The diffusion-adoption of accrual accounting in Sri Lankan local governments
Thusitha Dissanayake
Deakin Business School, Faculty of Business & Law, Deakin University, Melbourne, Australia
Search for more papers by this authorCorresponding Author
Steven Dellaportas
School of Accounting, RMIT University, Melbourne, Australia
Correspondence
Steven Dellaportas, School of Accounting, RMIT University, GPO Box 2476V, Melbourne, 300, Australia.
Email: steven.dellaportas@rmit.edu.au
Search for more papers by this authorP. W. Senarath Yapa
School of Accounting, RMIT University, Melbourne, Australia
Search for more papers by this authorThusitha Dissanayake
Deakin Business School, Faculty of Business & Law, Deakin University, Melbourne, Australia
Search for more papers by this authorCorresponding Author
Steven Dellaportas
School of Accounting, RMIT University, Melbourne, Australia
Correspondence
Steven Dellaportas, School of Accounting, RMIT University, GPO Box 2476V, Melbourne, 300, Australia.
Email: steven.dellaportas@rmit.edu.au
Search for more papers by this authorP. W. Senarath Yapa
School of Accounting, RMIT University, Melbourne, Australia
Search for more papers by this authorAbstract
The aim of this paper is to evaluate the diffusion-adoption of accrual accounting among Sri Lankan local governments. The paper draws on the Diffusion of Innovation theory to explain the factors that assist or mitigate the adoption of accrual accounting as a new accounting practice. Finance managers, charged with the responsibility of adopting accrual accounting, were influenced by two major factors: a centralised knowledge-diffusion process educating these finance managers about its compatibility; and its observability in practice to understand the benefits of adoption. The paper contributes to the understanding of the diffusion of accounting innovation in developing countries and the role of key players such as professional associations within this process.
REFERENCES
- Abrahamson, E. (1991). Managerial fads and fashions: The diffusion and rejection of innovations. Academic of Management Review, 16(3), 586–612. https://doi.org/10.2307/258919
- Adhikari, P., & Garseth-Nesbakk, L. (2016). Implementing public sector accrual in OECD member states: Major issues and challenges. Accounting forum, 40, 125–142. https://doi.org/10.1016/j.accfor.2016.02.001
- Adhikari, P., Kuruppu, C., & Matilal, S. (2013). Dissemination and institutionalization of public sector accounting reforms in less developed countries: A comparative study of the Nepalese and Sri Lankan central governments. Accounting forum, 37(3), 213–230. https://doi.org/10.1016/j.accfor.2013.01.001
10.1016/j.accfor.2013.01.001 Google Scholar
- Adhikari, P., Kuruppu, C., Wynne, A., & Ambalangodage, D. (2015). Diffusion of the cash basis international public sector accounting standards (IPSAS) in less developed countries (LDCS)- The cash of the Nepali Central Government. The Public Sector Accounting, Accountability and Auditing in Emerging Economies, 15, 85–108. https://doi.org/10.1108/S1479-356320150000015004
- Alcouffe, S., Berland, N., & Levant, Y. (2008). Actor-networks and the diffusion of management accounting innovation: A comparative study. Management Accounting Research, 19, 1–17. https://doi.org/10.1016/j.mar.2007.04.001
- Autant-Bernard, C., Fadairo, M., & Massard, N. (2013). Knowledge diffusion and innovation policies within the European region: Challnges based on recent empirical evidences. Research Policy, 42, 196–210. https://doi.org/10.1016/j.respol.2012.07.009
- Ax, C., & Bjørnenak, T. (2005). Bundling and diffusion of management accounting innovations—the case of the balanced scorecard in Sweden. Management Accounting Research, 16(1), 1–20. https://doi.org/10.1016/j.mar.2004.12.002
10.1016/j.mar.2004.12.002 Google Scholar
- Bjørnenak, T. (1997). Diffusion and accounting: The case of ABC in Norway. Management Accounting Research, 8, 3–17. https://doi.org/10.1006/mare.1996.0031
10.1006/mare.1996.0031 Google Scholar
- Broadbent, J., & Guthrie, J. (2008). Public sector to public service: 20 years of “contextual” accounting research. Accounting, Auditing & Accountability Journal, 21(2), 129–169. https://doi.org/10.1108/09513570810854383
10.1108/09513570810854383 Google Scholar
- Broadbent, J., Jacobs, K., & Laughlin, R. (2001). Organisational resistance strategies to unwanted accounting and finance changes. Accounting, Auditing & Accountability Journal, 14(5), 565–586. https://doi.org/10.1108/EUM0000000006263
10.1108/EUM0000000006263 Google Scholar
