Comparison of Public Financial Reporting in Nigeria With Good Practice

COMPARISON OF THE
FORMAT OF GENERAL PURPOSE FINANCIAL

STATEMENTS
REQUIRED BY THE
FAAC SUB-COMMITTEE
ON THE ROADMAP FOR THE ADOPTION OF IPSAS
WITH THE ICGFM INTERNATIONAL PUBLIC SECTOR
ACCOUNTING STANDARDS: COMPILATION GUIDE
INITIAL DRAFT: JUNE 2013
Produced for the Financial Reporting Council of Nigeria

by Bayo Ayoade advised by Andy Wynne
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
2. COMPARISON OF FAAC REQUIREMENTS WITH ICGFM

COMPILATION GUIDE...................................................................7
b) Stage OneCurrent Financial Information Collected by Select
Entities within Central Government..................................................13
c) Stage TwoCash Basis Financial Statements for Central
Government....................................................................................15
d) Stage ThreeModified Cash Financial Statements for Central
Government....................................................................................21
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
Page 1
(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.
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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.
Roles of the FAAC and the Financial Reporting Council

In June 2001, the Federation Account Allocation Committee (FAAC)
established a Technical Sub-Committee to carry out a review and
standardization of the format and content of the annual financial accounts
of the Federal, state and local governments. This committee reported in
Page 3
2004 and recommended that the following seven statements should be

produced:
Statement
Statement
Statement
Statement
Statement
Statement
Statement
No.1:
No.2:
No.3:
No.4:
No.5:
No.6:
No.7:
Responsibility for Financial Statements

Statement of Opinion of the Auditor General
Cash Flow Statement
Statement of Assets and Liabilities
Statement of Consolidated Revenue Fund
Statement of Capital Development Fund
Notes to the Financial Statements.
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
Page 4
(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.
ICGFM Compilation Guide

The International Consortium on Governmental Financial Management
(ICGFM - www.icgfm.org) has produced a draft Compilation Guide for annual
public sector financial statements. This Guide is currently being field-test in
a number of countries including Nigeria. This draft ICGFM Compilation
Guide is available from:
www.scribd.com/doc/134603499
The purpose of this 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 Cash Basis
IPSAS was first issued over a decade ago and as yet, not a single
government in the world has adopted a number of its core requirements.
The ICGFM Compilation Guide provides a practical, step by step guide
towards adoption of the IPSAS and other international good practice.
The ICGFM Compilation Guide describes three levels for governments
whose financial statements are broadly to be produced on the cash basis:
(1)Preparing a Statement of Cash Position, as well as a Comparative
Statement of Budget to Actual Amounts, for select entities within the
central government;
(2)Expanding the coverage to include a Statement of Cash Receipts and
Payments, as well as a Comparative Statement of Budget to Actual
Amounts, as prescribed in Part 1 of the Cash Basis IPSAS1.
Consolidated financial statements need not be prepared at this stage;
(3)Expanding the coverage to include financial assets and liabilities for
central government. This is generally referred to as the Modified Cash
or Modified Accrual Basis.
Compliance with the requirements of the ICGFM Compilation Guide will
enhance comprehensive and transparent financial reporting by government
entities. It will also enhance comparability with the financial statements of
other entities which adopt the Guide.
1
Financial Reporting Under the Cash Basis of Accounting, IFAC, New York, 2003.
Page 5
Purpose of this Report

The purpose of this report is to assess the financial reporting requirements
issued by the FAAC Sub-Committee on the Roadmap for the Adoption of
IPSAS against the ICGFM Compilation Guide and to assess the stage that
financial statements produced in line with the FAAC requirements may
achieve.
Where the FAAC requirements would not ensure achievement of the
requirements of the ICGFM Compilation Guide, recommendations are made
to the Financial Reporting Council on the detailed guidance that they should
produce to complement the FAAC requirements and ensure that all levels of
government in Nigeria comply with the highest possible international
standards for financial reporting.
The main body of this report assesses the Roadmap for the Adoption of
IPSAS (FAAC 2012) against the key requirements of the ICGFM Compilation
Guide. It assesses which stage would be achieved by financial statements
produced in line with the Roadmap and makes detailed recommendations
for additional guidance and requirements to be produced by the Financial
Reporting Council.
The report is complemented by a series of annexes. The first provides
recommendations to the Financial Reporting Council on the key
requirements to be included in their financial statements for public sector
entities. The second details the Financial Statements required by the 2012
FAAC guidance. The third reproduces the ICGFM Checklists associated with
their Compilation Guide. The fourth identifies good practice with financial
reporting by the Government of the Federal Republic of Nigeria. The fifth
annex assesses the annual financial reports provided by the state
governments of Nigeria in line with the FAAC (2004) guidance. The final
annex provides the terms of reference for this assignment.
Page 6
2. COMPARISON OF FAAC REQUIREMENTS WITH ICGFM

