Impact Assessment of International Public Sector Accounting Standards (IPSASs) on Commercial Public Sector Entities in Africa

International Journal of Research and Scientific Innovation (IJRSI) | Volume VII, Issue X, October 2020 | ISSN 2321–2705

Impact Assessment of International Public Sector Accounting Standards (IPSASs) on Commercial Public Sector Entities in Africa  

Zivanai Mazhambe

Post Doctoral Research Department, Bright Africa Consultancy Training

Abstract—
IPSASs are generally applied to not-for-profit making public entities whose primary objective is accountability and effectiveness in the provision of public goods and services. The incorporation of elements of profits and return on investment as part of objectives of commercial public sector entities makes the application of IPSASs technically complex. The study therefore seeks evaluate how impactful are IPSASs on commercial public sector entities. The methodology adopted for this study was mixed research methodology through questionnaires and interviews of PAFA professional in Africa public sector. The findings revealed that commercial public sector entities are greater defined extent profit driven in their objectives, using International Financial Reporting Standards ( IFRSs) as their accounting standards. The findings further revealed that the hybrid adoption of IPSASs with IFRSs applied to commercial public sector entities especially in consolidated financial reporting is technically challenging and compromising the objectivity of IPSASs which require full adoption and application. The study concluded that IPSASs are therefore less impactful and relevant to commercial public sector entities.

Keywords— IPSASs, Public Sector Accounting, Government accounting, Commercial Public Sectors, PAFA, IPSASs Challenges

1. INTRODUCTION

Commercial public sector entities are to a defined extent profit oriented with service potential being the core. The incorporation of elements of profits and return on investment as part of objectives of commercial public sector entities and the application of IPSASs requires technical guidance and objective professional judgments which are scenario specific in terms of evaluation. The study therefore seeks evaluate how impactful are IPSASs on commercial public sector entities.

According to OECD (Christiansen, 2013) there numerous rational arguments that causes governments to establish and seek ownership in commercial public entities mainly monopolies in economic sectors with limited open competition is deemed not feasible or inefficient. The other compelling reasons (Christiansen, 2013) being market incumbency where marginalised completion is available with state operators maintaining a key defining responsibility , imperfect contracts which cannot clearly defined the State Owned Enterprises (SOEs) in service contracts and also where industrial policy development strategies are deemed should overcome growth obstacles and market imperfection

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