Transitioning to IPSAS in Africa: An analysis of the benefits and challenges

Abstract

International Public Sector Accounting Standards (IPSAS) have gained worldwide acceptance and acclaim as an accounting and reporting framework as far as public sector financial reporting is concerned. IPSAS are therefore of interest to public sector accounting in many jurisdictions and this interest appears to be more and surging in the developing economies of the world, including the African region. As empirical evidence suggest that many countries are desirous of adopting these IPSAS, an in-depth exposition of the benefits and associated challenges of the framework could help the transitioning process in diverse ways. For instance, adopting countries could learn from examples, experiences and best practices as evidenced in extant literature. This concept paper therefore examines the benefits and challenges of IPSAS with particular focus on the African region. It also assesses the mechanisms for addressing the challenges so that the full benefits ascribed to the IPSAS accounting and reporting regime could be realised. The paper first explains the fundamental principles underlying IPSAS, followed by a discussion of the benefits and challenges in transitioning to IPSAS in general, and by African governments in particular. Cash and accrual IPSAS are examined and the status of IPSAS adoption by African countries discussed. It then explains and proposes the approach African governments may use to effectively transition to IPSAS. The paper concludes with recommendations to guide the effective transition to IPSAS.