European Journal of Business, Economics and Accountancy Vol. 6, No.

6, 2018
ISSN 2056-6018

THE IMPLEMENTATION OF INTERNATIONAL PUBLIC SECTOR

ACCOUNTING STANDARDS IN LIBERIA: ANALYSIS OF THE
BENEFITS AND CHALLENGES
Hussein Salia, PhD, CA Williams Abayaawien Atuilik, PhD, CA
Department of Accounting, School of Business Department of Accounting, School of Business
Heritage Christian University College, Amasaman Heritage Christian University College, Amasaman
Accra, GHANA Accra, GHANA
[email protected] [email protected]

ABSTRACT

This study evaluates the main factors influencing the implementation of International Public
Sector Accounting Standards (IPSAS) in Liberia. The study adopted a survey design to
collect data using a five-point Likert scale questionnaire administered on a sample of 100
Accountants, and internal and external auditors selected from public accounting and audit
firms, the General Auditing Commission, government departments and related public sector
entities within the Montserrado County of the Republic of Liberia. The research data was
analysed using descriptive statistics, and the hypotheses were formulated and tested using
analysis of variance (ANOVA) at a 5% significance level. The results show that IPSAS
application in Liberia improves the quality and reliability of government accounting
information, aligns government financial accounting with best international standards,
stimulates Public-Private sectors partnerships, and increases government accountability and
transparency within the Liberian economy. The results also show that lack of IPSAS experts,
conflict between IPSAS and existing laws, and high cost of transition from existing
accounting practices to IPSAS represent threats to realising the full benefits of IPSAS.
Hence, the paper calls for political buy-in through moral suasion among government officials.
High level of political commitment is expected to ease stakeholders’ efforts at removing the
associated bottlenecks to IPSAS implementation.

Keywords: Benefits, Challenges, Implementation, International Public Sector Accounting

Standards (IPSAS).

INTRODUCTION

International Public Sector Accounting Standards (IPSAS) has become a worldwide

revolution in government accounting reforms. Many national and international governmental
organisations have started implementing accounting reforms to align with IPSAS. The main
reason for this insurgency is the demand for increased transparency and accountability over
the management of the financial affairs of governments and international governmental
organisations (Chan, 2006; Christiaens, Vanhee, Manes-Rossi, Aversano, & Van
Cauwenberge, 2015; Navarro Galera & Rodríguez Bolívar, 2007; Tickell, 2010). Before this
revolution, most government institutions in emerging economies relied significantly on
Generally Accepted Accounting Principles (GAAP) as the principal approach to accounting
for the use of public funds. Until recently, the government of Liberia totally depended on
GAAP in accounting for the use of public funds, largely due to the perceived convenience
and costliness in using GAAP. However, GAAP has neither been able to uphold the level of
transparency and accountability expected of it within the public sector nor harmonise
international trade and commerce between emerging nations and the developed world
(Ijeoma & Oghoghomeh, 2014). Consequently, emerging countries reliance on GAAP puts at

Progressive Academic Publishing, UK Page 17 www.idpublications.org

European Journal of Business, Economics and Accountancy Vol. 6, No. 6, 2018
ISSN 2056-6018

risk, the sustainability of public sector entities and the chance of success of international trade
and commerce with other global partners.

For example, most of the financial crises witnessed in less developed countries were partly
attributed to practitioners’ inability to apply GAAP intended to eliminate waste, curtail
excessive spending, handle poor service delivery and improve accountability and
transparency of public sector entities (Babatunde, 2017; Nkwagu et al., 2016). Nkwagu et al.
(2016) and Babatunde (2017) also ascribed the occurrence of the 2007 global financial crisis,
the 2008-2009 meltdown of the financial markets, and the 2009 - 2012 European debt crises
to the non-existence of internationally recognized public sector accounting reporting
frameworks. These and other reasons persuaded the International Federation of Accountants
(IFAC) through its International Public Sector Accounting Standards Board (IPSASB) to
introduce and continue to impress upon national governments and international governmental
organisations to adopt and implement IPSAS. IPSAS adoption therefore is intended to result
in a number of benefits including increased level of transparency and accountability in the
management of public funds, harmonisation of international trade and commerce between the
emerging counties and development partners.

Additionally, IPSAS adoption and implementation seeks to align governments reporting

formats with best accounting practices through the application of credible and independent
accounting standards (Harun, 2007; Nkwagu et al., 2016). Alignment of government
reporting requirements with best practices is a catalytic agent for the attainment of national
development objectives in many countries including Liberia where support from development
partners represents the major source of funding. Multilateral institutions such as the African
Development Bank, Asian Development Bank, the World Bank, the International Monetary
Fund (IMF) and the United Nations (UN) are the principal providers of financial resourceS to
most developing countries. All of these multilateral institutions have endorsed the application
of IPSAS in accounting for resources they provide (Chan, 2006; Babatunde, 2017).
Therefore, the implementation of IPSAS is expected to serve as a catalyst to drive increased
inflow of foreign aid and foreign direct investment arising from a more accurate and fair
reporting of government financial performance, fiscal and cash flows positions.

The adoption and implementation of IPSAS contributes towards improving government

accountability. Tickell (2010) credits the increasing rate of IPSAS adoption among NGOs
and national governments to the desire for better accountability over the management of
public funds. Besides, Ijeoma and Oghoghomeh (2014) urge governments of emerging
nations to adopt IPSAS as the benchmark for justifying the use of public financial resources
since both IPSAS and International Financial Reporting Standards (IFRS) are based on a
similar set of conceptual frameworks.

