Consolidated financial statements – a new challenge for the public sector administration

Abstract

PurposeConsidering the worldwide importance granted to this topic, the purpose of this paper is to analyze, through a detailed pyramidal analysis, the intention of International Public Sector Accounting Standards (IPSAS) to respond better to the public sector characteristics.Design/methodology/approachThe research methodology combines content analysis with the comparative and interpretive method, and also some statistical methods such as residual analysis, association coefficients, that come to bring added value to the public sector literature.FindingsThe main findings of the research concern the appreciation of consolidation approach in the public sphere under a dual aspect. The first one is theoretical, by presenting the evolution of the concept in literature, and the second one is empirical, by analyzing how IPSAS correlates with International Financial Reporting Standards (IFRS), how the Exposure Draft 49 (ED 49) respondents perceive its content and implications, along with the extent to which the publication of IPSAS 35 took into account the exposure draft stage. In the authors’ opinion, the study manages to capture, theoretically and empirically, the evolution and the stage of consolidation in the public sector. The main results of the study lie in the combination in the empirical sphere of the content analysis with the mathematical and statistical methods, in order to assess the correlation IPSAS/IFRS, the responses to ED 49, but also the influences on the final version of IPSAS 35.Research limitations/implicationsThe main limitations of the study are: the diversity of the received responses to ED and the number of comment letters submitted by the respondents.Practical implicationsThe study addresses to a broad range of users: theoreticians, practitioners or professional bodies/legislators who will have a basis for analyzing what the acceptance and inclusion of IPSAS 35 in the national accounting rules would mean.Social implicationsThe paper offers the possibility to understand the evolution of the concept of public sector consolidation.Originality/valueThe first originality aspect is revealed by the theoretical documentation and the second one lies in the combination of the empirical sphere of the content analysis with the mathematical and statistical methods.