Transition to accrual accounting in the public sector of emerging economies: a literature review

Abstract

This paper presents a literature review on the adoption and implementation of accrual accounting in the public sector (AAPS) in the context of emerging economies. The aim is to understand the main factors that have determined (1) the decision to adopt AAPS by governments in emerging economies and (2) the (in)success of the implementation process. The study is motivated by the gap identified in the literature about the lack of research on the changes in public accounting, in particular the transition to accrual accounting, in emerging economies. The aim is to contribute to the literature on public accounting in emerging economies by understanding the institutional context in which the changes have occurred and the factors that determine the different levels of implementation. Findings evidence an increasing interest of the governments in emerging economies to reform their public accounting systems. However, the study indicates that reforms might be more successful if they are preceded or accompanied by further managerial reforms and the creation of the necessary conditions (skills, technological support, and the adaptation of national accounting standards). In addition, the strong influence of external stakeholders (e.g., IMF and World Bank) and the high level of corruption and fraud in administrative and political structures deviate the main sense of the reform. The institutional theory (motivated by coercive and normative pressures) and the need for external legitimacy are the main drivers in the decision to adopt AAPS.