Public Sector Accounting Systems Research Articles

Public Sector Accounting System-A Conceptual Analysis

Public sector accounting is the system of accounting that involves recording and maintenance of books of accounts by the government authorities on their financial performance. There are three categories of organisations normally working in any environment: public, private and non-profit concerns. Each of these organisations are working on a different motive, for instance private sector organisations run for making more profit for their long-existence, public organisations or governments work for socioeconomic sustainable development of the country, where as NGOs are for rendering the services to the society at large. If this is the reality, it is clear that the financial transactions of each of these organisations are different from each other. So it is not possible to record their transactions as per single accounting standard. Hence, it is necessary to have different accounting standards applicable to these organisations individually. Government accounts must be available to the public in a transparent manner. To ensure this, it is necessary to have standards which are applicable to public sector to account for their financial transactions. The present paper is intended to analyse the public sector accounting system at the global level and in Indian context.

Developments and Challenges in Public Sector Accounting

In Public Sector Accounting system, steps have been initiated for shifting from cash system to the accrual system of accounting together with double entry system of accounting but the complete adoption is a long process and will take time. In this study an attempt is made to discuss the concept of public sector accounting, history of the public sector accounting in India, present status of public sector accounting in India and other countries. This article also discusses major developments and challenges in complete adoption of accrual system in India and other countries. This article concludes with the present status of public sector accounting i.e. a mix of cash system and accrual system in some organizations, full adoption of accrual in some organizations and some are still working on cash system of accounting. There are many Challenges in the complete adoption of accounting standards as per requirement of public sector and full conversion to accrual system and all these challenges needs special attention.

Public Sector Accounting System in India- A Study

Public Sector Accounting is the process of recording, analyzing, classifying, summarizing, communicating and interpreting financial information of Government organization. Present Government Accounting System is primarily based on Cash basis of accounting. It is conducted by Government Accounting Rules, 1990 (GAR) framed under article 150 of the Constitution of India. GASAB has developed accounting standards under cash basis known as Indian Government Accounting Standards (IGAS) for the existing accounting system, and standards for accrual basis under Indian Government Financial Reporting Standards (IGFRS). Regarding the various reforms, Many State Governments have agreed in principle to introduce accrual accounting system in their Government organizations. Most of the developed countries have used accrual basis of accounting in their Government organizations. We can say that if the government is adopting accrual basis of accounting in a phased manner over a span of 10 years, it is useful for all the stakeholders in the country.

Accountability, maps and inter-generational equity: evaluating the Nigerian oil spill monitor

The Oil Spill Monitor (OSM) is an innovative public sector accounting system intended to improve the regulation of oil pollution in the Niger Delta through greater transparency and stakeholders’ engagement. The Nigerian OSM, an online accounting and geographic information system, was set up by non-governmental organizations before becoming part of the regulator’s accountability system. Problems with data quality, regulatory enforcement and remediating practices meant that improved accountability and stakeholder engagement were necessary but not sufficient in this case.

Evaluating the Implementation of a Mandatory Dual Reporting System: The Case of Indonesian Local Government

AbstractInformative and transparent financial information in the public sector is crucial for improving public sector management and eradicating corruption. Given this, Indonesia has reformed its public sector accounting, reporting and accountability systems by implementing a dual reporting system known as ‘cash towards accrual’, following similar reforms in developed countries. Drawing on the experience of five local governments (districts) in Indonesia, this study finds that the implementation of the dual reporting system has helped local governments to produce transparent and informative reports. However, the accrual‐based contents of the dual reports produced by the new reporting system are underused for decision making. In addition, there has been a significant increase in costs associated with the implementation of the new accounting regime in the jurisdictions studied. The study also finds that the ability of the users to use information generated by the new accounting system is more important than just a legal and mandatory requirement to use the new system.

Local government administration systems and local government accounting information needs: is there a mismatch?

