Public Sector Accounting Reforms Research Articles

New development: The role of education in public sector accounting reforms in emerging economies: a socio-material perspective

IMPACT This article delivers new insights regarding the importance of continuous professional development (CPD) for practitioners designing and implementing public sector accounting (PSA) reforms. Public sector accounting education (PSAE) in universities has been the subject of many studies and its relevance is well recognized. By emphasizing the continuous professional development of public sector accountants, this article adds a new perspective to the debate on PSAE. The authors focus on PSA reforms in emerging economies, where the agenda is often driven by international financial institutions promoting IPSAS. Applying a socio-material perspective, the authors demonstrate that the technical aspects of reforms require human capacity development. This means conducting a preliminary evaluation of the CPD capabilities before drafting the agenda for any PSA reform.

Public-Sector Accounting Reforms and Governmental Efficiency: A Two-Stage Approach

Synopsis The research problem We investigated the association between public-sector accounting reforms and efficiency at a central-government level, assessing efficiency through a global perspective. Motivation The effects of financial management reforms on efficiency have rarely been investigated. We contribute to the academic debate concerning both public-sector accounting reforms (implementation of international accounting standards and accrual-accounting systems) and governmental efficiency, merging two streams of literature that have not been investigated thoroughly. The test hypotheses H1: Countries that have implemented IPSAS are more efficient. H2: Countries that have implemented accrual-accounting systems are more efficient. Target population We used a sample of 22 European countries in the period 2010–2018. Adopted methodology We adopted a two-step approach: first, we created several efficiency indicators using different techniques; second, we implemented a model to test our hypotheses. Analyses Data Envelopment Analysis (DEA) technique, DEA with application of the bootstrap technique, and Order-m model Findings Accrual accounting was positively associated with efficiency while findings did not totally support an association with IPSAS.

Implementation of accrual accounting by the Indonesian central government: An investigation of social factors

Public sector accounting reforms have resulted in crucial changes in accounting reporting by the government, namely the adoption of accrual accounting in the public sector. This study looks into the social factors that led to the Indonesian central government implementing accrual accounting reform. This study adopted a quantitative approach using purposive sampling. Structural Equation Modeling (SEM) with PLS version 3.0 was used to analyze the data. The information for this study was gathered using a Google Form, which was used to send 70 questionnaires to government finance officials, chief accountants and auditors, and heads of accounting and auditing divisions in the Ministry of Finance. Seeing these social factors is expected to increase the effectiveness of the administration of accrual accounting implementation. The results showed that pressure from donors, pressure from the National Board of Accountants and Auditors (NBAA), political will, and audit process had an impact on the effectiveness of accrual accounting application (AAA). However, management change, regulatory matters, and a culture of transparency have no effect. In addition, the effective administration of AAA affects managerial accountability. This study implies that the effective application of accrual accounting depends on human-related concerns and culture. It is important to note that accrual accounting is more of a management reform that entails changes to bigger areas of institutional and accountability systems than merely adopting a new accounting technology.

The main challenges of Public Sector Accounting reforms and World Bank's Public Sector Accounting and Reporting (PULSAR) Program

PurposeThe purpose of this article is to contribute to a dialogue between practitioners and academics. The article discusses the relevance of Public Sector Accounting (PSA) reforms, including their key approaches and challenges, and the role of the World Bank's Public Sector Accounting and Reporting (PULSAR) Program.Design/methodology/approachThis is a practitioner's viewpoint, which reflects World Bank and PULSAR Program's publicly available documents and the opinions of a practitioner involved in the implementation of PSA reforms.FindingsImplementation of PSA reforms, based on the good international standards and practices, such as International Public Sector Accounting Standards (IPSAS), represents an opportunity for governments to significantly improve (1) the quality, reliability and comparability of their financial information; (2) decision-making process of the high-level public officials; and (3) the overall levels of fiscal transparency and public sector accountability and performance. There are several main approaches of the PSA reform implementation that could be observed across the globe. In practice, many countries and different jurisdictions face multiple challenges associated with PSA reform implementation. The World Bank and PULSAR Program in particular represent a valuable source of knowledge generation and sharing, and also acts as a catalyst for promoting PSA reforms in beneficiary countries.Research limitations/implicationsThe limitations of this article (which are also its strength in terms of fitness for purpose) are that as a practitioner's viewpoint, it provides a brief overview and personal judgements rather than an empirical analysis of developments applying a theoretical framework.Social implicationsA practitioner's engagement with academic supports increased understanding of the respective views leading to better outcomes for practitioners and academics working in the area of public sector accounting.Originality/valueThe article provides a practitioner's input on the relevance of PSA reforms and their key challenges.

