2012 FAAC
Guidance
In 2012, the Federal Account Allocation Committee (FAAC) established a
Sub-Committee on the Roadmap for the Adoption of IPSAS. This committee
produced guidance on the implementation of key aspects of the Cash Basis
IPSAS for the financial statements of the Federal, state and local
governments in Nigeria.
This committee recommended the retention of the four main statements of
the annual accounts with some minor amendments. These four statements
are to be supplemented with additional performance and statistical reports.
This guidance is to be implemented starting with the financial statements
of the 2014 financial year.
The core statements to be included in the annual accounts of all the
Federal, state and local governments are to be:
A.
MAIN FINANCIAL STATEMENTS (General Purpose Financial
Statements)
STATEMENT NO. 1:
December, 20xx
STATEMENT NO. 2:
December, 20xx
STATEMENT NO. 3:
Statement of Consolidated Revenue Fund for the
year ended 31st December, 20xx
STATEMENT NO. 4:
Statement of Capital Development Fund for the
year ended 31st December, 20xx
B
PERFORMANCE REPORTS
STATISTICAL REPORTS
Page 31
Annex C
Checklists to Certify Conformance with ICGFM Compilation Guide
Stage 2Controlled Entities within Central Government
Has each of the controlled entities prepared a Comparative Statement of Budget to Actual Amounts, where
appropriate?
YES
NO
Comparison of budget to actual for each MDA provided in the report from the Accountant General for personal, overhead and
contributions to the Capital Development Fund
If so, has a combining Comparative Statement of Budget to Actual Amounts been prepared to present a combined
total for the controlled entities? (not required)
Has each of the controlled entities prepared a Statement of Cash Receipts and Payments, where appropriate?
This is not explicitly required by the FAAC Guidance, but it is assumed that it is prepared to enable the consolidated statements to be
produced for the government.
If so, has a combining Statement of Cash Receipts and Payments been prepared to present a combined total for the
controlled entities? (not required)
Has the Auditor General expressed an opinion on the fair presentation of financial information in the prepared
statements in accordance with the ISAs?
Has a narrative Financial Statement Discussion and Analysis been prepared to explain in plain language the
information presented in the prepared statements?
This is not explicitly required by the FAAC Guidance, but it is usually provided by the Federal and state Accountants General.
Have notes been attached to the prepared statements to further explain the financial information in the prepared
statements?
Has the combining statements been provided to the legislative body for informational purposes along with the Auditor
Generals opinion, the Financial Statement Discussion and Analysis, and the Notes?
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YES
NO
X
X
X
Grading Criteria
AHas answered Yes to all questions in applicable stage except attaching the Auditors Opinion. A Certificate of
Conformance can be issued.
BSame as A except narrative Financial Statement Discussion and Analysis is not attached. A Certificate of
Conformance can not be issued.
CSame as B except Statement of Cash Receipts and Cash Payments or Statement of Cash Flows and disclosures
are not attached. A Certificate of Conformance can not be issued.
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DSame as C except financial statements do not comply with pertinent IPSAS. A Certificate of Conformance can
not be issued.
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Annex D
Good Practice with Financial Reporting by the Federal
Republic of Nigeria
Audited Financial Statements
for the year ended 31 December 2008
This is an extract on Nigeria from the following report:
Stephen Emasu, Mercy Nyangulu and Andy Wynne (2012) Annual Financial
Reporting by Governments existing good practices in sub-Saharan Africa,
Harare: African Capacity Building Foundation www.scribd.com/doc/111894078.
Identified good practice:
1.
2.
3.
4.
5.
6.
7.
8.
9.
r/Report%20of%20the%20AGF%20and%20Financial%20Statements
%20for%202008.pdf
Contents of the Financial Statements :
Statements
Statement
Statement
Statement
Statement
1:
2:
3:
4:
Cash flow
Assets and Liabilities
Consolidated Revenue Fund
Capital Development Fund
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The members of National Assembly claim that they did not receive the
2001 accounts either, but the meetings in the Office of Auditor General
suggests that it is likely that it was finalized and submitted to the National
Assembly. However, because the document is highly confidential and
produced in a limited number of copies, it just may have gone missing.
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Annex E
Financial Reporting by the State Governments of Nigeria
Summary
In 2010 a survey was undertaken of the Accountants General for each of
the states in Nigeria. Fourteen of the 36 states responded to the survey and
provided an indication of the annual financial reports which are provided by
the state governments.
