Thesis Proposal - An Example
Marwata, FEB UKSW Salatiga
marwata@staff.uksw.edu
Marwata, FEB UKSW Salatiga
marwata@staff.uksw.edu
1. INTRODUCTION
1.1. Topic and purpose
During the last 20 years, many governments have undertaken significant public sector
reform. A new paradigm known as New Public Management (NPM) first introduced
by OECD countries in the 1980s has brought significant changes to public sector
organizations. Hood (1991) (cited in Lapsley and Pallot, 2000b) describes NPM as a
new public management system with key dimensions such as disaggregation of
bureaucracy, short term employment on contract basis, adoption of private sector
management style and techniques, greater stress on frugality and discipline, greater
visibility, greater quantification, and greater emphasis on outputs.
NPM has implicated public sector accounting. As a new approach to public sector
management, the NPM paradigm represents fundamental shifts in management
structures, processes, and practices in the public sector towards that of private sector
approach. This fundamental change has redefined what the public sector is all about.
The role and the way the public sector are managed have changed. Under the
umbrella of NPM, new systems and symbols of accountability have emerged, and new
accounting visibilities have been created in the public sector spheres (Broadbent and
Guthrie, 1992). In such changes, accounting has been implicated and there are new
demands for the practices of accounting to make new organizational visibility and to
discipline performance (Hopwood, 1984). The introduction of NPM in the public
sector sphere has challenged public sector accounting to play a new role in the new
language of decision-making and public sector accountability. Although the basic
objectives of public sector accounting have not changed, given the change in the
environments in which accounting information is used, public sector accounting needs
to go forward in order to accomplish its objectives (Ruiz, 2000).
To support such a movement towards management practice convergence between
public and private sectors, governmental accounting in many nations has been
reformed. Accounting techniques that traditionally are being practiced in the private
sectors have been adopted by public sectors.
1.1. Topic and purpose
During the last 20 years, many governments have undertaken significant public sector
reform. A new paradigm known as New Public Management (NPM) first introduced
by OECD countries in the 1980s has brought significant changes to public sector
organizations. Hood (1991) (cited in Lapsley and Pallot, 2000b) describes NPM as a
new public management system with key dimensions such as disaggregation of
bureaucracy, short term employment on contract basis, adoption of private sector
management style and techniques, greater stress on frugality and discipline, greater
visibility, greater quantification, and greater emphasis on outputs.
NPM has implicated public sector accounting. As a new approach to public sector
management, the NPM paradigm represents fundamental shifts in management
structures, processes, and practices in the public sector towards that of private sector
approach. This fundamental change has redefined what the public sector is all about.
The role and the way the public sector are managed have changed. Under the
umbrella of NPM, new systems and symbols of accountability have emerged, and new
accounting visibilities have been created in the public sector spheres (Broadbent and
Guthrie, 1992). In such changes, accounting has been implicated and there are new
demands for the practices of accounting to make new organizational visibility and to
discipline performance (Hopwood, 1984). The introduction of NPM in the public
sector sphere has challenged public sector accounting to play a new role in the new
language of decision-making and public sector accountability. Although the basic
objectives of public sector accounting have not changed, given the change in the
environments in which accounting information is used, public sector accounting needs
to go forward in order to accomplish its objectives (Ruiz, 2000).
To support such a movement towards management practice convergence between
public and private sectors, governmental accounting in many nations has been
reformed. Accounting techniques that traditionally are being practiced in the private
sectors have been adopted by public sectors.
In the governmental financial accounting area, accrual accounting has been adopted
based on the argument that this accounting technology is capable of providing better
financial reports for decision-making and accountability. Accrual accounting, a
market oriented accounting technology, has widely been adopted by public sectors to
support the move towards market-oriented new public management around the world,
especially in developed countries. Accrual accounting has been adopted by public
sectors to support performance evaluation systems in the context of market-oriented
public sectors.