After several years of reforms inspired by the New Public Management approach, public sector accounting and performance measurement systems continue to differ among countries. Based on previous literature and data collected through a questionnaire, we perform an exploratory study on the relations between local government administrative systems and local government accounting information needs in a sample of European countries characterized by a legalistic orientation. Our results reveal that there is a frequent mismatch between the needed accounting and performance measurement information for internal and external purposes assessed on the basis of the administrative system in place and the accounting information and performance measurement information required by the law for decision-making and accountability. Moreover, as the results reveal, legislation in European local governments only sporadically stipulates the information suitable to satisfy the information needs created by the different levels of financial and organizational autonomy of local government administration systems to be available.

Mental models and cognitive discomfort

PurposeThe purpose of the study is to examine whether public servants as users of accounting information are responsive to changes in the content of an accounting report and, if so, how responsive they are.Design/methodology/approachThe study applies a theoretical framework, linking accounting information and accounting use by focusing on users’ “mental models”. The empirical context for the study is a municipality located in Northwest Russia. Three public servants were followed over several days for the purpose of studying their use of a formal accounting report. Later, those users were also presented with a different version of the same accounting report that was re-constructed by the researcher based on normative accounting theory. The study documents the responses of public servants and presents those in a narrative form.FindingsThe study reveals that though the original formal financial accounting report is extensively used, the public servants mostly reject the usefulness of the modified version of the report. The modified accounting report puts public servants in a “discomfort” zone, where the users’ mental models come in conflict with the information in the modified report. Following that, the study uncovers that the use of the traditional accounting report is based on three different mental models developed by users over time and guiding the use of accounting. Those mental models are described by three metaphors: “balanced matrix”, “water tank” and “fair rules”.Originality/valueThere is an unreasonable expectation that change in the public sector accounting system from cash toward accrual information will improve the quality of decision-making by public servants. The claim needs evidence that change in the accounting information supply will actually lead to change in information use. The paper demonstrates that change in use requires more substantial change in the users’ mental models. This change is difficult, time-demanding and requires the development of tailor-made training programs. The paper is also a response to van Helden’s (2016) call for more observational studies that can give a more accurate picture of use.

Introduction and Rationale for IPSAS and IFRS Implementation

The global wind of economic integration has now reached the doorstep of accounting profession with intense pressure on nations state to apply unified accounting Standards in government undertakings. This effort could be seen as a centaury reform to the profession. The reform agenda was perceived as way forward towards harmonizing public sector with private sector liked system and principle of financial reporting, which for long experts had been advocating on the believed that both sectors should operate at the same level of efficiency. The need for high quality standards to enhance sound and consistent financial reporting and the fact that the inefficiency and ineffectiveness of public sector extended to a belief that public and private sectors did not have to be managed in fundamentally different ways, fostered a wide-ranging discussion about the harmonization of public sector accounting systems and their convergence towards the private sector financial reporting standards. There is no doubt that applying universal high quality standards can promote efficiency, transparency which in long run may promote public accountability. However, the process of adopting a uniform set of accounting standards, as a part of the international convergence of financial reporting systems, is perceived as a very complex, time consuming and difficult task. The trend of international convergence and harmonization policy of private sector accounting and financial reporting standards has also made the influence on the process of entire public sector reform that has been progressing worldwide. According to Ball (2006), since accounting is shaped by economic and political factors, harmonization of accounting standards and practices is almost an inevitable consequence of the increasing integration of markets and policies. This has been witnessed by the mandatory adoption of the International Financial Reporting Standards (IFRS) in several countries in the last decade. The International Accounting Standards Board (IASB) is a private organization of international scope established in 1973. It has issued a set of standards to be used when preparing financial statements, namely 41 International Accounting Standards (IAS) and 13 International Financial Reporting Standards (IFRS). The IAS are standards issued by the IASB by 2001 and IFRS are standards issued after that year. Nevertheless, currently, the expression IFRS is commonly used alone to designate this set of rules (IAS and IFRS). This IFRS adoption worldwide is a significant economic transformation and it gave rise to a major line of research. This paper reviews the empirical literature on the effects of IFRS adoption on financial management and economic transformation with the focus on Cameroon. Empirical research allows evaluating the impact of changing standards on the financial reporting quality, as well as the effects of such a change on the capital market (Douala Stock Exchange), it can also contribute to understanding the factors that influence the consequences of change. This knowledge is important for regulators in Cameroon that are preparing to change standards, but also for national regulators that have already done it when considering ways to improve IFRS implementation. This paper will revisit some cases studies encouraging the implementation of IFRS and IPSAS worldwide and attempt to domesticate the concepts in Cameroon. The first part provides the rationale of IFRS and IPSAS implementation, while the second part gives some international cases studies on IFRS implementation. The last part of the paper gives a roadmap for effective and efficient implementation of IFRS in Cameroon.