COMPILATION GUIDE
This section of the report assesses each of the FAAC Sub-Committee
requirements, as detailed in the Roadmap for the Adoption of IPSAS (2012),
against the key requirements contained in the ICGFM Compilation Guide.
For each of these requirements (written in bold italics) the FAAC
requirements are assessed as follows:
The requirement is either clearly covered by the FAAC Guidance or
current practice is that the requirement is adopted. No change is
necessary.
The requirement is not clearly or explicitly and adequately covered by
the FAAC Guidance and the requirement is not necessarily widely
adopted at present. Accounting standards issued by the Financial
Reporting Council should ensure that this requirement is clearly and
adequately explained.
The requirement is not covered by the FAAC Guidance and the
requirement is not adopted at present. FAAC Guidance should be
amended to include this requirement. Accounting standards issued by the
Financial Reporting Council should ensure that this requirement is clearly
required and adequately explained.
The ICGFM Compilation Guide describes four stages for governments whose
financial statements are broadly to be produced on the cash basis:
(1)General Considerations for financial statements of governments
(2)Stage One: A Statement of Cash Position is produced, as well as a
Comparative Statement of Budget to Actual Amounts, for select
entities within the government
(3)Stage Two: Expanding the coverage to include a Statement of Cash
Receipts and Payments, as well as a Comparative Statement of
Budget to Actual Amounts, as prescribed in Part 1 of the Cash Basis
IPSAS. Consolidated financial statements need not be prepared at
this stage
(4)Stage Three: Expanding the coverage to include financial assets and
liabilities for the government. This is generally referred to as the
Modified Cash or Modified Accrual Basis.
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)
ICGFM Compilation Guide: General Considerations
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.
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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.
General Considerations of the ICGFM Compilation Guide require:

2.1 The general purpose financial statements should be presented to the legislative body annually. When, in
exceptional circumstances, an entitys reporting date changes and the annual financial statements are
presented for a period longer or shorter than one year, an entity should disclose in addition to the period
covered by the financial statements:
(a) The reason(s) for a period other than one year being used; and
(b) The fact that comparative amounts may not be comparable.
The FAAC Guidance does not specify this, but it is generally complied with.
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.
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.
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.
Page 10
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.
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.
The FAAC Guidance should be extended to include this information.

The FAAC Guidance suggests that consolidated financial statements are to
be produced for each level of government (Federal, state and local).
However, the nature of the consolidation is not made clear neither is the
absence of consolidation between levels of government.
The FAAC Guidance does state that, The Consolidation of the GPFS are
based on the Cash transactions of all Ministries, Department and Agencies
(MDAs) of the Government except Government Business Enterprises
(GBEs).
2.19 The format, presentation and classification of items in the financial statements should be retained from
one period to the next unless:
a. A significant change in the nature of the operations of the entity or a review of its financial
statement presentations demonstrate that the change will result in a more appropriate
presentation of events or transactions
b. The relevant laws or regulations require such changes; or
c. A change in presentation is required by a future amendment to this Guide or an IPSAS.
This has been largely achieved since the original FAAC Guidance was
issued in 2004.
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.
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.
This requirement is not explicitly stated in the FAAC Guidance, but it is

assumed that this would be complied with in practice.
2.30 The financial statements should be clearly identified and distinguished from other information in the
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same published document.
The FAAC Guidance just indicates the formats of the financial

statements, but this requirement is complied with in practice and the four
main financial statements are clearly numbered.
2.32 Each component of the financial statements should be clearly identified. In addition, the following
information should be prominently displayed and repeated when it is necessary for a proper understanding of
the information presented:
a. The name of the reporting entity or other means of identification;
b. Whether the financial statements cover an individual entity or a group of entities;
c. The reporting date or the period covered by each financial statement;
d. The reporting currency; and
e. The level of precision used in the presentation of figures in the financial statements.
These requirements are indicated in the FAAC Guidance and are

complied with in practice.
2.36 The classifications used in the financial statements should be the same as those used in the governments
annual budget.
The FAAC Guidance requires adoption of a standard Chart of Accounts

which is also to be used for the budget and the financial statements.
2.40 Cash receipts, payments and balances should be reported on a gross basis.
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.
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.
This is not required by the FAAC Guidance, but is generally complied

with in practice. Accounting Standards issued by the Financial
Reporting Council should advice that this requirement is complied with and
indicate the issues to be covered by such a commentary.
2.52 The financial statements should be signed by the relevant Accounting Officer.

with in practice.
2.54 The opinion of the Supreme Audit Institution should be provided in the same document and alongside the
financial statements.