Accrual accounting adoption by the public sector in many developed countries is not a
stand-alone phenomenon. The adoption of accrual accounting by public sectors is
embedded within a wider set of public sector reforms. The adoption of accrual
accounting in developed countries is to support market-oriented new public
management informed by neoclassical economics paradigm. Accrual accounting
adoption can support the notion of contestable market, internal market, and
contracting out of public services by providing better services cost calculations
(Yamamoto, 2000). Within the NPM paradigm, public sector management is
evaluated based on performance, output, and outcomes. The tenure of public
organization managers is short term on a contract basis, and its renewal is based on
performance. Public sector management is driven by particular objectives. The role of
politician and bureaucrat is disaggregated. In such a disaggregated role, politicians
demand greater transparency of the use of public monies. To meet such a demand,
accrual accounting is suitable because accrual accounting has an advantage in
producing less biased and more transparent financial information than cash based
accounting (Yamamoto, 2000). It is in this context that accrual accounting is
mobilized. The intention of accrual accounting mobilization to the public sectors is to
support the “marketization” of public services, results-oriented accountability
regimes, performance evaluation systems, and greater demands for transparency.
Accrual accounting can serve well this intention by providing a set of financial
statements that cannot be provided by cash basis accounting systems such as balance
sheet and profit and loss.
based on the argument that this accounting technology is capable of providing better
financial reports for decision-making and accountability. Accrual accounting, a
market oriented accounting technology, has widely been adopted by public sectors to
support the move towards market-oriented new public management around the world,
especially in developed countries. Accrual accounting has been adopted by public
sectors to support performance evaluation systems in the context of market-oriented
public sectors.
Accrual accounting adoption by the public sector in many developed countries is not a
stand-alone phenomenon. The adoption of accrual accounting by public sectors is
embedded within a wider set of public sector reforms. The adoption of accrual
accounting in developed countries is to support market-oriented new public
management informed by neoclassical economics paradigm. Accrual accounting
adoption can support the notion of contestable market, internal market, and
contracting out of public services by providing better services cost calculations
(Yamamoto, 2000). Within the NPM paradigm, public sector management is
evaluated based on performance, output, and outcomes. The tenure of public
organization managers is short term on a contract basis, and its renewal is based on
performance. Public sector management is driven by particular objectives. The role of
politician and bureaucrat is disaggregated. In such a disaggregated role, politicians
demand greater transparency of the use of public monies. To meet such a demand,
accrual accounting is suitable because accrual accounting has an advantage in
producing less biased and more transparent financial information than cash based
accounting (Yamamoto, 2000). It is in this context that accrual accounting is
mobilized. The intention of accrual accounting mobilization to the public sectors is to
support the “marketization” of public services, results-oriented accountability
regimes, performance evaluation systems, and greater demands for transparency.
Accrual accounting can serve well this intention by providing a set of financial
statements that cannot be provided by cash basis accounting systems such as balance
sheet and profit and loss.
Public sector reform is a global phenomenon. The language of NPM has spread
throughout many parts of the world, developed and developing countries. The spread
of NPM is the result of either political globalization or policy convergence (Common,
1998) or institutional isomorphism (DiMaggio and Powell, 1983). As far as
developing countries are concerned, however, Polidano and Hulme (1999) warn that
although we are witnessing public sector reforms in developing countries, such
reforms are unrelated or even contrary to the basic tenets of NPM. In a similar vein,
Cheung (2001) argues that, instead of NPM paradigm, state capacity paradigm is
more relevant to understand public sector reforms in developing countries,
particularly in Asian countries. While NPM type reforms drive public sectors of
developed countries toward market-oriented public sectors, public administration in
developing countries remains bureaucracy oriented. The idea of market in providing
public services is strange for most developing countries, particularly in the Asian
tradition in which economy and society are regarded as integral and organic parts of
the wider state (Cheung, 2001). Thus, the bureaucratic nature of public administration
in developing countries remains dominant, despite current public management reform
experimentation in many developing countries (Turner and Hulme, 1997).
The social, political, and cultural context of the public sector in developing countries
is different from that of developed countries (Turner and Hulme, 1997). Public sector
reforms in developing countries are non-NPM types of reforms (Polidano and Hulme,
1999; Cheung, 2001), public sector administration in developing countries is
dominated by Keynesian paradigm (Turner and Hulme, 1997), the notion of market is
strange (Cheung, 2001), governments are producers and distributors of services
(Riggs, 1964), the political and bureaucratic role is amalgamated within bureaucracy
institutions (Riggs, 1964; Turner and Hulme, 1997), the accountability regime is
compliance-oriented, and public sector performance evaluation systems are hardly
based on output.