As part of the efforts to improve the public financial management system, the Government of Liberia
decided to adopt the Cash Basis IPSAS in 2009 with a view to transitioning to full accrual basis
IPSAS in the shortest possible time. This decision was driven by the desire to bring more
transparency, fiscal probity and accountability into the management of public funds. The
decision to adopt the Cash Basis IPSAS was accelerated by the global appeal associated with
IPSAS adoption evidenced by the massive support for IPSAS adoption by Liberia’s
development partners. The decision was considered timely and in the right direction at the time as it
was going to facilitate the implementation of the Integrated Financial Management Information
System (IFMIS) which was the flagship PFM reform programme being rolled out by the then
government. Consequently, on November 19, 2009, through the Ministry of Finance (now the

Progressive Academic Publishing, UK Page 18 www.idpublications.org

European Journal of Business, Economics and Accountancy Vol. 6, No. 6, 2018
ISSN 2056-6018

Ministry of Finance and Development Planning) the government took the giant step by
formally announcing the adoption of the Cash Basis IPSAS as the standard for the
preparation of its financial statements. The Cash Basis IPSAS has since become the official
accounting standard for reporting all central government financial transactions of the
Government of Liberia with the view to achieving the perceived benefits. The then Minister
of Finance, Honourable Augustine Ngafuan, in formally announcing the adoption of the Cash
Basis IPSAS for reporting all government of Liberia financial transactions proclaimed the
Government's long-term goal of implementing the accrual basis IPSAS. The Minister
intimated that the Cash Basis IPSAS should be applied to prepare government of Liberia’s
financial statements starting from the fiscal year July 1, 2009, to June 30, 2010, and that the
Country will migrate to the accrual basis IPSASs over a five-year period to further enhance
greater transparency, fiscal responsibility, and accountability. The question that needs to be
answered is whether the adoption of the Cash Basis IPSAS by the Government of Liberia has
yielded the intended benefits, and what obstacles exist, if any, that challenge the
implementation of the Cash Basis IPSAS adopted by the Government of Liberia.

The objectives of this study therefore are: to determine whether the government of Liberia
has realised the intended benefits associated with IPSAS implementation; and whether there
exist factors that significantly impede the implementation of the Cash Basis IPSAS adopted
by the Government of Liberia. To accomplish the above mentioned objectives two research
questions and hypotheses were formulated to guide the study:
1. Has the adoption of the Cash Basis International Public Sector Accounting Standard
by the Government of Liberia yielded the intended benefits for Liberia?
2. Are there challenges that have impeded the implementation of the Cash Basis
International Public Sector Accounting Standard adopted by the Government of
Liberia?
The paper is premised on the following hypotheses:
H01: The Adoption of the Cash Basis International Public Sector Accounting Standard by the
Government of Liberia has not significantly yielded the intended benefits for Liberia.
H02: Challenges associated with the adoption of the Cash Basis International Public Sector
Accounting Standard by the Government of Liberia do not significantly impede its
implementation in Liberia.
The results from this study are expected to achieve the following outcomes:
1. To restore confidence in the public sector financial reporting system in Liberia
considering the government's efforts through PFM reforms in general and
accounting reforms in particular aimed at ensuring high-quality, consistent,
credible, transparent, accountable and harmonised financial reporting system.
2. To afford PFM practitioners and scholars in Liberia the opportunity to
appreciate the factors that threaten governments’ efforts to promote
transparent and accountable governance.
3. To serve as a reference point for practitioners in IPSAS implementation in
other developing countries with similar characteristics as Liberia.
4. To offer a methodological basis to researchers in conducting evaluation
studies that assess the success or otherwise of reform implementation.
5. The findings from the study would contribute to the current body of
knowledge in accounting, public financial management, economics, and other
related fields. Development partners, lenders, non-governmental
organizations, and rating agencies will equally appreciate governments' efforts
to achieving IPSAS compliance.

Progressive Academic Publishing, UK Page 19 www.idpublications.org

European Journal of Business, Economics and Accountancy Vol. 6, No. 6, 2018
ISSN 2056-6018

This study is focused on assessing the perceived gains recorded and challenges confronting
the government of Liberia in its efforts to implement the Cash Basis IPSAS. The study used
accountants, internal and external auditors of the major public accounting and audit firms in
Liberia, staff of the General Auditing Commission, government departments and related
public sector entities in Liberia as subjects. These subjects are most suited for the study given
that they represent the practitioners at the forefront in the implementation of the Cash Basis
IPSAS in the country.

The rest of the study is structured as follows: the next section presents the literature review on
the IPSAS framework, its perceived benefits, and challenges in transitioning to IPSAS by
national governments. Next is the description of the research design, presentation and
analysis of results. The paper ends with the research conclusions and recommendations to
guide policy decisions on an effective transition to IPSAS.

THEORETICAL AND LITERATURE REVIEW

The accounting literature is replete with a number of research findings suggesting public
clamour for improved government transparency and accountability in the use of public funds
in many countries across the globe (Chan, 2006; Guthrie, Olson, & Humphrey, 1999;
Transparency International, 2016). Chen (2012) posits that the incidents of institutional fraud
and irregularities are mainly false financial reporting, inflated revenues, assets embezzlement,
and irregular transactions; and maintains that these have been on the increase globally, thus,
providing reason for the need for adopting more suitable accounting standards capable of
curtailing such menace. The emphasis on transparent and accountable governance is
especially critical in developing countries where corruption is more endemic (Atuilik,
Adafula, & Asare, 2016; Babatunde, 2017; Transparency International, 2016). These
incidences have generated series of debates and subsequent development of various theories
in public financial management.

