Sage Journals: Discover world-class research

Abstract

This article takes a comparative international accounting history (CIAH) approach (Carnegie and Napier, 2002) to describe and discuss motivations for, and developments in the adoption of accrual accounting in five Anglo-American countries: Australia, Canada, New Zealand, the United Kingdom, and the United States. Although the adoption of accrual accounting across these countries over the last two decades can be attributed to the 1980s philosophy of new public management (NPM), the CIAH perspective illuminates similarities and differences in the nature of accrual accounting practices. The differences are due, in large part, to the timing and speed of change required by government, as well as the role played by the profession. Several tensions have arisen from the adoption of accrual accounting and these are also outlined. Given the inclusion of five countries and a span of 30 years, this article is necessarily in the nature of an overview.

Keywords

Accrual accounting Australia Canada government new public management NPM New Zealand public sector UK US

Get full access to this article

View all access options for this article.

References

Accounting Standards Board (2011) The Committee on Accounting for Public-benefit Entities (CAPE). Available at: http://www.frc.org.uk/asb/about/committee4.cfm (accessed 10 September 2011).

Accounting Standards Review Board (2010) Suitability of IPSAS Review, Report of the Working Group, September.

Auditor General of Canada (2003) Report of the Auditor General on the Condensed Financial Statements of the Government of Canada. Available at: http://www.fin.gc.ca/afr-rfa/2003/afr03_2-eng.asp (accessed 23 July 2010).

Australian Accounting Standards Board (2010) About the AASB: Frequently asked questions. Available at: http://www.aasb.com.au/About-the-AASB/Frequently-asked-questions.aspx (accessed 16 July 2010).

Australian National Audit Office and CPA Australia (2008) Monitoring and Reporting Financial and Non-financial Performance of Australian Government Organisations. Report, University of Canberra Corporate Governance ARC Project, Issues paper series No.5, February.

Baker

Rennie

(2006) Forces leading to the adoption of accrual accounting by the Canadian federal government: An institutional perspective. Canadian Accounting Perspectives 5(1): 83–112.

Ball

Dale

Eggers

Sacco

(1999) Reforming Financial Management in the Public Sector: Lessons U.S. Officials can Learn from New Zealand. Report, Reason Public Policy Institute, Policy Study No.258, May.

Barton

(2004) How to profit from defence: A study in the misapplication of business accounting to the public sector in Australia. Financial Accountability & Management 20(3): 281–304.

Barton

(2009) The use and abuse of accounting in the public sector financial management reform program in Australia. Abacus 45(2): 221–248.

10.

Baskerville

Newby

(2002) Due process failure in sector-neutral accounting standard-setting. Financial Accountability & Management 18(1): 1–23.

11.

Bradbury

Baskerville

(2007) Sector-neutral accounting standards: A ten-year experiment. Working paper series, Victoria University of Wellington, Working paper no. 48.

12.

Broadbent

Guthrie

(2008) Public sector to public services: 20 years of “contextual” accounting research. Accounting, Auditing & Accountability Journal 21(2): 129–169.

13.

CAmagazine (1991) Ten years and accounting. CAmagazine September: 24–31.

14.

CAmagazine (1993) PSAAC undergoes restructuring. CAmagazine February: SS2.

15.

Canadian Institute of Chartered Accountants (1980) Financial Reporting by Governments. Toronto: Canadian Institute of Chartered Accountants.

16.

Canadian Institute of Chartered Accountants (2000) Archived 2 March 2000 website available at: http://web.archive.org/web/20000302105104/www.cica.ca/cica/cicawebsite.nsf/public/SGPublicSector (accessed 23 July 2010).

17.

Canadian Institute of Chartered Accountants (2010) Public Sector Accounting Handbook. Toronto: Canadian Institute of Chartered Accountants.

18.

Canadian Institute of Chartered Accountants (2012) Public Sector Accounting Board Terms of Reference. Available at: http://www.frascanada.ca/public-sector-accounting-board/what-we-do/terms-of-reference/index.aspx (accessed 31 May 2012).

19.