Interestingly, while the nature of public sector reforms in developing countries is
different to that of developed countries, we are witnessing a convergence in the
direction of governmental financial accounting reforms. Notwithstanding differences
in the nature of the public administration, governmental sectors in both developed and
throughout many parts of the world, developed and developing countries. The spread
of NPM is the result of either political globalization or policy convergence (Common,
1998) or institutional isomorphism (DiMaggio and Powell, 1983). As far as
developing countries are concerned, however, Polidano and Hulme (1999) warn that
although we are witnessing public sector reforms in developing countries, such
reforms are unrelated or even contrary to the basic tenets of NPM. In a similar vein,
Cheung (2001) argues that, instead of NPM paradigm, state capacity paradigm is
more relevant to understand public sector reforms in developing countries,
particularly in Asian countries. While NPM type reforms drive public sectors of
developed countries toward market-oriented public sectors, public administration in
developing countries remains bureaucracy oriented. The idea of market in providing
public services is strange for most developing countries, particularly in the Asian
tradition in which economy and society are regarded as integral and organic parts of
the wider state (Cheung, 2001). Thus, the bureaucratic nature of public administration
in developing countries remains dominant, despite current public management reform
experimentation in many developing countries (Turner and Hulme, 1997).
The social, political, and cultural context of the public sector in developing countries
is different from that of developed countries (Turner and Hulme, 1997). Public sector
reforms in developing countries are non-NPM types of reforms (Polidano and Hulme,
1999; Cheung, 2001), public sector administration in developing countries is
dominated by Keynesian paradigm (Turner and Hulme, 1997), the notion of market is
strange (Cheung, 2001), governments are producers and distributors of services
(Riggs, 1964), the political and bureaucratic role is amalgamated within bureaucracy
institutions (Riggs, 1964; Turner and Hulme, 1997), the accountability regime is
compliance-oriented, and public sector performance evaluation systems are hardly
based on output.
Interestingly, while the nature of public sector reforms in developing countries is
different to that of developed countries, we are witnessing a convergence in the
direction of governmental financial accounting reforms. Notwithstanding differences
in the nature of the public administration, governmental sectors in both developed and
developing countries are on the same course towards accrual accounting adoption. For
instance, since 2001 Indonesian local governments have been adopting accrual
accounting. Given that accounting as an institution has to be compatible with
exogenous factors such as social, political, and cultural context (Yamamoto, 2000;
Burchel et al., 1980), such a phenomenon is intriguing. We are witnessing a mixed
situation: Accrual accounting, a market-oriented accounting technology, is being
transplanted into a bureaucratic-oriented public sector environment.
In such a situation, there are several potential complications when accrual accounting
is to be adopted. For instance, bureaucrats might resist accrual accounting adoption
because accrual accounting creates new visibilities, it will expose things that have
been hidden under cash basis accounting, and it will depict bureaucratic malpractices.
Politicians might not give the support necessary for accrual accounting adoption
(Luders, 1992; Christensen, 2002) because there is no sufficient incentive to do so
(Jones, 1996) and that the actual political power is in the hands of bureaucrats (Riggs,
1964). Accrual based financial reports might not function properly because there is no
performance evaluation in a systematic way and the action of bureaucrats is more
guided by speculation than rational analysis (Turner and Hulme, 1997).
Such potential complications warrant attention and consideration. We are concerned
to understand the motivation, the intended and unintended consequences, and the full
range of ramifications when a bureaucratic-oriented public sector organization adopts
a market-oriented accounting technology such as accrual accounting. It is the
intention of the proposed study to explore these issues.
instance, since 2001 Indonesian local governments have been adopting accrual
accounting. Given that accounting as an institution has to be compatible with
exogenous factors such as social, political, and cultural context (Yamamoto, 2000;
Burchel et al., 1980), such a phenomenon is intriguing. We are witnessing a mixed
situation: Accrual accounting, a market-oriented accounting technology, is being
transplanted into a bureaucratic-oriented public sector environment.
In such a situation, there are several potential complications when accrual accounting
is to be adopted. For instance, bureaucrats might resist accrual accounting adoption
because accrual accounting creates new visibilities, it will expose things that have
been hidden under cash basis accounting, and it will depict bureaucratic malpractices.
