Accrual vs Cash Accounting Basis

Public Sector Accounting System in Nigeria: A Comparative Study of Cash-Basis and Accrual-Basis of Reporting

By

Cletus .O. Akenbor (Ph.D)
Faculty of Management
University of Port Harcourt, Choba
Rivers State, Nigeria
E-Mail: [e-mail] Tel:[phone]

And

Tennyson Oghoghomeh
Director – Finance and Accounts
Office of the Deputy Governor of Delta State
Asaba, Nigeria [e-mail] Tel: [phone]

ABSTRACT

The objective of this study is to investigate the accounting system that should be adopted in the Nigerian public sector for achieving the financial, public and growth objectives of the government. To achieve this purpose, research questions were raised, hypotheses were formulated and a critical review of extant literature was made. The population of the study consists of eighteen(18) state legislators and thirty-nine(39) Directors of Finance and Accounts of the chosen ministries and extra-ministerial departments. In order to generate the necessary data for this study, the survey method of research design was adopted in which a well structured questionnaire designed in five-point Likert-Scale was administered on the study population. The data generated for this study were analysed using mean scores while the stated hypotheses were statistically tested with Z-test. The findings generated from this study indicated that cash basis of accounting does not significantly promote effective financial reporting of public sector entities in Nigeria, since the z-test result shows that the computer z-value (1.0) is less than the critical z-value (1.96). Similarly, it was gathered in this study that accrual basis of accounting significantly promotes effective financial reporting of public sector entitles in Nigeria. In view of the above findings we recommended the adoption of accrual basis of accounting in public sector entitles in Nigeria.

Key words; Cash accounting, accrual

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