Decision‐making processes of public sector accounting reforms in India—Institutional perspectives

Abstract

While International Financial Reporting Standards (IFRS) convergence has been the face of the global accounting standardisation movement for the past few decades, accounting reforms in the public sector had started to gain momentum from the late 1990s. This paper examines the reasons for the adoption of public sector accrual accounting reforms in India. It explores the various sources of pressure influencing these reforms and the ways in which these pressures are balanced and addressed by key decisionmakers in the national and transnational contexts of an emerging economy like India. This study finds that demands for greater accountability from the public in the national context (demand pressures) as well as requests for greater transparency from international financial institutions in the transnational context (supply pressures) are two major sources of pressure that are balanced by the state in its quest for greater legitimacy. This is demonstrated through a triggering event such as political scandals evoking responses from the government to reinforce its weakened legitimacy by adopting public sector accounting reforms. Extant literature on public sector accounting reforms, mostly focuses on the phases where the standards are being actually implemented by the This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.

International financial reporting standards convergence in the Indian context: Insights from practitioners

“…The study is relevant today as there are amendments and clarifications of the various aspects of Ind‐AS standards happen in continuous basis, which is notified time to time by the regulators such as MCA and ICAI. There have been studies that collected data from 2000 to 2014 (Krishnan, 2021; Ortiz Martínez et al, 2022) and are yet the findings are relevant in the context of emerging countries scenario with similar socio‐economic landscape and similar concerns may be relevant while implementing Ind‐AS for SMEs.…”

Is IPSAS Implementation Related to Fiscal Transparency and Accountability?

“…However, and as it will be seen later, the final number of available observations for the cross-section regressions falls noticeably (56 or 79) when control variables are included. 6 Regarding our control variables, it is important to mention, as it is also suggested by the theories of the agency and legitimacy, that goals such as transparency and accountability, which are commonly pursued through recent financial reforms in public sector (Krishnan, 2021), depend on many other factors that must be taken into account to avoid misspecification bias. Table 1 presents the set of available variables on which our empirical work is supported (including indicators of fiscal transparency and accountability -endogenous variables -and those related to the bases and frameworks that central governments use for financial reporting), expected association signs (in parentheses), 7 a brief description in each case, data sources, and some basic statistics.…”

“…Financial information is taken as a key input to make decisions in the public arena (e.g., the approval and funding of an investment project), although its preparation requires that accountants follow certain criteria to recognize and measure economic transactions. To this regard, policy makers and multilateral institution (e.g., the Organization for Economic Cooperation and Development -OECD, the International Monetary Fund -IMF, and the World Bank) have promoted, especially since the 90s, the adoption of accrual accounting systems and IPSAS 3 (Ball, 2012;Brusca et al, 2016;Carnegie & West, 2005;Castañeda-Rodríguez, 2019;Chan, 2008;Gómez-Villegas, Brusca, & Bergmann, 2020;Krishnan, 2021).…”

“…Indeed, pressures to adopt IPSAS in particular countries, especially in developing ones, come also from abroad (Castañeda-Rodríguez, 2019;Chan, 2008;Krishnan, 2021). 4 Multilateral institutions such as the IMF, the World Bank, and the IFAC stress that these standards favor comparability, transparency, and accountability.…”

Constraints and stimuli in the implementation of public accounting reform: systematic literature review and future research agenda

“…Consequently, due to their elevated dependence on international funding and other Note: The sum of the articles is greater than the total number of articles. Each article can mention more than one stimulus and/or more than one country, and each country is analyzed by more than one article Source: Created by the authors resources, developing countries are under pressure from international organizations to adopt public sector accounting reforms for better accountability and transparency (Adhikari et al, 2013;Harun et al, 2021;Krishnan, 2023;Lokuwaduge and Silva, 2020;Mbelwa et al, 2019;Tetteh et al, 2021). Financial crisis.…”