Politicians might not give the support necessary for accrual accounting adoption
(Luders, 1992; Christensen, 2002) because there is no sufficient incentive to do so
(Jones, 1996) and that the actual political power is in the hands of bureaucrats (Riggs,
1964). Accrual based financial reports might not function properly because there is no
performance evaluation in a systematic way and the action of bureaucrats is more
guided by speculation than rational analysis (Turner and Hulme, 1997).
Such potential complications warrant attention and consideration. We are concerned
to understand the motivation, the intended and unintended consequences, and the full
range of ramifications when a bureaucratic-oriented public sector organization adopts
a market-oriented accounting technology such as accrual accounting. It is the
intention of the proposed study to explore these issues.
1.2. General aim
To gain holistic understanding of governmental financial accounting reforms in a
developing country context.
1.3. Specific objectives:
To gain holistic understanding of governmental financial accounting reforms in a
developing country context.
1.3. Specific objectives:
1. To explicate the emergence of accrual accounting in the public sectors in a
developing country context.
2. To explore the process by which accrual accounting is adopted by public sectors
in a developing country context.
a. To examine the context, events, and activities leading to a decision to
adopt accrual accounting in the public sectors in a developing country
context.
b. To examine the strategies, problems, and organizational dynamics in
managing the process of implementation of accrual accounting in the
public sector in a developing country context.
3. To explore the ramification of accrual accounting implementation in the public
sectors in a developing country context.
4. To analyze the role of accrual based financial reports in the accountability systems
in the public sector in a developing country context.
1.4. Significance and potential contribution of the study
Accrual accounting adoption by public sectors has been widely studied. Accrual
accounting adoption by governmental units has dominated the body of literature on
the governmental financial accounting reforms in the nineties. Various aspects of the
issue of the introduction of accrual accounting in the governmental units have been
discussed.
A significant body of literature has extensively debated whether accrual accounting
adoption by governmental units is appropriate or not. Some people have argued for
and against accrual accounting adoption by governmental units (see e.g. Richardson,
1996; Montesinos and Bargues, 1996; Ross and Kelly, 1996; Anthony, 1989; Mellor,
1996; Redburn, 1996; Strom, 1996; Jones, 1996; Guthrie, 1998, 1999). Some people
argue that accrual accounting and cash accounting should not be polarized. Instead, it
should be combined because the two are basically complementary (see e.g.
Christiaens and Vanhee, 2001).
developing country context.
2. To explore the process by which accrual accounting is adopted by public sectors
in a developing country context.
a. To examine the context, events, and activities leading to a decision to
adopt accrual accounting in the public sectors in a developing country
context.
b. To examine the strategies, problems, and organizational dynamics in
managing the process of implementation of accrual accounting in the
public sector in a developing country context.
3. To explore the ramification of accrual accounting implementation in the public
sectors in a developing country context.
4. To analyze the role of accrual based financial reports in the accountability systems
in the public sector in a developing country context.
1.4. Significance and potential contribution of the study
Accrual accounting adoption by public sectors has been widely studied. Accrual
accounting adoption by governmental units has dominated the body of literature on
the governmental financial accounting reforms in the nineties. Various aspects of the
issue of the introduction of accrual accounting in the governmental units have been
discussed.
A significant body of literature has extensively debated whether accrual accounting
adoption by governmental units is appropriate or not. Some people have argued for
and against accrual accounting adoption by governmental units (see e.g. Richardson,
1996; Montesinos and Bargues, 1996; Ross and Kelly, 1996; Anthony, 1989; Mellor,
1996; Redburn, 1996; Strom, 1996; Jones, 1996; Guthrie, 1998, 1999). Some people
argue that accrual accounting and cash accounting should not be polarized. Instead, it
should be combined because the two are basically complementary (see e.g.
Christiaens and Vanhee, 2001).
Another body of literature has devoted to study the worth of accrual accounting
adoption by governmental units (see e.g. Christiaens, 2000; Ruiz, 2000; Carpenter and
Feroz, 2001, Guthrie, 1998). In general, these studies find that accrual accounting has
not brought any significant change in governmental organizational life.
Many attempts have been made to explore the contextual factors that affect the
likelihood of accrual accounting adoption by governmental units. In this regard, the
most significant contribution has been Luder’s (1992 contingency model of
governmental accounting innovation. The contingency model concerns how
governmental accounting changes in the light of politico-administrative factors that
conditioned them (Luder, 1992). In essence, the theory suggest that accrual
accounting adoption by governmental units is the outcome of an interaction between
stimuli of reform, social structural variables of a country, structural variables of
politico administrative systems, and implementation barriers. The body of literature
has proliferated under Luderian paradigm in the nineties (Chan, et al., 1996).