In all but four of these states the Accountant General is a Permanent
Secretary. The average number of staff in the Office of the Accountant
General is 298, although this varies greatly from 753 to only 40 staff. On
average 38 of these are senior staff (grade 14 or above). The average
office has 6 ICAN members and 41 ANAN members.
The timeliness with which the financial statements are passed to the
Auditor General varies greatly from state to state. Two of the 14 states
always manage this within three months of the end of the financial year.
Five other states manage this some of the years, but five of the states are
always late (two of the states did not provide data).
Most states print around 250 copies of their financial statements, but two
states print around 2,500 and two others only print 50. Four states provide
their financial statements on their website. The average size of the annual
report and financial statements is just less than 50 pages.
All states provide notes to the accounts including the accounting policies
adopted and the main applicable laws. Six of the states do not provide
explanations of all terms used in the financial statements. Most of them provide a
general review of budget execution for the year and eight of the states provide a review of
payments and receipts over the last three or five years or at least some summary figures. Eight
of the states provide a range of graphs to illustrate the financial statements. In all states an
introduction is provided by the Accountant General and a report is provided by the Auditor
General. In 10 states the Auditor General also provides a commentary on the financial
statements.
All the states provide the four main statements required by the FAAC and almost all provide
the key information required to be disclosed in these statements. The Accountants General
considers that all these statements are required.
In most states the key requirements of the 2004 FAAC guidance was complied with. However,
a significant number of states (5) did not disclose imprests outstanding at the year end and
seven did not disclose outstanding advances. All states disclosed their subventions to
parastatals. However, only five indicated the loans made and outstanding to parastatal bodies.
The detailed results of the survey are provided on the next seven pages of this report.
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Appendix F
Terms of Reference
responsibilities for setting financial reporting standards for the public sector
in Nigeria.
The ICGFM Compilation Guide was developed from existing good practices
with public sector financial reporting in consultation with the IPSAS Board
and the Financial Management Service of the World Bank. This Guide
identifies six levels for the implementation of the IPSAS. Levels one to
three refer to the cash basis and levels four to six refer to the IPSASs for the
accrual basis.
The aim of this assignment is to establish the progress made and to identify
differences, if any, as a basis for the introduction of IPSAS Cash Basis in the
public sector of Nigeria and so assist with the effective delivery on the
mandate of the Council.
The World Bank, therefore, in recognition of the above, has come to the aid
of the Federal Government by assisting the Financial Reporting Council
(FRC) - a federal government agency that has responsibility for monitoring
and promoting education, research and training in the fields of accounting,
auditing, financial reporting and corporate governance.
NEED FOR A CONSULTANT
The Financial Reporting Council of Nigeria has concluded arrangements for
the survey of financial reporting practices in the public sector in order to
ascertain the basis for effective institutionalisation of same in the public
sector of Nigeria.
In order to achieve these objectives and of institutionalising broader
corporate governance, the FRC has set up a National Steering Committee
on Harmonised Corporate Governance Codes in Nigeria and require inputs
that will facilitate the work of the committee, the Financial Reporting
Council of Nigeria plan to use the services of a consultant to facilitate the
survey which is expected to amongst others:
- Assess the existing revised FAAC formats against the Cash Basis
IPSAS;
- Ascertain the level of compliance with such practices against the
ICGFM Guidance and the level which will be achieved;
- Identify the modifications which may be necessary for the
achievement of the next level from the ICGFM Compilation
Guide.
DELIVERABLES AND CRITERIA FOR SUCCESSFUL CONTRACT
PERFORMANCE
The deliverables include project documentation and reports. The reports
shall cover, at a minimum, the executive summary and the main report on
the survey.
The first main output is a comprehensive and detailed report, including
relevant analysis covering the following issues:
JOB SPECIFICATION
The Consultant is expected, amongst others, to:
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i)
ii)
iii)
iv)
v)
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REMUNERATION
The consultant will be paid a lump sum of $7,000 that will cover his/her
total fees as well as any associated expenses.
SUPERVISION
In the performance of the task described above, the consultant will report
to the Executive Secretary/Chief Executive Officer of FRC, through the
Assistant Director, Head, CLAP/SORP, FRC.
REQUIREMENTS
In addition to the requirements stated below, the consultant must provide
information indicating that they are qualified to perform the services (by
providing description of similar assignments, experience in similar
conditions, availability of appropriate skills, etc).
- Curriculum Vitae (CV) of management and key technical/professional
staff including evidence of their registration with relevant professional
bodies.
-
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