Carnegie

Napier

(2002) Exploring comparative international accounting history. Accounting, Auditing & Accountability Journal 15(5): 689–718.

20.

Carnegie

West

(2005) Making accounting accountable in the public sector. Critical Perspectives on Accounting 16 (7): 905–928.

21.

Carnegie

Wolnizer

(1996) Enabling accountability in museums. Accounting, Auditing & Accountability Journal 9(5): 84–99.

22.

Chan

(2003) Government accounting: An assessment of theory, purposes and standards. Public Money & Management January: 13–20.

23.

Chan

(2008) Chapter 3: The history of American government accounting reform. Available at: http://jameslchan.com/papers/ChanAmGASCh3Sept08.pdf (accessed 29 October 2011).

24.

Chow

Humphrey

Moll

(2007) Developing whole of government accounting in the UK: Grand claims, practical complexities and a suggested future research agenda. Financial Accountability & Management 23(1): 27–54.

25.

Chow

Humphrey

Moll

(2008) Whole of Government Accounting in the UK. ACCA Research Report 101. London: Association of Chartered Certified Accountants.

26.

Christensen

(2002) Accrual accounting in the public sector: The case of the New South Wales government. Accounting History 7(2): 93–124.

27.

Christensen

Parker

(2010) Using ideas to advance professions: Public sector accrual accounting. Financial Accountability & Management 26(3): 246–266.

28.

Chua

Sinclair

(1994) Interests and the profession-state dynamic: Explaining the emergence of the Australian Public Sector Accounting Standards Board. Journal of Business Finance & Accounting 21(5): 669–705.

29.

Comes

Riley

(1999) Federal financial statements: The revolution is here! Journal of Accountancy June: 53–63.

30.

Congressional Budget Office, Congress of the United States (1977) Federal financial reporting: Accrual accounting and the budget. Technical analysis paper, June.

31.

Denning

(2000) Governments are different. CAmagazine December: 32–34.

32.

Department of Finance, Canada (2002) Annex 5: Implementation of full accrual accounting in the federal government’s financial statements. Available at: http://www.fin.gc.ca/ec2002/eca5-eng.asp (accessed 18 September 2011).

33.

Devonport

van Zijl

(2010) Standard setting for financial reporting in the New Zealand public sector. Paper presented at the sixth Accounting History International Conference, Wellington, NZ, August.

34.

Dupuis

(2004) Full Accrual Accounting. Report, Parliamentary Research Branch, Library of Parliament, Canada, PRB 04-04E, 1 May.

35.

Dyer

(1996) Financial management in the Bowsher years – progress made. The Journal of Government Financial Management 45(3): 18–23.

36.

Ellis

Mitchell

(2002) Outcome-focused Management in the United Kingdom. Report, OECD.

37.

Ellwood

(2002) The financial reporting (r)evolution in the UK public sector. Journal of Public Budgeting, Accounting and Financial Management 14(4): 565–594.

38.

Ellwood

Newberry

(2007) Public sector accrual accounting: Institutionalising neo-liberal principles? Accounting, Auditing & Accountability Journal 20(4): 549–573.

39.

External Reporting Board (2011) Accounting standards framework: A multi standards approach. Position paper, September.

40.

Federal Accounting Standards Advisory Board (2010) FASAB facts. Available at: http://www.fasab.gov/pdffiles/fasab_facts_2009.pdf (accessed 16 July 2010).

41.

Federal Accounting Standards Advisory Board (2011) The history of FASAB. Available at: http://www.fasab.gov/about/our-history/the-history-of-fasab/ (accessed 31 October 2011).

42.

Fédération des Experts Comptables Européens Public Sector Committee (2007) Accrual Accounting in the Public Sector. Report, Fédération des Experts Comptables Européens, January.

43.

Financial Accounting Foundation (2010) 2009 Annual Report.

44.

Financial Reporting Council (2010) Bulletin 2010/05-16 December 2010. Available at http://www.frc.gov.au/bulletins/2010/05.asp (accessed 17 March 2011).

45.

Financial Reporting Council (2011) FRC Annual Report 2010–2011. Available at: http://www.frc.gov.au/reports/2010_2011/frc_ar_2010-11-09.asp (accessed 21 February 2012).