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.

The Reporting Entity in Private-Public Accounting Harmonisation. Is Control Enough for the Local Government Consolidated Financial Statements?

The European Commission initiated a discussion on the expediency of using the International Public Sector Accounting Standards (IPSAS), based on the IAS/IFRS, as a common base for harmonizing the public sector accounting systems of the member states. However, literature suggests that accounting is not neutral with respect to the economic, social and political dimensions. In the perspective of evolution of the accounting regulation outlined, balanced between accountability, with the need to represent phenomena for reporting pur-poses, and decisionmaking issues, which concentrates on the quantitative importance of the values, the paper aims to analyse the effects of the application of different criteria for the definition of the reporting entity of the local government consolidated financial statements (CFS). The Italian PCA 4/4, the test of control and the financial accountability approaches are examined. The evidence that emerged from the case studies examined identifies several criticalities in the Italian PCA 4/4 and support the thesis that the financial accountability approach is more effective in providing a complete representation of the public resources entrusted to and managed by the group, whereas the control approach better approximates quantification of the group results in terms of central government surveillance. The analysis highlights the importance of the post implementation review period and the opportunity to contextualize the adoption of the consolidated financial statement in the broader spectrum of the accounting harmonization process, participating in the process of definition of the European Public Sector Accounting Standards (EPSAS).

THE CHALLENGES CONFRONTING PUBLIC SECTOR ACCOUNTING AND FINANCIAL MANAGEMENT: A PERSPECTIVE OF PROFESSIONAL ACCOUNTING PRACTICE IN NIGERIA

The public sector is that sector of the economy that is organised and operated by the government, to cater for the citizenry and composed of ministries, parastatals, Agency & municipal. It is distinct from the private sectors that are built on profit orientation. Public sector accounting system is unique and meant to record all financial information and transaction of government activities and transaction. It is described as a process of recording, communicating, summarizing, analyzing and interpreting government financial statement Adams (2004) and as the value of monitory operations increase, there became the need to introduce professionalism in financial reporting. This was to curb financial statement anomalies, falsification and engineering that became the other of the day in recent time of which both directors, administrators, top political personalities and professional accountants and auditors were indicated, which calls for over haul of the public sector financial administration and the need for adequate capacity building within the two major accounting professional bodies ICAN and ANAN and the recent recognition of CPA Nigeria in the sector. Chi square was used to test the validity of the research hypothesis which reveals that challenges confronting public sector has impact on financial statement which is alternative hypothesis (HI). A simple questionnaire were administered to collect data used for analysis, the study investigated the respondents on five characteristics namely Gender, Age group, Highest level of Education, Professional qualification to mention, which O cells (0%) have expected frequency of 21.8 while b. 0 cells (0%) have expected frequencies less than 5, and the minimum expected cell frequency 43.5. It was revealed that public sector accounting and financial administration has witnessed a lot of storm of financial mismanagement, maladministration, and financial re-engineering which has devastated the economy and made many citizen unemployed, hungry and unstable. It was recommend that there should be adequate capacity building with the professional accounting bodies with a good system of financial administration reform with global policy such as IPSAS backed with restructure of procedure to strengthen professional independence as to ensure accountability. JEL: H83, M41, M42, H20 Article visualizations:

Running the Obstacle Race towards Public Accounting Harmonization in EU-28: A Temporal Study

The European Commission has recently started a project aimed at harmonizing EU public accounting systems through the development of European Public Sector Accounting Standards (EPSAS). The project is a response to the lack of coherence between primary public-sector accounts and government financial statistics, in order to strengthen the economic governance structure in the euro area. This paper aims to show that the divergences (adjustments) between the measures of surplus/deficit in governmental (working balance, WB) and national accounting (net borrowing lending, NBL) vary over time to provide future research opportunities around the factors that, affecting temporal divergences between these measures, enhance fiscal fragility within the EU public sector accounting system. By analysing the Excessive Deficit Procedure (EDP) tables issued by 28 EU countries over the period 2010-2015, the paper uses novel approaches in measuring adjustments based on network analysis and regression models, showing that they are significantly different over time.