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with in practice.
Page 13
b) Stage OneCurrent Financial Information

Collected by Select Entities within Central
Government
Summary
At Stage One of the ICGFM Compilation Guide, the FAAC Roadmap for the
Adoption of IPSAS (2012) scored as follows:
Stage One
Green
Yellow
Red
Each of the two key requirements at this stage is considered to be fully

complied with by the FAAC Roadmap.
Thus this stage is fully met by the FAAC Roadmap for the Adoption of
IPSAS (2012).
Detailed analysis
In this section, each of the key requirements of Stage One of the ICGFM
Compilation Guide is considered. In each case the extent to which the
FAAC Roadmap for the Adoption of IPSAS (2012) is indicated.
Stage One of the ICGFM Compilation Guide requires:
3.2 The structure for the financial reports is as follows:
(a) Supreme Audit Institutions Opinion on Fair Presentation
(b) Financial Statement Discussion and Analysis
(c) Financial Statements
(d) Comparative Statement of Budget and Actual Amounts
(e) Statement of Cash Position
(f) 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 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
This is required by the FAAC Guidance. The amount of cash and

equivalents is included in both the Cash Flow Statement and the
Statement of Assets and Liabilities.
Page 15
c) Stage TwoCash Basis Financial Statements

for Central Government
Summary
At Stage Two of the ICGFM Compilation Guide, the FAAC Roadmap for the
Stage Two
Green
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).
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.
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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:
(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.
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.
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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.
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.
This is currently complied with by the FAAC Guidance as far as can be

ascertained from the guidance. This could be made explicit in Accounting
Standards to be developed by the Financial Reporting Council.
4.8 Line items, headings and sub-totals should be presented in the Statement of Cash Receipts and Payments
when such presentation is necessary to present fairly the entitys cash receipts, cash payments and cash
balances.
This is currently complied with by the FAAC Guidance.

4.12 The entity should disclose separately on the face of the Statement of Cash Receipts and Payments, total
external assistance received in cash during the period compared to the budget for such funds.
(a) Where external assistance is received from more than one provider, or for more than one project, the
significant individual providers of assistance and the amounts for each project should be disclosed
separately, either on the face of the Statement of Cash Receipts and Payments or in the notes to the
financial statements. The currency in which the assistance was provided should be reported and the
exchange rate used if appropriate.
(b) Where external assistance is received in the form of loans and grants, the total amount received
during the period as loans and the total amount received as grants should be shown separately, either
on the face of the Statement of Cash Receipts and Payments or in the notes to the financial
statements.
External assistance is to be reported on the face of the cash flow

statement as Proceeds from Aid and Grants, Proceeds from External
Loans and Development Loan Stock. However, external assistance is
only analysed into broad categories such as bilateral and multilateral.
Significant individual providers of assistance are not required to be
disclosed. The assistance is only provided in Naira, not the currency
actually provided. Loans which are provided at concessional rates do not
have to be disclosed separately.
4.14 The budgetary information in the financial statements should be presented in the same format as the
annual budget agreed by the legislative body.
It is expected that this will introduced as the new Chart of Accounts

also developed by the FAAC Sub-Committee is introduce for the budget
Page 18
and the financial statements.

4.17 The notes to the financial statements of an entity should:
(a) Present information about the basis of preparation of the financial statements and the specific
accounting policies selected and applied for significant transactions and other events; and
(b) Provide additional information which is not presented on the face of the financial statements but is
necessary for a fair presentation of the entitys cash receipts, cash payments and cash balances and
adequately account to the legislative body for the funds received and disbursed.
This requirement is largely addressed in the current FAAC Guidance.

4.18 Notes to the financial statements should be presented in a systematic manner. Each item on the face of the
Statement of Cash Receipts and Payments and other financial statements should be cross referenced to any
related information in the notes.
This requirement is currently addressed in the FAAC Guidance.

4.19 General purpose financial statements should present information that is
(a) timely the audited financial statements are made public promptly after the end of the financial year
to which they refer;
(b) understandable the financial statements are clear and the key aspects and terms are explained;
(c) open the key financial information of interest citizens and their elected representatives is made
publicly available; and
(d) consistent the information is consistent from one year to the next, between accounts within the same
financial statements and between related financial statements as well as reliable and free from
material error.
This requirement is currently largely addressed in the FAAC Guidance.

