Public-sector accounting is increasingly recognized as a fundamental enabler of sustainable development, particularly through its capacity to support transparent measurement, management, and disclosure of Sustainable Development Goals (SDG) achievements. This study examines the relationship between accrual accounting practices at the government level and progress in the social pillar of the SDGs in EU Member States from 2016 to 2022.
The social pillar of the SDGs is based on a composite index drawing on indicators from seven EU SDGs considered by the EU to reflect social sustainability. The analysis employs econometric techniques to estimate the relationship between accrual accounting and social SDG achievements, also controlling for macroeconomic variables and regional disparities.
The results suggest a positive association between accrual accounting practices and social sustainability. Furthermore, they reveal that social protection expenditure and pre-existing levels of social sustainability are the primary drivers of social SDG achievement in the EU countries, reflecting a path-dependent and policy-driven pattern.
Our study expands the implications of public financial management beyond those advocated in New Public Management and provides evidence that advanced accounting practices can also support societal sustainability objectives. The results also provide tangible evidence to encourage European Union countries to invest in advanced accrual accounting systems now that the development of European Public Sector Accounting Standards has been put on pause by Eurostat.
Our findings offer valuable insights into the role and potential of public financial management tools, such as accrual accounting, in promoting and facilitating social sustainability.
