STANDARDIZATION OF FINANCIAL REPORTING AT THE LOCAL GOVERNMENT LEVEL (A CASE STUDY OF PORT HARCOURT LOCAL GOVERNMENT AREA)

CHAPTER ONE
INTRODUCTION
1.1  BACKGROUND OF THE STUDY
Government financial reporting are responsible for making public the data gotten and accumulated in the government accounting system open to the public. This research work willmajorlydeal with the financial reports, specifically year-end financial statements. It will also be concerned with the reports for proper monitoring budget execution, and the statistical reports for national and international macro-fiscal comparisons, and compare these three reporting systems. This research will be useful both to general readers and to practitioners who are responsible for finding out the framework and content of financial reports, giving approvals to the accounting policies used to prepare financial statements,throwing more light on the financial reports to legislators and the public, dealing with auditors to address disputes and misunderstandings, and making sure the proper use of information in financial reports in the government’s decision-making processes. It is generally accepted that Financial Reporting Standardsexplains the rules which are expected to beadhered to, specifically, in preparing general purpose financial statements (GPFS). In the private sector, these financial statements are meant for investors and creditors, in discrepancy to “special purpose financial reports,” which are internal reports to management and external reports needed by tax and regulatory authorities. The idea of GPFS was invented by state and local governments in the 1970s and by the federal government in the 1990s in the United States to bring into existence a dierentarena for setting standards for external financial reporting, to avoid trespassing upon the birthright or right of legal authorities.
This system of governance has been raised to the international level with the IPSAS Board. The concept of GPFS is a new idea to governments in many countries, especially where the major object of financial reporting is the outcomes of budget execution. In these countries, during the fiscal year and at year-end, the exact report of the incomes and expenditures are given, either alone or in comparison to planned revenues and appropriations, respectively. These comparisons are used during the year to enhance performance. At the end of a fiscal year, they might also be used to explain why the exact deficit was different from the yearly budgeted deficit. Thus,financial reporting is not generally understood as only year-end reporting to the public. For instance, China has pursued its own path to bringing into existence a framework of accounting and financial reporting. The financial information about the reporting entity that is needed to already existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity. These decisions include buying, selling or holding equity and debt instruments, and providing or settling loans and other forms of credit. Numerousalready existing and potential investors, lenders and other creditors cannot expect reporting entities to provide information directly to them and must depend on general purpose financial reports for much of the financial information they need. As a result, they are the major users to whom general purpose financial reports are directed. General purpose financial reports do not and will not even in years to come provide all of the information that exist and potential investors, lenders and other creditors need.
1.2  STATEMENT OF THE PROBLEM
Although many countries have faced challenges in their decisions to adopt standardized financial reporting, its wide spread adoption has been promoted by the argument that the benefits outweigh the costs. Recently there has been a push towards the adoption of standardized financial reporting developed and issued by the International Accounting Standards Board (IASB). The organizations should enable regulators and other key player to gauge the effectiveness of the financial reporting system in place such as training and development for practitioners and new members, due diligence for Accounting standards and the overall institutional and professional organization conducive for effective standards application.
Therefore, implementation of a standardized financial reporting at the local government level would reduce information irregularity and strengthens the communication like between all shareholders and also reduces the cost of preparing different version of financial statements.
1.3  AIMS AND OBJECTIVES OF THE STUDY
The major aim of the study is to examine the standardization of financial reporting at the local government level. Other specific objectives of the study include;
1. To examine the benefit of a standardized final report at the local government level.
2. To assess the level of implementation of the standardized financial reporting at the local government level. 3. To determine the impact of a standardized financial report on local government administration.
4. To recommend ways of effectively implementation of the standardized financial reporting at the local government level.
1.4  RESEARCH QUESTIONS
1. What are the benefits of a standardized final report at the local government level?
2. What is the level of implementation of the standardized financial reporting at the local government level?
3. What is the impact of a standardized financial report on local government administration?
4. What are the ways of effectively implementation of the standardized financial reporting at the local government level?
1.5  RESEARCH HYPOTHESIS
H0: standardization of financial reporting at the local government level has no impact on local government administration.
H1: standardization of financial reporting at the local government level has an impact on local government administration.
1.6  SIGNIFICANCE OF THE STUDY
The study would be of immense benefit to local government administrations as it would reveal the benefits of implementing a standardized financial reporting at the local government level. The study would also highlight ways of implementing standardized financial reporting at the local government level. The study would also benefit students, researchers and scholars who are interested in developing a further study on the subject matter.
1.7  SCOPE OF THE STUDY
The study is restricted to the standardization of financial reporting at the local government level using Port Harcourt local government area as the case study.
1.8   LIMITATION OF THE STUDY
Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.