4.21 The accounting policies section of the notes to the financial statements should describe each specific
accounting policy that is necessary for a proper understanding of the financial statements.
Limited detail is provided on the accounting policies to be adopted. In

addition, the accounting basis is described as being cash. However,
The basis could be more accurately described as being the modified cash
basis as it has been modified to include recognition of financial assets and
liabilities (for example, government debt). Accounting Standards to be
developed by the Financial Reporting Council should specify in greater
detail the accounting policies to be adopted.
4.22 Inappropriate accounting treatments are not rectified either by disclosure of the accounting policies used,
or by notes or explanatory material.

However, this point could be developed further in the Accounting Standards
to be developed by the Financial Reporting Council.
4.25 The notes to the financial statements should provide details of cash and cash equivalents on hand and the
Page 19
balances held at the Central Bank as well as the total balances of accounts held at other banks.
This requirement is currently not clearly addressed in the FAAC

Guidance. The balances held at the Central Bank are not clearly
reported separately from those at other banks. In addition, significant
holdings in individual banks are not disclosed.
4.27 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.
These disclosures are not currently required by the FAAC Guidance.

4.29 Details of the payments and receipts of primary service delivery units should be made public.

4.32 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.

4.34 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.
These disclosures are not currently clearly required by the FAAC

Guidance.
4.35 An entity should disclose in the notes to the financial statements the following:
(d) The nature of the error;
(e) The amount of the correction; and
(f) The fact that comparative information has been restated or that it is impracticable to do so.

Guidance.
4.38 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.
Page 20

Guidance.
4.39 Cash balances held in a foreign currency should be reported using the closing rate at the end of the
reporting period.

Guidance.
4.40 An entity should disclose the amount of exchange differences included as reconciling items between
opening and closing cash balances for the period.
This disclosure is not currently required by the FAAC Guidance.

4.41 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.
Page 21
d) Stage ThreeModified Cash Financial

Statements for Central Government
Summary
At Stage Three of the ICGFM Compilation Guide, the FAAC Roadmap for the
Stage Three
Green
Yellow
Red
For three of the 15 ICGFM requirements at this stage, the FAAC

requirements will ensure full compliance with the ICGFM Compilation Guide.
For a further six requirements, the FAAC requirements will ensure partial
compliance. Six of the 15 requirements are not met by the FAAC
requirements.
Thus this stage is not met by the FAAC Roadmap for the Adoption of IPSAS
(2012).
ensure that the following requirements of the ICGFM Compilation Guide are
achieved by each reporting entity to achieve Stage Three of this Guide:
1.
The notes to the financial statements should provide details of provisions.
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:
(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.
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.
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.
This requirement is essentially complied with except details of the

public debt denominated in foreign currencies may not be disclosed
other than in total and in Naira. Under assets, Receivables are not
disclosed as the basis is modified cash and these amounts are not
recognised until they are received. Under liabilities, Sundry creditors are
not disclosed as the basis is modified cash and these amounts are not
recognised until they are actually paid.
5.14 The Intermediate Statement of Financial Performance should provide a clear comparison of actual
financial results (surplus or deficit) at the end of the reporting period with those of the previous period. The
Intermediate Statement of Financial Performance should also present the following amounts for the
reporting period:
(a) Total financial income of the entity showing separately the following balances and a sub-classification
using a classification basis appropriate to the entitys operations:
(i)
Taxes;
(ii) Social contributions
(iii) Grants; and
(iv) Other income.
(b) Total financial expenses of the entity by economic classification showing separately the following
balances and a sub-classification using a classification basis appropriate to the entitys operations:
(i)
Compensation of employees;
(ii) Purchase of goods and services;
(iii) Interest;
(iv) Subsidies;
(v)
Grants;
(vi) Social benefits; and
(vii) Other expenses.
(c) Surplus or deficit by which these are represented including the common fund and other funds as
appropriate.
This statement, Intermediate Statement of of Financial Performance,

is not required by the FAAC Guidance. However, this statement is not
usually used in the public sector.
5.16 The Intermediate Statement of Changes in Net Assets should provide a clear comparison of the changes
in net assets (including accumulated surplus or deficit) at the end of the reporting period with those of the
previous period. The Intermediate Statement of Changes in Net Assets should also present the following
amounts for the reporting period:
(a) Reserves for foreign exchange rate differences due to foreign operations as well as any other equity
reserves;
(b) Unrealized gain or loss on revaluation of property or investments; and
(c) Changes in net assets by which these are represented including the common fund and other funds as
Page 24
appropriate.
This statement, Intermediate Statement of Changes in Net Assets is

not required by the FAAC Guidance. However, this statement is not
usually used in the public sector.
5.18 The notes to the financial statements should provide details of investments, outstanding loans, advances,
imprests and other monies which may be owed to the government. Details should also be provided of any
suspense accounts which have not been cleared.
This requirement is currently addressed by the FAAC Guidance.

