Budgeting in accrual terms is one of the most controversial issues in public sector accounting. In this paper, we analyze the accounting treatment of problematic elements of the financial statements when introducing accrual budgeting, and discuss the effects of the analyzed accounting alternatives on fiscal policy. We focus on three pioneer countries in the implementation of accrual budgeting and accounting: the United Kingdom, Sweden, and New Zealand. The accounting standards of the International Public Sector Accounting Standards Board, the European System of Accounts, and the Government Finance Statistics Manual of the International Monetary Fund are taken as benchmarks.

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This paper analyses financial performance adjustment in English local governments and the specific accruals used to achieve it. Based on statistical approaches used in previous literature, our results indicate the use of abnormal accruals in English local governments in order to report surpluses/deficits close to zero as well as to avoid reporting big deficits. We find that depreciation and impairment expense of fixed assets is the item most significantly related to abnormal accruals. Consistent with the conservatism theory, local governments with higher leverage use more income‐decreasing accounting policies.

The objective of this study is to explore whether a relationship exists between public financial management (PFM) systems and expert perceptions of countries' governance in an international cross-country study. We examine the extent to which variations in accounting, budgeting and auditing practices are associated with governance in a sample of 97 countries that represent different levels of development, analysing the differences between countries classified into factor, efficiency and innovationdriven economies. Our concept of governance perception includes three dimensions: accountability, government effectiveness and corruption. We find that countries with a higher level of economic development show, on average, more sophisticated PFM systems characterized by the presentation of accrual-based financial statements, the application of value for money audits and higher budget transparency. When analysing the sub-samples of countries according to the level of economic development, we find that countries with similar governance perception scores show different patterns of PFM practices, suggesting that there is no one-size-fits-all approach. INTRODUCTIONPublic financial management (PFM) practices have been one of the central issues in the agenda of public management reforms in many countries. The greater demand for transparency, accountability and efficiency forces governments all over the world to adopt new accounting, auditing and budgeting techniques and to improve the scrutiny and timeliness of their reporting. The link between the modernization of PFM and the quality of governance has not been thoroughly explored yet in an international cross-country setting. For instance, a gap needs to be filled as regards matters of governance and accounting (Broadbent and Guthrie, 2008). In a similar vein, the relationship between particular governance perception measures, such as corruption and accounting, has received little academic attention (Alawattage et al., 2007).This study is aimed at contributing to the incipient body of research about the relationship between expert perceptions of governance and several characteristics of PFM. Selecting PFM characteristics, following Pollitt and Bouckaert (2011), we consider three areas: accounting, budgeting and auditing. We focus on the degree of adoption of accrual-based financial statements and budgeting, the timeliness of the release of the audited financial statements, the scope of value for money (VFM) audit and the transparency of budgeting processes as relevant PFM characteristics, which may influence governance perceptions.The measurement of the quality of governance has attracted numerous research efforts. A multitude of governance indicators have been developed, reflecting the fact that there is no consensus on the criteria for measuring good governance and there is little agreement on what constitutes high-quality government (Nanda, 2006;Andrews, 2010;Fukuyama, 2013). Given these difficulties in conceptualization, we focus on three main

This article analyzes accrual-based performance budgeting systems in the United Kingdom, Australia, and New Zealand, focusing on the content and format of implemented performance budgets and the added value that accrual budgeting brings to performance budgeting. In all three countries, full accrualbased costs, revenues, and funding appropriations are linked to specifications of planned and actual performance in terms of outputs/outcomes, thereby increasing the quality of departmental performance reporting. Some differences between the accrual-based performance budgeting models in the three countries are identified.