One of such important theories around which this study revolves is the New Public
Management (NPM) theory. Alonso, Clifton, and Díaz-Fuentes (2015) asserted that “there is
broad consensus that NPM involves the attempt to implement management ideas from
business and the private sector into the public services” (p. 4). Pollitt (1995) outlines the
elements of NPM to include: techniques of cost management and cost containments;
breaking up bureaucratic public sector institutions into smaller agencies; decentralization of
power, authority and responsibility to smaller units or to units closer down to the local levels;
introduction of competitive market based approaches; setting performance targets for staff to
achieve; increasing reliance on contract based employments as opposed to permanent
employment; and an increasing emphasis on service quality. Hood (1995) suggested that
much of NPM reforms in the 1980s centered on the introduction of private sector type
accounting and financial management system into the public sector aimed at improving
public accountability. This might have urged Liberia planned migration to accrual basis
IPSAS in the immediate future. Hood (1991) further intimated that NPM has a connotation of
the following doctrines: hands on professional management of the public sector; application
of explicit standards of performance measurement in public administration; increased
emphasis on output controls in public administration; a shift to greater competition in the
public sector; and an emphasis on increased financial discipline and prudent use of financial
resources.

Progressive Academic Publishing, UK Page 20 www.idpublications.org

European Journal of Business, Economics and Accountancy Vol. 6, No. 6, 2018
ISSN 2056-6018

NPM has, however, not been without criticisms. Hood (1995) asserted the following
challenges: The NPM approach is over hyped; NPM does not automatically lead to lower cost
of running government as is claimed; NPM rather than promote the public good, leads to
particularistic advantage for privileged bureaucrats; also, NPM is not as universally
applicable as is claimed. According to Cortes (2006) and Onatuyeh et al. (2013), the NPM
theory is focused largely on achieving efficiency, fiscal discipline, performance
measurement, accountability and transparency in public governance. Proper application of
NPM is expected to lead to improved decision-making in public sector institutions through
the use of better decision- making techniques (Mack, & Ryan, 2006). Thus, appropriate
application of NPM reforms by an emerging country such as Liberia is expected to eliminate
waste, poor service delivery, inefficiency, and overspending that is currently pervasive in
most public sector institutions. The consensus, therefore, is that most public sector
accounting reforms introduced in many countries are in tandem with the NPM theory (Harun,
2007).

Governments usually use accounting systems as a means for providing accountability to

citizens. Chan (2003) argued that effective government accounting systems lead to improved
government accountability as these accounting systems provide the platform for the
generation of financial reports for assessing government’s ability to meet its responsibilities
and thereby help attract funding to itself. Barton (2005) and Guthrie (1998) report that a
number of governments are relying on private sector style financial reporting systems to build
their accounting systems following the introduction of NPM. It is appropriate to point out
that this phenomenon is not necessarily right because there are clear differences between
private sector and public sector institutions thereby calling for differences in accounting
systems. After their extensive review of the literature, Broadbent and Guthrie (1992) drew
attention to a number of questions yet to be answered with respect to the application of NPM
concepts in the field of accounting. such questions include: Why did a “new” accounting
develop, what is its significance and what are the forces producing it? How are these “new”
accountings maintained and their influence enhanced? How are these “new” accountings
linked to the promotion and acceptance into practice of other management, organizing and
structuring technologies into the public sector? What consequences have been observed and
how can these changing accountings be theorized?” (p. 25).

The Institute of Chartered Accountants of Ghana (2010) explained Public sector accounting
as a system established for gathering, recording, classifying and summarizing fiscal and
financial transactions of government activities into information to users connected with
public institutions. This implies that good public sector financial statements must be of a
general purpose in nature satisfying the information needs of its frequent users. Cash Basis
IPSAS compliant financial statements currently implemented by Liberia (with the view to
migrating to accrual basis) are also considered to be general purpose financial statement
because it seeks to protect the public interest against abuse of state resources, especially, cash
resources by public sector officials. As mentioned by Legenkova (2016), the primary
objective of general purpose financial statements is to provide the information needs of users
of financial statements that are not well placed to demand reports tailored to their specific
needs from government.

It is well established that public interest is best served if public sector financial information
generated for users is readily understandable, relevant, reliable, and comparable to other
public sector information produced elsewhere. This is only feasible where government
financial statements are prepared in compliance with IPSAS as the basis of preparation will

Progressive Academic Publishing, UK Page 21 www.idpublications.org

European Journal of Business, Economics and Accountancy Vol. 6, No. 6, 2018
ISSN 2056-6018

be consistent for all adopting governments (Legenkova, 2016; Mack & Ryan, 2006).
Accordingly, the adoption of IPSAS, which is an NPM move is intended to aid the
preparation and presentation of standardized and comparable financial information across the
entire area of the public sector in a given country and for a number of countries of the world.
This buttresses the assertion that IPSAS represents the most suitable form of reporting in
respect of the use of public funds (Brown, 2013). It is for these reasons that accounting
regulatory bodies the world over have endorsed the adoption of IPSAS by governments for
the preparation and presentation of their financial statements (Chinedu et al., 2016). Given
the appealing nature of IPSAS globally, it is not surprising that the adoption of IPSAS has
become a major reform instrument used by most developing countries for signalling to the
rest of the world that they are ready to use benchmarked standards in financial reporting,
hence helping most of these developing countries to attract development partners.

As a result, some developing nations have adopted IPSAS in partial fulfilment of the pursuit
of public sector accounting reforms often included as conditionalities for accessing financial
assistance from bilateral and multilateral development partners (Babatunde, 2017;
Legenkova, 2016). In other instances, some countries regardless of their political and
economic arrangements have been encouraged to harmonise their national standards with
IPSAS (IFAC, 2017). Accordingly, IPSAS has become the de facto international benchmark
for evaluating government accounting practices worldwide. For these reasons, KPMG (2013)
claimed that IPSAS deserves special attention from accounting policy-makers, practitioners
and scholars in every country.

