New development: The conceptual underpinnings of international public sector accounting

The conceptual underpinnings of accounting standards are potentially very important for the future of public sector accounting internationally. The authors explain why and comment on the implications for public sector accounting.     

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.     

The first steps towards harmonizing public sector accounting for European Union member states: strategies and perspectives

This paper analyses the process that led the European Commission to the decision to develop European Public Sector Accounting Standards (EPSAS) for harmonizing public sector accounting practices within the European Union. The paper finds that there was limited scope in terms of stakeholder participation in the public consultation that served as a basis for the decision. In addition, the decision to adopt EPSAS for EU member states raises questions on the relationship between regional and global governance in the area of public sector accounting.     

A theoretical basis for public sector accrual accounting research: current state and perspectives

ABSTRACT

Public sector or government accounting has been the subject of many research endeavors. However, scholars have repeatedly criticized the lack of a consistent and well-defined theoretical basis for international research. So far, most researchers have drawn from various streams of theoretical perspectives with often unsatisfactory results. The goal of this paper is to put forward the International Public Sector Accounting Standards Board’s (IPSASB) Conceptual Framework as a point of reference for establishing a better-fitting theoretical basis for public sector accrual accounting research.     

Legitimating the standard-setter of public sector accounting reforms

ABSTRACT

This paper shows how the Brazilian Treasury has developed strategies to build legitimacy in a civil law context where the legislature left a vacuum regarding the accrual accounting standard-setting mandate. While the accounting ‘rule-enforcers’ neglected to require compliance with the rules, the ‘rule-makers’ co-operated with each other to build normativity for accounting rules and eventually attempted to develop new forms of enforcement, which the ‘rule-appliers’ lobbied against.     

New development: The practical relevance of public sector accounting research; time to take a stand

ABSTRACT

This article discusses three major themes that challenge researchers to focus more on practice-relevant public sector accounting research: How to combine practice-oriented research with being an impartial scholar? Which types of research themes have practical relevance? How can research contribute to societally-relevant issues?     

Sustainability accounting regulation in Spanish public sector organizations

In 2011, the Spanish government made sustainability accounting mandatory for public sector organizations. This paper documents why, despite the new legislation, the quantity and quality of sustainability accounting practices remains low.     

Deadlines and software: disentangling local government accounting reforms in Brazil

ABSTRACT

This paper shows how ongoing accounting reforms in Brazilian local governments were affected by a shift from a universal to a gradual implementation approach. Deadlines being postponed led to a decrease in local governments’ willingness to reform. This effect varied according whether the accountants involved depended on commercial software to operate a particular accounting policy. An important finding from this research was that software providers are to some extent setting the IPSAS implementation agenda in Brazil.     

How numbers of the future are shaping today: The role of forecasts and calculations in public sector strategic thinking

This article examines the role of numbers in forming a city strategy in the case of Gothenburg, Sweden. The article illustrates how numbers make people act and react and shape the strategy process. The study is situated between the theoretical fields of accounting and strategy processes in cities. By relating them to the concept of ‘governmentality’, numbers are seen as helping render the city governable. Because strategizing is seen as concerning the future, the actors involved in drafting the strategy feel free to challenge historically institutionalized practices. The effect is paradoxical: the future‐looking strategy process becomes a forum for solving current problems.     

New development: Integration of budget and governmental accounting in Mexican states

ABSTRACT

Mexico recently introduced an accounting–budgeting framework compatible with the International Public Sector Accounting Standards (IPSAS). This article discusses the implementation of this framework, including the harmonization of information for the functional, administrative and economic budget categories for all Mexican states and for Mexico City. The author analysed public accounts and budgets prepared under the framework’s information requirements, as well as assessing the harmonization of accounts between the local, state and national levels of government. The results show an increase in both the amount and the harmonization of the public expenditure information being reported. This paper contributes to the literature of harmonization between financial reporting and budgeting processes (Dabbicco, G., & Mattei, G. (2020 Dabbicco, G. , & Mattei, G. (2020). The reconciliation of budgeting with financial reporting: A comparative study of Italy and the UK. Public Money & Management , 1–11. doi: 10.1080/09540962.2019.1708059 [Taylor & Francis Online], [Web of Science ®] , [Google Scholar]). The reconciliation of budgeting with financial reporting: A comparative study of Italy and the UK. Public Money & Management, 1–11).     

Publicly traded versus privately held: implications for conditional conservatism in bank accounting

Compared with privately held banks, publicly traded banks face greater agency costs because of greater separation of ownership and control but enjoy greater benefits from access to the equity capital market. Differences in control and capital market access influence public versus private banks’ accounting. We predict and find that public banks exhibit greater degrees of conditional conservatism (asymmetric timeliness of the recognition of losses versus gains in accounting income) than private banks. We predict and find that public banks recognize more timely earnings declines, less timely earnings increases, and larger and more timely loan losses. Although public ownership gives managers greater ability and incentive to exercise income-increasing accounting, our findings show that the demand for conservatism dominates within public banks and that the demand for conservatism is greater among public banks than private banks. Our results provide insights for accounting and finance academics, bank managers, auditors, and regulators concerning the effects of ownership structure on conditional conservatism in banks’ financial reporting.

