Institutionalization of accrual accounting in the Indonesian public sector

Abstract

Purpose -The purpose of this paper is to evaluate the institutionalization of an accrual accounting system in the Indonesian public sector. Design/methodology/approach -The authors undertake a case study to gain insights relating to the critical features of the institutionalization process of the accrual accounting system (AAS) in one Indonesian public sector municipality. The data are drawn from official documents of the Indonesian Government and from publicly available information about the accrual adoption processes. The authors also interviewed key actors who were involved in the accrual accounting policy formulation, standards development and implementation. The data under investigation cover the period from 1983 to 2010. Findings -The IPM of Dambrin, Lambert and Sponem is employed to evaluate the process by which an AAS was idealized, standardized, implemented and used in one Indonesian municipality. Scott's pillars of legitimization also inform rationales behind practice. This study reveals how the decision of the Indonesian Government to adopt accrual accounting in 2003 was part of greater political and economic reforms following the financial and political crisis that occurred in 1998. Idealized in the early 1980s by technocrats in the Ministry of Finance, accrual accounting practices were deferred and then enabled by a series of national political events. Their ultimate internalization into our municipality was led by new legislation but also influenced by the habits and histories of the Indonesian local context and was as a result decoupled in many respects from ideals, discourses and techniques established for it.Research limitations/implications -The findings should be understood in the economic, social and historical context of Indonesia. Findings offered here may differ from other applications due to the nature of the economic, social and political contexts. Originality/value -Uniquely employing the IPM model, and drawing from a context which has undergone significant political change but which has benefitted from little research, this study contributes to an understanding of the institutionalization and legitimization process of an accrual accounting system in an emerging-economy public sector. Findings demonstrate how notions of politics and power inform the complexity of institutionalization in this unique political-economic environment.

The Key Success and Strategic Role of Accrual Based Accounting Implementation

“…Lengthy process must be taken to change the existing system by making changes in some aspects. The concept of IPM used by Dambrin, Lambert, and Sponem (2007) before used by Harun, Peursem, and Eggleton (2012) analyze the institutionalization process of accrual accounting in Indonesia is relevant enough to explain the process of implementation of accrual based accounting in Semarang Government. This study is limited to the analysis in a Local Government, so the ability of researchers to explain part of the process of implementation of accrual accounting is still limited.…”

Performance Management of IT in Public Administrations: A Literature Review on Driving Forces, Barriers and Influencing Factors

“…The aim of benefits management is to pursue the benefits both during the implementation and the use of an investment or in this case IT PM [65]. Until now, almost no research is done concerning benefits management -linked with IT PM -in public administrations [51].…”

“…As all these stakeholders have different objectives and requirements regarding IT PM, these stakeholders and their requirements need to be analyzed and one needs to find a way on how the benefits regarding IT PM can be presented to the different internal and external stakeholders. Therefore, benefits management could help solving this issue [51]. Benefits management describes the process of organizing and managing so that the benefits of the use of IT PM can be realized.…”

“…The barriers concerning both the implementation and use of IT PM deal with strategic questions, stakeholder concerns and organizational or political factors. [49,50]  no clear objectives [26,30,50]  definition of performance for public services difficult [7]  no presentation of the benefits of performance management [23,50,51]  autonomy of departments [50]  more bureaucratic effort [12,24]  political determining factors (e.g. political election cycles) [23,52,53] …”

The Institutionalization of Accrual Accounting: The Perspective of New Institutional Sociology Theory

“…71 of 2010 that is period 2015 until now. Previous research conducted in Indonesia is mostly done in the transition period from cash basis to accrual (Harun and Kamase, 2012;Harun, Van Peursem, and Eggleton, 2012;Setyaningsih, 2013;Suhendro et al, 2015;Susanto and Djuminah, 2015) while this research is conducted in the full implementation phase of the accrual basis. Thus, this research seeks to present an update view of the GAS reform agenda, especially in Indonesia.…”