Perception of the Malaysian Federal Government accountants of the usefulness of financial information under an accrual accounting system: a preliminary assessment

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Suhaiza Ismail
Keyword(s):  
Decision Making ◽  
Public Sector ◽  
Federal Government ◽  
Work Experience ◽  
Accounting Information ◽  
Perceived Usefulness ◽  
Financial Information ◽  
Accounting System ◽  
Accrual Accounting ◽  
Content Type

Purpose The objective of this study is to examine the perceived usefulness of accrual accounting-based financial information for accountability and for supporting decision-making in public sector organisations. Design/methodology/approach A questionnaire survey adapted from Kober et al. (2010) was used to survey Malaysian Federal Government accountants to ascertain their views on the usefulness of accrual accounting information across 12 situations regarding accountability and decision-making. Mean scores and mean score ranking were computed on a total of 165 usable responses received. The independent t-test was conducted to investigate the differences in the perception between “accountants with” and the “accountants without” prior work experience in the private sector. Findings The study provides evidence that Malaysian Federal Government accountants consider accrual accounting information as very useful for decision-making. The three most important decision-usefulness indicators in the survey are “To assist in managing the department’s assets and liabilities”, “To assess cash flow needs of a department” and “For departmental resource allocation decisions”. The least useful accrual accounting information as perceived by the Malaysian public sector accountants is “To assist in discharging the department’s accountability obligations”. Originality/value The study provides valuable insights into the extent to which accrual accounting information is considered useful for accountability and decision-making, lending support to the Malaysian Government’s reform agenda of moving towards using accrual accounting in public sector organisations at the federal level.

The use of budgetary and financial information by politicians in parliament: a case study

2019 ◽  
Vol 31 (4) ◽  
pp. 539-557 ◽  
Author(s):  
Susana Jorge ◽  
Maria Antónia Jorge de Jesus ◽  
Sónia P. Nogueira
Keyword(s):  
Public Sector ◽  
Information Needs ◽  
Accounting Information ◽  
Financial Information ◽  
Content Type ◽  
Members Of Parliament ◽  
Information Intermediaries ◽  
Public Sector Accounting

Purpose The purpose of this paper is to research the use of accounting information by politicians. Based on the Portuguese Parliament setting, it seeks to understand how useful politicians consider this information to be, what type of budgetary and financial information they use, and for what purposes. Finally, the research also seeks to find out whether politicians resort to expert intermediaries or advisors help them in the use of this information. Design/methodology/approach Following a qualitative and interpretative methodology, the study draws upon interviews with Members of Parliament in Portugal (and their technical advisors (TAs)) from all political parties, in particular the members of the Budget, Finance and Administrative Modernization Committee (COFMA) of the Parliament. Findings Research shows that, due to the general lack of knowledge and the complexity of the accounting information, politicians in the Parliament do not use it frequently, only occasionally. To be better or worse informed for the debates and other activities depends on each Member of Parliament’s personal willingness to prepare oneself, notwithstanding some aggregated and previously analyzed information made available by official technical support units. Parliamentarians may also resort to TAs, who prepare the information at their request. Both intermediaries and TAs are deemed important to support parliamentarians’ understanding of more technical budgetary and financial issues. Practical implications This paper shows that politicians acknowledge there is room for improving the role of information intermediaries and advisors, who would support them to better understand and use accounting information. Parliamentary groups incharge of hiring advisors, as well as accounting professionals, in Portugal and in other countries, must be aware of the very useful role accountants play in this process. Social implications While allowing to understand whether and how politicians use accounting information, this research contributes to the process of public sector accounting reforms in Portugal, and at an international level, inasmuch as public sector accounting and reporting standards should better address these users’ information needs. Assuming that these reforms would foster more accurate, transparent and useful information for accountability and decision making, it is essential that politicians acknowledge and become real users of accounting information, in order to accomplish those objectives. Originality/value This study contributes to the general knowledge of how politicians use accounting information. Academic studies so far have not gathered enough evidence about the type of accounting information that is actually important for politicians. This paper highlights that use of such information by politicians depends on individual skills and their willingness to receive the appropriate advice.