5.22 The notes to the financial statements should provide details of contingent liabilities.

5.25 The notes to the financial statements should provide details of provisions.

5.27 The notes to the financial statements should provide details of the total of domestic debt and the total debt
denominated in each significant foreign currency. Details should also be provided of each individually
material debt or loan agreement indicating the provider, original value, the amount outstanding at the end of
the period, the interest rate and the remaining term of the debt.
This disclosure is largely required by the FAAC Guidance. However, the

total debt denominated in each significant foreign currency is not required
to be disclosed. The providers of individually material debts or loans are not
provided neither are the original value nor the interest nor the remaining
term of the loan.
5.30 An entity should disclose in the notes to the financial statements the amount of any debt cancelled during
the period.
This disclosure is not currently required by the FAAC Guidance

5.32 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.

5.35 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
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.

5.37 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.

5.38 Details of development expenditures to date should be provided by project and should be compared to
Total Estimated Cost. The previous years expenditure on each material project should also be disclosed. This
will show the total costs to date of individual development or capital projects compared with the overall budget
for the project which may cover several years, rather than just the results for the particular reporting period.
These details may be provided in the individual financial statements of ministries, departments and agencies
rather than in the financial statements of the common fund.
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.
5.39 An entity should disclose in the notes to the financial statements the salaries and benefits of senior
Page 26
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:
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:
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:
ensure that the following requirements of the ICGFM Compilation Guide are
achieved by each reporting entity to achieve Stage Three of this Guide:
1.
The notes to the financial statements should provide details of provisions.
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.
Page 28
6.
The notes to the financial statements should disclose the salaries and benefits of senior
Page 29
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
Cashflow Statement for the Year Ended 31st
STATEMENT NO. 2:
December, 20xx
Statement of Assets and Liabilities as at 31st
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
Monthly Revenue Returns Performance Report

Annual budget; revenue this month; revenue to date; % achieved on
budget; remarks
Monthly Recurrent Expenditure Performance Report
Annual budget; actual expenditure this month; actual expenditure to-date;
liability committed; total expenditure & liability; balance available
Monthly Capital Expenditure Performance Report
Annual budget; actual expenditure this month; actual expenditure to-date;
liability committed; total expenditure & liability; balance available
Page 30
Monthly Bank Reconciliation Statements

Monthly Cash Advances Report
Analysed by the age of the advance in months
C
STATISTICAL REPORTS
Statement of Total Government Expenditure by Main Function for the year

ended 31st December, 20xx
Actual compared with initial/original, supplementary and final budgets;
variance with final.
Recurrent and capital expenditure by main function.
Statement of Capital Expenditure by Programme by Objective Report for
the year ended 31st December, 20xx
Projects listed by the 16 main programme codes figures for each project
Objectives provided for each capital project
variance with final. Actual for the previous year.
Statement of Capital Expenditure Projects by Geo Location for the year
ended 31st December, 20XX
Capital projects by geopolitical zone and state
variance with final. Actual for the previous year.
D
STATEMENT OF ACCOUNTING POLICIES
A summary of accounting policies adopted to address the following
fundamental accounting issues:
(1)definition of accounting terminologies
(2)recognition of accounting items
(3)measurement of accounting items
(4)accounting treatment of items.
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?
Page 32
Stage 3Controlled Entities within Central Government

Has each of the controlled entities prepared a Comparative Statement of Budget to Actual Amounts, where appropriate?
Has each of the controlled entities prepared a Statement of Cash Receipts and Payments, where appropriate?
Has each of the controlled entities prepared an Intermediate Statement of Financial Position, where appropriate?
Has each of the controlled entities prepared an Intermediate Statement of Financial Performance, where appropriate?
Has each of the controlled entities prepared an Intermediate Statement of Changes in Net Assets, where appropriate?
If so, has a combining statement for each of the prepared statements been prepared to present combined totals 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?
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?
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.
Page 33
DSame as C except financial statements do not comply with pertinent IPSAS. A Certificate of Conformance can
not be issued.
Page 34
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.
Financial statements include a covering letter from the Minister of