Natural Capital Accounting in Accordance with Public Sector Accounting Reforms

Faithful information reporting on natural resources is essential for the formation of macroeconomic indicators, including such an important socio-economic indicator as domestic wealth. The new Federal Accounting Standard of Government Finance on Non-Production Assets, which became law on January 1, 2021, establishes uniform requirements for accounting and disclosure of information on natural resources in financial statements. The article considers the requirements for natural resources accounting, including their estimation in accordance with the new federal standard. The article reveals some theoretical and methodological problems of natural resources accounting and makes proposals for its further improving in public sector organizations. The article proposes a non-produced assets classification on the basis of their form — tangible and intangible non-produced assets. The author also suggests using the key rate of the Bank of Russia for discounting when determining a fair value of natural resources in an inactive market or in its absence.

The institutionalization of public sector accounting reforms: the role of pilot entities

PurposeThis paper aims at understanding the action of pilot entities, in order to ultimately infer about their role to the overall reform process of public sector accounting (PSA).Design/methodology/approachTaking the Portuguese case as a reference, the new institutional theory (isomorphism perspective) and institutional logics are used to explain the action and stance of pilot entities in the implementation process of reforms.FindingsPilot experiments are expected to provide feedback on the main difficulties felt in the implementation of a new PSA system, helping to define a global strategy to overcome those problems and to improve the system to be generally and finally put into practice. Nevertheless, entities seem to find it important to be pilots, more for individual advantages than for the common benefit of the reform as a whole. Therefore, in order for them to actually be important actors in the reform process, pilots need to be included in the decision process, better realizing the benefits of the new IPSAS-based system and be provided with the proper technical, human and financial support.Research limitations/implicationsThis research suffers from some limitations, namely concerning the use of questionnaires. The findings may, in some points, reflect the perceptions of the respondents and not the actual reality. Additionally, the respondents were not asked about any personal background factors, which may influence their answers. Also, they did not allow relating the new PSA system features with the way pilot entities (re)acted. In regard to the implications for practice, the study points to a need for decision-makers and external support bodies to work more closely with pilot entities in the overall design and implementation of PSA reforms. Pilot entities need to understand the importance and usefulness of changes, and reform authorities need to better recognize their institutional reality and the support they require. Only in this way, the use of pilots can make a difference in the implementation of PSA innovations.Originality/valueThis paper contributes to theory by adding to a better understanding of the role of the ones acting in the development and implementation of PSA innovations, enlightening on how pilot entities can act/react. Despite several studies on PSA reforms, very few so far have addressed pilot entities in particular, their attitude and actual contribution toward PSA reforms, and why. The case of Portugal as a frontrunner in adopting an IPSAS-based system within the EU helps contribute to that understanding in the setting of European countries.

Issues on Public Sector Accounting Reform in Jordan

Issues on Public Sector Accounting Reform in Jordan

The Institutionalization of a New Accrual-based Public Sector Accounting System: The Case of Cape Verde*

ABSTRACT This paper analyses the process of institutionalization of a new public sector accounting system. Taking the Cape Verdean Central Government as setting, it seeks to understand what have been the main factors interfering in the reform, how such action has led to the institutionalization of the system currently in force, and how it may determine future reforms. From the theoretical perspective of contingency, several stimuli drive the reform of public sector accounting in emerging countries. In Cape Verde, they have been: changes in the political regime, the dominating doctrine of business accounting, financial pressures, and requirement of a wider public sector reform. In the light of institutional perspectives, behaviors of seeking for legitimacy and presence of mimetic and coercive forces in the reforms, have been evident. This study makes other countries with similar contexts and under public sector accounting reforms, aware of how to promote and manage these processes successfully.

Public sector accounting reform in Latin America and Epistemic Communities: an institutional approach

Abstract Latin American countries have undergone a growing interest in international accounting standards. Several countries are making progress in the adoption of international standards driven by different internal factors as well as external dynamics. The role of experts in the design of public policies associated with international standards has been studied by the epistemic community theory, which is the theoretical framework used in this study to address the influence of different international organizations on the adoption of IPSAS in Brazil and Colombia. This paper discusses the isomorphic institutional pressure exerted over the governments of these two countries in order to meet an international standard considered to be adequate. Meanwhile, the emerging trend towards the adoption of IPSAS in Latin America continues to grow, although some obstacles to achieving the goals defined in the reform arise.