scholarly journals Implementation of accrual accounting by Malaysian federal government

2018 ◽  
Vol 14 (2) ◽  
pp. 234-247 ◽  
Author(s):  
Suhaiza Ismail ◽  
Siti Alawiah Siraj ◽  
Shahril Baharim
Keyword(s):  
Federal Government ◽  
Questionnaire Survey ◽  
Design Methodology ◽  
Accounting System ◽  
Accrual Accounting ◽  
Content Type ◽  
Task Knowledge ◽  
Factors Influencing ◽  
Change Commitment ◽  
And Task

Purpose The purpose of this paper is to examine factors influencing the readiness of public sector accountants to implement the accrual accounting system in the Malaysian Federal Government. The readiness was measured in terms change commitment and change efficacy. Design/methodology/approach The study uses a questionnaire survey that comprises three factors (change valence, task knowledge and task availability) in predicting readiness to implement the accrual accounting system. Multiple regressions were performed on a total of 165 usable responses received. Findings The results reveal that change valence, task knowledge and task availability are significant and positively influence the change efficacy of the Federal Government to implement accrual accounting in Malaysia. However, only change valance is a positively significant factor in influencing change commitment. Originality/value This study is important as it contributes not only by adding to the scant literature assessing the readiness to implement the accrual accounting system but also by providing useful information on determinants of readiness for accrual accounting implementation in supporting the Malaysian Government’s financial transformation agenda.

scholarly journals Factors affecting accrual accounting reform and transparency of performance in the public sector in Vietnam

2020 ◽  
Vol 18 (2) ◽  
pp. 180-193
Author(s):  
Phuong-Nguyen Thi Thanh ◽  
Hai-Phan Thanh ◽  
Tung-Nguyen Thanh ◽  
Tien-Vo Thi Thuy
Keyword(s):  
Public Sector ◽  
Work Experience ◽  
Positive Impact ◽  
Small Sample ◽  
Accounting System ◽  
Accrual Accounting ◽  
Factors Affecting ◽  
Technology Application ◽  
The Public ◽  
Short Period

This study was conducted to determine the factors and their influence on accrual accounting reform in the public sector in Vietnam. Combining qualitative and quantitative research methods based on empirical surveys of 268 accountants, controllers, and auditors working in state agencies such as the Department of Finance, state treasuries and agencies receiving revenues from the state budget in 2019. This study shows that six factors influence the reform of the accounting system in the public sector in Vietnam to accrual-based: accounting staff – especially their expertise, competence, and work experience; training and support of the consulting experts; costs of the accounting reform; level of information technology application; funding and assistance from international organizations; legal environment.At the same time, the accrual-based accounting reform will have a positive impact on improving the transparency and efficiency of public sector operations in Vietnam. Among the factors affecting accounting reform, the legal environment factor is the most influential determinant, followed by the contingent of accountants. The study’s limitation is that the new experimental investigation is only conducted with a small sample size and in a short period. However, the research results are also a useful reference for those who are interested in the context that Vietnam is preparing to have strong reforms in accounting in the public sector in the coming time.

The effect of audit findings and audit recommendation follow-up on the financial report and public service quality in Indonesia

2020 ◽  
Vol 33 (5) ◽  
pp. 535-559
Author(s):  
Andi Chairil Furqan ◽  
Ratna Wardhani ◽  
Dwi Martani ◽  
Dyah Setyaningrum
Keyword(s):  
Public Sector ◽  
Public Services ◽  
Accounting System ◽  
Accrual Accounting ◽  
Financial Reports ◽  
Content Type ◽  
Financial Report ◽  
The Public