A significant and direct link can therefore be seen between IPSAS compliance and the quality
of financial information a nation makes available to user groups of public sector financial
statements. According to Bellanca and Vandernoot (2014), IPSAS compliance rate has a
direct impact on the attributes that government financial statements display. Bellanca and
Vandernoot (2014) are of the view that those countries with better IPSAS compliance rate
often demonstrate better government policy decision-making, better resource allocation, great
transparency, and increased accountability among government officials compared to
countries without IPSAS compliance. Some of the possible reasons that explain this trend as
suggested by Bellanca and Vandernoot (2014) include enforcement of effective functioning
budgetary surveillance system that ensures the provision of consistent, clear, and concise
accounting information. The adoption and attainment of full IPSAS compliance level will
ultimately boost comparability of financial statements published by public sector entities,
thereby facilitating transparent and accountable governance. The benefits that have been
claimed for IPSAS implementation can be summarised as follows: IPSAS aligns government
accounting with best accounting practices through the application of credible, independent
accounting standards; improves internal controls and transparency with respect to assets and
liabilities; promotes Public Private Partnerships due to better accountability and transparency
of the public sector; makes available comprehensive information about costs that will better
support results based management; improves consistency and comparability of financial
statements; and promotes cross border investments thereby enhancing the flow of foreign
Direct Investments (Atuilik, 2017; Atuilik, Adufula & Asare, 2016). This study assesses
whether or not the implementation of the Cash Basis IPSAS by the Government of Liberia
has actually delivered these intended perceived benefits.

Nonetheless, the adoption and effective implementation of IPSAS is predicated on the

presence of certain conditions and requirements. Firstly, there should be high-level
government support for the implementation of IPSAS to be achieved (Babatunde, 2017;

Progressive Academic Publishing, UK Page 22 www.idpublications.org

European Journal of Business, Economics and Accountancy Vol. 6, No. 6, 2018
ISSN 2056-6018

Felix, 2016). Tickell (2010) explained that an effective implementation of IPSAS is based on
factors such as the level of skill of the existing accounting personnel, the rate of labour
turnover, the level of investment in technology and type of capital equipment used in
reporting public sector reporting information. Tickell (2010, p.71) argued that migrations to
and use of accrual accounting method does usually result in greater transparency and
accountability in the public sector entities. He however identified existence of capacity gap in
the public sector compared to that of the private sector as the main bane towards achieving
full IPSAS compliance in most countries. This argument by Tickell (2010) highlights the
need for thorough training, re-training, and retention of accounting staff in public sector
institutions. It also reinforces the need for series of seminars and workshops to raise public
awareness, educate and train various practitioners to guarantee a smooth transition to IPSAS.

Despite the obvious need for training, IPSAS training is viewed as expensive projects which
many governments are either unable or unwilling to undertake especially given that there
exist so many competing developmental needs. The high cost of training coupled with high
labour turnover rate in government makes investments in IPSAS capacity building efforts
even less attractive. In Nigeria, poor conditions of service make it difficult to attract qualified
personnel required for IPSAS implementation and neither has it always been easy retaining
the services of staff trained internally (Aderemi, 2013; Akhidime, 2010; Akhidime &
Ekiomado, 2014; Ijeoma & Oghoghomeh, 2014; Isenmila & Aderemi, 2013). This means that
government policies must not only be aimed at attracting or training IPSAS experts but
should also be targeted at improving conditions that will results in staff retention within the
public sector intuitions.

It has also been suggested that successful IPSAS implementation largely depends on a
reliable government financial management information system exists (Atuilik, Adafula, &
Asare, 2016; Omolehinwa & Naiyeju, 2015). However, financial conversion cost is
documented as one of the leading factors hampering the attainment of this objective.
According to Mhaka (2014), statutory bodies and regulators usually require funding to train
professional accountants, regulators, and preparers of public sector financial statements in
order to ensure a smooth transition to a fully operational IPSAS regime. Even so, the
financial outlay including consultancy costs, information technology needs, and enterprise
resource planning (ERP) implementation costs are often too huge that most developing
nations are unwilling to bear (Irvine & Lucas, 2006). For example, Zimbabwe had to grapple
with the shortage of professional accountants, regulators, and auditors in the public sector
during the implementation of IPSAS because of the huge cost involved in providing training
(Martins, 2011). The challenges presented as impediments against successful IPSSAS
implementation can thus be summarised as follows: IPSAS is too complicated; there is a
shortage of professionals with IPSAS expertise to support implementation; lack of local
expertise with IPSAS knowledge; significant additional cost of implementation; conflict with
local laws; differences in implementation process and strategy; and lack of clear
implementation guidelines (Atuilik, 2017; Atuilik, Adufula & Asare, 2016). This study
assesses whether any of these perceived challenges did actually impede the implementation
of IPSAS in Liberia.

Notwithstanding the perceived challenges in IPSAS implementation, IFAC has been resolute
in propagating IPSAS adoption through its member bodies. Regardless of the efforts by
IFAC, the actual journey to IPSAS implementation is still deemed to be very slow especially
in developing countries. It is reported that most emerging countries such as Nigeria that
adopted IPSAS for its perceived benefits are still static in execution due to many practical

Progressive Academic Publishing, UK Page 23 www.idpublications.org

European Journal of Business, Economics and Accountancy Vol. 6, No. 6, 2018
ISSN 2056-6018

implementation issues (Babatunde, 2017). Equally, IFAC (2017) attributed slow direct
adoption of IPSAS in many of the Organisation for Economic Co-operation and Development
(OECD) countries to serious issues including technical, cultural, and absence of personnel
with essential skills. Given the prevailing circumstances, only the Cayman Islands and
Anguilla within the Caribbean enclave currently qualify as IPSAS compliant nation
(Babatunde, 2017). Studies further suggest that the majority of countries in the Caribbean
region still struggle to comprehend the actual IPSAS requirements, with all the few
governments that purport to have adopted IPSAS rather applying other standards that were
inconsistent with IPSAS (Adhemar, 2006; Babatunde, 2017). The import of these findings is
that governments must be prepared to tackle potential threats to IPSAS implementation by
investing in both human and material resources in order to achieve full compliance rate.

