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Nigerian naira

The software, dubbed OneBook, is intended to provide a portal through which states and local governments in particular can report on and manage their finances on an accruals basis.

Launching the tool, Nigeria’s finance minister, Kemi Adeosun, explained that one of the key advantages will be consistency in the training delivered across states and comparability “because everybody’s accounts will look the same and be prepared on a similar basis”.

She added that it will also put an end to disputes over how much a state holds in assets or owes in debt. Nigerian state governments in particular are known for their poor financial management and governance.

With most relying on their share of national oil revenues from the federal government, this was only exacerbated when commodity prices tanked from mid-2014. Last year, the government had to supply a half-a-billion dollar bailout to ease strain on budgets.

The finance ministry, which spearheaded the initiative, said the “unified accounting and reporting solution” will help states better oversee their accounts and enhance efficiency, accountability and transparency.

“[OneBook] is tailored for the public sector,” explained Adeosun. “It’s everything from budgeting, warrant issuance, payments, reconciliations and reports.”

With the country in its first recession in 25 years, a costly and time consuming project like a shift from cash to accrual-based accounting could serve to place further pressure on overstretched departments and sub-national governments.

Adeouson agreed there is a need to tighten the purse strings, but said this initiative would deliver “considerable” savings for state governments, which last year committed to abiding by fiscal sustainability plans. These included measures to improve transparency and prudence and compliance with IPSAS.

A single software solution that any state could subscribe to would remove the need for states to develop their own, Adeouson noted.

The current administration in Nigeria has taken aim at the endemic corruption blighting the country. Advocates of accruals argue a shift away from the more basic method of cash accounting would enhance transparency and accountability, and leave the books less open to manipulation.

However others reject these alleged benefits, and even many global organisations that do support a shift to accruals would approach the reform with caution in a developing country when a move to accruals has proven challenging for even the most advanced economies.