“Does your walk match your talk?” Analyzing IPSASs diffusion in developing and developed countries

• Date: 19 November 2019
• Pages: 117-139
• DOI: https://doi.org/10.1108/IJPSM-03-2019-0071
• Published date: 19 November 2019
• Author: Tobias Polzer,Levi Gårseth-Nesbakk,Pawan Adhikari
• Subject Matter: Public policy & environmental management,Politics,Public adminstration & management

“Does your walk match your

talk?”Analyzing IPSASs

diffusion in developing and

developed countries

Tobias Polzer

University of Sussex Business School, University of Sussex, Brighton, UK

Levi Gårseth-Nesbakk

Nord University Business School, Bodø, Norway, and

Pawan Adhikari

Essex Business School, University of Essex, Colchester, UK

Abstract

Purpose –The purpose of this paper is to provide a global overview of the adoption status of International

Public Sector Accounting Standards (IPSASs) in the different contexts of developed and developing countries

on central government level, particularly delineating key reform issues and attempts to overcome these.

Design/methodology/approach –Drawing on an analytical framework that combines neo-institutional

theory with diffusion theory, prior research and official documents were re-analysed.

Findings –There are substantial differences regarding whether countries acknowledge having experienced

large implementation challenges and the extent to which the reform benefits have been achieved. The study

sheds light on the (institutional) underpinnings of these differences.

Research limitations/implications –First, the analysis could be extended to regional and local

governments, as well as social funds. Both qualitative and quantitative strategies are suggested. Second, the

implementation of the conceptual framework deserves further attention. Third, further research should more

thoroughly scrutinise cost-benefit analyses used for justifying the (non)implementation of IPSASs, and in

particular the assumptions that are being made in such analyses.

Practical implications –The paper informs policymakers and standard setters by delineating the areas

and issues complicating the widespread adoption of IPSASs across countries, including pointing out

directions to overcome these.

Social implications –Substantial amounts of public money are invested internationally to converge

accounting standards and translate them into native languages. A close(r) monitoring is needed to ensure that

these efforts obtain sufficient value for money.

Originality/value –This study is original as it applies an analytical framework that combines neo-

institutional theory and diffusion theory to examine public sector accounting convergence issues

internationally. Such an approach explicitly puts a focus on decoupling between reform “talk”(decision) and

“walk”(implementation) and helps to analyse the reasons for this decoupling.

Keywords Developing countries, Diffusion, Developed countries, Diffusion theory, IPSASs,

Neo-Institutional theory

Paper type Research paper

Introduction

Steps taken by Western developed countries to adopt public sector accounting

reforms –mainly accrual accounting (henceforth ACC.A) –have resulted in an intense

academic debate (see, e.g. Manes Rossi et al., 2016, amongst many others). Whilst some

academics are convinced of the benefits of ACC.A (Brusca and Martínez, 2016; Bergmann,

2012), othersbelieve these are largely overstated(Guthrie, 1998; Bromwichand Lapsley, 1997).

Cases where politicians and other users have actually utilised accrual information in

decision-makingare scarce (Ezzamel et al.,2014; Hepworth, 2015; Liguori and Steccolini, 2018).

Received 8 March 2019

Revised 12 July 2019

Accepted 5 October 2019

The current issue and full text archive of this journal is available on Emerald Insight at:

www.emeraldinsight.com/0951-3558.htm

The authors are grateful to Noel Hyndman for the inspiration for the title.

Analyzing

IPSASs

diffusion

InternationalJournalof Public

SectorManagement

Vol.33 No. 2/3,2020

pp.117-139

©EmeraldPublishingLimited

0951-3558

DOI10.1108/IJPSM-03-2019-0071

117

Developed countries are becoming increasingly convinced of the need for ACC.A, either as a

means for demonstrating governments’long-term sustainability or for managing the

consequencesof fiscal and sovereign debt crises(Adhikari and Gårseth-Nesbakk, 2016). It has

been argued that the recent financial crisis has made the adoption of ACC.A inevitable for

public sectorentities in Western countries (Ball and Pflugrath, 2012). However,the debate has

now shifted towards the significance of the adoption of International Public Sector

Accounting Standards (IPSASs) for achieving the above-mentioned aims (Christiaens et al.,

2015; ManesRossi et al., 2015). The IPSASssupposedly supplement the effective use of ACC.A

and reinforce intended benefits for improved public sector governance and accountability

(Ball and Pflugrath, 2012; Manes Rossi et al., 2016). Mirroringthe scope of this special issue,

this study centres on the diffusion of IPSASs in developed and developing countries.

Although not to the same extent as studies of Western countries, research covering the

efforts of developing countries to streamline their public sector accounting systems has

increased in recent years (Adhikari and Mellemvik, 2010; Hopper et al., 2017). Particularly,

international organisations –the World Bank (WB) and the International Monetary Fund

(IMF) –push ACC.A and IPSASs as being allegedly important to improve day-to-day

accounting (Goddard et al., 2016; Harun et al., 2012). These reforms are promoted as being

learnt from the “best (accounting) practices”of Western countries. Their adoption in

developingcountries is reckoned tobe paramount to ensure soundgovernance, accountability

and sustained economic growth (ACCA, 2017). More recently, however, challenges associated

with adopting ACC.A and IPSASs in developing countries have been acknowledged (Bakre

et al., 2017; Goddard et al., 2016; Hopper et al., 2017; Lassou, 2017), and their suitability has been

questioned (Hepworth, 2017). This has led international organisations and donors to promote

the CashBasis IPSAS as an intermediate step toimprove the quality of accounting information

and financial reporting in these countries (Adhikari et al., 2015). The Cash Basis IPSAS is

predicated on the assumption that it would help developing countries obtain the required

capacity and competence to undertake a transition towards ACC.A in the longer term.

Extant work demonstrates that while IPSASsadoption (we refer to this in this paper as the

“talk”) has become largely an externally driven exercise in a range of countries, the (actual)

implementation and outcomes (i.e. the “walk”) have been often disappointing (Anglo-Saxon

countries beingan exception). Critics state thatIPSASs privilege the interestsof international

financial organisations (e.g. the WB and theIMF ), policymakers and standard setters(e.g. the

Organisation for Economic Cooperation and Development (OECD), the International

Federation of Accountants (IFAC) and the European Commission), and professional

accounting firms and associations (e.g. the Association of Chartered Certified Accountants

(ACCA) or PricewaterhouseCoopers), marginalising the context-specific elements, as well as

the actual accounting needs of countries (Adhikari and Gårseth-Nesbakk, 2016).

This research aims to provide an overview of the adoption status of IPSASs in the

different contexts of developed and developing countries on central government level,

particularly delineating key reform issues and attempts to overcome these. Mirroring these

aims, the research question is as follows:

RQ. What is the current status of the adoption and implementation of the IPSASs at

central government level in developing and developed countries?

The material for this paper was derived through document analysis and a synthesis of prior

research. Drawing on an analytical framework that combines neo-institutional theory

(Meyer and Rowan, 1977; DiMaggio and Powell, 1983) and diffusion theory (Rogers, 2003;

Abrahamson, 1991), this material is re-analysed. The research is relevant, as substantial

amounts of public money are invested internationally to streamline public sector accounting

systems. A close(r) monitoring is needed to ensure that these efforts obtain sufficient value

for money. In a nutshell, it is found that there are considerable differences regarding

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