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The inefficacy of accrual accounting in public sector performance management: Evidence from an emerging market

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  • Heru Fahlevi
  • Irsyadillah Irsyadillah
  • Imam Arafat
  • Muhammad Ichsan Adnan

Abstract

This study aims to investigate the impact of accrual accounting adoption on Indonesian local governments. In particular, this study examines the differences of financial performance before and after the accrual adoption and the usefulness of accrual accounting information for public managers. Using mixed-method, data was collected from secondary sources and interviews. T Test for paired samples and Wilcoxon Signed Rank were employed to examine the statistical difference of Indonesian local government financial ratios before and after the adoption. Interviews were undertaken with local government managers and their consultants. To provide comprehensive understanding and discussion, this study adopts a theoretical pluralism using old institutional economics (OIE) and new institutional sociology (NIS) conjointly. The quantitative part demonstrated mixed results and lack of benefit of accrual accounting adoption in the Indonesian local governments. In the same vein, the qualitative part unveiled the failure of institutionalisation of new public management (NPM) values and principles that explained a marginal role of accrual accounting information in public managers decision-making process. The paper contributes to the continuing debate of the benefits of accrual accounting adoption for local governments.

Suggested Citation

  • Heru Fahlevi & Irsyadillah Irsyadillah & Imam Arafat & Muhammad Ichsan Adnan, 2022. "The inefficacy of accrual accounting in public sector performance management: Evidence from an emerging market," Cogent Business & Management, Taylor & Francis Journals, vol. 9(1), pages 2122162-212, December.
    • Handle: RePEc:taf:oabmxx:v:9:y:2022:i:1:p:2122162
    DOI: 10.1080/23311975.2022.2122162
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    Cited by:

    1. Cecilia Lelly Kewo & Stella Theodora Kewo, 2024. "Measurement of Factors That Can Improve the Implementation of Accrual-Based Accounting in Regional Government Agencies," International Journal of Economics and Financial Issues, Econjournals, vol. 14(5), pages 10-17, September.

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