46.

Foltin

(2008) Unrest in government accounting. The CPA Journal March: 26–31.

47.

Government Accountability Office (2011) Statement of the Acting Comptroller General of the United States, 2010 Financial Report of the United States Government. Available at: http://www.gao.gov/financial/fy2010/10gao1.pdf (accessed 29 October 2011).

48.

Governmental Accounting Standards Board (2006) Why governmental accounting and financial reporting is – and should be – different. White paper, 16 March.

49.

Governmental Accounting Standards Board (2008) State and local government use of Generally Accepted Accounting Principles for general purpose external financial reporting. Available at: http://www.gasb.org/cs/ContentServer?c=Document_C&pagename=GASB%2FDocument_C%2FGASBDocumentPage&cid=1176156726669 (accessed 16 July 2010).

50.

Governmental Accounting Standards Board (2010) Facts about GASB. Available at: http://www.gasb.org/cs/BlobServer?blobcol=urldata&blobtable=MungoBlobs&blobkey=id&blobwhere=1175824006278&blobheader=application%2Fpdf (accessed 16 July 2010).

51.

Governmental Accounting Standards Board (2011) Basic facts about service efforts and accomplishments reporting. Available at: http://www.gasb.org/cs/ContentServer?c=Document_C&pagename=GASB%2FDocument_C%2FGASBDocumentPage&cid=1176156714761 (accessed 27 May 2011).

52.

Graham

(2007) Canadian Public-sector Financial Management. Kingston: McGill-Queen’s University Press.

53.

Gray

(1988) Towards a theory of cultural influence on the development of accounting systems internationally. Abacus 24(1): 1–15.

54.

Guthrie

Olson

Humphrey

(1999) Debating developments in New Public Financial Management: The limits of global theorising and some new ways forward. Financial Accountability & Management 15(3/4): 209–228.

55.

Heinrich

(2002) Outcomes-based performance management in the public sector: Implications for government accountability and effectiveness. Public Administration Review 62(6): 712–725.

56.

HM Treasury (2011a) Financial Reporting Advisory Board. Available at: http://www.hm-treasury.gov.uk/psr_frab_index.htm (accessed 9 October 2011).

57.

HM Treasury (2011b) Public spending and reporting. Developing financial reporting guidance for the public sector: Memorandum of Understanding between the relevant authorities. Available at: http://www.hm-treasury.gov.uk/frab_memorandum_of_understanding.htm (accessed 17 March 2011).

58.

HM Treasury (2011c) Whole of Government Accounts: Unaudited summary report for the year ended 31 March 2010. Available at: http://www.hm-treasury.gov.uk/wga (accessed 7 October 2011).

59.

HM Treasury (2012) Whole of Government Accounts. Available at: http://www.hm-treasury.gov.uk/wga (accessed 19 February 2012).

60.

Hood

(1991) A public management for all seasons? Public Administration 69(1): 3–19.

61.

Hood

(1995) The “New Public Management” in the 1980s: Variations on a theme. Accounting, Organizations and Society 20(2/3): 93–109.

62.

Hood

Peters

(2004) The middle aging of New Public Management: Into the age of paradox. Journal of Public Administration Research and Theory 14(3): 267–282.

63.

Humphrey

Miller

Scapens

(1993) Accountability and accountable management in the UK public sector. Accounting, Auditing & Accountability Journal 6(3): 7–29.

64.

International Federation of Accountants (2008) International Public Sector Accounting Standards Board: Process for Reviewing and Modifying IASB Documents. Report, International Federation of Accountants, October.

65.

International Federation of Accountants (2011) IPSASB members. Available at: http://www.ifac.org/public-sector/about-ipsasb/ipsasb-members (accessed 6 November 2011).

66.

International Public Sector Accounting Standards Board (2006) The Road to Accrual Accounting in the United States of America. Report, International Federation of Accountants, March.

67.

International Public Sector Accounting Standards Board (2007) International Public Sector Accounting Standards Board Strategy and Operational Plan 2007–2009.

