An Assessment of Adopting Accrual Accounting on the Quality of the Financial Reports in Public Institutions in Rwanda. Case Study of Nyamasheke District

Globalisation has increased the interconnection of economies and cultures across the globe, which led to the need for uniformity in reporting public finance in the form of International Public Sector Accounting Standards (IPSAS), designed to harmonise accounting practices in the public sector across countries. Even though IPSAS has been ascribed to be beneficial, not all countries have adopted it at the same level. This work study seeks to ascertain the Effect of The Adoption of Accrual Accounting on the Quality of Financial Reports in Public Institutions in Rwanda, particularly in Nyamasheke district, through assessing the effect of revenue recognition, determining the effect of expenses recognition, analysing the effect of liability recognition and assessing the effect of asset recognition, on the quality of financial reports in public institutions, from 2020 to 2023. This study was conducted on a sample size of 51 accountants, budget officer, Director of finance and Director of Administration and Finance who were purposively selected from public institutions locating in the study area, namely hospitals, district headquarter, health centers, boarding schools and sector offices for to answer to a questionnaire for both descriptive and correlative analytical fact, with the help of SPSS version 20. A mixed survey design, being both descriptive and correlative, was used in this study where, in the context of accrual accounting adoption and quality of financial reporting, this study involved gathering and analyzing data to describe the current state of accrual accounting adoption and correlate it with the quality of financial reports. The study revealed that the revenue recognition with (B=0.728; t=3.978, p=.035); Expenses recognition with (B=0.587; t=3.787, p=.036); liability recognition with (B=0.834; t=4.821, p=.014) and asset recognition with (B=0.556; t=2.896, p=.047) were significantly affecting quality of financial report, but at low level as proven by the R-square of 0.106. on the other hand, the study concluded that adoption of accrual accounting had a weak significant positive effect on quality of financial report in public institutions in Rwanda. Therefore, it was recommended for public institutions to invest in comprehensive training and capacity-building programs for staff members involved in financial reporting; working towards standardizing their practices in revenue recognition, liability recognition, expenses recognition, and asset recognition and be actively engaged in the implementation process and ensure that their recognition practices are in accordance with IPSAS guidelines. Key terms: Revenue Recognition, Expenses Recognition, Liability Recognition, Asset Recognition and Financial Reports