Accrual Accounting Adoption and Financial Reporting Quality in Nigerian State Governments

This study investigates the relationship between accrual accounting adoption and financial reporting quality in Nigerian state governments. Nigeria's federal and state governments have been under pressure to migrate from cash-basis to accrual-basis accounting in line with the International Public Sector Accounting Standards framework promoted by the Office of the Accountant General of the Federation. However, adoption across states has been uneven, and the impact on reporting quality has not been rigorously assessed. This study uses a mixed-method design, combining a survey of 95 state accountants general and finance officers from 12 states with content analysis of state financial statements published between 2020 and 2023. Reporting quality is evaluated using dimensions of completeness, comparability, timeliness, and compliance with IPSAS requirements. Regression and descriptive analysis are applied. Results show that states with more advanced accrual adoption consistently produce financial statements of higher quality, particularly in terms of asset recognition and liability disclosure completeness. Capacity constraints and inadequate IT infrastructure were the most frequently cited barriers to full accrual transition. The study concludes that accrual accounting adoption significantly improves financial reporting quality in Nigerian state governments. It recommends that the Federal Government provide targeted technical assistance and financial incentives to accelerate IPSAS adoption among lagging states, with particular focus on training the next generation of public sector accountants in accrual concepts and application.

Keywords: accrual accounting, state governments, IPSAS, financial reporting quality, public sector reform.