- Carpenter, V. L., & Feroz, E. H. (2001). Institutional Theory & Accounting rule choice: An analysis of four US state governments' decision to adopt generally accepted accounting principles. Accounting, Organizations and Society, 26, 565–596. https://doi.org/10.1016/S0361-3682(00)00038-6
- Christensen, M., & Parker, L. (2010). Using ideas to advance professions: Public sector accrual accounting. Financial Accountability & Management, 26(3), 246–267. https://doi.org/10.1111/j.1468-0408.2010.00501
10.1111/j.1468-0408.2010.00501.x Google Scholar
- Christiaens, J., & Rommel, J. (2008). Accrual accounting reforms: Only for businesslike (parts of) government. Financial Accountability & Management, 24(1), 59–75. https://doi.org/10.1111/j.1468-0408.2008.00443
10.1111/j.1468-0408.2008.00443.x Google Scholar
- Connolly, C., & Hyndman, N. (2006). The actual implementation of accruals accounting: Caveats from a case within the UK public sector. Accounting, Auditing & Accountability Journal, 19(2), 272–290. https://doi.org/10.1108/09513570610656123
10.1108/09513570610656123 Google Scholar
- Ezzamel, M., Hyndman, N., Johnsen, A., & lapsley, I. (2014). Reforming central government accounting: An evaluation of an accounting innovation. Critical Perspective on Accounting, 25(4–5), 409–422. https://doi.org/10.1016/j.cpa.2013.05.006
- Gurd, B. (2008). Structuration and middle-range theory—A case study of accounting during organizational change from different theoretical perspectives. Critical Perspectives on Accounting, 19(4), 523–543. https://doi.org/10.1016/j.cpa.2006.10.001
10.1016/j.cpa.2006.10.001 Google Scholar
- Harun, H., Peursem, K. V., & Eggleton, I. (2012). Institutionalization of accrual accounting in the Indonesian public sector. Journal of Accounting & Organizational Change, 8(3), 257–285. https://doi.org/10.1108/18325911211258308
10.1108/18325911211258308 Google Scholar
- Hood, C. (1995). The “new public management” in the 1980s: Variations on a theme. Accounting, Organizations and Society, 20(2/3), 93–109. https://doi.org/10.1016/0361-3682(93)E0001-W
- Jackson, A., & Lapsley, I. (2003). The diffusion of accounting practices in the new “managerial” public sector. International Journal of Public Sector Management, 16(5), 359–372. https://doi.org/10.1108/09513550310489304
10.1108/09513550310489304 Google Scholar
- Jae Moon, M., & deLeon, P. (2001). Municipal Reinvention: Managerial values and diffusion among municipalities. Journal of Public Adminstration Research and Theory, 11(3), 327–351. https://doi.org/10.1093/oxfordjournals.jpart.a003505
- Korteland, E., & Bekkers, V. (2007). Diffusion of E-government innovations in the Dutch public sector: The case of digital community policy. Information Polity, 12, 139–150. https://doi.org/10.3233/IP-2007-0120
10.3233/IP-2007-0120 Google Scholar
- Lapsley, I. (1999). Accounting and the new public management: Intruments of substantive efficiency or a rationalising modernity? Financial Accountability and Management, 15(3 & 4), 201–207. https://doi.org/10.1111/1468-0408.00081
10.1111/1468-0408.00081 Google Scholar
- Lapsley, I., & Wright, E. (2004). The diffusion of management accounting innovations in the public sector: A research agenda. Management Accounting Research, 15(3), 355–374. https://doi.org/10.1016/j.mar.2003.12.007
10.1016/j.mar.2003.12.007 Google Scholar
- Liguori, M. (2012). Radical change, accounting and public sector reforms: A comparison of Italian and Canadian Municipalities. Financial Accountability & Management, 28(4), 437–463. https://doi.org/10.1111/j.1468-0408.2012.00555
10.1111/j.1468-0408.2012.00555.x Google Scholar
- Liguori, M., & Steccolini, I. (2013). Accounting, innovation and public-sector change. Translating reforms into change? Critical Perspectives on Accounting, 25(4-5), 319–323. https://doi.org/10.1016/j.cpa.2013.05.001
- Malmi, T. (1999). Activity-based costing diffusion across organizations: An exploratory empirical analysis of Finnish firms. Accounting, Organizations and Society, 24(8), 649–672. https://doi.org/10.1016/S0361-3682(99)00011-2
- Midgley, D. F., Morrison, P. D., & Roberts, J. H. (1992). The effect of network structure in industrial diffusion process. Research Policy, 21(6), 533–552. https://doi.org/10.1016/0048-7333(92)90009-S
- Olsson, O., Guthrie, J., & Humphrey, C. (1998). International experience with New Public Financial Management (NPFM) reforms: New world? Small world? Better world? In: O. Olsson, J. Guthrie, & C. Humphrey (Eds.), Global warning: Debating international developments in new public financial management (pp. 17–48). Oslo, Norway: Cappellen Akademisk Forlag.
