Differential reporting in the public sector—financial reporting for small- and medium-sized entities

Abstract

IMPACT According to the International Public Sector Accounting Standards Board (IPSASB), public sector entities should apply the IPSAS when they fulfill certain criteria, such as the delivery of public services or financing by taxes. Size is currently not a matter for the application of IPSAS and smaller public sector entities have to apply the full suite of IPSAS. Based on an empirical study, this article shows that differential reporting is a suitable approach to overcome the accounting challenges that small- and medium-sized public sector entities (SMPSEs) are facing. The authors explain the potential advantages and disadvantages of differential reporting in the context of SMPSEs’ accounting challenges.