The Public Sector Accounting Reform of 2014 in the Light the Experiences of the Local Governments : A Pilot Project to Explore the Problems

The renewal of public finance accounting in 2014 can be labelled as one of the greatest changes in the Hungarian public sector. The accounting information system used previously had significant shortcomings, which ultimately led to disruptions in the operation of the local government system and its indebtedness. The aim of the research is to explore the experience of the local governments regarding the process of the introduction of the accounting reform and the emerging system. In the research, interviews and small group sessions were conducted with 18 experts from 8 institutions. Based on what was said, the transitional period was a turbulent process, and compliance with the new regulation tested the adaptability of local governments. The opinions regarding the new system are heterogeneous. According to the involved experts, the new approach can provide a more true and fair view and present up-to-date information about the given organisational unit. However, the introduction of the new system was not fully successful as the new system proved to be more complex and more difficult to handle. In addition, it was also revealed that in most cases the data of the accounting information system fail to fulfil their intended purpose in financial management.

The role of public-sector accounting in controlling corruption: an assessment of Organisation for Economic Co-operation and Development countries

This study adds new insights to the academic debate on the effectiveness of both accrual-basis systems and the adoption of harmonised accounting rules at the international level by considering an additional perspective: their effect on corruption. This study investigates a sample of 33 Organisation for Economic Co-operation and Development countries for the period 2010–2014, creating a panel data set that allows the taking of an international comparative approach. The results indicate that corruption is reduced as governments advance in public-sector accounting reforms, adopting International Public Sector Accounting Standards, or implementing accrual-basis systems. Points for practitioners Our findings show the relevant role played by public sector accounting reforms in reducing corruption. Concretely, International Public Sector Accounting Standards implementation and accrual-accounting adoption can attenuate the information advantage of politicians towards citizens, reducing the level of corruption. This article contributes to the debate concerning the institutional arrangements that should be implemented to reduce corruption.

Legitimating change in the public sector: the introduction of (rational?) accounting practices in the United Kingdom, Italy and Austria

ABSTRACTThis paper explores the deployment of rhetorical legitimation strategies during public-sector accounting reforms by investigating how organizational actors justify related changes in the central governments of the United Kingdom (UK), Italy and Austria. The study shows that changes are largely legitimated (and rarely delegitimated) by key actors, with authorization strategies dominating. Country differences and actors’ professional backgrounds also impact upon the use of legitimation strategies, with those from an accounting background and working in the UK being more likely to justify change in terms of rationalization and normalization. Italian and Austrian actors more frequently resort to authorization strategies to explain accounting change.

The power of language in legitimating public-sector reforms: When politicians “talk” accounting

Language can play an essential role in shaping how accounting reforms and the information around them are communicated and legitimated. However, scant consideration has been given to study what happens when politicians are the decision makers of accounting changes. This paper explores the political use of language by investigating how the Members of Parliament discuss about public-sector accounting reforms, and deploy different rhetorical strategies to legitimate or de-legitimate them. Through the analysis of Italian parliamentary debates in the 1990s and 2000s, this study highlights how the use of language can facilitate the exercise of power by deploying arguments rhetorically dominated by authorisation and moralisation strategies. The rhetorical arguments brought forward allow politicians to disguise their loss of power in favour of the European Union, depicting their actions and proposals as necessary and/or in favour of the public interest.

Italian Public Sector Accounting Reform: A Step Towards European Public Sector Accounting Harmonisation

Abstract This paper discusses post-New Public Management (NPM) approaches to current patterns of public management reforms as a path-dependent phenomenon and as proposing corrective solutions to unintended shortcomings of NPM-inspired reforms. Public sector accounting reforms are seen as developing coherently with general public managerial reforms, and as showing a shift in the prioritised purposes assigned to public accounts in line with the overall design of projected reform-making. EU public sector accounting harmonisation is interpreted in this framework, and the Italian experience of public sector accounting reform is discussed in the light of EU membership. Particular emphasis is given to the likely overlap between national and government accounting due to increasingly shared purposes, whereby the former acquires a functional supportive role to the latter. Considerations on the drivers, as well as on the technical solutions of the new Italian public sector accounting system, suggest that Italian public sector accounting has taken a step in the direction of European public sector accounting harmonisation. Finally, the Italian case provides evidence of post-NPM-like accounting reform, contributing to the scanty empirical research on this topic.

