Implementation of accrual accounting by the Indonesian central government: An investigation of social factors

Abstract

Public sector accounting reforms have resulted in crucial changes in accounting reporting by the government, namely the adoption of accrual accounting in the public sector. This study looks into the social factors that led to the Indonesian central government implementing accrual accounting reform. This study adopted a quantitative approach using purposive sampling. Structural Equation Modeling (SEM) with PLS version 3.0 was used to analyze the data. The information for this study was gathered using a Google Form, which was used to send 70 questionnaires to government finance officials, chief accountants and auditors, and heads of accounting and auditing divisions in the Ministry of Finance. Seeing these social factors is expected to increase the effectiveness of the administration of accrual accounting implementation. The results showed that pressure from donors, pressure from the National Board of Accountants and Auditors (NBAA), political will, and audit process had an impact on the effectiveness of accrual accounting application (AAA). However, management change, regulatory matters, and a culture of transparency have no effect. In addition, the effective administration of AAA affects managerial accountability. This study implies that the effective application of accrual accounting depends on human-related concerns and culture. It is important to note that accrual accounting is more of a management reform that entails changes to bigger areas of institutional and accountability systems than merely adopting a new accounting technology.

Keywords

• accountability
• accrual accounting
• audit process
• management change
• political will
• pressure