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Article
Publication date: 3 June 2019

Josette Caruana and Kimberly Zammit

The purpose of this paper is to analyse the relationship between control by the Maltese Central Government on Local Government and the format and basis of budgetary and financial…

319

Abstract

Purpose

The purpose of this paper is to analyse the relationship between control by the Maltese Central Government on Local Government and the format and basis of budgetary and financial reporting used. The study analyses the role of reporting in agency and fiscal federalism theories.

Design/methodology/approach

Semi-structured interviews were carried out with the controller (Central Government officials and the National Audit Office), while a survey was carried out with the controlled (Maltese Local Councils).

Findings

The type of reporting used by Maltese Local Councils may be undermining the control that Central Government seeks to exercise on overspending and debt levels. The Local Councils’ financial statements report accrual deficits and increasing liabilities. This overspending appears to slip through Parliamentary scrutiny because the latter approves cash allocations to Local Councils; the financial reports submitted to Parliament do not highlight overspending in cash terms; and the cash budget execution report that should be prepared by Local Councils is not given due importance.

Originality/value

Central Government should be consistent in its policy towards Local Government, which may require more elaborate reporting. This study highlights the importance of aligning the reporting required (top-down) and the reporting presented (bottom-up) – otherwise, control is at stake.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 31 no. 2
Type: Research Article
ISSN: 1096-3367

Keywords

Available. Open Access. Open Access
Article
Publication date: 4 July 2024

Caroline Aggestam Pontoppidan, Marco Bisogno, Josette Caruana and Giovanna Dabbicco

This study aims to explore natural resources from a public sector accounting perspective, focusing on their definitions, classifications, recognition criteria and disclosure…

616

Abstract

Purpose

This study aims to explore natural resources from a public sector accounting perspective, focusing on their definitions, classifications, recognition criteria and disclosure requirements provided by different standard-setters and regulators at both international and national levels.

Design/methodology/approach

By reviewing accounting frameworks for natural resources, this study extrapolates accounting dilemmas around the debate on natural resource accounting, using the dialogic accounting perspective as a theoretical framework.

Findings

Natural resources cannot be defined as a single category. Various categories have different characteristics, requiring different standards to recognize multiple orientations. This avoids monetary reductionism. Furthermore, uncertainty, both in existence and measurement, may disqualify some of these resources from being considered assets. Perhaps, concentrating on the flow of services derived from natural resources is better than focusing on their valuation. This may lead to a split-asset approach (flows and underlying assets) for certain resources. This study’s findings indicate that public-sector entities should consider preparing a separate non-financial report regarding the management of natural resources with the objective of maintaining inter-generational equity.

Originality/value

This study contributes to the debate on natural resources from an accounting and reporting perspective, highlighting the importance of holding public-sector entities accountable for the use of natural resources.

Details

Meditari Accountancy Research, vol. 32 no. 7
Type: Research Article
ISSN: 2049-372X

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Article
Publication date: 9 September 2022

Magdalena Kowalczyk and Josette Caruana

This paper compares governmental accounting and budgeting in two European Union (EU) member states, analysing the developments in each country as to how they “fit” into the EU's…

340

Abstract

Purpose

This paper compares governmental accounting and budgeting in two European Union (EU) member states, analysing the developments in each country as to how they “fit” into the EU's harmonization project and the push towards the implementation of accrual accounting compliant with the International Public Sector Accounting Standards (IPSAS).

Design/methodology/approach

An explanatory multiple case study is used to describe the structures and changes in governmental systems (accounting and budgetary) in Malta and Poland. The methodology takes a qualitative interpretative approach, examining the underlying legislations and related ministerial publications as secondary sources.

Findings

Focusing on the output from financial accounting and budgetary systems, the results illustrate how organizations respond in a different manner to similar institutional pressures. In particular, Poland shows no inclination to adopt the IPSAS, but emerges with a sophisticated budgeting system while Malta is more focused on developing its financial reporting in line with the IPSAS. The theoretical lens highlights that while both countries tend towards pragmatic legitimacy, Poland appears more inclined towards exchange legitimacy, and Malta is more subject to influence legitimacy.

