Public Sector Accounting and Auditing in Europe

Dear Colleagues,

In recent decades, many countries have implemented important reforms, innovating their accounting systems at central, regional, and local governmental levels. These innovations have been supported by the new public financial management (NPFM) movement, leading to the implementation of accrual-based accounting systems and/or the adoption of the International Public Sector Accounting Standards (IPSAS). Several international organizations have adopted the IPSAS, which are becoming a fulcrum for modernizing and harmonizing public-sector accounting (Manes-Rossi et al., 2016).

In the European context, the European Union (EU) Commission launched a project in 2012, with the aim to develop a harmonized public-sector accounting system, thereby controlling the deficit and debt of member countries. During this process, the Eurostat proposed establishing a set of European Public Sector Accounting Standards (EPSAS) to be adopted by EU member countries, while retaining the IPSAS as a benchmark (EC, 2013).

Scholars have highlighted both the disadvantages (Christiaens and Rommel, 2008; Lapsley et al., 2009; Oulasvirta, 2014), and the advantages (Bergmann, 2012; Caperchione and Salvatori, 2012; Pina and Torres, 2003; Cuadrado-Ballesteros et al., 2019) regarding the implementation of accrual-based accounting systems or the adoption of IPSAS. However, the process seems to be unstoppable, influenced also by global pressures for harmonized accounting rules (Baskerville and Grossi, 2019).

Innovations in public-sector accounting should occur contemporarily with further improvements in public-sector auditing. Politicians and managers are retained accountable for using public resources correctly, while providing services to citizens, and auditing is the tool by which this purpose is achieved (Brusca et al., 2015). In the EU context, Council Directive 2011/85/EU requires both internal controls and independent audits. Generally, internal audits are carried out by public-sector auditors, who are employed by the very entity to be audited, while external audits are carried out by professionals who are exterior to the entity. However, as in the case of accounting systems, several differences persist in the European context at different levels of government (central, regional, and local), regarding both the type of audit and the standards adopted.

This Special Issue aims to investigate public-sector accounting and auditing in the European context. The editor calls for theoretical, empirical, and literature review papers, covering the different levels of government, public-sector health entities, and public universities, using both quantitative and qualitative methodologies. Studies covering specific issues in the public sector, such as non-exchange transactions (Bisogno et al., 2019), or heritage assets (Biondi and Lapsley, 2014; Ellwood and Greenwood, 2016), are particularly desirable, investigating the various standards adopted in different European countries. Even if research focused on a single country is welcomed, taking a comparative approach would be preferable, in order to discuss accounting and auditing issues through the lens of both the standardization and the international harmonization processes.

Furthermore, it would be desirable to avoid focusing on the technicalities, while assessing the effects of public-sector accounting/auditing practices and reforms (Caruana et al., 2019). In fact, changing the accounting framework would lead to organizational changes, technological developments, and new managerial approaches, which in turn would affect the economic and political life of social communities (Mussari, 2014).

In particular, submitted papers for this Special Issue might include:

• Comparative studies dealing with public-sector accounting standards.
• Comparative studies regarding public-sector auditing standards.
• Public-sector accounting and auditing harmonization: strategies and perspectives in the European context.
• The differences between European countries concerning the accounting and auditing systems: the role of legal, cultural and political factors.
• The development of a theoretical framework for financial reporting in the public sector.

References

• Baskerville, R., & Grossi, G. (2019), Glocalization of accounting standards: Observations on neo-institutionalism of IPSAS. Public Money & Management, 39, 2, pp. 95-103.
• Bergmann, A. (2012), The influence of the nature of government accounting and reporting in decision-making: evidence from Switzerland. Public Money & Management, 32, 1, pp. 15-20.
• Biondi, L., & Lapsley, I. (2014), Accounting, transparency and governance: the heritage assets problem. Qualitative Research in Accounting & Management, 11, 2, pp. 146-164.
• Bisogno, M., Aggestam Pontoppidan, C., Hodges, R., & Manes-Rossi, F. (2019). Setting International Public-Sector Accounting Standards: Does ‘Public’ Matter? The Case of Revenue from Non-Exchange Transactions. Accounting in Europe, pp. 1-17, doi: 10.1080/17449480.2019.1624791.
• Brusca, I., Caperchione, E., Cohen, S., & Manes Rossi, F. (2015), Comparing accounting systems in Europe. In Brusca, I., Caperchione, E., Cohen, S., Manes Rossi, F. (Eds.). Public Sector Accounting and Auditing in Europe (pp. 235-251), Palgrave Macmillan, London.
• Caperchione, E., & Salvatori, F . (2012), Rethinking the relationship between local government and financial markets. Public Money & Management, 32, 1, pp. 21–25.
• Caruana, J., Brusca, I., Caperchione, E., Cohen, S., & Manes-Rossi, F. (2019), Exploring the Relevance of Accounting Frameworks in the Pursuit of Financial Sustainability of Public Sector Entities: A Holistic Approach. In Caruana, J., Brusca, I., Caperchione, E., Cohen, S., Manes-Rossi, F. (eds. by), Financial Sustainability of Public Sector Entities. The Relevance of Accounting Frameworks. Switzerland, Palgrave MacMillan (pp. 1-18).
• Christiaens, J., & Rommel, J. (2008). Accrual accounting reforms: only for businesslike (parts of) governments. Financial Accountability & Management, 24, 1, pp. 59-75.
• Cuadrado-Ballesteros, B., Citro, F., & Bisogno, M. (2019). The role of public-sector accounting in controlling corruption: an assessment of Organisation for Economic Co-operation and Development countries. International Review of Administrative Sciences, pp. 1-20 doi: 0020852318819756.
• EC (2013), Report from the Commission to the Council and the European Parliament. Towards Implementing Harmonised Public Sector Accounting Standards in Member States. The Suitability of IPSAS for the Member States, COM (2013) 114 (http://eur-lex.europa.eu).
• Ellwood, S., & Greenwood, M. (2016), Accounting for Heritage Assets: Does measuring economic value ‘kill the cat’? Critical Perspectives on Accounting, 38, pp. 1-13
• Lapsley, I., R. Mussari, G., & Paulsson, G. (2009), On the Adoption of Accrual Accounting in the Public Sector: A Self-Evident and Problematic Reform. European Accounting Review, 18, 4, pp. 719-723.
• Manes-Rossi, F., Cohen, S., Caperchione, E., & Brusca, I. (2016), Harmonizing public sector accounting in Europe: thinking out of the box, Public Money & Management, 36, 3, pp. 189-196.
• Mussari, R. (2014), EPSAS and the Unification of Public Sector Accounting Across Europe. Accounting, Economics and Law: A Convivium, 4, 3, pp. 299-312.
• Oulasvirta, L. (2014), The reluctance of a developed country to choose International Public Sector Accounting Standards of the IFAC; a critical case study. Critical Perspectives on Accounting, 25, 3, pp. 272–285
• Pina, V., & Torres L. (2003), Reshaping public sector accounting: an international comparative view. Canadian Journal of Administrative Sciences, 20, 4, pp. 334-350.

Prof. Dr. Marco Bisogno
Guest Editor

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• Standardization
• International harmonization
• Accrual accounting
• IPSAS
• EPSAS
• Auditing