PurposeThis study aims to analyze the effect of audit findings and audit recommendations follow-up on the quality of financial reports and the quality of public services in the context of applying accrual accounting systems to local government in Indonesia. This study also examines whether the quality of the financial report affects the quality of public services.Design/methodology/approachThis study employed cross-sectional regression using data from 1,437 observations from 491 districts/cities for 2014–2016. The data illustrates the conditions prior to the adoption of the accrual accounting system (2014), the initial year of application/transition period (2015) and the second year of the expected accrual accounting system (2016).FindingsThe results of the study indicate that, in general, the quality of financial reports affects the quality of public services. Regarding the implementation of audits in the public sector, it is also found that audit findings have a negative impact on the quality of financial report and the quality of public services, while audit recommendations follow-up plays a positive role in improving the quality of financial report and the quality of public services.Research limitations/implicationsThe implication of the results of this study is closely related to the efforts to realize the ultimate goal of the recent government reforms. In order to increase the quality of public services in the era of higher report requirements through an accrual accounting system, the government should focus on the quality of financial reports, audit findings and the audit recommendations follow-up.Originality/valueThis study provides new insight on the link between the public sector auditing and the quality of accounting in accrual implementation context and the quality of public services.

scholarly journals The perceived usefulness of financial information for decision making in Portuguese municipalities

2017 ◽  
Vol 18 (1) ◽  
pp. 116-136 ◽  
Author(s):  
Sónia Paula da Silva Nogueira ◽  
Susana Margarida Faustino Jorge
Keyword(s):  
Decision Making ◽  
Local Government ◽  
Empirical Evidence ◽  
Financial Reporting ◽  
Internal Control ◽  
Perceived Usefulness ◽  
Financial Information ◽  
Decision Makers ◽  
Content Type ◽  
The Relationship

Purpose The purpose of this paper is to analyse the extent to which the perceived usefulness of financial information for internal decision making is affected by the internal control to which that information is subjected. Design/methodology/approach The research is positivist and quantitative, based on a cross-sectional analysis developed in the local government context. Data were collected from a survey to decision makers (politicians and chief officials) in charge of the financial area in all Portuguese municipalities. The response rate was approximately 49 per cent, assuring representativeness. Findings Regarding the perceived usefulness of financial and budgetary reporting for internal decision making, the results in the paper show that municipalities’ internal users’ attitudes towards using accrual-based financial reporting for decision making is changing. Additionally, internal decision makers consider financial and budgetary information as very useful for decision making, and the different types of internal control applicable to that information as very important. The results also clearly point to the existence of a significant and positive relationship between the internal control (including internal auditing) to which financial and budgetary information is subject, and its perceived usefulness for municipal decision making. Research limitations/implications The main limitations of this study are related to the way in which information was collected in order to obtain empirical evidence. The questionnaire, sent by e-mail, despite reaching a wide-range and dispersed population, cannot guarantee the truthfulness and integrity of the responses. Findings might have been affected by the fact that respondents may have been sympathetic to the reforms brought by the Official Local Government Accounting Plan (POCAL). Certainly, politicians linked to the political party that promoted those reforms would be predisposed in this way. Another limitation might concern the fact that new laws and regulations passed after POCAL, might have somehow affected the answers regarding the perceived usefulness of budgetary and financial information for internal decision making, as well as the importance of the internal control to which that information is subject. Practical implications The results of this study have important repercussions for the implementation of internal control systems at local government level. Particularly, they highlight the need to develop or improve internal control procedures to ensure budgetary and financial information reliability, which in turn determines its usefulness for decision-making purposes. Originality/value This research makes a contribution to the (scarce) literature on the relationship between internal control and the perceived usefulness of financial and budgetary information for decision making, particularly in the local government setting. It adds with further empirical evidence concerning the relationship between these two issues, helping to reinforce previous embryonic research in this field. As to policy making, this research also contributes by calling attention for the need to define the types of internal control financial information must be subject, a critical issue while assuring the usefulness of that information for decision making. This is particular important in current contexts of countries moving towards IPSAS-based financial reporting systems.

