The Magic Shoes of IPSAS: Will They Fit Turkey?

Selver Seda Ada,Johan Christiaens

doi:10.24193/tras.54e.1

Abstract

In this study, we seek to further delineate the reasons for the existence of shortfalls in the level of formal and material harmonization regarding the accrual-based rules in International Public Sector Accounting Standards (IPSAS) by analyzing the law, the executive order and the Turkish Central Government Public Reports from2010to 2014 (using a mixed method approach).We highlight that coercive pressure itself is insufﬁcient for improving substantive performance and changing the internal structures of organizations, instead, such pressures cause decoupling in ﬁnancial reporting. As a new ﬁnding in the context of a developing country, we suggest that there are several discrepancies between the law and the executive order. Moreover, we conclude that there are emerging country-speciﬁc reasons affecting the gap in the harmonization levels, including a lack of social pressure which tends to be prominent in developed countries, state domination over both civic matters and the private sector, and translation problems that arise during the adoption process.

Highlights

The implementation of policies and techniques associated with accrual accounting is understood to be a crucial factor in modernizing the public sector in developing countries (Antipova and Bourmistrov, 2013, p. 444) and IPSAS has been considered a point of departure for streamlining central governments to improve transparency and accountability (Hughes, 2013).International Public Sector Accounting Standards (IPSAS) based accrual accounting standards have been well established in most of the OECD countries, and 50% of non-OECD countries have expressed an intention to adopt accrual accounting, often using IPSAS as a reference point (Alshujairi, 2014, p. 1)
We highlight that coercive pressure itself is insufficient for improving substantive performance and changing the internal structures of organizations, instead, such pressures cause decoupling in financial reporting
Using institutional theory and the concept of decoupling, we argued that the change in the public sector accounting system in Turkey was primarily motivated by international organizations as a potent coercive force for the adoption of accrual-based rules

Summary

Introduction

The implementation of policies and techniques associated with accrual accounting is understood to be a crucial factor in modernizing the public sector in developing countries (Antipova and Bourmistrov, 2013, p. 444) and IPSAS has been considered a point of departure for streamlining central governments to improve transparency and accountability (Hughes, 2013).International Public Sector Accounting Standards (IPSAS) based accrual accounting standards have been well established in most of the OECD countries, and 50% of non-OECD countries have expressed an intention to adopt accrual accounting, often using IPSAS as a reference point (Alshujairi, 2014, p. 1). Research concerning developing countries and transitional economies adopting and implementing accrual accounting has only begun and has primarily focused on a limited number of country-specific cases involving IPSAS standards adoption Most of the studies have demonstrated that failure in the disclosure level of the financial reporting is caused by numerous problems that arise during the implementation process (Allen and Sanders, 1994; Ryan, Stanley and Nelson, 2002; Pina and Torres, 2003; Giroux and McLelland, 2003; Coy and Dixon, 2004; Tooley and Guthrie, 2007; Benito, Brusca and Montesinos, 2007)

Objectives

Findings

Discussion

Conclusion