The need to align with international best practice and improve quality of financial reports, comparability of financial report in local governments requires the need for IPSAS adoption. In light of this, the study examined the effect of IPSAS adoption on the quality of financial reporting of local government councils in Lagos state. The population of this study consists of the staff of the office of auditor-general for local governments and the staff of the internal audit department of the 20 local government councils in Lagos State. Two hypotheses were formulated and tested. The study adopted a survey design; the data for this study were obtained from a primary source through administration of questionnaires to153 personnel selected from the office of auditor-general for local government and internal audit department of the of the selected 10 local governments in Lagos State. The study was validated using content validity. The reliability test value was 0.78 using Crouchback Alpha technique. Simple linear regression was adopted to analyse the data gathered. The findings revealed that IPSAS adoption has positive and significant effects on faithful representation of financial reports and level of comparability of financial reports in Lagos state’s local government councils. The study concludes that IPSAS adoption improves quality of financial reporting of local governments in Lagos. The study thus recommends among others that office of Auditor-General for local governments in Lagos State should effectively monitor preparers of financial reports in local government councils to ensure their IPSAS compliance.