Kegunaan Informasi Akuntansi dalam Pengambilan Keputusan Internal oleh Unit Akuntansi Kuasa Pengguna Anggaran (UAKPA)

2017 ◽  
Vol 2 (4) ◽  
pp. 73-91
Author(s):  
Karno Pandu Wibowo
Keyword(s):  
Decision Making ◽  
Accounting Information ◽  
Information Use ◽  
External Factors ◽  
Accrual Accounting ◽  
Related Factors ◽  
Internal Factors ◽  
Level Of Use ◽  
Accrual Basis ◽  
Cash Basis

This study aims to determine the usefulness level of accounting information (on cash basis and accrual basis) in central goverment agencies internal decision-making process. In addition, this study also aims to determine the influence of the organization’s external factors, the organization's internal factors and Individual Actor’s Characteristic Related Factors on the level of use of accounting information in central goverment agencies internal decision making.The research show that  level of accrual accounting information use in the context of internal decision making is high. In addition it showed differences between  level of cash-based accounting information use and accrual-based accounting information use. This study also addressed that the organization’s external factors, the organization's internal factors and individual actor’s characteristic related factors significantly influence both level of accounting information use  on cash basis and accrual basis in the internal decision-making. Except for the organization’s external factors  did not significantly affect the level of accrual accounting information use  in the internal decision-making.   Abstrak Penelitian ini bertujuan untuk mengetahui tingkat kegunaan informasi akuntansi (berbasis kas dan akrual) dalam proses pengambilan keputusan internal Unit Akuntansi Kuasa Pengguna Anggaran (UAKPA). Selain itu penelitian ini juga bertujuan untuk mengetahui pengaruh faktor eksternal organisasi, faktor internal organisasi dan faktor karakteristik individu pengguna terhadap tingkat penggunaan informasi akuntansi dalam pengambilan keputusan internal Unit Akuntansi Kuasa Pengguna Anggaran (UAKPA).Temuan peneliti menunjukan bahwa tingkat penggunaan informasi akuntansi berbasis akrual tinggi dalam rangka pengambilan keputusan internal. Selain itu penelitian menunjukan adanya perbedaan tingkat penggunaan antara informasi akutansi berbasis kas dan informasi akutansi berbasis akrual. Penelitian juga menujukan bahwa faktor eksternal organisasi, faktor internal organisasi dan faktor karakteristik individu pengguna berpengaruh signifikan terhadap tingkat penggunaan informasi akuntansi (berbasis kas dan akrual) dalam pengambilan keputusan internal. Kecuali untuk faktor eksternal organisasi tidak berpengaruh signifikan terhadap tingkat penggunaan informasi akuntansi akrual dalam pengambilan keputusan internal.

Comparison of the perception of overt and covert options in IPSAS financial statements by intergovernmental organizations

Tékhne ◽  
2018 ◽  
Vol 16 (1) ◽  
pp. 28-39
Author(s):  
Berit Adam
Keyword(s):  
Public Sector ◽  
European Commission ◽  
Accounting Standards ◽  
Financial Statements ◽  
Criminal Court ◽  
Intergovernmental Organizations ◽  
Accounting System ◽  
Accrual Accounting ◽  
Public Sector Accounting ◽  
Primary Reference

AbstractSince 2012, the European Commission has embarked on the ambitious project to harmonize public sector accounting rules on all levels of government within Europe, mainly to improve the quality as well as the comparability of financial data. Although International Public Sector Accounting Standards were deemed not to be suitable for a simple take-over because of various reasons, they nevertheless shall function as a primary reference point for developing European Public Sector Accounting Standards. A total of 21 out of 28 central governments have already reformed their accounting standards to accrual accounting, and some of them have also relied on IPSAS in this exercise. Apart from governments, various international and supranational governmental organizations have also since the end of the 2000’s been reforming their accounting system to accrual accounting, and have in the same way relied on existing IPSAS. This paper explores accounting practices found in ten intergovernmental organizations (Commonwealth Secretariat, Council of Europe, European Commission, IAEA, INTERPOL, ITER, NAPMA, OECD, International Criminal Court, WFP) whose statements are prepared in compliance with IPSAS. It analyzes how overt and covert options contained in IPSAS with relevance to the activities of intergovernmental organizations are exercised and evaluates in which areas of accounting material differences in accounting practices can be found, which may hinder the comparability of financial statements prepared on the basis of IPSAS.

