Implementation of Accrual Accounting in the Public Sector: Evidence from Indonesia

Abstract

This article is inspired by complexities in the adoption and implementation of accrual accounting (AA), which has been explored in the public sector accounting literature, and seeks to examine its implementation in the Indonesian public sector. Using case-based research, the article is underpinned by Gramsci’s theory of hegemony to construe the process of the implementation of AA. The article adopts a qualitative research method including interviews with senior regulators of public sector reforms in Indonesia and an extensive review of documents, literature and reports to construct a historical analysis. The data reveal that international donor organizations such as the International Monetary Fund (IMF) and the World Bank influenced the implementation of AA in Indonesia. In line with Gramsci’s theory of hegemony, the international organizations directed the senior Indonesian regulators to perceive that AA was indispensable. Therefore, AA was implemented because of hegemonic influences and attempts to seek legitimacy. The empirical evidence provided identifies that major public sector reforms are complex. This is even more evident in new emerging market countries like Indonesia, where the intentions underpinning reforms may be challenging to realize and are driven by factors outside the control of those tasked with its adoption and implementation. The article is novel in identifying and interpreting the influence of the IMF, the World Bank, and other international organizations on the implementation of AA in Indonesia through the lens of Gramsci’s theory of hegemony.