Research limitations/implications

At a practical level, this study should be read by public sector accounting standard setters. It illustrates how EU member states are engaging with the IPSAS, emphasizing the ambitious nature of the EU's harmonization project, in spite of the structural legitimacy that the EU institution emanates.

Originality/value

Previous comparative international governmental accounting studies have examined accounting reform processes and developed or applied various theoretical models to try to understand the process. This study looks at the output from such reform processes. The two countries are seemingly experiencing the same type of pressures exerted by the demands of EU membership. However, the translation of the same external macro-forces at macro-level to micro (organizational)-level results in different compliance with the desired harmonization of governmental accounting systems.

Details

International Journal of Public Sector Management, vol. 35 no. 7
Type: Research Article
ISSN: 0951-3558

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Article
Publication date: 21 May 2018

Josette Caruana and Brady Farrugia

The purpose of this paper is to examine the use and non-use of the Government Financial Report by Maltese Members of Parliament (MPs). It refers to information overload theory to…

696

Abstract

Purpose

The purpose of this paper is to examine the use and non-use of the Government Financial Report by Maltese Members of Parliament (MPs). It refers to information overload theory to analyse the gap between financial reports and their relevance for decision making.

Design/methodology/approach

A mix of qualitative (interviews) and quantitative (questionnaire) research tools are applied, with the Maltese MPs being the research participants. This method is acclaimed to be comprehensive, but this study highlights certain disadvantages when applied in the political arena.

Findings

The characteristics of the information itself could be the main cause of information overload, resulting in the non-use of the financial report for decision making. Politicians refer to financial data for their decision making, but not to the data presented in the financial report. Irrespective of the politician’s professional background, the data in the financial report is perceived as incomplete and outdated.

Practical implications

The cause of information overload and its effects are important considerations for preparers of financial information and accounting standard setters, if they wish that their production is relevant for decision makers.

Originality/value

There is an increase in research concerning politicians’ use of budgetary and performance information, at local and regional levels of government. This study investigates exclusively the use of the financial report by politicians at central level, in a politically stable environment.

Details

Accounting, Auditing & Accountability Journal, vol. 31 no. 4
Type: Research Article
ISSN: 0951-3574

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Article
Publication date: 19 August 2019

Eugenio Anessi-Pessina, Josette Caruana, Mariafrancesca Sicilia and Ileana Steccolini

The purpose of this paper is to examine how the convergence of private and public sector accounting standards is affecting conceptual and practical issues relating to heritage…

625

Abstract

Purpose

The purpose of this paper is to examine how the convergence of private and public sector accounting standards is affecting conceptual and practical issues relating to heritage. More specifically, the paper is intended to provide a better understanding of the state of the art in national and international accounting standards on heritage assets, and of the views influencing such standards.

Design/methodology/approach

A qualitative documentary analysis is carried out to explore the variety of existing positions and views on heritage, ranging from the scholarly literature, through potential stakeholders and users, to international and national standard setters.

Findings

The analysis shows that the path of convergence between public and private sector standards and practices is still problematic. After more than two decades of debate around the nature, definition, measurement, and reporting of heritage, these issues are far from settled.

Research limitations/implications

In the light of calls for increased measurement and reporting of public sector “assets”, and specifically for the definition of standards to recognise heritage, the paper suggests the need to strongly reconsider whether the convergence between public and private sector standards is desirable, feasible and effective. As such, the risks of embracing simplified or hybrid forms of accounting and reporting for heritage should be more seriously assessed. While reporting on heritage is important, it is fundamental to keep it distinct from reporting on government’s regular operations, in order to appreciate its specific value, nature and features.

Originality/value

Looking at European national standards for heritage, the IPSASB’s proposals, and the reactions to the latter by relevant stakeholders, the paper provides a pluralistic view on the positions and experiences about heritage, contributing to the debate on the convergence between private and public sector accounting standards.