Public Sector Accounting Policy Reform in the Czech Republic: Experience from Local Governments (pilot)

The Czech Republic has recently introduced and implemented public sector accounting reform. The aim of the reform was to make the Czech public finance system more transparent, efficient and realistic. The authors of this reform, in fact, intended to bring public sector accounting and public financial management closer to private sector practices that, from their point of view, fulfil the reform goals previously mentioned. After a few years of functioning in this new accounting environment, certain associated points and problems have arisen that have to be tackled. The aim of this paper is to describe public sector accounting reform and its post-implementation process to current state in the Czech Republic based on pilot empirical research mirroring the opinions and experience of municipal Chief Financial Officers and its comparison with similar examples from other countries. The pilot sample for this research consists of municipal Chief Financial Officers and the research method is based on questionnaires and interviews with them. Results and findings achieved by this pilot research show that the reform of the new public sector accounting system in the Czech Republic has been developed in very extended scope in comparison with other countries, estimated costs perceived by users (local governments) are prevailing over advantages and benefits and thus there was identified certain degree of scepticism which may disrupt further efficient and positive use of this new accounting system.

Accounting representations of public debt and deficits in European central government accounts: An exploration of anomalies and contradictions

This article provides a theoretical view on European general government accounting, focusing on overarching accounting principles and models, as well as their consequences on the working and the very existence of public service activity. Our analysis applies to illustrative cases concerning: meaning of public deficit on accruals basis with a view to nature and use of public debt for redistributive purpose; the strange case of taxation on public sector employees’ remunerations and benefits; accounting for employees benefits provisioning; and measurement of public debt and deficit following European Union fiscal supervision of Member States, with specific attention to the Excessive Debt Procedure (EDP). This analysis develops a framework to assess the consistency of accounting models with non-lucrative missions of general interest that belong to public administration. It shows how budgetary accounting does (and should) complement accruals-based accounting in public sector accounting systems, asking to embed public sector accountability in a public service institutional order that is specific to public administration.

Harmonizing public sector accounting in Europe: thinking out of the box

A broad debate about the harmonization of public sector accounting standards in Europe is underway. The authors provide arguments in favour of harmonization, but they also acknowledge the existing pluralism and diversity by taking stock of the state of play in 14 European countries. The paper makes a proposal for a way forward for policy-makers and standard-setters, in which the benefits of harmonization can be obtained without obliging EU member countries to necessarily abandon their current public sector accounting systems.

Public accounting history in post-communist Romania

Having a longitudinal approach of the Romanian public accounting system’s evolution, this historical study proposes the development of a framework in order to assess in a descriptive manner the change of public accounting and its implications for Romania, a European emerging country. The evolution from cash accounting to accrual accounting took place during three time periods within the timeframe 1991–2015. For each of these time periods we investigated influential factors such as period, place, people, practices, propagation, products, and profession. The study shows that under the influence of the international managerial public reform and the internal factors analysed, the public accounting system shifts from the old values of the post-communist period to new reference bases such as International Public Sector Accounting Standards (IPSAS). The results of the study place Romania, an East European country, on the map of international public sector accounting systems as a relatively new arrival but with serious intentions of integration.

Public sector accounting, accountability and austerity: more than balancing the books?

