The Effect of Financial Reporting Quality and Accounting Process Automation on Sustainable Accountability in Nigerian Local Government Areas

Abstract

This study investigates the effect of financial reporting quality and automation of accounting processes on sustainable accountability in Nigeria's local government areas. It addresses a gap in understanding how technological integration mediates the relationship between reporting quality and accountability in sub-national governments, contributing to digital governance literature in developing economies. Based on agency theory, the research emphasises transparency and technology incorporation as core drivers of efficient public governance. The study population included all 774 local governments in Nigeria, with a sample from Ondo State. Primary data were collected via structured questionnaires administered to accountants, treasurers, internal auditors, and administrative officers. The data were analysed using correlation and multiple regression with SPSS version 20. Findings show that automation of accounting processes significantly improves accountability ( ³ = 0.679, p < 0.001) by reducing human errors and facilitating real-time reporting. However, financial reporting quality alone had no significant direct effect ( ³ = 0.018, p = 0.771) on accountability without technological integration. The complete model yielded an adjusted R² of 0.421, explaining 42.1% of sustainable accountability variation. The research concludes that high-quality financial reporting and automated accounting systems are crucial for sustainable accountability. Recommendations include continuous professional development, IPSAS adoption, and full digitisation of financial processes in local governments to promote transparency and good governance.