It is not always bad news

2018 ◽  
Vol 31 (5) ◽  
pp. 1319-1348 ◽  
Author(s):  
Mary-Anne McNally ◽  
Warren Maroun
Keyword(s):  
Impression Management ◽  
Financial Reporting ◽  
Value Creation ◽  
Sustainability Reporting ◽  
Management Control ◽  
Financial Information ◽  
Accounting System ◽  
Integrated Reporting ◽  
Content Type ◽  
Corporate Reporting

Purpose The purpose of this paper is to challenge the notion that non-financial reporting is mainly about impression management or is only a superficial response to the hegemonic challenges posed by the sustainability movement. It focuses on the most recent development in sustainability reporting (integrated reporting) as an example of how accounting for financial and non-financial information has the potential to expand the scope of accounting systems, promote meaningful changes to reporting processes and provide a broader perspective on value creation. Design/methodology/approach The research focuses on an African eco-tourism company which has its head office in South Africa. A case study method is used to highlight differences in the presentation of an integrated business model according to the case entity’s integrated reports and how individual preparers interpret the requirement to prepare those reports. Data are collected using detailed interviews with all staff members involved in the preparation process. These are complemented by a review of the minutes of the company’s sustainability workshops and integrated reports. Findings A decision by the case organisation to prepare an integrated report gives rise to different forms of resistance which limits the change potential of the integrated reporting initiative. Resistance does not, however, preclude reform. Even when individual preparers are critical of the changes to the corporate reporting environment, accounting for financial and non-financial information expands the scope of the conventional accounting system which facilitates broader management control and promotes a more integrated conception of “value”. Research limitations/implications Integrated reporting should not be dismissed as only an exercise in corporate reporting and disclosure; it has a transformative potential which, given time, can enable new ways of managing business processes and articulating value creation. Originality/value This study answers the calls for primary evidence on how the requirement or recommendation to prepare an integrated report is being interpreted and applied by individual preparers. The findings add to the limited body of interpretive research on the change potential of new reporting frameworks. In doing so, the research provides theoretical support for developing arguments which challenge the conventional position that integrated reporting is little more than an exercise in impression management.

Mitchell’s Brewery: entrepreneurship challenges in the South African craft beer industry

2018 ◽  
Vol 8 (4) ◽  
pp. 1-35
Author(s):  
Geoff Bick ◽  
Fezile Sidubi
Keyword(s):  
Decision Making ◽  
South African ◽  
Work Experience ◽  
Strategic Decision ◽  
Strategic Decision Making ◽  
The South ◽  
School Students ◽  
Content Type ◽  
Craft Beer ◽  
Beer Industry

Learning outcomes They are as follows: to identify strategic growth opportunities for SMEs in the South African craft beer industry; to understand the complexities associated with operating a craft beer SME in the South African alcohol sector and analyse the SME’s strategic decision-making process that happens as a result; to understand the challenges and identify opportunities for entrepreneurship and growth in an emerging economy and niche segment; to develop a differentiation strategy for a small player in a competitive market; and to impart industry-specific knowledge and insight on the craft brewing industry. Case overview/synopsis The case is centred on the challenges that Hein Swart, managing director of Mitchell’s Brewery, is facing in sustaining business operations amid heavy regulations and increasing competition from existing craft breweries. In addition, there is the entry of a different type of competitor into the South African market that did not exist previously. The case narrative broadly presents several industry themes that interact with each other and create the existing complexities. Complexity academic level This case is targeted at postgraduate business school students with some work experience who want to build their critical thinking, business management and strategic decision-making skills such as Masters of Business Administration (MBA) and Executive MBA academic programmes, and also delegates on Executive Education programmes. The case is expected to be used as a case study for courses in entrepreneurship and strategic management; however, it can also be applied in strategic marketing courses. Supplementary materials Teaching Notes are available for educators only. Please contact your library to gain login details or email [email protected] to request teaching notes. Subject code CSS 3: Entrepreneurship

