The influence of the socioeconomic and politico-administrative environment on the extent of compliance with IPSAS in developing countries

Abstract

PurposeThis paper investigates to what extent public sector entities (PSEs) in developing countries (DCs) are compliant with IPSAS and examines the impact of the socioeconomic and politico-administrative environment on this compliance during the period 2015–2018.Design/methodology/approachThis research develops a self-constructed checklist consisting of 116 disclosure items from five accrual-based IPSAS (IPSASs, 1, 2, 3, 14 and 24) and applies panel regressions for a sample of 500 entity-year observations of 125 PSEs.FindingsThe study results show a high level of disparity in the degree of compliance with IPSAS amongst DCs' governments, with an overall average level of 61%. They reveal that compliance with IPSAS is positively influenced by the level of citizen wealth, government political culture (degree of government openness) and the quality of public administration, whereas jurisdiction size, government financial condition and political competition are non-significant factors.Practical implicationsThis research provides researchers and practitioners with a comprehensive framework for understanding the extent of New Public Management reforms in DCs with a focus on International Public Sector Accounting Standards implementation. It might assist policymakers in their accounting strategies and might be a signal for DCs with low compliance to tap lessons from governments with successful experience of IPSAS adoption.Originality/valueFocusing on DCs' context, this paper brings new insights into the analysis of socioeconomic and politico-administrative incentives for government compliance with IPSAS. It is the first to investigate the impact of citizen wealth and political competition on IPSAS disclosures.

Exploring the effect of International Public Sector Accounting Standards adoption on national resource allocation efficiency in developing countries

“…However, political stability and pressure from influential parties can influence resource allocation decisions (Mbelwa et al, 2019). Institutional factors, such as weak institutional frameworks and regulatory systems, may result in inefficiencies in resource allocation (ACCA, 2017; Mnif & Gafsi, 2023). In addition, corruption and the absence of good governance practices can distort resource allocation and manipulate public resources for personal gain (Bakre et al, 2017).…”

“…In addition, adopting uniform accounting standards could weaken local practices and impede economic and sustainable development (Bekiaris & Paraponti, 2023;Polzer et al, 2023). Other concerns relate to the high costs associated with IPSAS adoption, as developing countries have insufficient resources, expertise, and infrastructure for successful implementation (Boolaky et al, 2020;Mnif & Gafsi, 2023). Also, it has been reported that IPSAS is not frequently utilized in financial decision-making and the budgeting process (Adhikari & Gårseth-Nesbakk, 2016).…”

“…This is achieved through enhanced transparency, accountability, governance quality, and control of corruption (Polzer et al, 2020;Salia & Atuilik, 2018). However, it also emphasizes the challenges and potential negative impacts that may arise due to institutional and contextual factors (ACCA, 2017; Mnif & Gafsi, 2023). Therefore, it reflects that the advantages of IPSAS adoption are subject to debate, and further research is necessary (Abdulkarim et…”

Exploring the effect of International Public Sector Accounting Standards adoption on national resource allocation efficiency in developing countries

“…However, political stability and pressure from influential parties can influence resource allocation decisions (Mbelwa et al, 2019). Institutional factors, such as weak institutional frameworks and regulatory systems, may result in inefficiencies in resource allocation (ACCA, 2017; Mnif & Gafsi, 2023). In addition, corruption and the absence of good governance practices can distort resource allocation and manipulate public resources for personal gain (Bakre et al, 2017).…”

“…In addition, adopting uniform accounting standards could weaken local practices and impede economic and sustainable development (Bekiaris & Paraponti, 2023;Polzer et al, 2023). Other concerns relate to the high costs associated with IPSAS adoption, as developing countries have insufficient resources, expertise, and infrastructure for successful implementation (Boolaky et al, 2020;Mnif & Gafsi, 2023). Also, it has been reported that IPSAS is not frequently utilized in financial decision-making and the budgeting process (Adhikari & Gårseth-Nesbakk, 2016).…”

“…This is achieved through enhanced transparency, accountability, governance quality, and control of corruption (Polzer et al, 2020;Salia & Atuilik, 2018). However, it also emphasizes the challenges and potential negative impacts that may arise due to institutional and contextual factors (ACCA, 2017; Mnif & Gafsi, 2023). Therefore, it reflects that the advantages of IPSAS adoption are subject to debate, and further research is necessary (Abdulkarim et…”

Exploring the effect of International Public Sector Accounting Standards adoption on national resource allocation efficiency in developing countries

“…However, political stability and pressure from influential parties can influence resource allocation decisions (Mbelwa et al, 2019). Institutional factors, such as weak institutional frameworks and regulatory systems, may result in inefficiencies in resource allocation (ACCA, 2017; Mnif & Gafsi, 2023). In addition, corruption and the absence of good governance practices can distort resource allocation and manipulate public resources for personal gain (Bakre et al, 2017).…”

“…In addition, adopting uniform accounting standards could weaken local practices and impede economic and sustainable development (Bekiaris & Paraponti, 2023;Polzer et al, 2023). Other concerns relate to the high costs associated with IPSAS adoption, as developing countries have insufficient resources, expertise, and infrastructure for successful implementation (Boolaky et al, 2020;Mnif & Gafsi, 2023). Also, it has been reported that IPSAS is not frequently utilized in financial decision-making and the budgeting process (Adhikari & Gårseth-Nesbakk, 2016).…”

“…This is achieved through enhanced transparency, accountability, governance quality, and control of corruption (Polzer et al, 2020;Salia & Atuilik, 2018). However, it also emphasizes the challenges and potential negative impacts that may arise due to institutional and contextual factors (ACCA, 2017; Mnif & Gafsi, 2023). Therefore, it reflects that the advantages of IPSAS adoption are subject to debate, and further research is necessary (Abdulkarim et…”

Exploring the effect of International Public Sector Accounting Standards adoption on national resource allocation efficiency in developing countries

“…However, political stability and pressure from influential parties can influence resource allocation decisions (Mbelwa et al, 2019). Institutional factors, such as weak institutional frameworks and regulatory systems, may result in inefficiencies in resource allocation (ACCA, 2017; Mnif & Gafsi, 2023). In addition, corruption and the absence of good governance practices can distort resource allocation and manipulate public resources for personal gain (Bakre et al, 2017).…”

“…In addition, adopting uniform accounting standards could weaken local practices and impede economic and sustainable development (Bekiaris & Paraponti, 2023;Polzer et al, 2023). Other concerns relate to the high costs associated with IPSAS adoption, as developing countries have insufficient resources, expertise, and infrastructure for successful implementation (Boolaky et al, 2020;Mnif & Gafsi, 2023). Also, it has been reported that IPSAS is not frequently utilized in financial decision-making and the budgeting process (Adhikari & Gårseth-Nesbakk, 2016).…”

“…This is achieved through enhanced transparency, accountability, governance quality, and control of corruption (Polzer et al, 2020;Salia & Atuilik, 2018). However, it also emphasizes the challenges and potential negative impacts that may arise due to institutional and contextual factors (ACCA, 2017; Mnif & Gafsi, 2023). Therefore, it reflects that the advantages of IPSAS adoption are subject to debate, and further research is necessary (Abdulkarim et…”