Public Sector Accounting Reform at Local Government Level in Indonesia

AbstractThis paper describes and analyses the challenges encountered in attempting to reform public sector accounting in Indonesia, the main objective of which is to combat corruption and thus help improve governance. Our observations suggest that this reform has been seriously hindered by a lack of staff with adequate accounting skills — a problem exacerbated by the decision to continue to prepare old‐style cash‐based reports alongside the new accrual‐based reports. Our key contribution is to demonstrate the danger of rushing to copy public sector financial management techniques from quite different country contexts, especially when there are significant differences of opinion as to the appropriate design of these reforms among the influential policy‐making agencies.

Public-Sector Accounting Reforms in the Post-Soeharto Era

Public-Sector Accounting Reforms in the Post-Soeharto Era

Survey of recent developments

In the recent legislative elections the Democrat Party of President Susilo Bambang Yudhoyono (SBY) was by far the most successful. Support for other major secular-nationalist parties fell significantly, as did that for the Islamic parties as a group. Two new parties led by former generals also performed relatively poorly. At the time of writing SBY seemed the likely winner of the forthcoming presidential election, supported by running mate Boediono, the former governor of Bank Indonesia. Indonesia's performance during the global financial crisis has been vastly better than during the Asian financial crisis, and superior to that of most other countries in the region. Output growth remained positive through Q1 2009, although there were signs of heightened caution within the business community. Deft monetary policy saw inflation decline significantly, with little negative impact on output growth or the banking sector. Much of the earlier declines in the financial markets had been reversed by mid-June. Successful management of exchange rate policy in late 2008 and early 2009 raises the question whether Indonesia would fare better with a more genuinely floating exchange rate and a much lower level of international reserves. Economic outcomes during the SBY administration fell well short of the president's 2004 election campaign promises, but were comparable with those under former president Megawati, reflecting the great policy similarities of the two regimes. A key feature of the presidential election campaign has been the use of the term ‘neo-liberal’ to attack one's opponents. It has been implied that those following ‘neo-liberal’ policies favour the business sector and foreigners over the people, whereas the real issue is what types of policies are more likely to benefit the Indonesian people as a whole. The debate provides the opportunity potentially to resolve long-standing disagreements as to the relative efficacy of free market- and interventionist-type policies. Public sector accounting reform is an important aspect of efforts to improve governance. Newly introduced accounting standards require a shift to double-entry accounting, and away from the single-entry system inherited long ago from the Dutch. This requires the listing of government entities’ assets and liabilities in a balance sheet, and should lead to far greater accuracy in government financial reporting. In turn, this has the potential to be a powerful anti-corruption instrument. But progress is significantly limited by a severe shortage of accountants in the public sector, and by dysfunctional personnel management practices.

OBSTACLES TO PUBLIC SECTOR ACCOUNTING REFORM IN INDONESIA

This paper draws attention to the importance of improving the quality of public sector accounting in Indonesia, in line with the aims of reformasi (reform) and demokratisasi (democratisation), and in the context of decentralisation. It highlights a continuing lack of progress in reform of government accounting. This is attributable partly to a lack of interest in and understanding of the issues among newly empowered electors. Successive governments have been reluctant to push hard for accounting reform, not least because improved accountability poses a significant threat to politicians’ and bureaucrats’ overall income levels. In addition, current human resource management practices in the public sector have resulted in a shortage of accounting skills, and without these there is little prospect of successful reform in this area. A possible solution may be to establish a parallel civil service specifically to undertake the accounting functions of government.

The Impact of New Zealand’s Public Sector Accounting Reforms on Performance Control in Museums

Accounting by most New Zealand museums was subject to public sector reforms requiring private sector ‐style financial reporting, and service performance reporting. This study into the impact of the reforms on how museum managements pursue successful performance found museums adopting a more accounting‐oriented approach to planning and evaluation. Service performance reporting has facilitated the periodic evaluation of non‐financial targets by managements, but as currently constituted the reporting model is flawed, particularly in its implications for essential long‐term resource capacity of museums. This threatens its effectiveness for promoting good performance. Non‐accounting based professional practices also have a role in museum success.