Purpose -The purpose of this paper is to investigate the implementation of performance measurement systems (PMSs) in Indonesian local government (ILG) using Smart PLS. Couched within an institutional theory framework, it explores a conceptual model developed to explain the hypothesised relationships between technical and organisational factors and the development and use of performance indicators and accountability practices. Design/methodology/approach -Surveys were sent to senior finance officers in all local governments (457) across Indonesia with a response rate of 21.4 percent being achieved. Smart PLS was used to assess the quality of the data and analyse the research model proposed. Findings -Findings revealed that ILGs developed performance indicators more to fulfil regulatory requirements than to make their organisation more effective and efficient. As a way of increasing the success of PMS implementation management commitment through good leadership was found to be a major contributor. Coercive pressure from central government impacted on the result as did normative isomorphism by way of widespread training by universities (and others) and the subsequent sharing of this knowledge. Practical implications -The findings will assist Indonesian central government formulate future government policy as well as design appropriate strategies for implementing the second wave of (bureaucratic) reform. Originality/value -Set in a local government environment in a developing country, this research is original and makes three major contributions. First, it provides an understanding of factors influencing the development and use of performance measures in the ILG context. Second, the use of Smart PLS is original in this context and fills a gap in the literature examining local government PMS. Last, the existence of institutional isomorphism reaffirms that this theory is still applicable in the twenty-first century and relevant as an explanator of the results in the context examined here.
Prior management and manipulation of financial accounting information research has overwhelmingly been focused within a private sector setting. This study adopts a public sector focus in empirically examining the use of a specific discretionary accrual (i.e., depreciation) to adjust the financial performance of New South Wales (Australia) local governments. Findings indicate a significant positive association between absolute unexpected depreciation and absolute local government income before capital contributions, and a significant positive association between absolute unexpected depreciation and capital contributions. Overall, the results make significant contributions to various literature streams with implications for various stakeholders interested in local governmental financial performance.
This research explores the drivers behind the implementation of performance measurement systems (PMSs) in Indonesian local government (ILG). It analytically assesses Indonesia's attempt to introduce a PMS by addressing three research questions: RQ1) Do organisations in developing countries actually use PMSs to aid decision-making and help plan for future performance improvement? RQ2) Do the three isomorphic pressures exist in the development and use of PMSs? and RQ3) If institutional isomorphism is evident, can accountability exist within the development and use of PMSs given these pressures. Design To assist in answering the research question, both closed and open-ended interview questions were developed. The questions were structured under four headingsaccountability, performance measurement, institutional isomorphism and others. In-depth interviews were conducted in 2010 with 24 Indonesian local governments targeted using purposive sampling. Both types of local government (regional and municipal) and both localities (Java and non-Java) were represented. A cross-section of participants ensured a range of responses from low-level officials to high-level managers in functions including administrative, finance, planning and audit, were obtained. Findings Results determined that although employees perceived coercive isomorphism as being a driver of ILG compliance with LAKIP, many councils were still not reporting and those that were, were not doing it well. Many councils lacked management motivation with some choosing to merely mimic (mimetic isomorphism) what others were doing. Better-resourced councils made use of external consultants or local universities where knowledge was shared (normative isomorphism). Practical implications An understanding of factors influencing the development and use of performance measures, in turn, can be used not only to improve PMSs in the future but to improve the quantity and quality of LAKIP reporting. Originality / Value The theoretical development and interpretation of this research is drawn from institutional theory with a major contribution being that it provides an in-depth conceptual overview and understanding of factors influencing the development and use of performance measures. Further, it fills a gap in the literature exploring PMSs and accountability in a developing countryin this case, Indonesia.