While the body of knowledge informed by Luder’s contingency model has focused on
analysis of contextual factors that influence the adoption of accrual accounting by
governmental sectors, some studies have given attention to the process of accrual
accounting adoption (see e.g. Carpenter and Feroz, 2001; Christensen, 2002). Studies
on the process of accrual accounting adoption reveal that there is a dynamic process
involving extraorganizational and intraorganizational actors in the decision process to
adopt accrual accounting in the governmental sectors.
The extant literature, however, is mainly focused on the adoption of accrual
accounting in developed countries context. This is not surprising because accrual
accounting adoption by governmental sectors in developing countries is relatively
very recently. As such, accrual accounting adoption by governmental units has mostly
been studied in a market-oriented public sector environment. In such a context,
accrual accounting adoption by governmental sectors has been studied as part of
wider performance measurement systems of market-oriented public sectors. We are
lacking in knowledge on the ramifications of transplanting an accounting technology
adoption by governmental units (see e.g. Christiaens, 2000; Ruiz, 2000; Carpenter and
Feroz, 2001, Guthrie, 1998). In general, these studies find that accrual accounting has
not brought any significant change in governmental organizational life.
Many attempts have been made to explore the contextual factors that affect the
likelihood of accrual accounting adoption by governmental units. In this regard, the
most significant contribution has been Luder’s (1992 contingency model of
governmental accounting innovation. The contingency model concerns how
governmental accounting changes in the light of politico-administrative factors that
conditioned them (Luder, 1992). In essence, the theory suggest that accrual
accounting adoption by governmental units is the outcome of an interaction between
stimuli of reform, social structural variables of a country, structural variables of
politico administrative systems, and implementation barriers. The body of literature
has proliferated under Luderian paradigm in the nineties (Chan, et al., 1996).
While the body of knowledge informed by Luder’s contingency model has focused on
analysis of contextual factors that influence the adoption of accrual accounting by
governmental sectors, some studies have given attention to the process of accrual
accounting adoption (see e.g. Carpenter and Feroz, 2001; Christensen, 2002). Studies
on the process of accrual accounting adoption reveal that there is a dynamic process
involving extraorganizational and intraorganizational actors in the decision process to
adopt accrual accounting in the governmental sectors.
The extant literature, however, is mainly focused on the adoption of accrual
accounting in developed countries context. This is not surprising because accrual
accounting adoption by governmental sectors in developing countries is relatively
very recently. As such, accrual accounting adoption by governmental units has mostly
been studied in a market-oriented public sector environment. In such a context,
accrual accounting adoption by governmental sectors has been studied as part of
wider performance measurement systems of market-oriented public sectors. We are
lacking in knowledge on the ramifications of transplanting an accounting technology
with particular orientation into environment with different orientation. The proposed
study will fill this particular need.
I believe that addressing this issue will make us better informed on governmental
accounting developments especially in developing countries context. This study will
contribute to the body of literature on governmental accounting in general and
particularly in the developing country context, which has been seriously being
neglected in the extant literature. This study has the potential to provide a theory on
governmental accounting reforms in developing countries. This study will also
contribute to making those who are concerned with the development of governmental
accounting in developing countries aware of the nature of governmental accounting
innovation in developing countries. Particularly, international advocates and
institutions that frequently impose new technologies from developed countries,
including accrual accounting, to developing countries as part of loan schemes or
technical assistances should be benefited by this study.
study will fill this particular need.
I believe that addressing this issue will make us better informed on governmental
accounting developments especially in developing countries context. This study will
contribute to the body of literature on governmental accounting in general and
particularly in the developing country context, which has been seriously being
neglected in the extant literature. This study has the potential to provide a theory on
governmental accounting reforms in developing countries. This study will also
contribute to making those who are concerned with the development of governmental
accounting in developing countries aware of the nature of governmental accounting
innovation in developing countries. Particularly, international advocates and
institutions that frequently impose new technologies from developed countries,
including accrual accounting, to developing countries as part of loan schemes or
technical assistances should be benefited by this study.
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