Finance showing political support and responsibility.
2.
Some financial reporting guidance has been developed - Report on

Standardisation of Federal, States and Local Government Accounts in
Nigeria (Federation Account Allocation Committee 2004).
3.
Inclusion of audit certificate from the Auditor General.
4.
Eight page introductory narrative by the Accountant General of the

Federation including a graph and six tables.
5.
Financial statements include the legal basis.
6.
Inclusion of four basic financial statements (cashflow, balance sheet,

payments/receipts for Consolidated Revenue Fund and Capital
Development Fund) and consistency of main totals between them.
7.
Inclusion of comprehensive set of notes and accounting policies,

including outstanding imprests and advances.
8.
Detailed schedules provided of internal and external loans (with $

amounts for external loans).
9.
Details provided of subventions to parastatals by overseeing ministry,

department or agency.
10. Consistency of financial statements from 2005 (when new formats

introduced) to 2008.
11. Audit of financial statements brought up to date in last year.
12. Financial statements on the internet: http://oagfnig.org/downloadPage 35
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
Notes to the Accounts

1.
Accounting Policies
2.
Other Funds of the Federal Government
3.
Closing cash book balance held by Federal Pay Offices
4.
Closing cash book balance held by Ministries, Depts and Agencies
5.
Outstanding Imprest Account
6.
Ministries of Finance Incorporated Assets (Investments)
7.
Outstanding Advances
8.
Revolving Loan Accounts
9.
External Loans of the Federal Government
10.
Internal Loans of the Federal Government
11.
Development Loan Stock of the Federal Government
12.
Deposit Accounts
13.
Personnel Costs of the Federal Government
14.
Overhead Costs of the Federal Government
15.
Consolidated Revenue Fund Charges
16.
Subvention to Parastatals
World Bank PEMFAR Report 2007 notes and extracts
Some progress was made in improving general accessibility of budget
information.
Significant parts of federation account allocations remain outside of the
regular budget process (although there are constitutional limitations for
achieving full budget consolidation).
Efforts are under way to reduce the backlog, but the 2001 accounts are still
the latest that were submitted to the Public Accounts Committees.
Accounts for 2002, 2003 and 2004 have been submitted to the AuditorGeneral.
Public Accounts Committees meet on a regular basis and there is improved
cooperation with Auditor General.
Page 36
PI-25: Quality and Timeliness of Annual Financial Statements

Best Practice
For the purpose of the PEFA assessment best practice in generation of
annual financial statements is defined as:
(i) A consolidated government statement is prepared annually and
includes full information on revenue, expenditure and financial
assets/liabilities.
(ii) The statement is submitted for external audit within 6 months of the
end of the fiscal year.
(iii) IPSAS or corresponding national standards are applied for all
government financial statements.
Present situation [as in 2007]
No full set of audited government financial statements have been
presented to the National Assembly since 20012, but an effort is underway
to reduce a backlog of late accounts. The 2002 accounts were submitted to
the Auditor Generals Office in April 2004 and resubmitted in September
2005 after errors pointed out by the Auditor-General were corrected. The
2003 and 2004 accounts could not be submitted until issues in regard to
the 2002 accounts are sorted out, but it was subsequently reported that the
2004 accounts were submitted in June 2006.
The submission of the 2004 final accounts means that in the past 15
months, the Office of the Accountant General of the Federation has
successfully prepared the accounts for both 2003 and 2004, an
achievement made possible by the ATRRS deployment (IT package). The
Office of the Accountant General of the Federation expects that the 2005
accounts could be ready by December 2006, and the 2006 accounts by
April 2007.
Parastatals and independent agencies submit audited financial statements
directly to the National Assembly but the Auditor-Generals Office gets
copies of audited statements. The latter are used for two purposes:
a) to monitor the use of budget subventions, and
b) to determine how much of revenue parastatals have to turn over to the
Exchequer.
Most of these financial statements are submitted within seven to eight
2
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.
Page 37
months after the closing of the year.

