Mind Your Accruals: Perceived Usefulness of Financial Information in the Australian Public Sector Under Different Accounting Systems

Abstract

This study examines the usefulness of three accounting systems (cash, Generally Accepted Accounting Principles (GAAP) accrual, and Government Finance Statistics (GFS) accrual) for public sector decision‐making. From a survey of internal users, external users, and preparers in Australia, we find that GAAP accrual information is perceived to be relatively more useful and understandable than the other two systems for most decisions examined. The relatively higher ratings for GAAP accrual information differ from earlier studies and may reflect an experience or familiarity effect whereby perceptions of usefulness are enhanced because respondents have become more used to the system. This effect might also explain the lower ratings for GFS accrual.

O regime de competência no setor público brasileiro: uma pesquisa empírica sobre a utilidade da informação contábil

“…Comparative studies by Olson, Guthrie andHumphrey (1997 apud Guthrie, 1998) identified 10 accounting reforms currently underway in Organization for Economic Cooperation and Development (OECD) member countries in which the adoption of accrual basis accounting was a central element (Kober, Lee, & Ng, 2010).…”

“…An exploratory survey was conducted using the methodology proposed by Kober, Lee, and Ng (2010), and the data were statistically analyzed using Wilcoxon and Mann-Whitney tests. The results indicated that the survey respondents perceived accrual basis accounting as having the potential to provide informational benefits for decision-making within governmental agencies.…”

Governmental budgetary reporting systems in the European Union: is the accounting basis relevant for the deficit reliability?

“…More recently, Kober et al (2010), whose research focuses on the Australian public sector situation, discussed the usefulness of accounting information prepared and disclosed according to three different accounting methods: cash-based, accrual-based GAAP, both in the GA context, and GFS accrual-based reporting under NA. They show the existence of two different perspectives on the usefulness of accounting information.…”

The Institutionalization of Accrual Accounting: The Perspective of New Institutional Sociology Theory

“…When accrual accounting is applied to a government organization, the organization must adapt the accounting techniques of financial administration by beginning to recognize and record the effect of transactions and other events at the time the transactions and events occur, regardless of when cash or cash equivalents are received or paid. Over time, the accounting techniques will be repeated and then become part of the routine received by the organization and changes occur (Burns and Scapens, 2000;Kober et al, 2010;Siti-Nabiha and Scapens, 2005).…”

“…Therefore, the problem of accrual accounting implementation in the government sector is no longer related to whether accrual accounting should be adopted or not, but about how the accrual accounting concept can be done in accordance with the relevant regulations and bring a variety of good changes for the organization or called institutionalization on the standard of accrual-based financial accounting within the organization. When accrual accounting is applied, it will bring the consequences of changes as well as the improvement of the organizational financial management practices (Carlin, 2005;Kober, Lee, and Ng, 2010;Ter Bogt and Van Helden, 2000). When accrual accounting is applied to a government organization, the organization must adapt the accounting techniques of financial administration by beginning to recognize and record the effect of transactions and other events at the time the transactions and events occur, regardless of when cash or cash equivalents are received or paid.…”