Fund accounting and government-wide financial reporting during the Pre-IPSAS implementation era from a Nigerian experience

2020 ◽  
Vol 32 (3) ◽  
pp. 339-358
Author(s):  
Christopher Enyioma Alozie
Keyword(s):  
Information Asymmetry ◽  
Financial Reporting ◽  
Financial Statements ◽  
Accounting System ◽  
Accrual Accounting ◽  
Public Funds ◽  
Content Type ◽  
Financial Position ◽  
Fund Accounting ◽  
Fund Balances

PurposeThis paper assessed accuracy level in accounting for government funds in Nigeria's federal treasury and their faithful presentation in government financial reporting. It aimed to determine whether the reported annual balances in Nigeria's financial reporting were reliable or otherwise. Data used in analysis were obtained from secondary sources from federal treasury.Design/methodology/approachEx-post “facto” analysis method was adopted in the study involving the use of statistical techniques of absolute or aggregate mean percentage error derived from differences between recomputed and published fund balances and was employed. This was augmented with interactive review meetings of the initial case research report with the management of Nigeria's audit agency.FindingsResults distilled from the consolidated revenue fund (CRF), development fund and public debt show that recomputed values were greater than the fund balances in the gazetted financial statements. Results for contingency fund (CTF), federation account fund (FAF), special trust fund (STF) and sundry deposit fund yield equal figures and accurate. The paper concludes that there were serial understatements of the core public fund balances in the financial statements over the years. This trend of reporting incorrect in three core public funds in financial statements rendered Nigeria's financial position unreliable in the affected years for decisions. It also facilitated frauds, mismanagement of funds and corrupt practices.Research limitations/implicationsThe scope of the research is restricted to assessment of degree of accuracy in fund accounting, faithful representation of the respective fund balance in the liabilities side of FGN balance sheet and the reliability of the financial position. But, it did not consider or cover the implementation of International Public Sector Accounting Standards (IPSASs) in federal treasury since FGN had not issued any full IPSAS–oriented financial statements as on 2015.Practical implicationsIdentification of deficiencies in fund account balances, structural defects in fund accounting and acts of understatement of carrying balances in CRF and capital development fund (CDF) implies that the aggregate core fund liabilities reported in financial statement of government entities without corresponding assets do not actually reflect a true and fair financial position in some countries. It reveals remarkable degree of financial information asymmetry in government financial reporting. Illusionary fund accounting has direct linkage to poor fiscal governance in many sovereign with associated sub-optimal delivery of public goods and service level distress syndrome in many economies; lead to poverty, unemployment, crisis and macroeconomic disturbances.Social implicationsThe study contributes to the development of fund accounting system; strengthening government financial reporting architecture and practices. It provides framework for tracking financial information asymmetry in government financial reporting and mismanagement of public funds. It provides platform to effect necessary adjustment (correction) during the “first time 3-year adoption” adjustment window in Nigeria. Flowing from the findings, it advocates for institutionalization of government fund accounting standards and provides evidence for migration to accrual accounting system in countries that have not already implemented it. Evaluation system developed herein will improve fund management in federal treasury and contribute to efficient public financial management, good governance and enhance development of public accounting practice.Originality/valueThis exploratory empirical research is the one to ever evaluate accuracy level of fund accounting in sovereign entities and faithful representation in government's financial position prior to implementation of accrual accounting and financial reporting. The study established substantial level of illusionary accounting for public funds and information asymmetry in published government's financial reporting. It is necessary to rectify these discrepancies in fund accounting and financial reporting prior to and or during the first three years of the IPSAS transition implementation programme. These research deliverables provide adopters with relevant data for adjustment accounting during the transition period in strengthening public financial reporting in order to realize the benefit of full IPSAS accrual accounting.

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