International public sector accounting standards (IPSAS): current status, practices and future agenda
One of the New Public Management reforms of public sectors worldwide concerns the introduction of accrual accounting (Oulasvirta, 2014). The progressive reduction of public resources, further exacerbated by the financial crisis, has led international organisations to discuss the need for policies and guidelines to support a better financial management. The International Public Sector Accounting Standards (IPSAS) are an important example of such practices (Christiaens et al., 2010; Adhikari et al., 2013; Bracci et al., 2015; Lassou and Hopper, 2016). These standards aim to protect and manage public money, discharge accountability and combat corruption (Chan, 2003; Oulasvirta, 2014; IFAC, 2016; Bakre et al., 2017). However, IPSAS are heavily influenced by private sector practices. This special issue aims to investigate the adoption, use and effects of IPSAS in the public sector in various countries and government organisations.
IPSAS were developed by the IPSAS International Independent Board (Lassou and Hopper, 2016). The board's operations are facilitated by the International Federation of Accountants (IFAC). Since 1997, the board has developed and issued 38 accrual standards, and a cash basis standard for countries that are moving towards full accrual accounting. According to IFAC (2016), “Governments that report on a cash-basis do not account for significant liabilities, such as pensions and infrastructure development; as a result, the IPSASB [board, MN] encourages public sector entities to adopt the accrual basis of accounting—which will improve financial management and increase transparency resulting in a more comprehensive and accurate view of a government's financial position”. IPSAS and accrual accounting practices are therefore often combined, or recommended to be combined.
The adoption of IPSAS varies between countries. So far, not much research has been done to explain these differences in levels of adoption of IPSAS (Christiaens et al., 2015). Some findings are noteworthy though. For example, there still remains reluctance to adopt IPSAS in countries, such as Finland, where accrual accounting has been implemented already (Christiaens et al., 2015) (Oulasvirta, 2014). In developing countries, international organisations have been working since the 1990s to reform public sector accounting practices. However, results are often lagging; for example, in Nepal and Sri Lanka, IPSAS have not gone beyond the stage of being proposed (Adhikari et al., 2013). Authors argue that the implementation of IPSAS also differs in both developed and developing countries (Ellwood and Newberry, 2007). Adhikari and Gårseth-Nesbakk (2016) describe the political and technical uncertainties in implementing public sector accruals in Organisation for Economic Co-operation and Development (OECD) member states. It is argued that the historical development of politics and regulation of a country which may impact the decisions of adopting IPSAS should be taken into consideration when adopting and implementing IPSAS, especially by Western international organisations that aim to reform the financial management practices of developing countries (Harun et al., 2015). More evidence-based research is needed (Ryan, 1999).
The purpose of this special issue is to address an important gap in the public sector accounting standards literature. It studies the adoption and implementation of IPSAS in the public sector in various countries, both developed and developing countries. It asks questions such as why do countries, or do not, adopt and implement IPSAS, what are implementation issues and what are the effects of IPSAS' adoption? By answering these questions, the contributions in the special issue contribute to our knowledge on public sector reform, in this case of financial management, and raises new questions for future research.
Polzer, Gårseth-Nesbakk and Adhikari begin this special issue with an analysis of the diffusion of IPSAS all around the globe. Three different waves are identified in the adoption of accrual-based accounting practices in OECD countries, which did not lead always to adoption of accrual-based IPSAS though. For developing countries, the situation is much less clear. Some countries adopted the cash-based IPSAS, for example in Asia and Africa, while in Latin American countries the reform trend was to go from cash to accruals accounting and then to accrual-based IPSAS. The authors warn for differences between formal and actual adoption though, and refer to the “talk” and “walk” of reforms: some reforms are adopted only in name, in response to pressure from donor agencies. This may in fact lead to unintended negative effects.
Mnif Sellami and Gafsi delve deeper into the sub-Saharan Africa case by analysing the compliance with IPSAS in 60 government entities between 2014 and 2017. They find significant differences which can be attributed to the strength of public management systems and accounting education. This points to the existence of important pre-conditions for the successful implementation of IPSAS, a conclusion which is supported in several other contributions to this special issue. For example, Alsharari describes the case of the Jordan Customes and shows that existing beyond budgeting principles can facilitate the adoption of specific IPSAS standards. De Silva Lokuwaduge and De Silva ffer a comparable analysis for the Sri Lankan case, while Azevedo, Lino, Aquino and Machado-Martins conclude that the adoption of IPSAS in Brazil local government is highly contingent on adoption and practices like accrual accounting and Financial Management Information Systems.
Next we turn to the European level, in particular to the development of harmonized European Public Sector Accounting Standards (EPSAS). Three contributions are included in this special issue on this topic. Dabbicco and Steccolini analyse the role of government and accounting representatives in the decision-making process to achieve EPSAS. Polzer and Reichard use a discourse analysis to study the same process. And Tiron-Tudor, Nistor and Stefanescu compare the current national practices to the desired EPSAS, to estimate the chances of successful harmonization. They conclude first that such success is highly dependent on the adoption of accrual-based accounting practices and second that the adoption of European IPSAS alone will not be enough to achieve the desired results of more transparency, accountability and decreased corruption. Accounting standards have to become part and parcel of countries' financial management systems.
One of the problems in the adoption and implementation of IPSAS in the public sector relates to their origin, the private sector. Specific public tasks are not easily aligned with the prescribed practices of IPSAS. Two contributions illuminate such problems in the case of heritage. Anessi-Pessina, Caruana, Sicilia and Steccolini discuss the specific nature of heritage and the problems of fitting this task with IPSAS application. Similarly, Aversano, Christiaens, Tartaglia Polcini and Sannino analyse the comment letters from government organisations on the IPSAS consultation paper on how apply IPSAS practices on heritage assets and tasks.
After having discussed causes and antecedents of IPSAS adoption and implementation, the special issue turns to the effects, in particular regarding the expected increase in transparency (information) and accountability (control). As predicted by Tiron-Tudor et al., the adoption of IPSAS alone is not enough and caution is warranted with governments, regulators and auditors alike. More research into the effects is highly necessary, particularly more systematic research. In this special issue two contributions are included that discuss effects, but only for specific country cases: Muraina and Dandago present findings on the Nigerian case, and Ben Rejeb Attia on Tunisia.
Finally, the special issue is concluded with a contribution on the preparation and training of future professionals in their knowledge about and use of IPSAS. Adam, Brusca, Caperchione, Heiling, Jorge and Rossi present findings from a survey held in four EU countries (Germany, Italy, Portugal and Spain). Not only is there a need for more research studies but also for better education on this topic.