Implementing IFRSs in the public sector: caveats from a case in the UK

This article assesses the implementation of International Financial Reporting Standards (IFRSs) in the United Kingdom public sector. Possible motivations for the move are suggested before presenting the findings of interviews with, and a survey of, key personnel. The primary issues discussed are the rationale, challenges and costs associated with implementing IFRSs. The article concludes that the policy appears to have been implemented against a backdrop of indeterminate benefits and to be a continuation of New Public Management-style reforms with their emphasis on public sector professionalization and the language of accountancy.     

Financial reporting standards for the public sector: New Zealand's 21st-century experience

New Zealand was seen as world-leading when public sector financial reports were prepared using sector-neutral accounting standards from 1995 onwards. The decision in 2002 to adopt IFRS was disruptive, effecting new understandings of ‘sector-neutral’, and the standard-setter's approach was unsuccessful in meeting public sector users’ needs. The development of a new strategy finalized in 2012 has created a multi-standards framework, including adapted IPSASB standards applicable from 1 July 2014. While neutrality is still prized, it is within a framework of meeting users’ needs. This paper traces the influences expediting these changes.     

IPSAS in Latin America: innovation,isomorphism or rhetoric?

ABSTRACT

Over the past 30 years, many initiatives have been undertaken to reform public administration in Latin American countries. Among other aspects, the reforms seek to improve the transparency and accountability of the public sector by modernizing public accounting and budgeting systems. The adoption of accrual accounting in the public sector has been seen as an innovation and it is driven by the implementation of IPSAS. This paper sheds light on the process of reform of public financial management in Latin America and the state of implementation of IPSAS. The paper analyses the driving forces for adopting or adapting IPSAS, as well as the obstacles and challenges in doing so.     

A comparison of debt measures in fiscal statistics and public sector financial statements

This paper examines the differences between measures of debt used to analyse a government's financial position. It compares the statistical and accounting approaches and presents a way of reconciling the two statements: thereby identifying possible convergence between GPFS and GFS. In doing so, it contributes to the ongoing international debate on harmonization of public sector accounting standards, such as IPSAS/EPSAS and GFS.     

The usefulness of accrual-based surpluses in the Canadian public sector

This paper investigates the usefulness of accrual-based surpluses for predicting future cash flows and surpluses in the context of the Canadian public sector. We provide evidence that surpluses incrementally enhance the ability of operating cash flows to predict future cash flows and surpluses. Analysis of our accrual quality model illustrates that accrual accounting is useful in the public sector for mitigating the noise in operating cash flows. We also find that decomposing surpluses into operating cash flows and accruals enhances the ability of surpluses to forecast future cash flows and surpluses, indicating that aggregate and disaggregated surpluses are positively related to both relevance and reliability. Our test results do not indicate the presence of conservatism in the Canadian public sector, and confirm that the usefulness of surpluses in making predictions is independent of selected control factors.     

Public service motivation and public sector employment preference: Comparing Italian and British students

ABSTRACT

Previous research has suggested that an individual’s public service motivation (PSM) is positively linked to a preference for public sector employment. The authors explore this link using a sample of British and Italian undergraduate students. They found a positive relationship between PSM and public sector job preferences among Italian students but not with the British students. The UK has implemented more NPM-style reforms than Italy and this could be impacting on public sector recruitment. Implications for recruitment and retention the public sector are discussed.     

Acting in the public interest: accounting for the vulnerable

This article seeks to initiate research around the potential roles of the accounting profession for tackling the challenges of the vulnerable. Its backdrop is the current consideration of the profession’s public interest role. The importance of dialogue around the public interest role is evidenced by the increasing levels of vulnerability, even within developed countries. Accounting underpinned by broader values has potential to provide knowledge of issues relating to the vulnerable. However, the accounting profession has only engaged with such potential to a limited degree. The article overviews existing knowledge and areas within which more research is required. In order to illustrate the potential for such research, initial findings from two case studies of homelessness (an example of the vulnerable) provide evidence as to the importance, and challenges, of accounting for the vulnerable. This article highlights the need to: take a principles-based approach in defining the vulnerable, undertake an accounting that reflects the lives they value, acknowledge that there are different ways for addressing these issues, recognise that an absence of perfect numbers should not become a barrier to action, and that accounting for the vulnerable is one way that the accounting profession may discharge their public interest roles.     

Dissemination and institutionalization of public sector accounting reforms in less developed countries: A comparative study of the Nepalese and Sri Lankan central governments

One of the major issues in the developing world today is the alleviation of poverty and it is acknowledged that public sector accounting has a key role to play in this through the effective allocation of resources. Implementing public sector accounting changes in developing nations has been a key agenda of international organizations since the 1980s. This study, drawing on the ideas of new institutionalism, strives to explore the implementation of public sector accounting reforms in two less developed countries (LDCs), namely Nepal and Sri Lanka. The empirical findings of the study demonstrate that, while internationally propagated public sector accounting reform ideas have not gone beyond the trial/proposal stage in Nepal, colonialism has bequeathed on Sri Lanka the promotion of accounting education and training, enabling the country to implement some of these reform ideas. However, increasing resistance to accounting changes at the lower administrative level, witnessed in both countries, indicates a need to understand the contexts of LDCs and to fulfil basic preconditions prior to disseminating/embarking on reforms there.