Accrual Basis Accounting and Accountability in Nigerian NGOs: Practices and Challenges

Abstract

This study explores how the use of accrual basis accounting influences accountability and transparency among Nigerian non-governmental organizations (NGOs). As expectations from donors, stakeholders and partners for financial accountability continue to grow, NGOs face mounting pressure to adopt more reliable reporting systems. The research examines current levels of adoption, the challenges of moving from cash based to accrual accounting, and the implications for financial reporting. The study uses mixed-method approach (quantitative and qualitative) research design, agency theory was used to underpin the study and data were collected through questionnaires administered to sixteen (16) NGO staff members, including finance, administrative, and management personnel operating in the Borno, Adamawa and Yobe (BAY) states. Among the organizations studied, eleven were national NGOs and five were international NGOs all operating in the Borno, Adamawa and Yobe (BAY) states. Out of many NGOs operating in the BAY states, sixteen (16) NGOs met the criteria for selection i.e access to audited financial statement, knowledge of Accrual basis accounting and voluntary respondents while others decline to respond. Findings reveal that many NGOs favor a hybrid or mixed accounting approach, largely due to the unpredictable and conditional nature of donor funding. Key barriers to full accrual adoption include shortages of skilled staff, funding structures, and irregular disbursements. The study highlights that limited compliance with IFRS/IPSAS standards may weaken donor confidence and potentially reduce funding opportunities. Overall, the results emphasize the need for capacity building, supportive policies, and harmonized donor requirements. The paper concludes with recommendations for strengthening practice through training, policy reforms, donor engagement, and further research.