Implementing IFRSs in the UK devolved administrations

Abstract

Implementing IFRSs in the UK Devolved AdministrationsAbstract Purpose -Utilising concepts drawn from the governmentality literature, this paper examines the adoption of International Financial Reporting Standards (IFRSs) in the United Kingdom's (UK's) devolved administrations of Northern Ireland, Scotland and Wales in order to assess why they were adopted and how their introduction has been governed. Design/methodology/approach -This research applies a combination of three different approaches, namely: a content analysis; an anonymous online questionnaire; and semistructured interviews. Findings -These include: the transition has had minimal impact upon policy setting and the information produced to aid budgeting and decision-making; IFRSs are not entirely appropriate for the public sector; the time, cost and effort involved outweighed the benefits; public sector accounting has become overly-complicated; and the transition is not perceived as part of a wider privatisation programme. Research limitations/implications -As this study focuses upon the three UK devolved administrations, the findings may not be applicable in a wider setting. Practical implications -Public sector change must be adequately resourced, carefully planned, with appropriate systems, trained staff and interdisciplinary project teams; accounting change should be based on value for money; and a single, coherent financial regime for the way in which government uses budgets, presents estimates to Parliament and publishes its resource accounts should be implemented. Originality/value -This study highlights that accounting change is not just a technical issue and, while it can facilitate a more business-like environment and enhance accountability, all those affected by the changes may not have the requisite skills to fully utilise the (new) information available.

Usefulness of consolidated government accounts: A comparative study

“…For example, Bergmann et al (2016) classifies them as countries that have the most extensive reforms, implementing not just accruals but also consolidated government accounting reforms (see Bergmann et al, 2016). Wall and Connolly (2016) classify them as countries with the highest intensity of NPM reforms and also most experienced in adopting accruals accounting reforms. Grossi and Pepe (2009) compared these five countries' approaches to consolidated government accounts, but their study was not empirical and conducted before the completion of WGA-UK reforms.…”

“…Recent studies continue to support Rutherford's (1992) distinction between normative and positive definitions of users/usefulness. These studies reveal a recurring contradiction between (rhetorical) claims of improved accountability, with questions over the usefulness of accruals accounting information and continued reliance on budgetary and statistical systems (Connolly and Hyndman, 2006;Ezzamel et al, 2014;Jones et al, 2013;Wall and Connolly, 2016;van Helden, 2016;Heald and Hodges, 2015;Brusca et al, 2013). For example, the implementation of IFRS in devolved UK governments (Wall and Connolly, 2016) and IPSAS in Spain (Brusca et al, 2013) has had minimal effect on the actual use of information from GAAP-based systems by politicians.…”

“…These studies reveal a recurring contradiction between (rhetorical) claims of improved accountability, with questions over the usefulness of accruals accounting information and continued reliance on budgetary and statistical systems (Connolly and Hyndman, 2006;Ezzamel et al, 2014;Jones et al, 2013;Wall and Connolly, 2016;van Helden, 2016;Heald and Hodges, 2015;Brusca et al, 2013). For example, the implementation of IFRS in devolved UK governments (Wall and Connolly, 2016) and IPSAS in Spain (Brusca et al, 2013) has had minimal effect on the actual use of information from GAAP-based systems by politicians. Similarly, van Helden (2016) and Kobayashi et al (2016) found that politicians' professed appreciation of accruals accounting information does not necessarily mean that they actually use them, as they still generally prefer cashbased budgetary systems in policy making.…”

“…Chow et al (2007) argue that the grand claims of transparency, accountability, and comparability need to be evidenced. Others have also reported practical and conceptual challenges in, and exaggerated benefits of, importing private sector techniques into the public sector (Wall and Connolly, 2016;Barton, 2009), as well as technical challenges related to measurement and boundary issues (Heald and Georgiou, 2011). From a financial analysis perspective, Newberry (2011) reports on the lack of transparency from the macro-aggregation of consolidated figures, obscuring the effects of privatization.…”

The United Nations’ (UN) decision to adopt International Public Sector Accounting Standards (IPSAS)

“…However, in the context of government accounting reforms in the United Kingdom (UK), Connolly and Hyndman (2006) found that claims for the introduction of accruals accounting were overly optimistic as costs were obfuscated and users struggled to articulate the benefits of the reforms. Wall and Connolly (2016) concluded that the introduction of (modified) IFRS to the devolved UK governments (i.e., Scotland, Northern Ireland and Wales) have had minimal impact on the decision-making processes of their real-world users. Chow, Humphrey and Moll (2008) also found that reformers had retrospectively justified the implementation of consolidated 'Whole of Government Accounting' reforms on the grounds that it is useful for catalysing further accounting reforms in the UK public sector.…”