- Perera, S., McKinnon, J. L., & Harrison, G. L. (2003). Diffusion of transfer pricing innovation in the context of commercialization—A longitudinal case study of a government trading enterprise. Management Accounting Research, 14(2), 140–164. https://doi.org/10.1016/s1044-5005(03)00023-4
10.1016/S1044-5005(03)00023-4 Google Scholar
- Premkumar, G., Ramamurthy, K., & Nilakanta, S. (1994). Implementation of electronic data interchange: An innovation diffusion perspective. Journal of Management Information System, 11(2), 157–186. https://doi.org/10.1080/07421222.1994.11518044
10.1080/07421222.1994.11518044 Google Scholar
- Rogers, E. M. (1995). Diffusion of innovations ( 4th ed.). New York, NY: The Free Press.
10.1002/1520-6297(198624)2:4<501::AID-AGR2720020412>3.0.CO;2-G Google Scholar
- Rogers, E. M. (2003). Diffusion of innovations ( 5th ed). New York, NY: The Free Press.
- Rosenberg, N. (1982). Inside the black box. New York, NY: Cambridge University Press.
- Swan, J. A., & Newell, S. (1995). The role of professional associations in technology diffusion. Organization Studies, 16(5), 847–874. https://doi.org/10.1177/017084069501600505
- Swan, J. A., Newell, S., & Robertson, M. (1999). Central agencies in the diffusion and design of tecnology: A comparision of the UK and Sweden. Organization Studies, 20(6), 905–931. https://doi.org/10.1177/0170840699206001
- USAID. (2005). Local and provincial government assessment: Sri Lanka. Washinton, DC: Author.
- Venieris, G., & Cohen, S. (2004). Accounting Reform in Greek Universities: A slow moving porcess. Financial Accountability & Management, 20(2), 183–203. https://doi.org/10.1111/j.1468-0408.2004.00192
10.1111/j.1468-0408.2004.00192.x Google Scholar
- Virkkala, S. (2007). Innovation and networking in peripheral areas- a case study of emergence and change in rural manufacturing. European Planning Studies, 15(4), 512–529. https://doi.org/10.1080/09654310601133948
- Walker, R. M. (2006). Innovation type and diffusion: An empirical analysis of local government. Public Administration, 84(2), 311–335. https://doi.org/10.1111/j.1467-9299.2006.00004
- Walker, R. M., Avellaneda, C. N., & Berry, F. S. (2011). Exploring the diffusion of innovation among high and low innovative localities. Public Management Review, 13(1), 95–125. https://doi.org/10.1080/14719037.2010.501616
- Yapa, P. W. S., & Guah, M. W. (2012). Public-sector accounting and E-Governance in developing countries: Case of Sri Lanka. Journal of Asia-Pacific Business, 13(1), 37–58. https://doi.org/10.1080/10599231.2012.630609
10.1080/10599231.2012.630609 Google Scholar
- Yapa, P. W. S., & Ukwatte, S. (2015). The new public financial management (NPFM) and accrual accounting in Sri Lanka. Accounting in Emerging Economies, 15, 7–50. https://doi.org/10.1108/S1479-356320150000015002