68.

International Public Sector Accounting Standards Board (2011) Key Characteristics of the Public Sector with Potential Implications for Financial Reporting. Exposure draft, International Federation of Accountants, April.

69.

Johnson

Langsam

(1991) Historical sources and current status of GAAP for state and local governments. The Government Accountants Journal 40(2): 54–64.

70.

Jones

(1992) The development of conceptual frameworks of accounting for the public sector. Financial Accountability & Management 8(4): 249–264.

71.

Kober

Lee

(2010) Mind your accruals: Perceived usefulness of financial information in the Australian public sector under different accounting systems. Financial Accountability & Management 26(3): 267–298.

72.

Kravchuk

Voorhees

(2001) The new government financial reporting model under GASB Statement No. 34: An emphasis on accountability. Public Budgeting & Finance Fall: 1–30.

73.

Laing

(2007) Compliance in the first four years of AAS 27 Financial Reporting by Local Government: A study of the New South Wales experience. Australasian Accounting Business and Finance Journal 1(2): 34–41.

74.

Laughlin

(2008) A conceptual framework for accounting for public-benefit entities. Public Money & Management 28(4): 247–254.

75.

Lye

Perera

Rahman

(2005) The evolution of accruals-based crown (government) financial statements in New Zealand. Accounting, Auditing & Accountability Journal 18(6): 784–814.

76.

McCall

Klay

(2009) Accountability has always been the cornerstone of accounting. Journal of Government Financial Management Fall: 52–57.

77.

Mellett

(1997) The role of resource accounting in the UK government’s quest for “better accounting”. Accounting and Business Research 27(2): 157–168.

78.

Mosso

(1999) Accounting for the business of government – new goals, old myths. Public Budgeting & Finance Winter: 65–74.

79.

Mosso

(2005) Standards watch. Journal of Government Financial Management Spring: 8–9.

80.

Mosso

(2006) FASAB – major progress after 15 years, but still a long way to go. Journal of Government Financial Management, Spring: 8–9.

81.

Naik

(2005) A cruel accounting. CAmagazine December: 44–46.

82.

New Zealand Government (2012) Statement of service performance. Available at: http://www.legislation.govt.nz/act/public/1989/0044/latest/DLM162489.html (accessed 12 February 2012).

83.

OECD Statistics (2011) Available at: http://stats.oecd.org/Index.aspx (accessed 1 November 2011).

84.

Office of the Auditor-General (2011) Central Government: Results of the 2010/11 Audits (Volume 1). New Zealand, December.

85.

Office of the Auditor General of Canada (1998) September 1998 report, Chapter 18 – The financial information strategy: A key ingredient in getting government right.

86.

Pallot

(1992) Elements of a theoretical framework for public sector accounting. Accounting, Auditing and Accountability Journal 5(1): 38–59.

87.

Pallot

(1994) The development of accrual-based accounts for the government of New Zealand. Advances in International Accounting 7: 289–310.

88.

Pallot

(2001) A decade in review: New Zealand’s experience with resource accounting and budgeting. Financial Accountability & Management 17(4): 383–400.

89.

Pallot

(2003) A wider accountability? The Audit Office and New Zealand’s bureaucratic revolution. Critical Perspectives on Accounting 14(1/2): 133–155.

90.

Parker

Guthrie

(1993) The Australian public sector in the 1990s: New accountability regimes in motion. Journal of International Accounting Auditing and Taxation 2(1): 59–81.

91.

Patton

Mosso

(2009) Is the Federal Accounting Standards Advisory Board independent? Can the Federal Accounting Standards Advisory Board be more independent? Journal of Government Financial Management Fall: 60–63.

92.

Patton

Bean

(2001) The why and how of the new capital asset reporting requirements. Public Budgeting & Finance Fall: 31–46.

93.

Peters

Savoie

(1994) Civil service reform: Misdiagnosing the patient. Public Administration Review 54(5): 418–425.

94.

Pollitt

(1995) Justification by works or by faith? Evaluating the New Public Management. Evaluation 1(2): 133–154.

95.

