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IPSAS or IFRS as the Framework for Public Sector Financial Reporting? New Zealand Preparers’ Perspectives

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  • Fawzi Laswad
  • Nives Botica Redmayne

Abstract

type="main"> The last 30 years have seen public sector accounting in many countries undergo considerable change. More recently, some governments adopted accrual accounting and International Public Sector Accounting Standards (IPSAS), some adopted modified International Financial Reporting Standards (IFRS) while others continued with cash-based accounting. New Zealand (NZ) has, for more than two decades, followed a sector neutral approach to financial reporting and standard setting where the same accounting standards were applied to all entities in all sectors: for-profit, not-for-profit and the public sector. This period included the adoption of IFRS by for-profit entities with minor modifications for the public sector. The suitability of IFRS for the public sector has been questioned and, recently, standard setters in NZ decided to adopt a sector-specific standard-setting approach with multiple tiers for each sector. The for-profit sector will continue to follow IFRS but reporting standards for the public sector will be based on IPSAS. In this period of change we sought the views of preparers of public sector financial reports regarding the users of such reports and their preferences for the public sector reporting framework. We also sought the views of the preparers regarding the usefulness of each financial statement for users, and whether the benefits of reporting by their organisations exceeds the costs. The findings indicate support for maintaining IFRS as a basis for reporting in the NZ public sector. However, IPSAS modified to NZ conditions is also perceived as an acceptable option by respondents in this study. The income statement is, in the opinion of the respondents in this study, the most useful statement while cash flows appear to hold little value. A high proportion of respondents believe that the benefits of reporting exceed the costs, which contradicts the view that such reports are mainly compliance documents that provide little value. This finding contributes to the continuing debate on costs versus benefits on the recent introduction of IPSAS as the reporting framework for the public sector and the perceived appropriateness of IPSAS in public sector reporting.

Suggested Citation

  • Fawzi Laswad & Nives Botica Redmayne, 2015. "IPSAS or IFRS as the Framework for Public Sector Financial Reporting? New Zealand Preparers’ Perspectives," Australian Accounting Review, CPA Australia, vol. 25(2), pages 175-184, June.
    • Handle: RePEc:bla:ausact:v:25:y:2015:i:2:p:175-184
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    References listed on IDEAS

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    1. Martina K. Linnenluecke & Jacqueline Birt & Xiaoyan Chen & Xin Ling & Tom Smith, 2017. "Accounting Research in Abacus, A&F, AAR, and AJM from 2008–2015: A Review and Research Agenda," Abacus, Accounting Foundation, University of Sydney, vol. 53(2), pages 159-179, June.
    2. Zhuquan Wang & Javed Miraj, 2018. "Adoption of International Public Sector Accounting Standards in Public Sector of Developing Economies -Analysis of Five South Asian Countries," Research in World Economy, Research in World Economy, Sciedu Press, vol. 9(2), pages 44-51, June.
    3. Zubir Azhar & Ervina Alfan & Krishnen Kishan & Nurul Husna Assanah, 2022. "Accrual Accounting at Different Levels of the Public Sector: A Systematic Literature Review," Australian Accounting Review, CPA Australia, vol. 32(1), pages 36-62, March.
    4. Evangelos Chytis & Ioannis Georgopoulos & Stergios Tasios & Ioanna Vrodou, 2020. "Accounting Reform and IPSAS Adoption in Greece," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 165-184.

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