METHODOLOGY

The paper used the purposive sampling technique to select the respondents for the study. The
respondents consist of accountants and auditors from public accounting and audit firms,
personnel of the General Auditing Commission, and staff of accounting departments of
various government ministries within the Montserrado County, the Republic of Liberia.
Purposive sampling technique was adopted to ensure that persons with the necessary
experience or insight into IPSAS implementation were selected for the study. This sampling
technique was similarly relied on by Boateng et al. (2014) to select participants (accountants
and auditors) with relevant experience in the workings of firms listed on Ghana Stock
Exchange market in their assessment of the rationale, benefits and challenges on International
Financial Reporting Standards (IFRS) Adoption in Ghana.

Montserrado County which is the focus of the research is situated north-western of the West
African nation of Liberia. The researchers choose Montserrado County because it provides
the largest markets in the entire Liberia economy (Market Review Liberia, 2007). Most
importantly, all the practicing firms, ministries and the General Auditing Commission have
their head offices, and core staff (equipped with the relevant provisions and operations of
IPSAS) headquartered in this County.

The main elements of the population comprise of accountants and auditors (internal and
external). A five-point Likert scale questionnaire instrument outlined with points of strongly
agree, agree, unsure, disagree, and strongly disagree was adopted for the study. The research
instrument used to formulate the content of the research was concise and straightforward and
followed a similar design by previous researchers (Ijeoma & Oghoghomeh, 2014 and Yin,
2003). The content of the research instrument was validated by a Senior Lecturer of
accounting thus ensuring that instrument measures the variables it purports to investigate.

The designed questionnaire comprises of three (3) primary segments. The first section
covered the demographic data of each research participant. The second and third segments of
the survey were respectively designed to offer information for investigating the questions
about the benefits and common challenges associated with IPSAS implementation in Liberia.
In addition to the closed-ended questions outlined in the second and third segments, open
spaces were provided for any additional comments from the research participants. In all, a
sample of hundred (100) was drawn from the population size of hundred and fifty (150)
based on the Taro Yamane sample size determination method at 95% confidence level (see
Taro, 1967). The reliability test was carried out utilizing Cronbach's alpha test. A Cronbach's
alpha of .76 was recorded, and this is higher than the conventional standard of 0.70.

Progressive Academic Publishing, UK Page 24 www.idpublications.org

European Journal of Business, Economics and Accountancy Vol. 6, No. 6, 2018
ISSN 2056-6018

Therefore, the investigation is highly reliable. The next section provides analyses of
responses using both descriptive statistics and analysis of variance (ANOVA).

ANALYSIS AND DISCUSSION OF RESULT

Data generated from the questionnaire were analysed using descriptive statistics in Tables 1
to 5. Tables 1 shows the breakdown of responses obtained from the respondents.
Table 1. Responses to Research Questionnaire
Respondents Number Number Number Valid number Percentage Percentage of
Function distributed returned invalid used of returned valid returned
Accountants 67 58 3 55 87% 95%
Auditors 33 30 2 28 91% 93%
Total 100 88 5 83 - -
Source: Field Survey 2017
From table 1, it can be observed that out of the 100 questionnaires administered 88 were
returned. Of the returned questionnaires, 58 were from accountants and 30 from auditors
representing 87% and 91% of distributed questionnaire respectively. Out of the total number
returned by accountants and auditors, 95% and 93% respectively were considered valid and
were used to conduct the analysis. While 5 of the returned questionnaires (i.e., 6% of returned
survey questionnaires) were incomplete and therefore classified as invalid.

Table 2. Mean Scores of Respondents on the Extent to which Adoption of IPSAS Result in
Identifiable Benefits.
Strongly Strongly
S/N Identifiable Benefits Agree Unsure Disagree Mean
Agree Agree
IPSAS aligns government accounting with best accounting
1 practices through the application of credible, independent 36 40 7 0 0 4.35
accounting standards.
IPSAS improves internal control over the receipts and
2 22 50 10 1 0 4.12
disbursement of cash resources.
IPSAS promotes Public Private Partnership due to better
3 21 45 12 4 1 3.98
accountability and transparency of public sector.
IPSAS makes available comprehensive information about
4 23 48 9 3 0 4.10
costs that will better support results-based management.
IPSAS improves consistency and comparability of financial
5 42 35 6 0 0 4.43
statements.
IPSAS promotes cross border investment thereby enhancing
6 19 33 26 5 0 3.80
the flow of foreign Direct Investment.
7 IPSAS facilitates the flow of aid and assistance from foreign 20 49 13 1 0 4.06
Grand Mean 4.12
Source: Field Survey 2017

In Table 2, the study employs mean statistics to assess how far each research variable is,
compared to the mass responses. The results show that respondents agreed that the adoption
of IPSAS by the government of Liberia leads to identifiable benefits with mean scores of
4.35, 4.12, 3.98, 4.10, 4.43, 3.8, and 4.06 on items 1,2,3,4,5,6,7 respectively. The results in
Table 2, item 5, further show that the mean score of 4.43 for improved consistency and
comparability of financial statements factor, recorded the highest mean among all the
variables tested. Item 5 is closely followed by item 1 with a mean score of 4.35, confirming
that IPSAS implementation has helped the government of Liberia align its accounting
practices with international standards that are more credible and less subjective. However,
foreign direct investment and private-public partnership with mean scores of 3.8 and 3.98

Progressive Academic Publishing, UK Page 25 www.idpublications.org

European Journal of Business, Economics and Accountancy Vol. 6, No. 6, 2018
ISSN 2056-6018

were perceived to be the least factors (benefits) IPSAS implementation could contribute to
the nation.