Potter

(1999) The power of words: Explaining recent accounting reforms in the Australian public sector. Accounting History 4(2): 43–72.

96.

Public Sector Accounting Board Conceptual Framework Task Force (2011) Characteristics of public sector entities. Consultation paper 1, August.

97.

Public Sector Committee (1994) Implementing accrual accounting in government: The New Zealand experience, Occasional paper 1, International Federation of Accountants.

98.

Public Sector Committee (1996) Perspectives on accrual accounting, Occasional paper 3, International Federation of Accountants.

99.

Public Sector Committee (2002) Resource accounting: Framework of accounting standard setting in the UK central government sector. Occasional paper, International Federation of Accountants, June.

100.

Roy

(1988) Government reporting: The big picture. CAmagazine April: 42–49.

101.

Ryan

(1998) The introduction of accrual reporting policy in the Australian public sector: An agenda setting explanation. Accounting, Auditing & Accountability Journal 11(5): 518–539.

102.

Savoie

(1995) What is wrong with the New Public Management? Canadian Public Administration 38(1): 112–121.

103.

Simpkins

(2006a) The IASB/FASB conceptual framework project’s preliminary views on an improved conceptual framework for financial reporting: The objectives of financial reporting and qualitative characteristics of decision-useful financial reporting information, application to not-for-profit entities in the private and public sector. Working paper prepared for the accounting standard setting boards of Australia, Canada, New Zealand and the United Kingdom.

104.

Simpkins

(2006b) A review of the policy of sector-neutral accounting standard-setting in Australia. Available at: http://www.frc.gov.au/reports/other/Sector_neutral_Standards_Report.asp (accessed 13 August 2009).

105.

Stanton

(1998) The questionable economics of government accounting. Accounting, Auditing & Accountability Journal 11(2): 191–203.

106.

Steinberg

(2009) The Federal Accounting Standards Advisory Board already is independent. Journal of Government Financial Management Winter: 28–33.

107.

Talbot

(2010) Performance in government: The evolving system of performance and evaluation measurement, monitoring, and management in the United Kingdom. ECD Working paper series, The World Bank, November.

108.

Treasury

Australia

(2004) Harmonisation of Generally Accepted Accounting Principles (GAAP) and Government Finance Statistics (GFS). Available at: http://www.treasury.act.gov.au/accounting/download/IAS_02.pdf (accessed 18 October 2011).

109.

Treasury Board of Canada Secretariat (2011) Results-based management lexicon. Available at: http://www.tbs-sct.gc.ca/cee/pubs/lex-eng.asp (accessed 24 August 2011).

110.

Treasury, New Zealand (2010) Government adoption of NZ IFRS. Available at: http://treasury.govt.nz/publications/guidance/reporting/nzifrs (accessed 25 November 2010).

111.

UK Parliament (2009) Adoption of IFRS by central government. Briefing note by the House of Commons Scrutiny Unit, July 2009. Available at: http://www.parliament.uk/documents/upload/ifrsbriefing.pdf (accessed 27 October 2011).

112.

UK Parliament, House of Lords (1998) Report of the Select Committee on Public Service. Available at: http://www.publications.parliament.uk/pa/ld199798/ldselect/ldpubsrv/055/psrep01.htm (accessed 01 November 2011).

113.

UK Treasury (1994) Better Accounting for the Taxpayer’s Money: Resource Accounting and Budgeting in Government. London: HMSO, CM2626.

114.

UK Treasury (1995) Better Accounting for the Taxpayer’s Money: Resource Accounting and Budgeting in Government. London: HMSO, CM2929.

115.

United States (1990) Chief Financial Officers Act of 1990.

116.

Warren

(2005) Converting to International Accounting Standards. Chartered Accountants Journal of New Zealand July: 18–21.

117.

West

Carnegie

(2010) Accounting’s chaotic margins: Financial reporting of the library collections of Australia’s public universities, 2002–2006. Accounting, Auditing & Accountability Journal 23(2): 201–228.

Accrual accounting by Anglo-American governments: Motivations,developments,and some tensions over the last 30 years

Abstract

Keywords

Get full access to this article

References