Sector neutrality: A possible improvement of the accounting standards. Evidence from NZ model

Abstract

In May and June 2018, the Italian financial crisis (public debt) got back to the news when the new political government was going to be formed. Part of the literature claims that the public sector needed to be more "business-like" and that in order to do so, the adoption of "better", in this case "accrual", accounting was crucial. New Zealand is the pioneer country for accrual-based government accounting. More than ten years ago, when the adoption of IFRS was mandatory, New Zealand standard setters preserved sector neutrality in the financial reporting standards. Thanks to a systematic literature review, the paper investigates the evidence of NZ accounting sector neutrality model, with the purpose to assess if importing NZ public sector accounting model would be efficient for allowing a higher level of transparency in other countries such as Italy. The methodology is to define the economic literature relevant to the topic, considering the year of publication and the citation rate. Recently, standard setters in NZ decided to adopt a sector specific standard setting approach with multiple tiers for each sector. The for-profit sector will continue to follow IFRS but reporting standards for the public sector will be based on International Public Sector Accounting Standards (IPSAS). Amongst the former contributes, no systematic research overview on public sector accounting has been created based on the NZ model. This article fills this void by providing a systematic literature review of 258 publications that examines five key aspects of the literature on the benchmark accounting model.