Table 3. Mean Scores of Respondents on the Challenges Impeding the Implementation of

IPSAS in Liberia
Strongly Strongly
S/N Identifiable Challenges Agree Unsure Disagree Mean
Agree Disagree
8 IPSAS is too sophisticated to understand. 7 12 15 37 12 2.58
9 Shortage of professionals with IPSAS knowledge 27 35 14 7 0 3.99
10 Lack of local experts with IPSAS knowledge 18 32 17 16 0 3.63
11 IPSAS implementation results in additional costs 17 32 20 13 1 3.61
12 IPSAS conflicts with local laws 7 33 20 21 2 3.27
13 Differences in IPSAS implementation process & strategy 2 35 24 20 2 3.18
14 IPSAS lacks clear guidance 4 6 18 41 14 2.34
Grand Mean 3.23
Source: Field Survey 2017

The results presented in Table 3 show that the respondents agreed with items 9, 10, 11 and 12
with mean scores of 3.99, 3.63, 3.66 and 3.27 respectively. Respondents were, however, in
disagreement with the assertion that IPSAS is too sophisticated or lacks clear guidance for
implementers. These items (8 and 14) recorded mean scores of 2.58 and 2.34 respectively, far
below the average means score of 3.23. In other words, respondents disagreed that lack of
clear guidance is an identifiable challenge hampering the implementation of IPSAS in
Liberia. They also disagreed with the assertion that IPSAS was too sophisticated to
understand or apply by persons working in public sector entities in Liberia. Besides, the
majority of the respondents as depicted by item 13 with means score of 3.18, either disagreed
or were uncertain of any current conflict between IPSAS implementation process and
strategy.

In answering the first research question, “Has the adoption of the Cash Basis International
Public Sector Accounting Standard by the Government of Liberia yielded the intended
benefits for Liberia?” the following hypothesis was tested through ANOVA:
H0: µ1=µ2...=µk
HA: µ1≠µ2…=µk
H01: The Adoption of the Cash Basis International Public Sector Accounting Standard by the
Government of Liberia has not significantly yielded the intended benefits for Liberia.
At the significance Level (α): 0.05, the results produced using ANOVA are displayed in
Table 4.

Table 4. ANOVA: Interaction between IPSAS Adoption and Identifiable Benefits

Source of Variation SS df MS F P-value F crit
Treatment Between Groups 23.359725 6 3.8932874 7.4629436 1.03E-07 2.114359
Within Groups 299.44578 574 0.5216825
Total 322.80551 580
Source: Empirical Analysis of Data, 2017

The result in Table 4 showed P < 0.0001, suggestive of rejection of the null hypothesis. An F
value of 7.4629 with a p-value of 0.0000 confirms the statistical significance of this model.
As a result, the alternate hypothesis which states that the Adoption of the Cash Basis
International Public Sector Accounting Standard by the Government of Liberia has not
significantly yielded the intended benefits for Liberia was accepted.

Progressive Academic Publishing, UK Page 26 www.idpublications.org

European Journal of Business, Economics and Accountancy Vol. 6, No. 6, 2018
ISSN 2056-6018

In short, the result confirms the assertion that the application of IPSAS enhances greater
government accountability and transparency (Bellannca & Vandernoot, 2014; Transparency
International, 2016). The results further supports the argument that proper implementation of
IPSAS helps to improve the quality and reliability of accounting and reporting systems within
government institutions (Brown, 2013). The results similarly confirm the assertion that
private-public sector partnership is enhanced once a country adopts and comply with IPSAS
provisions due to better-harmonised and comparable information (Babatunde, 2017; IFAC,
2017; Nkwagu et al., 2016).

To answer the second research question, "Are there any noticeable challenges that impede the
implementation of International Public Sector Accounting Standards in Liberia?" the
following hypothesis was tested utilizing ANOVA:
H02: µ1=µ2...=µk
HA2: µ1≠µ2…=µk
H02: Challenges associated with the adoption of the Cash Basis International Public
Sector Accounting Standard by the Government of Liberia do not significantly impede its
implementation in Liberia.
The results produced based on ANOVA are displayed in Tables 5.

Table 5. ANOVA: Interaction between IPSAS Adoption and Identifiable Challenges

Source of Variation SS df MS F P-value F crit
Treatment Between Groups 174.68503 6 29.114171 28.453625 7.85982E-30 2.11435911
Within Groups 587.3253 574 1.0232148
Total 762.01033 580
Source: Empirical Analysis of Data, 2017

The result in Table 5 showed P < 0.0001; this suggests the rejection of the null hypothesis.
An F value of 28.4536 with a p-value equivalent of 0.0000 confirms the statistical
significance of this model. Therefore, we accept the alternate hypothesis which states that
challenges associated with the adoption of the Cash Basis International Public Sector
Accounting Standard by the Government of Liberia do significantly impede its
implementation in Liberia. The results corroborate the earlier findings that IPSAS success is
dependent on the availability of expertise (Babatunde, 2017), accessibility to financial
resources to cater for transitional costs (Nkwagu et al., 2016), and progressive harmonisation
of national standards with the international standards (Ijeoma & Oghoghomeh (2014).

CONCLUSIONS AND RECOMMENDATIONS

This research sought to assess the benefits for implementing the Cash Basis IPSAS by the
Government of Liberia. The study also uncovered the major threats to IPSAS implementation
in the country. The paper has expanded the existing literature on perceived benefits of IPSAS
adoption and the risks to its implementation in developing countries such as Liberia.
Additionally, the methodology adopted to obtain the empirical evidence is scholarly, as such
it is recommended for future use by scholars and practitioners alike.

The results revealed that IPSAS adoption improves the quality and reliability of government
accounting information, aligns government financial accounting with international standards,
increases government accountability and transparency, and stimulates private-public sectors
partnership within the economy. There is need to address challenges such as, non-availability
of sufficient number of IPSAS experts, conflict between IPSAS and existing laws, and the

Progressive Academic Publishing, UK Page 27 www.idpublications.org

European Journal of Business, Economics and Accountancy Vol. 6, No. 6, 2018
ISSN 2056-6018

high cost of transitioning from existing GAAP to IPSAS as these were found to be threats to
achieving the benefits associated with IPSAS implementation.