It is difficult to assess the quality of the consolidated statements. An
indication of existing weaknesses may be the fact that Auditor-General had
to send back the 2002 accounts to the OAGF because they still contained
liabilities of parastatals that had been privatized and where the liabilities
were handled over as a part of the privatization deal.
It is worth noting that the audits carried out by the Auditor-General are
focused on compliance. No performance or value for money audits are
carried out. An indication that the value for money of public spending
leaves something to be desired is the fact that the Budget Monitoring and
Price Intelligence Unit in its first year of operations was able to save
US$674 million by renegotiating contracts already negotiated and agreed
by the MDAs.
The team has not been in the position to evaluate the quality of the audited
accounts from the parastatals.
Reforms underway [as in 2007]
As indicated above, the government is now making a concerted effort to
eliminate the backlog of consolidated accounts. The deployment of the
ATRRS (IT packaged) is accelerating their production and by 2007 the
Government ought to be able to respect the deadlines for its submission as
set in the Constitution.
Assessment [as in 2007]
The members of National Assembly have vociferously complained about the
non-submission of audited consolidated accounts. Despite this pro-active
attitude of the legislature, it has taken considerable time after the return to
democracy for the Government to get up to speed tackling the backlog.
At the same time, the Federal Ministry of Finance demonstrates somewhat
lax attitude towards the laggard MDAs. Funds have been released without
any reports having been produced. The moral hazard of this practice is
obvious. In addition, failure to produce timely accounts and financial
statements weakens the accountability nexus that is at the heart of PFM.
However, as noted in PI-22 and 24, acting under a May 2006 Presidential
directive, the Office of the Accountant General of the Federation and the
Budget Office have started instilling reporting discipline by sanctioning
defaulting MDAs through withholding further release of funds to them.
Page 38
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.
Page 39
Appendix F
Terms of Reference
EVALUATION OF THE GUIDANCE FROM THE FAAC

SUB-COMMITTEE ON THE ADOPTION OF IPSAS
(CASH) USING THE ICGFM COMPILATION GUIDE
Financial Reporting Council of Nigeria
Issuance Date May 27, 2013
BACKGROUND
The government of Nigeria obtained a Credit from the International
Development Association (IDA) in support of the Economic Reform and
Governance activities. Project Implementation commenced in June 2005
and is expected to end by 30 June 30, 2013. The aims of the credit are to:
(i)
improve the Federal Governments economic management;
(ii)
launch a process to build an efficient and effective federal civil
service; and
(iii) strengthen the impact of the federal governments targeted anticorruption initiatives.
The project has four broad components:
(i)
support for the public expenditure management reforms budget,
financial management and procurement policies and processes
and targeted anti-corruption initiatives;
(ii)
support for the roll out of civil service (administrative) reforms in
five pilot ministries/agencies;
(iii) support for implementation of pensions reforms; and (iv)
strengthening of statistics and statistical capacity.
The Financial Reporting Council of Nigeria has been given varied
responsibilities by the FRC Act No 6, 2011, including developing accounting
and financial reporting standards for the public sector. The Public Sector in
Nigeria has been preparing financial statements based on the Federal
Account Allocation Committee (FAAC) format since 2004 and revised
guidance was issued in January 2013 for the application of the Cash Basis
IPSAS, to be adopted for the 2014 financial year by the annual financial
statements of the Federation, states and local governments.
Meanwhile the International Consortium on Governmental Financial
Management (ICGM) has developed a Compilation Guide for governments
that are introducing such reforms for the adoption of the IPSAS. This
evaluation will assess the extent to which Nigeria has progressed along the
different levels of the ICGFM Compilation Guide and the stage that will be
reached by the proposed formats in the revised FAAC Guidance. This will
provide valuable guidance to the FRC when taking over their legal
Page 40
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:
Page 41
i)
ii)
iii)
iv)
v)
Review the FAAC 2013 revised Guidance on the format and

content of the Annual Report and Financial Statements on
implementing the Cash Basis IPSAS against the ICGFM
Compilation Guide;
Assess the stage that the current practice and guidance would
achieve against the ICGFM Guide;
Identify significant constraints and changes needed to this
guidance to lead to the achievement of the next stage of the
ICGFM Guide;
Provide any comments on the practicality of the ICGFM
Compilation Guide within the context of Nigeria; and
Prepare and submit report as follows:
a. A discussion draft to be submitted by Friday 21 June, to be
discussed, revised and agreed with the Assistant Director,
Head, CLAP/SORP, Financial Reporting Council
b. A draft report to be submitted by Wednesday, 26 June to be
considered by the Executive Secretary/Chief Executive
Officer of Financial Reporting Council.
Contract performance will be based on:

