Indonesian public sector accounting reforms: dialogic aspirations a step too far?

Abstract

Purpose – Drawing from an interest in the changing Indonesian political and regulatory history, the purpose of this paper is to provide an understanding of the role that accounting reform can play in nurturing, or failing to nurture, a more dialogic form of accounting in a local Indonesian municipality. Design/methodology/approach – To collect the data, the authors undertook a case study of a local municipality and drew from patterns found in Indonesia’s long colonial history. Data were acquired from official and publicly available documents and interviews with 29 key figures, including those involved in formulating and disseminating laws and also those affected by the accounting reforms from 1998 to 2009. Document collection and interviews were conducted at national and local levels. Findings – This study shows that Indonesia has undertaken significant economic and political reforms for the intended purposes of fostering democracy, strengthening accountability, and creating transparency in relation to public sector practices. As part of these reforms, accrual accounting is now mandatory, independent audit is conducted, and disclosure is required by Government offices at central and local levels. Nonetheless, drawing from dialogic accounting principles, this study demonstrates the limitations of legislation and regulation in countering patterns that have long been laid down in history. Essentially, there is limited opportunity to question the elements of these reforms, and the study has also found that centralizing forces remain to serve vested interests. The root of the problem may lie in traditions of central control which have played out in how a dialogic form of accounting has failed to emerge from these important accounting reforms. Research limitations/implications – The findings of this study should be understood from historical, political, and cultural backgrounds of the site of the study. Practical implications – The implications of the findings should be taken into account by public sector policy makers, particularly in emerging economies – where political realities, economic, social, political, and cultural backgrounds set different historical patterns and result in unique circumstances that may tend to retain traditions of the past even under rules and regulations of the present. Originality/value – A key contribution of this study is to show how the political traditions of a nation can permeate and divert the intent of, in this case, engaging a broader public in discourse about accounting reform in the public sector. In addition, this study also provides an understanding of public sector reform in the context of a diverse and unsettled nation which has been long subject to colonial, top-led, and military leadership. The findings demonstrate complexities and unintended outcomes that can emerge in public sector accounting reform and how, in this case, they appear to be influenced by historical traditions of centralized control.

Public sector management accounting in emerging economies: A literature review

“…13 In a recent publication, Harun et al (2015) show that the history of centralization and the culture of apathy and submissiveness in Indonesia inhibit public-sector reforms aiming to strengthen accountability and participation at the local governmental level.…”

Accounting, accountants and accountability regimes in pluralistic societies

“…Tools such as Q methodology (Byrch et al, 2015), futures thinking through Utopian visioning (Atkins et al, 2015), and scenarios methods are examples of useful technologies to identify people's self-interpretations and future desires but they are insufficient on their own (Glynos and Howarth, 2007, chapter 2). As Harun et al (2015) demonstrate, actors' understandings must be placed within their historical, cultural and socio-political contexts [6] for, as Modell (2015, pp. XX) observes, reflexive agency may vary according to structural conditions in which actors are embedded and their personal characteristics [7].…”

“…Byrch et al (2015) note how the diverse perspectives on sustainability, the contested nature of the domain, and the disinterest of those in power in listening to or debating with alternative voices stymies possibilities for agonistic dialogue and debate. Célérier and Cuenca (2015) and Harun et al (2015) similarly found facilitating pluralism and democratic participatory governance through new forms of accounting problematic, not least in developing countries. However, some change is possible.…”

“…"Indonesian public sector accounting reforms: dialogic aspirations a step too far?" by Harun et al (2015) notes that recent government accounting reforms in Indonesia, including accrual accounting, have been adopted to increase efficiency and promote democracy. Their case study, based on documentation and interviews, explores the reform's potential for dialogic accounting.…”

“…They find that the legacy of legislation and practices under colonial and military governments, and the unwillingness of central politicians and administrators to decentralize and give up powers render this unlikely. Dialogic accounting was not attempted but Harun et al (2015) identify how situational factors and history present significant problems in doing so.…”