Implementation of accrual accounting by Malaysian federal government

Abstract

Purpose The purpose of this paper is to examine factors influencing the readiness of public sector accountants to implement the accrual accounting system in the Malaysian Federal Government. The readiness was measured in terms change commitment and change efficacy. Design/methodology/approach The study uses a questionnaire survey that comprises three factors (change valence, task knowledge and task availability) in predicting readiness to implement the accrual accounting system. Multiple regressions were performed on a total of 165 usable responses received. Findings The results reveal that change valence, task knowledge and task availability are significant and positively influence the change efficacy of the Federal Government to implement accrual accounting in Malaysia. However, only change valance is a positively significant factor in influencing change commitment. Originality/value This study is important as it contributes not only by adding to the scant literature assessing the readiness to implement the accrual accounting system but also by providing useful information on determinants of readiness for accrual accounting implementation in supporting the Malaysian Government’s financial transformation agenda.

Determinants of Auditors’ Readiness for Accrual Accounting Adoption

“…Based on the research conducted by Phillips (2017), he found that change valence has a significant positive impact on organisational readiness for changes in software which includes change commitment. A similar result was found by Ismail et al (2018) who conducted a study on accountants' readiness for accrual accounting adoption. They found that change valence is positively significant in affecting change commitment.…”

“…Accrual accounting is an accounting basis which records economic events that can reflect an entity's financial position and performance regardless of when the cash transactions occur (Ismail, Siraj, & Baharim, 2018;Khan & Mayes, 2009). Accrual accounting exists as an alternative in financial reporting preparation due to the weaknesses noted in cash accounting.…”

“…The Theory of Organisational Readiness for Change will be used in determining factors that contribute to auditors' readiness for accrual accounting adoption. Since the establishment of the theory in 2009, the theory has been used in studies relating to organisational readiness for change in several disciplines such as health (Helfrich, (Phillips, 2017) and accounting (Ismail et al, 2018). For the purpose of this study, three factors are chosen namely, change valence, task knowledge and resource availability.…”

“…With regards to change efficacy, a study by Ismail et al (2018) found that resource availability has a significant positive impact on change efficacy. Similarly, Phillips (2017) found that informational assessment, which include resource availability, has a significant positive impact on the organisational readiness for changes of software through change efficacy.…”

Factors Influencing The Readiness Of Government Financial Personnel In Migrating Towards Accrual Accounting

“…For example, human resources capability and information technology were found to be important factors by [28], [2] and [45] to raise the readiness of government financial personnel in the context of Indonesia, Malaysia and Thailand respectively. Additional important factors associated with readiness of financial personnel in the migration process such as change valence, task knowledge and task availability were found by [29] study in Malaysia. However, none of the abovementioned studies addressed the role of psychological needs (i.e.…”