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The New Public Financial Management (NPFM) and Accrual Accounting in Sri Lanka

The Public Sector Accounting, Accountability and Auditing in Emerging Economies

ISBN: 978-1-78441-662-1, eISBN: 978-1-78441-661-4

Publication date: 15 October 2015

Abstract

Purpose

The purpose of this paper is to analyse the reasons why Sri Lanka adopted International Public Sector Accounting Standards (IPSAS) recently. Many less developed countries (LDCs) have introduced IPSAS during the recent past. However, little research has been conducted to study the New Public Financial Management and accrual accounting and their impact on LDCs.

Methodology/approach

Using a qualitative approach, the methods of this paper consist of interviews, a documentary review and participatory observation in the Ministry of Finance and Planning (MOFP) and Auditor General’s Department of Sri Lanka, and present a critical interpretation supported by the perspective of globalisation.

Findings

The findings of the research indicate that the public sector reforms and the transition from cash accounting to accrual accounting in the public sector have been strongly affected by the global pressures imposed by international agencies such as International Public Sector Accounting Standards Board (IPSASB) and the World Bank (WB). Empirical evidence shows the dysfunctional impact of globalisation in the public sector accounting standards as there are major structural issues yet to resolve. There are increasing doubts over whether the change to accrual accounting is worth the costs and the additional risks involved.

Research limitations

The results of the interviews are based on the knowledge and past experiences of interviewees. What is generalisable is an understanding of the processes and mechanisms that relate to the way the public sector accounting functions.

Originality/value

This paper adds new literature on public sector accounting in LDCs, which recognises the nexus and interests of international agencies and practice of public sector accounting.

Keywords

Acknowledgements

Acknowledgements

The authors wish to acknowledge the precious help offered by the officers of the Ministry of Finance and Planning, Treasury Department and Auditor General’s Office for the support in the collection of data for this study. Financial support from the RMIT University for this study is also acknowledged. This research is based on work carried out in Beijing – PRC while the first author was on Study Leave and working as a visiting fellow based on the Tsinghua University, PRC from July to October 2014.

Citation

Senarath Yapa, P.W. and Ukwatte, S. (2015), "The New Public Financial Management (NPFM) and Accrual Accounting in Sri Lanka", The Public Sector Accounting, Accountability and Auditing in Emerging Economies (Research in Accounting in Emerging Economies, Vol. 15), Emerald Group Publishing Limited, Leeds, pp. 7-50. https://doi.org/10.1108/S1479-356320150000015002

Publisher

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Emerald Group Publishing Limited

Copyright © 2015 Emerald Group Publishing Limited