Based on the above findings the following recommendations are considered useful for the
consideration of policy makers, PFM practitioners and accounting scholars:
1. Policy makers should take the necessary steps to court political buy-in from the
highest echelons of key stakeholders including the executive branch of government
to the legislative branch and regulators of accounting practice in Liberia. This will
ensure that there is concerted effort to facilitate IPSAS implementation in Liberia.
2. The findings that the adoption of the Cash Basis IPSAS does actually deliver the
intended benefits should provide more impetus and encouragement to the Ministry
of Finance and Economic Planning and the Liberian Institute of Certified Public
Accountants to renew sustained efforts at migrating from the Cash Basis IPSAS as
was planned to the more superior Accrual Basis IPSASs. The Government of
Liberia had originally planned to migrate from the Cash Basis IPSAS five years
from 2010. This period has long lapsed without visible evidence of clear
preparations towards such migration.
3. The government through the Ministry of Finance and Economic Planning should
also show increased commitment to providing continuous training opportunities for
accounting staff and put in place schemes for the retention of trained accounting
personnel who have responsibility for generating public sector accounting
information.
4. The findings should also provide comfort to the legislative body to be prepared to
embark on legislative amendments to align the legal framework of financial
reporting within the public sector of Liberia with the reporting requirements of
IPSAS achieve consistency between IPSAS as adopted by the Government of
Liberia and the legal requirements for financial reporting in Liberia.
5. The Professional Accountancy Organisation in Liberia should take a leading role
and exert more regulatory authority to support the transition to accrual IPSAS in the
light of evidence of the benefits offered by IPSAS adoption.
6. The findings should also provide comfort to Liberia’s developments partners not to
get weary in providing support towards public sector accounting reform. The
evidence is that such support, which has greatly facilitated the adoption of the Cash
Basis IPSAS does actually translate in to meaningful results for the citizenry in the
form of improved transparency and accountability over public funds which should
lead to high quality service delivery.
7. Universities and professional accounting bodies in the country should design their
educational and training curricula to provide IPSAS implementation skills. These
bodies must endeavor to increase the IPSAS awareness and intensify measures that
ensure compliance with the relevant requirements in all their dealings.

REFERENCES

Adhemar, P. (2006). International Public Sector Accounting Standards Board (IPSASB),

PowerPoint Presentation at the Sixth Annual OECD Public Sector Accruals
Symposium, Paris, 6-7 March 2006.
Akhidime, A. E. (2010). The Adoption and Implementation of International Financial
Accounting Reporting Standards (IFRSs): Evaluation of the roles of key stakeholders
in Nigeria. AAU Journal of Management Sciences, 1(1), 147-157.

Progressive Academic Publishing, UK Page 28 www.idpublications.org

European Journal of Business, Economics and Accountancy Vol. 6, No. 6, 2018
ISSN 2056-6018

Akhidime, A. E, & Ekiomado, E. B. (2014). Adoption and implementation of International

Financial Reporting Standards (IFRSs) in Nigeria: Enduring challenges and
implications. International Journal of Development and Sustainability, 3(11). 2090-
2100.
Alonso, J. M., Clifton, J., & Díaz-Fuentes, D. (2015). Did new public management matter?
An empirical analysis of the outsourcing and decentralization effects on public sector
size. Public Management Review, 17(5), 643-660.
Atuilik, W. A. (2017). The global adoption of the Public Sector Accounting Standards
(IPSAS): The case for IPSAS – benefits and challenges. The Professional Accountant,
July/September, 19-21.
Atuilik, W, A., Adafula, B., & Asare, N. (2016). Transitioning to IPSAS in Africa: An
analysis of the benefits and challenges. International Journal of Social Science and
Economic Research, 1(6). 676-691.
Babatunde, S. A. (2017). Implementing international public sector accounting standards in
Nigeria: issues and challenges. International Journal of Business, Economics and
Law, 12(1). 52-61
Barton, A. (2005). Professional accounting standards and the public sector—a mismatch.
Abacus, 41(2), 138-158.
Bellanca, S., Vandernoot, J. (2014), International public sector accounting standards (IPSAS)
implementation in the European Union (EU) member states. Journal of Modern
Accounting and Auditing, 3, 257-269.
Boateng, A. A., Arhin, A. B., & Aful, V. (2014). International Financial Reporting Standard’s
(IFRS) Adoption in Ghana: Rationale, Benefits and Challenges. Journal of Advocacy,
Research and Education 1 (1), 27-32.
Broadbent, J. & Guthrie, J. (1992). Changes in the public sector: A review of recent
“alternative” accounting research. Accounting, Auditing and Accountability Journal,
5(2), 3-31.
Brown, P. (2013). Some observations on research on the benefits of nations adopting IFRS.
The Japanese Accounting Review, 3, 1-19.
Chan, J. L. (2006). IPSAS and government accounting reform in developing
countries. Accounting reform in the public sector: Mimicry, fad or necessity, 31-42.
Chan, J. L. (2006). IPSAS and government accounting reform in developing countries.
Retrieved from http://jameslchan.com/papers/Chan2006IPSAS%26GAFDC.pdf
Chan, J. L. (2003). Government Accounting: An Assessment of Theory, Purposes and
Standards. Public Money & Management, 23(1), 13-20.
Chen, M. C. (2012). The Influence of workplace spirituality on motivations for earnings
management: A Study in Taiwan’s hospitality industry. Journal of Hospitality
Management and Tourism, 3(1), 1-11.
Chinedu, N, L., Okoye, G, O., & Nkwagu, C, C. (2016). International public sector
accounting standards adoption and financial transparency in the Nigerian South
Eastern states public sector: A case of Ebonyi and Enugu states. IOSR Journal of
Humanities and Social Science, 21(4), 40-51.
Christiaens, J., Vanhee, C., Manes-Rossi, F., Aversano, N., & Van Cauwenberge, P. (2015).
The effect of IPSAS on reforming governmental financial reporting: An international
comparison. International Review of Administrative Sciences, 81(1), 158-177.
Cortes, J. L. (2006). The international situation vis-a-vis the adoption of accrual budgeting.
Journal of Public Budgeting, Accounting & Financial Management, 18(1), 1-26.
Felix, O. (2016). Assessment of the level of awareness and adoption of international public
sector accounting standards (IPSAS) in the curriculum of accounting education in

