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

Abstract

PurposeThis 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/approachAn 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.FindingsFocusing 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/implicationsAt 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/valuePrevious 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.

Constraints and stimuli in the implementation of public accounting reform: systematic literature review and future research agenda

“…In developed countries, several studies have analyzed the influence of a lack of previous experience or insufficient relevant expertise on accounting reform (Ding, 2000; Otrusinová, 2016; Santis et al , 2019). Other studies cite this lack of resilience and change resistance as critical factors to be considered (Agasisti et al , 2018; Arnaboldi and Lapsley, 2009; Christiaens and van Peteghem, 2007; Gomes et al , 2015; Kowalczyk and Caruana, 2022; Tikk, 2010).…”

“…The fact that the government does not have a formal accounting system that is considered “modern” by the external environment makes it vulnerable to claims of negligence. This happened in Malta and it explains why a government would develop a new accounting system before deciding on the broader conceptual design features behind that new system (Caruana, 2017; Jones and Caruana, 2014; Kowalczyk and Caruana, 2022). In addition, Haldma and Kenk (2014) found that the public sector in Estonia saw the expanding NPM concept for improving the efficiency and effectiveness of the public sector based on better financial and non-financial information, as a significant incentive for accounting reform.…”

“…In both developed and developing countries governments are aware of the importance of modern accounting systems (Brusca and Martínez, 2016). Kowalczyk and Caruana (2022) study mentioned that showing how the traditional cash-based budgetary accounting system has persisted amidst attempts by governments to "modernize" their accounting systems to perhaps meet private sector professional expectations reveals comprehensibility legitimacy. The modernization of governmental accounting brings new attention to how the technologies and digital solutions transform the way the public sector works.…”