Details

International Journal of Public Sector Management, vol. 33 no. 2/3
Type: Research Article
ISSN: 0951-3558

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Book part
Publication date: 20 March 2023

Josette Caruana, Marco Bisogno and Mariafrancesca Sicilia

This introductory chapter elaborates on the tricky issue of measurement in public sector financial reporting, which arises due to the particular features of the public sector when…

Abstract

This introductory chapter elaborates on the tricky issue of measurement in public sector financial reporting, which arises due to the particular features of the public sector when compared to the private sector. It provides a summary of the book chapters, highlighting the theoretical/practical frameworks used, methodologies and conclusions. Three themes are identified in the book, namely, (a) frameworks and methodologies; (b) measuring and reporting the elements in financial statements; and (c) heritage. This chapter identifies important avenues for further research.

Details

Measurement in Public Sector Financial Reporting: Theoretical Basis and Empirical Evidence
Type: Book
ISBN: 978-1-80117-162-5

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Book part
Publication date: 20 March 2023

Giovanna Dabbicco and Josette Caruana

The objective of this chapter is to compare the measurement bases of income and expenditures found in International Public Sector Accounting Standards (IPSAS) used in Public…

Abstract

The objective of this chapter is to compare the measurement bases of income and expenditures found in International Public Sector Accounting Standards (IPSAS) used in Public Accounts with those in the statistical rules used in National Accounts/Government Finance Statistics (GFS). Both frameworks apply an accrual methodology, but, while some governments appear dubious about adopting the IPSAS framework, the National Accounts framework is more ‘tried and tested’ for government financial reporting on an international scale. The practical application of the accrual methodology in the two frameworks differs to a certain extent. These differences provide learning opportunities for both frameworks.

Details

Measurement in Public Sector Financial Reporting: Theoretical Basis and Empirical Evidence
Type: Book
ISBN: 978-1-80117-162-5

Keywords

Available. Content available
Book part
Publication date: 20 March 2023

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Abstract

Details

Measurement in Public Sector Financial Reporting: Theoretical Basis and Empirical Evidence
Type: Book
ISBN: 978-1-80117-162-5

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Book part
Publication date: 20 March 2023

Riccardo Mussari, Pasquale Ruggiero and Daniela Sorrentino

Measurement and evaluation issues have long represented the main criticality of accrual accounting adoption in the public sector. While professional accountants and scholars have…

Abstract

Measurement and evaluation issues have long represented the main criticality of accrual accounting adoption in the public sector. While professional accountants and scholars have mostly focused on the recognition and measurement of typical public assets (e.g. heritage and community assets), the authors contend that more attention should be paid to the equity (net assets). The equity requires additional evaluation criteria that stem from the representation of an accounting aggregate that does not exist per se but rather derives as a residual from all the other items reported in the balance sheet. This chapter proposes an illustrative case study on the evolution of the accrual accounting principle for Italian local governments (LGs). The findings enable the gaining of a deeper understanding of how the equity can be represented and discuss which informative objectives it can address in public administrations. Practical recommendations are delivered for national and international accounting standard setters for the public sector.

Details

Measurement in Public Sector Financial Reporting: Theoretical Basis and Empirical Evidence
Type: Book
ISBN: 978-1-80117-162-5

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Book part
Publication date: 20 March 2023

Cristian Carini and Claudio Teodori

With the growth of municipal capitalism, both local governments (LGs) and their related entities are involved in debates about public sector financial debts. This chapter seeks a…

Abstract

With the growth of municipal capitalism, both local governments (LGs) and their related entities are involved in debates about public sector financial debts. This chapter seeks a deeper understanding of the relevance of measuring liabilities through the consolidated financial statements (CFS). With regard to a sample of Italian LGs, the analysis show that debts calculated with reference to the CFSs is statistically different from that derived from the analysis of the separate financial statements (SFS). The authors also conclude that the differences are largely due to the impact of non-controlled entities, which are proportionately consolidated. The analysis of this study is limited to considering the impact of debt and does not take into account other financial or non-financial variables. The usefulness of CFSs must also be evaluated with reference to these elements.

Details

Measurement in Public Sector Financial Reporting: Theoretical Basis and Empirical Evidence
Type: Book
ISBN: 978-1-80117-162-5

Keywords

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