Adopting International Public Sector Accounting Standards: a challenge for modernizing and harmonizing public sector accounting

Abstract

The International Public Sector Accounting Standards have been seen as a path towards the modernization of governmental accounting, and many countries have made efforts to adopt them. The purpose of this article is to analyse the stimuli and barriers to the adoption of International Public Sector Accounting Standards, as well as their main benefits, using a structural equation model. The research methodology is based on a questionnaire sent to American and European Union countries that has been used to construct a structural model, and our results show that comparability and modernization are direct benefits of International Public Sector Accounting Standards implementation, and that both adopter and non-adopter countries value these positive impacts. This justifies the process of harmonization that the European Commission recently started. Points for practitioners The analysis of the impact of International Public Sector Accounting Standards in the international context shows to what extent the adoption of International Public Sector Accounting Standards are useful for modernizing governmental accounting and achieving accounting comparability. Describing the experience of countries that have adopted International Public Sector Accounting Standards can help practitioners and professionals who participate in modernizing accounting systems, such as the European Union. Many countries are now moving towards International Public Sector Accounting Standards and the experiences of pioneer countries can serve as a learning process. This article shows that introducing International Public Sector Accounting Standards can have many advantages in practice and that countries that have implemented these standards consider that they allow an increase in transparency and accountability.

The enabling role of institutional entrepreneurs in the adoption of IPSAS within a transitional economy: The case of Estonia

“…Brusca and Martinez () summarize the main barriers that threaten the adoption of IPSAS as “the criticisms [IPSAS] received because of their closeness to the business accounting model, the interest of countries in maintaining control and fiscal illusion, the cost and training needs for the adoption of the IPSAS, and concerns about IPSASB governance” (p. 731). Resistance and obstacles have also been shown in Latin American and African states and in Asia (Adhikari, Timoshenko, & Gårseth‐Nesbakk, ; Brusca, Gómez‐Villegaz, & Montesinos, ; Deloitte, ).…”

Professionalism, Competency and Financial Reporting Quality: A Perception of Director of Finance in a Changing Public Sector Reporting Standard

“…Development of IPSAS took its root from the private sector framework. This dates back to the period when the IFAC chose the business accounting model as a reference point that public economic transactions can be prepared with the same criteria as those of business entities (Brusca & Martınez 2015). Subsequently, the IFAC in 2002 initiated four public sector specific standards including standard based on comprehensive cash basis (IPSASB 2010).The cash basis IPSAS according to Chan (2008) is presumably meant for developing countries that may not be ready to adopt the accrual basis IPSAS at the initial stage.…”

“…This consequently provided the basis for the introduction of International Public Sector Accounting Standards (IPSAS) in the recent time. Though, the scope and format of adoption of IPSAS among constituencies differ significantly (Brusca & Martınez 2015).…”

“…Nonetheless, the underlying principle of IPSAS fundamentally demonstrates a shift from the traditional cash basis to accrual accounting system which is aligned with the practice in private sector (IFRS) (Brusca & Martınez 2015). Although, the alignment of IPSAS with the IFRS has been largely criticized on grounds of fundamental differences between the public and private sector (Anessi-Pessina, Nasi & Steccolini 2008;Balios, Poutos & Toudas 2013).…”

The roots of budgetary and financial accounting in Brazil

“…Following an international trend of reforms (Brusca & Martínez, 2016), public sector accounting in Brazil has been officially converging to international standards since 2008 (Gama, Duque, & Almeida, 2014). Accounting practices used in the country for decades have been changed and the focus on recording accounting transactions based on budgetary information has been extended to include comprehensive net assets control (Aquino & Batley, 2016).…”