Purpose – The era of austerity that has followed the outbreak of the global financial crisis has posed a myriad of challenges for public services, with demands for major cuts in government spending, the delivery of balanced budgets and zstrategies for deficit reduction. The purpose of this paper is to consider how public sector accounting and accountability systems are implicated in the development and implementation of austerity policies. Also, it pinpoints a range of issues that accounting researchers need to be contemplating on the subject of accounting for austerity. Design/methodology/approach – Interdisciplinary literature review, coupled with an illustrative discussion of the changing nature of public sector accounting practices under austerity. Findings – Despite the significance and scale of austerity, public sector accounting research on the topic is in its infancy, with the prominent focus being on how accounting technologies are used to manage austerity. There have been few attempts to debate critically the construction of austerity and to provide alternative accounts of austerity. Accounting for austerity, especially in terms of its implications and consequences, is far too complex and challenging to be categorized as simply seeking to “balance the books”. Research limitations/implications – As an academic community, we need to be developing understanding of public sector accounting research under austerity across different organizational levels and contexts. Also, we should be framing the accounts of austerity in ways that respect and build on a sound understanding of the extensive available interdisciplinary research on this topic. Key research questions to address include: how is accounting shaping constructions of, and impressions, attitudes and behaviors toward, austerity and the status of governments and public service organizations? What do such patterns of development mean for the roles and contributions of public sector accountants under austerity? Are accounting systems destined to be used primarily as vehicles for cost-cutting, or can they be used as engines for growth and for thinking about public service responsibilities in more socially inclusive forms? Originality/value – Accountings of austerity in the field of public sector accounting research have been worryingly limited. This paper and the papers in this special issue of AAAJ address such failings, revealing a range of critical implications and challenges of austerity policies for public sector accounting research.

The effect of IPSAS on reforming governmental financial reporting: an international comparison

Over the past 25 years, significant New Public Management (NPM) reforms, particularly towards accrual accounting, have characterized the public sector in many countries. The diversity in public financial information systems created a need for harmonization, resulting in the elaboration of the International Public Sector Accounting Standards (IPSAS). Despite their relevance, little is known on the adoption process of IPSAS. This study aims to examine to what extent IPSAS(-like) accrual accounting is adopted in central/local governments worldwide as well as to investigate which factors affect the differing level of their adoption. Methodologically, a specific questionnaire constructed to obtain relevant information from local experts was sent worldwide to a sample of countries. The study reveals an important move to accrual accounting, particularly to IPSAS accrual accounting, for which there still remains a level of reluctance mainly in central governments, especially in countries where businesslike accrual accounting has been developed. Points for practitioners IPSAS have become the international reference for the development of public sector accounting systems worldwide. For this reason, IPSAS deserve the attention of accounting policy-makers, practitioners and scholars. The current study offers a comparative study of the level of adopting IPSAS worldwide as well as an explanation of the reasons behind the differing levels of adoption. The present study reveals that the transition towards IPSAS necessitates a long period of implementation whereby existing local business accounting regulations hinder jurisdictions from implementing international standards. The explanatory findings provide input for reformers and legislators when designing and developing financial information reforms.

EPSAS and the Unification of Public Sector Accounting Across Europe

AbstractIn March 2013, the EC started a project aimed at harmonizing accrual-based public sector accounting systems through a set of harmonized accrual-based public sector accounting standards. The entire project is based on the assumption that the “superiority of the accruals principle, whether for macro or micro fiscal monitoring, is indisputable” (

Governmental Accounting and Austerity Policies: Accounting Representations of Public Debt and Deficit in Europe and Abroad

This article provides a theoretical view on European Public Sector Accounting Standards (EPSAS), focusing on overarching accounting principles and models, as well as their consequences on the working and the very existence of public service activity. Our analysis applies to illustrative cases concerning: meaning of public deficit on accruals basis with a view to nature and use of public debt for redistribution purpose; the strange case of taxation on public sector employees’ remunerations and benefits; accounting for employees benefits provisioning; and measurement of public debt and deficit following European Union supervision of Member States. This analysis develops a framework to assess the consistency of accounting models with non-lucrative missions of general interest that belong to public administration. It shows how budgetary accounting does (and should) complement accruals-based accounting in public sector accounting systems, asking to embed public sector accountability in a public service institutional order that is specific to public administration.A revised published version is available at DOI: dx.doi.org/10.1016/j.accfor.2016.05.003