Designing Mechanisms to Overcome Obstacles in Implementing Public Sector Accounting Standards

Document Type : Research Paper


Assistant Prof., Department of Accounting, Kerman Branch, Islamic Azad University, Kerman, Iran.



Objective: In the public sector, accounting systems play a crucial role in serving as a means and tool for representation, coordination, and organization, primarily to ensure accountability. Furthermore, financial and accounting reforms transform and implement public policies and reshape the working of public administration. In recent years, many countries have made important efforts to reform and modernize public sector accounting systems, with a trend towards accrual accounting. So, the main purpose of this study is to design obstacle-removal mechanisms for implementing public sector accounting standards by the Grounded Theory.
Methods: The required data were collected using two techniques, i.e. unstructured interviews and document analysis. In an attempt to provide an amiable interview environment, tape recording was avoided and notes were taken of significant issues. Interviews were conducted through 25 sessions with Iranian senior managers and academics, in 2020 and 2021. Altogether, we were able to conduct 25 interviews during our visits. Each interview lasted between one and two hours. The interviews encompassed a diverse range of participants, including executive managers, senior and junior government accountants from the Supreme Audit Court of Iran, university professors specializing in auditing, and representatives/members of professional accounting institutions such as the Iranian Association of Certified Public Accountants.
Results: The findings revealed several obstacles that hinder the complete adoption of public sector accounting standards in Iran. These challenges encompass issues such as training in universities; creating an evaluation system; governments’ unwillingness in terms of political will towards full public sector accounting standards implementation; misperceptions of international standards; management attitude; readiness for change; human resources; statutory adjustment; inadequate funding; organizational characteristics of the reporting unit; infrastructures and technology; preventing corruption and reducing administrative violations; increasing efficiency; accepting financial statements in the international system.
Conclusion: In this study, we have utilized the concepts of extended new-institutional theory to investigate the significant obstacles associated with the implementation of public sector accruals in Iran. The findings of this study have revealed a notable resistance towards the implementation of reforms, particularly accrual accounting reforms, at lower levels within the administrative hierarchy of the public sector in Iran. In this respect, the study underpins the view that accrual accounting reforms should be part of a broader public sector reform, and it is crucial to ensure that countries fulfill certain prerequisites before transitioning towards accrual accounting


Main Subjects

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