A Taxonomy of the Perceived Benefits of Accrual Accounting and Budgeting: Evidence From German States

Abstract

Accrual Output‐Based Budgeting (AOBB) in government has been disputed intensely among academics and practitioners. While normative, conceptual, or theory‐based literature made promising claims about which benefits can be expected from reforming government accounting and budgeting, recent empirical research finds that at least some of these expectations have been massively overstated. The observed gap between promises and reality poses the question for the true benefits anew. Basing our analysis on practitioners’ judgment, we suggest a general and prioritized landscape of perceived benefits (taxonomy). Our findings are derived from 42 interviews conducted in the context of two German federal states. Mapping our results to prior claims in the literature, we reveal that the practitioners interviewed do not see upsides in areas that former research deems to be important while other and previously not emphasized areas, such as mindset changes, seem to convince in practical life. The results of our analysis offer a profound basis for further exploration of the benefits and/or even cost/benefit evaluations.

The Impact of Accrual-Based Public Accounting Harmonization on EU Macroeconomic Surveillance and Governments’ Policy Decision-Making

“…23 On a management decision-making level, available studies based on interviews and surveys on how public managers use the information from an accrual system indicate some advantages such as better access to financial information about all assets and liabilities, but conclude that public managers often consider accrual information to be not relevant or too complex, hence not used for decision-making and in routine operational work (Christensen, 2009;Christiaens & Rommel, 2008;Hassan, 2013;Jagalla et al, 2011;Mack & Ryan, 2006;Otrusinova & Pastuszkova, 2013aScheers et al, 2005). This may also be explained by the restrictions that managers may face in an accrual-based system, for example on allocation/disposal of assets and liabilities, and may also be attributed to the feeling that accrual reporting is only prepared at a (nonoperational) centralized level (Christensen, 2009;Jones & Lüder, 2011;Smullen, 2009).…”

Making Comparisons in Government Accounting

“…A further comparative study by Jagalla, Becker and Weber examines the accounting practices of states within the Federal Republic of Germany (Jagalla et al, 2011). The particular focus of this study is on the adoption of accrual accounting by these entities.…”

Internal Control System Deficiency and Capital Project Mis-management in the Nigerian Public Sector

“…The choice of Lagos State is based on the fact that the level of State government's internal control system and accounting have not been adequately focused in research (Jagalla, Becker, & Weber 2011). Lagos State is a fair sample representing other States of the federation, especially as it is arguably the largest economy in the country.…”