Public-Sector Accounting and E-Governance in Developing Countries: Case of Sri Lanka

Abstract

This article analyzes how new public financial management system should address the efficiency and effectiveness of the public sector and the emerging accrual basis accounting with e-governance for greater e-transparency on public-sector accounting in Sri Lanka. Despite the setting up of e-framework in 1983, the Sri Lankan public-sector accountancy environment during the last two decades raises concerns about efficiency, effectiveness, and accountability of the e-framework. The findings provide evidence of the importance of the economy and efficiency in the usage of public funds to provide more convenient access to government accounting information for citizens in Sri Lanka.

Keywords:

• public-sector accounting
• auditing
• accountability
• Sri Lanka
• new public financial management
• e-governance
• e-business
• education and training

ACKNOWLEDGMENTS

The authors wish to thank the Auditor General (Sri Lanka) and the World Bank – Work Shop participants at La Trobe University, Beechworth campus – February, 2006, and the audit superintendent of Auditor Generals Department – Sri Lanka – for the support in the collection of initial data for this paper. The authors would also like to acknowldege participants' comments on the original version of this paper that was presented at 31^st Annual Congress of the European Accounting Association in Rotterdam - Erasmus University, April 23–25, 2008. The final work was completed while the first author was working as a Visiting-Professor at School of Business Economics, Erasmus University, Rotterdam from February to April 2010.

Notes

1. In this paper e-governance is defined as the application of electronic means in (a) the interaction between government and citizens and government and business, as well as (b) in internal government operations to simplify and improve democratic, government and business aspects of governance.

2. ICASL was set up under the Institute of Chartered Accountants (ICA) Act No.23 in 1959. It was then named Institute of Chartered Accountants of Ceylon (ICAC). Subsequently, in 1972, with the constitutional change of the name of Ceylon to Sri Lanka, the Institute was eventually renamed Institute of Chartered Accountants of Sri Lanka (ICASL).

3. For example, the government has offered annual scholarships – Mahapola Scholarships – for students to follow the Chartered Accountancy program. Annually about 50 students are selected for these scholarships.

4. At the time of economic liberalization in 1977, the state sector of Sri Lanka played a dominant role in production, distribution and financing in the economy. Major economic and social activities such as banking, plantations, large scale industries, transport, insurance, telecommunication, postal services, ports, electricity, import and distribution of petroleum, roads, health, and education were either under public-sector monopoly or largely undertaken by public enterprises. The dominant role the state played in economic activity was a reflection of the sharp increase in state intervention from mid 1950s to late 1970s. During this period new public enterprises were set up, monopolies were created and selected private enterprises were nationalized.

5. SLAASMB was set up under the SLAAS Act, 1995 on the recommendation of the Committee on Financial Sector Reforms appointed by the Ministry of Finance after the East Asian financial crisis.

6. All quoted companies, banks, leasing and finance companies, unit trusts with a turnover in excess of Rs. 500 million or gross assets worth over Rs. 300 million, or with liabilities in excess of Rs. 100 million, and public corporations and statutory boards that are engaged in the supply of goods and services are defined as SBEs.