Abstract
IPSAS implementation is usually seen as a step toward improving the quality of public financial information, accountability, and transparency. However, it is worrying that many governments around the world are involved in the process of implementing IPSAS and transitioning to accrual base without certainty about the reality of those desired outcomes. This paper contributes to the matter by studying quantitatively whether there is any association between the use of accrual accounting and IPSAS for financial reporting purposes and both fiscal transparency and accountability. Using a cross-sectional dataset that includes observations from more than 70 countries in 2018, we find that other variables such as the degree of citizens’ political participation and media freedom are more important for analyzing differences in fiscal transparency and accountability than the degree of IPSAS implementation.
Highlights
There are many governments around the world in a race to implement International Public Sector Accounting Standards (IPSAS)1 with the hope of improving state intervention, efficiency, comparability, transparency, and accountability (Association of Chartered Certified Accountants [ACCA], 2017; Deloitte, 2013; International Public Sector Accounting Standards Board [IPSASB], 2014; Lusinyan, et al, 2009; Polzer, Grossi, & Reichard, 2021), but with uncertainty about the compliance of those goals
Multilateral institutions state that the adoption of IPSAS allows obtaining high quality public financial reporting and favors transparency and accountability (Ball, 2012; Brusca, Gómez-Villegas, & Montesinos, 2016; Castañeda-Rodríguez, 2019; Schmidthuber, Hilgers, & Hofmann, 2020), implementing them is a costly process in terms of money and time (Carnegie & West, 2005), and does not guarantee better results in those matters
We find that other variables such as the degree of citizens’ political participation and media freedom are more important for analyzing differences in fiscal transparency and accountability in the world than public financial accounting bases and frameworks
Summary
There are many governments around the world in a race to implement International Public Sector Accounting Standards (IPSAS) with the hope of improving state intervention, efficiency, comparability, transparency, and accountability (Association of Chartered Certified Accountants [ACCA], 2017; Deloitte, 2013; International Public Sector Accounting Standards Board [IPSASB], 2014; Lusinyan, et al, 2009; Polzer, Grossi, & Reichard, 2021), but with uncertainty about the compliance of those goals. For their part, multilateral institutions state that the adoption of IPSAS allows obtaining high quality public financial reporting and favors transparency and accountability (Ball, 2012; Brusca, Gómez-Villegas, & Montesinos, 2016; Castañeda-Rodríguez, 2019; Schmidthuber, Hilgers, & Hofmann, 2020), implementing them is a costly process in terms of money and time (Carnegie & West, 2005), and does not guarantee better results in those matters. The above obstacles make the goals pursued through IPSAS implementation more difficult to achieve, which warrants further research in this area
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