IPSAS for European Union member states as starting points for EPSAS. Analysis of the discourses among countries and stakeholders

• Date: 13 December 2019
• Pages: 247-264
• Published date: 13 December 2019
• DOI: https://doi.org/10.1108/IJPSM-12-2018-0276
• Author: Tobias Polzer,Christoph Reichard
• Subject Matter: Public policy & environmental management,Politics,Public adminstration & management

IPSAS for European

Union member states as

starting points for EPSAS

Analysis of the discourses among

countries and stakeholders

Tobias Polzer

University of Sussex Business School, University of Sussex, Falmer, UK, and

Christoph Reichard

Department of Public Management, University of Potsdam, Potsdam, Germany

Abstract

Purpose –The European Commission is pursuing an initiative to establish European Public Sector

Accounting Standards (EPSAS) as a common mandatory set of rules for financial reporting of all member

states of the European Union (EU). As a basis for developing EPSAS, the International Public Sector

Accounting Standards (IPSAS) are being used. The purpose of this paper is to structure and analyze the

discussion around EPSAS, with particular emphasis on the arguments that were brought forward by

governments and other stakeholders of various EU countries regarding the suitability of IPSAS.

Design/methodology/approach –Drawing on several schools of thought in new institutional theory, how

the prevailing institutional contexts in countries influence the debates is explored. Empirically, this research

investigates the responses to a consultation on the suitability of IPSAS for EU member states and takes a

closer look, via document analysis, at France and Germany as two critical cases.

Findings –It is found that, first, the majority of arguments from respondents are framed in a rational choice

way. Second, skeptics of IPSAS tend to make arguments rather from positions closer to historical and/or

sociological institutionalism.

Research limitations/implications –The paper illustrates that while technical matters around EPSAS

seem solvable, political, historical and cultural differences go deeper, and need to be addressed by change

agents. Regarding limitations of the research, first, the analysis concentrates on financial reporting and does

not deal with the implications for more reliable and comparable national accounts in the context of the

European System of Accounts (ESA, 2010). Second, it is focused on debates in the context of the EPSAS

proposal, and there is a need for an evaluation after the changes have gone live.

Originality/value –The study looks at a text genre that has so far received less attention in public sector

accounting research: responses to consultations. The paper contributes to the literature by showing how

institutional contexts matter in settings characterized by contestation of reform contents.

Keywords EU, Content analysis, EPSAS, IPSAS, New institutional theory, Accounting reforms,

Contestation of reform contents

Paper type Research paper

1. Introduction

For some years,the European Commission(EC), and more particularlyits Directorate-General

for Statistics (Eurostat), has been pushing forward an initiative to establish European Public

Sector Accounting Standards (EPSAS) (Aggestam-Pontoppidan and Brusca, 2016; European

Parliament,2015; Jorge et al., 2019). The major aim of this initiative is to improve transparency,

reliability and comparability of financial accounting and reporting of the governments of the

European Union (EU) member states, not least as a lesson from the financial crisis of 2007/ 2008

(Jorgeet al., 2016). Common rules are regarded as key prerequisites for sustainable public

finances of member states (European Commission, 2013).

Althoughthe majority of EU governments have moved to accrualaccounting in thelast few

years –even if not always on the central government level –there is still a mix of diverging

Received 30 December 2018

Revised 12 April 2019

18 August 2019

10 October 2019

Accepted 10 November 2019

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

https://www.emerald.com/insight/0951-3558.htm

IPSAS for

European

Union member

states

InternationalJournalof Public

SectorManagement

Vol.33 No. 2/3,2020

pp.247-264

©EmeraldPublishingLimited

0951-3558

DOI10.1108/IJPSM-12-2018-0276

247

accounting practices across Europe, which prevents coordinated and transparent fiscal

policy-making at EU level (Bruscaet al., 2015; EY, 2012). This is the result of different historic

accounting traditions, and also of different regul ations in the member states. Therefore,

potential opportunities and caveats of EPSAS are assessed quite unequally, and proposed

contents and strategies for change are discussed in controversial ways at times (European

Commission, 2012).

At the center of the ongoing debate about a common European public sector accounting

framework, and of our analysis, are the International Public Sector Accounting Standards

(IPSAS): at first, the EC intended to use IPSAS as a template for establishing a set of

mandatory accounting standards for financial reporting in all EU member states. Although

“IPSAS cannot easily be implemented in EU member states as it stands currently, […they]

represent an indisputable reference for potential EU harmonized public sector accounts”

(European Commission, 2013, p. 8). Research on the suitability of IPSAS as a basis for

EPSAS has echoed this (Aggestam-Pontoppidan and Andernack, 2016; Brusca et al., 2018;

Manes Rossi et al., 2016).

This paper intends to structure and analyze the ongoing discourse on E/IPSAS that is

taking place on both the EU and member state levels, covering the articulated opinions and

interests of major actors. We do this by looking at responses to a public consultation on the

suitability of IPSASfor EPSAS –a text genre that has so far receivedless attention in public

sector accounting research, contrary to studies in private-sector accounting regulation

(see e.g. Botzem, 2014; Linsley et al., 2016). Taking a new institutional perspective, we are

particularly interested in how different institutional contexts –e.g. different accounting

cultures, such as the Anglo-Saxon fair value focus in contrast to the Germanic prudence

principle (Hellman, 2008; Nobes andParker, 2016), and issues of isomorphism (e.g. Oulasvirta,

2014) –influence the discussion. We also investigate what roles particular governments and

stakeholders (e.g. Ministries of Finance (MoFs), auditors, accountancy firms or academics)

play in the discourse. Our research questions are as follows:

RQ1. What major issues have been brought forward by participating actors in the

Eurostat consultation on IPSAS?

RQ2. How have the prevailing institutional contexts in countries influenced the debates?

The research deals primarily with the conceptual framework and the major accounting

standards, but not with the more advanced aspects of EPSAS, such as issues of

governance or first-time implementation (see e.g. European Commission, 2014; Jones and

Caruana, 2014). Empirically, we take two steps. First, we perform a content analysis of the

responses of a consultation held by Eurostat on the suitability of IPSAS. Second, we

analyze the reactions of France and Germany, two countries that present critical cases due

to the disagreement of their central governments about using IPSAS as the basis for

developing EPSAS.

Although the consultation was conducted already in 2012, it is still worth to analyze its

results. This is because since then there have not been any other pan-European surveys on

the role of IPSAS in the ongoing process of EPSAS development among representatives of

governments and other relevant stakeholders. There is only anecdotal information available

about the positions and opinions of governments with regard to the IPSAS/EPSAS issue

(Adhikari and Gårseth-Nesbakk, 2016; European Commission, 2018). The results of the

consultation therefore provide rich information and insight on the positions and perceptions

of major stakeholders in the earlier stage of the still ongoing process of developing

common European standards. When analyzing the development of EPSAS, we take recent

developments into account (Caruana et al., 2019; Jorge et al., 2019), particularly when

outlining the reactions of France and Germany (Brusca et al., 2018; Calmel, 2014; Eulner and

Waldbauer, forthcoming; German SAI, 2017).

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