Defining a reporting entity for federal government reporting requires a deeper analysis of the facts about the connected entities. IPSASB define the reporting entity as a government or other public sector organization, program or identifiable area of activity that prepares general purpose financial reports (GPFRs)
The 1999 constitution of the Federal Republic of Nigeria makes provisions for government financial business. The payment of revenue into the Federation Account and the Consolidated Revenue Fund, the authorization of allocation of revenue from the federation account, the disbursement of funds from Consolidated Revenue Fund, the Development Fund and Contingencies Fund, the audit of public accounts and other financial matters are regulated by the relevant sections of the Constitution.
The President of the Federal Republic of Nigeria has assigned to the Minister of Finance the responsibility for all financial business of the government of the federation.
Certain matters of government are regulated by other laws of the Federation enacted by the National Assembly. These include (Control and Management) Act, CAP144 Laws of the Federation of Nigeria, 1990 , the Annual Appropriation Act and Supplementary appropriation Act and the Revenue Mobilization and Fiscal Allocation Commission Act, CAP 16 Laws of the Federation of Nigeria, 1990.
The passing into law of the Financial Reporting Council of Nigeria Act, 2011 has introduce international dimention to financial reporting in Nigeria through the adoption of IFRS/IPSAS for financial reporting.
A fundamental requirement of the FRCN Act, 2011 is the mandatory registration with the Council of all professionals that provide input into the GPFRs including all those with approval/signing authority.
The IPSAS conceptual framework is applicable to the following: Public sector entities; i.e. National (Federal), State & Local Governments; Government ministries; Departments; Programs; Boards; Commissions;Agencies; Public sector social security funds; Trusts; Statutory authorities and International government organizations.
The organization of the federal government is more complex compared to states and local governments. Consequently, defining a reporting entity for federal government reporting requires a deeper analysis of the facts about the connected entities. IPSASB define the reporting entity as a government or other public sector organization, program or identifiable area of activity that prepares general purpose financial reports (GPFRs).
To be considered a reporting entity for reporting for federal government, three criteria need to be met:
• There is an identifiable management team that can be held accountable for the entity’s performance, including stewardship of resources, production of output and outcome, and execution of the budget.
• The financial statements produced by the entity are meaningful.
• There are users who are interested in the information contained in the financial statements produced by the entity.
The federal government can be viewed for accounting and reporting purposes from three perspective: organizational, budget, and programme.
From the organizational perspective, the government is viewed as a collection of departments and agencies that provide governmental services. From the budget perspective, the government is viewed as a collection of expenditure (appropriation or funds) or receipts budget accounts. From the programme perspective, the government is viewed as an aggregation of programmes (or functions) and activities. Most programmes are financed by more than one budget accounts, and some programmes are administered by more than one organization. Similarly, some organisations administer multiple programmes. Thus, in defining the reporting entity, it is necessary to consider the interacting nature of the perspectives.
The consolidated financial statement of the federal government should be a GPFRs that can be understood by an average citizen. The average citizen is expected to have reasonable understanding of the federal government and be willing to study information with reasonable diligence. Other intended
Elements and recognition criteria
The basic elements of an accrual-based financial statements are: assets, liabilities, net position, revenues, and expenses. For an item to be recognized on the face of a financial statement, it must meet the definition of an element and be measurable.
The reporting entity is expected to select those measurement bases that most fairly reflect the cost of services, operational capacity and financial capacity of the entity in a manner that is useful in holding the entity to account, and for decision-making purposes.
Measurement Bases for Assets
• Historical cost.
• Current value (Market value; Replacement cost; Net selling price; Value in use).
Measurement Bases for Liabilities
• Historical cost.
• Current value (Market value; Assumption price; Cost of fulfillment; Cost of release).
Funds used in Federal Accounting
Fund accounting is needed for federal agencies to demonstrate compliance with requirement of legislation for which the federal funds have been appropriated. Fund accounting is also needed for financial reporting. Three major funds are mentioned in the Financial Regulations 2009 (revised): Consolidated Revenue Fund (CRF), Development Fund, and the Contingencies Fund. Exigencies have led to the creation of other funds after appropriate legislative approval.
Government assets arise from transactions of the federal government or an entity of the federal government with nonfederal entities. The federal government’s property, plant, and equipment (PP&E) include assets that are unique to the federal government. General PP&E is used to provide general goods and services, as well as military weapon systems. Heritage assets are unique in that they have historical or natural significance; cultural, artistic, or educational significance. The Tafawa Balewa Square, National Arts Theater both in Lagos are examples of a heritage asset.
A liability is a probable future outflow or other sacrifice of resources as a result of past transactions or events. Under IPSAS accrual-based reporting, liabilities covered by budgetary resources and liabilities not covered by budgetary resources are combined on the face of the statement of financial position. Recognition criteria is provided for liabilities arising from exchange and non-exchange transactions, government-related or acknowledged events, contingencies, federal debts, pensions and other postemployment benefits.