- Comprehensiveness and relevance of the reports; and
- Successful completion of the project, within the time indicated.
DURATION AND TIME SCHEDULE
The consultant is expected to ensure that the initial discussion draft is
made available to the Project Officer, ERGP of the Financial Reporting
Council on or before Friday 21 June, 2013. This draft will then be submitted
on or before Wednesday, 26 June to the Executive Secretary/Chief
Executive Officer of Financial Reporting Council. The final report will then be
discussed revised and submitted on 28th June 2013.
The assignment is expected to commence on Monday 3rd June, 2013.
REQUIRED QUALIFICATIONS OF CONSULTANT
The consultant for this job should have seven years or more cognate
experience in the Accounting and must be a member of recognised
professional accounting body.
The consultant should also have first-hand experience with similar projects,
and a close association with, and working knowledge of the government
agencies in Nigeria.
A broad-based working knowledge of other related discipline would enable
the consultant to better comprehend and analyse the requirements of
accounting education globally.
The consultants services required under this term of reference shall be
carried out at the consultants home base, but in close co-ordination with
officials of the FRC including, as necessary regular email and
telephone/Skype contacts.
Page 42
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.
-
Evidence of executing similar assignment(s) in the last five (5) years
Evidence of Registration of the individual with recognized professional

body.
EXECUTIVE SECRETARY/CHIEF EXECUTIVE OFFICER

Financial Reporting Council of Nigeria
Elephant Cement House (3rd Floor)
Assbifi Road,
Alausa, Ikeja,
Lagos,
NIGERIA.
Page 43

Comparison of Public Financial Reporting in Nigeria With Good Practice

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COMPARISON OF THE

FORMAT OF GENERAL PURPOSE FINANCIAL

INITIAL DRAFT: JUNE 2013

Produced for the Financial Reporting Council of Nigeria

2. COMPARISON OF FAAC REQUIREMENTS WITH ICGFM

Roles of the FAAC and the Financial Reporting Council

2004 and recommended that the following seven statements should be

Responsibility for Financial Statements

ICGFM Compilation Guide

Purpose of this Report

2. COMPARISON OF FAAC REQUIREMENTS WITH ICGFM

ICGFM Compilation Guide: General Considerations

General Considerations of the ICGFM Compilation Guide require:

The FAAC Guidance should be extended to include this information.

This requirement is not explicitly stated in the FAAC Guidance, but it is

same published document.

The FAAC Guidance just indicates the formats of the financial

These requirements are indicated in the FAAC Guidance and are

The FAAC Guidance requires adoption of a standard Chart of Accounts

This is not required by the FAAC Guidance, but is generally complied

This is not required by the FAAC Guidance, but is generally complied

This is not required by the FAAC Guidance, but is generally complied

b) Stage OneCurrent Financial Information

Each of the two key requirements at this stage is considered to be fully

This is required by the FAAC Guidance. The amount of cash and

c) Stage TwoCash Basis Financial Statements

This is currently complied with by the FAAC Guidance as far as can be

This is currently complied with by the FAAC Guidance.

External assistance is to be reported on the face of the cash flow

It is expected that this will introduced as the new Chart of Accounts

and the financial statements.

This requirement is largely addressed in the current FAAC Guidance.

This requirement is currently addressed in the FAAC Guidance.

This requirement is currently largely addressed in the FAAC Guidance.

Limited detail is provided on the accounting policies to be adopted. In

This requirement is currently addressed in the FAAC Guidance.

This requirement is currently not clearly addressed in the FAAC

These disclosures are not currently required by the FAAC Guidance.

These disclosures are not currently required by the FAAC Guidance.

These disclosures are not currently required by the FAAC Guidance.

These disclosures are not currently clearly required by the FAAC

These disclosures are not currently clearly required by the FAAC

These disclosures are not currently clearly required by the FAAC

These disclosures are not currently clearly required by the FAAC

This disclosure is not currently required by the FAAC Guidance.

This disclosure is not currently required by the FAAC Guidance.

d) Stage ThreeModified Cash Financial

For three of the 15 ICGFM requirements at this stage, the FAAC

The notes to the financial statements should provide details of provisions.

This requirement is essentially complied with except details of the

This statement, Intermediate Statement of of Financial Performance,

This statement, Intermediate Statement of Changes in Net Assets is

This requirement is currently addressed by the FAAC Guidance.

This requirement is currently addressed in the FAAC Guidance.

This disclosure is not currently required by the FAAC Guidance.

This disclosure is largely required by the FAAC Guidance. However, the

This disclosure is not currently required by the FAAC Guidance

This disclosure is not currently required by the FAAC Guidance.

This disclosure is not currently required by the FAAC Guidance.

This disclosure is not currently required by the FAAC Guidance.

This disclosure is not currently required by the FAAC Guidance.

The notes to the financial statements should provide details of provisions.

Cashflow Statement for the Year Ended 31st