Exploring the role of innovation in the level of readiness to adopt IPSAS

Abstract

Purpose The purpose of this study is to investigate the level of readiness of the public sector in Qatar to adopt International Public Sector Accounting Standards (IPSAS), based on the innovation diffusion theory. The responses of accountants (preparers) and auditors employed in the public sector are explored in this regard, and challenges faced in IPSAS implementation are highlighted. Design/methodology/approach A primary research approach was adopted using a questionnaire that yielded 101 responses. Five dimensions are focused on: relative advantage, top management support, satisfaction with the current accounting system, barriers to adopting IPSAS, and attitudes towards innovation. Findings Relative advantage, barriers to adopting IPSAS and satisfaction with the current system were found to be the most significant. The influence of these variables appears to promote or hinder the implementation of IPSAS in the public sector of Qatar and, perhaps, the wider region. Practical implications Even if professionals understand the potential benefits of adopting IPSAS, they are unlikely to advance such adoption without upper echelon-sanctioned cost-benefit analyses and approval. Hence, policymakers should consider the need for a top-down shift in the way IPSASs are viewed and promoted to enable their successful implementation in the public sector. Social implications The positive association between satisfaction with current systems and the level of IPSAS implementation suggests that respondents view the usefulness and ease of use of their current systems as a primary reason to adopt IPSAS as an ‘upgrade’. Originality/value This study advances the understanding of the pre-transition process by drawing on innovation theory, which reveals determinants of IPSAS implementation in the case of Qatar. This study adds to prior studies on government accounting in developing nations.

How do innovation and financial reporting influence public sector performance in a transition market?

“…These results have not been reported in previous studies. In addition, our findings reinforce the work of Abdulkarim et al (2020), suggesting that innovation has a crucial role to play in improving the level of readiness of public sector organisations to implement IPSAS in the context of developing countries. We suggest that public organisations with a highly innovation-oriented culture can absorb and operate new accounting practices.…”

“…In this context, managers can have multiple information sources to help inform their decisions. Besides, innovation-oriented culture will not only lead public organisations to use new and high-level accounting standards, but also improve efficiency of public organisations, or decrease corruption of public organisations (Abdulkarim et al, 2020). All the effects will impact the public sector performance positively.…”

“…The result will be that the financial reporting ensures timeliness, reliability and relevance; or in other words, ensures the prescribed quality criteria and meets user information needs. Behind this logic lies an innovation-oriented culture that leads to innovative behaviour, such as the adoption of new accounting practices, which in turn leads to improved financial reporting quality (Abdulkarim et al, 2020). On this basis, we propose the following hypothesis:…”

“…Thereby, public organisations seeking to increase operational efficiency must shift their organisational culture to renew outmoded accounting techniques and methods. This increases the quality and accountability of financial reporting (Abdulkarim et al, 2020). Thus, the study's recognition of the indirect influence of innovation-oriented cultures and performance on financial reporting quality and accountability is pertinent.…”

“…Moreover, this study helps organisations recognise the performance implication of an innovation-oriented culture across the organisation's departments-for example, the finance and accounting department, through the mediating roles of financial reporting quality and accountability. Vietnam and other emerging countries are changing their accounting regime for the public sector to apply a full accrual accounting system, which raises a requirement for innovation in the minds of Innovation and financial reporting accountants (Abdulkarim et al, 2020;Mohamed and Lashine, 2003). Under institutional pressures, employees in public organisations sometimes seek innovation opportunities on their own but need leadership support for displaying such behaviour (Van Der Wal and Demircioglu, 2020).…”