Progressive Academic Publishing, UK Page 29 www.idpublications.org

European Journal of Business, Economics and Accountancy Vol. 6, No. 6, 2018
ISSN 2056-6018

selected tertiary institutions in Ondo and Ekiti states Nigeria. European Journal of
Business, Economics and Accountancy, 4(5). 50-59.
Guthrie, J. (1998). Application of accrual accounting in the Australian public sector-rhetoric or
reality. Financial Accountability & Management, 14(1), 1-19.
Guthrie, J., Olson, O., & Humphrey, C. (1999). Debating developments in new public
financial management: the limits of global theorising and some new ways
forward. Financial Accountability & Management, 15(3‐4), 209-228.
Harun, H. (2007). Obstacles to public sector accounting reform in Indonesia. Bulletin of
Indonesian Economic Studies, 4(3), 365-75.
Hood, C. (1995). The “New Public Management” in the 1980s: variations on a
theme. Accounting, organizations and society, 20(2), 93-109.
Hood, C. (1991). A public management for all seasons? Public administration, 69(1), 3-19.
Institute of Chartered Accountants-Ghana (ICA-Ghana, 2010). Public Sector Accounting.
ICAG, Accra: Ghana.
Irvine, H. j, & Lucas, N. (2006).The rationale and impact of the adoption of international
financial reporting standards on developing nations: the case of the United Arab
Emirates. In proceedings 18th Asian-Pacific Conference on international Accounting
Issues, pages pp.1-22Maui, Hawaii. [Online] Available
http://eprints.qut.edu.au/13041
Ijeoma, N. B. & Oghoghomeh, G. N. (2014). Adoption of IPSAS in Nigeria: expectations,
benefits and challenges, problems. Journal of Investment and management, 3(1) 21 -
29.
International Federation of Accountants (IFAC) (2017). Accrual Practices and Reform
Expectations in the Caribbean. Public Sector Financial Accountability Survey
Findings. Retrieved from http://www.ifac.org/publications
Isenmila, P. A. & Aderemi, A. K. (2013). Mandatory adoption of International Financial
Reporting Standards (IFRS) in Nigeria: The unresolved institutional question.
Mediterranean Journal of Social sciences, 4 (1), 175-184.
Kara, E. (2012). Financial analysis in public sector accounting. An example of EU, Greece
and Turkey. European Journal of Science and Research, 69(1), 81–89.
Legenkova, M. (2016). International public sector accounting standards implementation in
the Russian Federation. International Journal of Economics and Financial Issues,
6(4), 1304-1309.
KPMG (2013). IPSAS, Africa Implementation Survey Price Waterhouse Coopers, (2013);
Towards a New Era in Government Accounting Reporting.
Mack, J. & Ryan, C. (2006). Reflections on the theoretical underpinnings of the general-
purpose financial reports of Australian government departments. Accounting, Auditing
& Accountability Journal, 19 (4), 592-612.
Martins, V. W. (2011). Practical challenges in IFRS implementation. What bank regulators
need to know. IFRS International conference-Nigeria KPMG.
Market Review Liberia (2007). The Republic of Liberia. July Edition.
Mhaka, C. (2014). IPSAS, a guaranteed way of quality government financial reporting? A
comparative analysis of the existing cash accounting and IPSAS based accounting
reporting. International Journal of Financial Economics, 3(3), 134-141.
Navarro Galera, A., & Rodríguez Bolívar, M. P. (2007). The contribution of international
accounting standards to implementing NPM in developing and developed
countries. Public Administration and Development: The International Journal of
Management Research and Practice, 27(5), 413-425.
Nkwagu, L. C., Uguru, L. C., & Nkwede, F. E. (2016). Implications of International Public
Sector Accounting Standards on Financial Accountability in the Nigerian Public

Progressive Academic Publishing, UK Page 30 www.idpublications.org

European Journal of Business, Economics and Accountancy Vol. 6, No. 6, 2018
ISSN 2056-6018

Sector: A Study of South Eastern States. IOSR Journal of Business and Management,
18(7). DOI: 10.9790/487X-180704105118
Omolehinwa, E. O. & Naiyeju, J. K. (2015). Government accounting in Nigeria: An IPSAS
Approach. Lagos. Pumark Nigeria Limited.
Onatuyeh, E. A. and Aniefor, S. J. (2013). Impact of Effective Internal Audit Functions on
Public Sector Management and Accountability in Edo State, Nigeria. International
Journal of Economic Development Research and Investment, 4 (3), 91-103.
Pollitt, C. (1995). Justification by works or by faith? Evaluating the new public
management. Evaluation, 1(2), 133-154.
Taro, Y. (1967). Statistics: An Introductory Analysis.2nd Ed., New York: Harper and Row.
Tickell, G. (2010). Cash to accrual accounting: One nation's dilemma. International Business
& Economics Research Journal, 9(11), 71-78.
Transparency International (2016). Corruption Perception Index 2016. Retrieved from
http://www.transparency.org
Wynne, A. (2007). Is the move to accrual based accounting a real priority for Public Sector
Accounting? Public Fund Digest, 6(1). 25-39.
Yin, R. K. (2003). Case Study Research: Design and Methods (3rd Ed.). Thousand Oaks,
CA: Sage.

Progressive Academic Publishing, UK Page 31 www.idpublications.org