New development: The first-time adoption of uniform public sector accounting standards—a German case study

ABSTRACT

The German state of Hesse switched in 2015 from its own accounting practice, based on the country’s private sector commercial code (the Handelsgesetzbuch), to the German public sector accounting standards (Standards Staatlicher Doppik: ‘SsD’). Hesse was the earliest adopter of accrual accounting and the only state in Germany whose consolidated financial statements were audited by an external audit company. This article examines Hesse’s critical areas of non-compliance with the SsD and the potential impact on comparability and transparency objectives and thus contributes to the literature on harmonization of accounting systems, extends the literature on areas of conflict between differing accounting rules in the public context and gives an exemplary case study of the situation in Germany.

IMPACT

The article updates academics and practitioners on the state of accrual-based public sector accounting in Germany. The analysis reveals challenges in the implementation of new uniform standards (Standards Staatlicher Doppik: SsD), leading to a weakening of comparability and transparency objectives. The article provides standard-setters with insights into critical implementation aspects, such as choices between simplified rules and more realistic and useful accounting policies. The article demonstrates the importance of dialogue with early adopters of new standards. The findings will also be of significance for the European Public Sector Accounting Standards (EPSAS) project.

KEYWORDS:

• Accrual accounting
• comparability
• public sector accounting
• SsD (Standards Staatlicher Doppik)
• transparency

Disclosure statement

No potential conflict of interest was reported by the author(s).