Purpose – This study aims to examine determinants of the extent of sustainability reporting on Malaysian local council web sites using a disclosure index within an institutional theory framework. Design/methodology/approach – Adopting a simplified disclosure index to measure the extent of sustainability reporting, the unit of analysis for this research is Malaysian local council web sites. To reduce any subjectivity, the disclosure index is unweighted and consists of 57 items. Findings – Several findings were apparent including size, Local Agenda (LA) 21 and public sector award all being found to be significant predictors of disclosure. Overall, the findings indicate the presence of institutional isomorphism – particularly coercive pressure – in explaining the extent of sustainability reporting on web sites. Research limitations/implications – The research has multiple implications as it provides insights into web site sustainability reporting in a developing country. It also adds support to institutional isomorphism as a valid theoretical framework within this context. Based on there being no mandatory requirement for local authorities to produce annual reports, one limitation is that this paper assumes that the web sites of local authorities are the primary medium for communicating sustainability information. Practical implications – One of the most significant practical implications relates to LA 21 which has a significant impact on sustainability disclosure on Malaysian local council web sites. With 113 countries in total implementing LA 21 to some degree (ICLEI), Malaysia's recognition as a key (developing country) player in advancing sustainable development should be acknowledged. Originality/value – With an apparent lack of web site sustainability reporting research in developing country public sector organisations, this study is unique in that it appears to be the first research conducted in Malaysia analysing sustainability web site reporting using a disclosure index in a local government setting – all within an institutional theory framework. Not only can the disclosure index be used as a tool for future public sector corporate social responsibility related research, but the “new” disclosure instrument provides insights into the extent of sustainability reporting in local authorities.
PurposeThe aim of this paper is determine the impact financial reporting obligations and, in particular, the International Financial Reporting Standards (IFRS) have on local government management decision making. In turn, this will lead to observations and conclusions regarding the research question: “Does reporting under the IFRS regime add value to the management of local government?”Design/methodology/approachFollowing analysis of a survey instrument distributed to all local governments in all states of Australia, this research reports on interviews within Australia's largest state – New South Wales (NSW).FindingsIn general, findings suggest that for smaller councils and those situated away from the major cities, the time spent on complying with IFRS and various other legislative demands results in management accounting issues often being downplayed.Research limitations/implicationsA further paper needs to be conducted in order to determine in the second year of implementation the impact of IFRS – both in Australia and, in the future, in other countries – where local government is implementing IFRS. Practical implications will be evident when all Australian states are compared as NSW is the only state where an IFRS template has been produced for all local authorities.Originality/valueThis is the first known analysis of IFRS in local government in Australia, and possibly the world. It utilises both survey and interview instruments within an institutional theory framework to capture the full richness of data available.
PurposeLocal government in Australia has a complex system of accountability, part of which includes the publication of financial comparative performance measures. The purpose of this paper is to demonstrate how questionable financial figures not only distort the reported “bottom line” of local councils but can also be included in a number of financial key performance indicators (FKPIs) upon which council performance is judged. Valuation and depreciation of transport infrastructure assets form the basis for the evaluation.Design/methodology/approachA longitudinal study of all New South Wales (NSW) councils (170) from 1999‐2000 to 2002‐2003 was conducted using archival research combined with in‐depth case study analysis and interviews (New South Wales (NSW) is the largest of Australia's eight states and territories). This paper provides detailed analysis of 28 local government councils classified as being on “financial watch” by the Department of Local Government and a comparative sample of 28 councils not classified as at risk but reporting figures considered to be contestable (At risk, or financially challenged councils, are defined as “having issues of concern with their financial operations”).FindingsOf the 170 councils in NSW, up to 98 per cent recorded an error in depreciation of some component of transport infrastructure during 1999‐2000 and 2002‐2003. The error margin ranged from 11 to 73,520 per cent significantly impacting on the three targeted FKPIs.Practical implicationsFuture research will examine preparation of possible alternative policies for local government addressing the issue of internal benchmarking and external performance measures.Originality/valueThis research offers some reparation for the relative lack of empirical research literature on local government FKPIs and, in particular, those that do not meet the underlying accountability focus of performance measurement.
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