Governmental accounting and budgeting in Malta and Poland – a different dance to the same tune

• DOI: https://doi.org/10.1108/IJPSM-12-2021-0284
• Published date: 09 September 2022
• Date: 09 September 2022
• Pages: 783-805
• Subject Matter: Public policy & environmental management,Politics,Public adminstration & management
• Author: Magdalena Kowalczyk,Josette Caruana

Governmental accounting and

budgeting in Malta and Poland –

a different dance to the same tune

Magdalena Kowalczyk

Pozna

n University of Economics and Business, Pozna

n, Poland, and

Josette Caruana

Department of Accountancy, Faculty of Economics Management and Accountancy,

University of Malta, Msida, Malta

Abstract

Purpose –This paper compares governmental accounting and budgeting in two European Union (EU)

member states, analysing the developments in each country as to how they “fit”into the EU’s harmonization

project and the push towards the implementation of accrual accounting compliant with the International Public

Sector Accounting Standards (IPSAS).

Design/methodology/approach–An explanatory multiple case study is used to describe the structures and

changes in governmental systems (accounting and budgetary) in Malta and Poland. The methodology takes a

qualitative interpretative approach, examining the underlying legislations and related ministerial publications

as secondary sources.

Findings –Focusing on the output from financial accounting and budgetary systems, the results illustrate

how organizations respond in a different manner to similar institutional pressures. In particular, Poland shows

no inclination to adopt the IPSAS, but emerges with a sophisticated budgeting system while Malta is more

focused on developing its financial reporting in line with the IPSAS. The theoretical lens highlights that while

both countries tend towards pragmatic legitimacy, Poland appears more inclined towards exchange

legitimacy, and Malta is more subject to influence legitimacy.

Research limitations/implications –At a practical level, this study should be read by public sector

accounting standard setters. It illustrates how EU member states are engaging with the IPSAS, emphasizing

the ambitious nature of the EU’s harmonization project, in spite of the structural legitimacy that the EU

institution emanates.

Originality/value –Previous comparative international governmental accounting studies have examined

accounting reform processes and developed or applied various theoretical models to try to understand the

process. This study looks at the output from such reform processes. The two countries are seemingly

experiencing the same type of pressures exerted by the demands of EU membership. However, the translation

of the same external macro-forces at macro-level to micro (organizational)-level results in different compliance

with the desired harmonization of governmental accounting systems.

Keywords Budgetary reporting, Comparative study, EPSAS, Financial reporting, Harmonization,

Institutional forces, IPSAS, Public sector accounting

Paper type Research paper

1. Introduction

Organizational responses to institutional pressures are not necessarily uniform.

Organizations respond in a different manner to similar institutional pressures depending

upon the multiplicity of internal and external institutional pressures, as well as the acceptable

responses available (Eden et al., 2001). The responses may be either symbolic or substantive

(Elsbach and Sutton, 1992).

There are “different expectations for different types of organizations”(Tolbert, 1985, p. 2),

and the effect of the external environment on each organization would vary due to inherent

differences between organizations (Zucker, 1987). Some organizations may resist the

institutionalization process (Covaleski and Dirsmith, 1988), while others may actively seek to

shape their institutional environment accordingly (Carruthers, 1995). As organizations react

Governmental

accounting and

budgeting

783

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Received 28 December 2021

Revised 14 April 2022

24 June 2022

Accepted 18 August 2022

International Journal of Public

Sector Management

Vol. 35 No. 7, 2022

pp. 783-805

© Emerald Publishing Limited

0951-3558

DOI 10.1108/IJPSM-12-2021-0284

to internal and external forces, a variety of responses by different organizations within an

organizational field are recognized in institutional theory (Dillard et al., 2004).

The expectation is for a greater degree of conformity (isomorphism). But this would

depend on the related need for greater legitimacy, as not all actions are viewed as equally

worthwhile (Dillard et al., 2004). There are differences in the ways the countries have

perceived the importance of public sector accrual accounting reforms in their jurisdictions’

(Adhikari and G



arseth-Nesbakk, 2016). Such different perceptions would ultimately be

reflected in the type of reporting actually produced. There are remarkable differences

regarding whether countries acknowledge having experien ced large implementation

challenges and the extent to which the reform benefits have been achieved (Polzer et al.,

2020 p. 134).

The objective of this paper is to examine the output from the public sector accounting and

budgeting systems in order to see the result of the reactions by two central governments to

seemingly the same pressures. The study elaborates on the outcome of public sector

accounting reform processes and highlights the resulting heterogeneity in practice, thus

affecting the expected level of harmonization. Although the two countries in this study are

subject to similar forces at macro-level, originating from the same institutions (basically, the

European Union [EU] and the International Monetary Fund [IMF]), the reform concept is quite

different.

Malta and Poland became member states of the EU in May 2004. Both countries are

classified as high-income countries by the World Bank. The IMF considers Malta as an

advanced economy, while Poland was the first country from the former Soviet bloc to be

graded as a developed economy. Both economies appear to be growing at a good rate;

however, as members of the EU, both are still struggling to achieve the European average

(refer to Figure 1). Thus, in the context of the group of countries that they are associated with,

Malta and Poland can be considered emerging economies. An emerging economy is one that

has some characteristics of a developed economy but does not fully meet the standard. Public

sector accounting is important in achieving economic development goals in emerging

economies (Van Helden and Uddin, 2016).

The two countries are fundamentally different –geographically and economically (refer to

Table 1). Poland is in East Europe, while Malta is in the centre of the south border of the

continent. The history of both countries is dominated by eras of occupation by super powers,

Figure 1.

GNI per capita

IJPSM

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