The Quest for a Primary EPSAS Purpose – Insights from Literature and Conceptual Frameworks

Abstract

Since 2013, the European Union has aimed to harmonize the public sector accounting (PSA) of its member states by developing European Public Sector Accounting Standards (EPSAS). As a prerequisite for consistent EPSAS, a conceptual framework (CF) is to be developed which includes an explicit selection of purposes. Providing an international comparative view with the theoretical underpinning of Nobes’ classification, this paper presents a literature-based systematization of PSA purposes. Our systematization is applied to three CFs: one international (IPSAS) and two national (from the USA and Germany, respectively). Through a normative discussion, we conclude that accountability is preferable as the overall accounting purpose. This theoretical lens is used to evaluate the recent status quo of the ongoing EPSAS CF project. This paper thereby develops relevant implications for accounting theory and offers a starting point for standard setters and scholars to prioritize purposes for PSA with respect to different legal frameworks.

Keywords:

• public sector accounting
• EPSAS
• IPSAS
• GASB
• conceptual framework
• purposes
• accountability

JEL Classification:

• D73
• H60
• H70
• H83
• M40

Acknowledgements

The authors acknowledge fruitful discussions of earlier versions of this paper at conference presentations. We would like to thank the participants of the 2016 Spring Workshop of the EGPA Permanent Study Group XII ‘Public Sector Financial Management’ on 5–6 May 2016 at the University of Modena and Reggio Emilia and the 16th Biennial CIGAR (Comparative International Governmental Accounting Research) Conference 2017 on 8–9 June 2017 in Porto. Also, the paper received valuable input from anonymous reviewers of the 2018 Annual Meeting of the German Academic Association for Business Research as well as the anonymous reviewers and guest editors of this Special Issue. The usual disclaimer applies.

Disclosure Statement

No potential conflict of interest was reported by the authors.

Supplemental Data

Supplemental data for this article can be accessed https://doi.org/10.1080/17449480.2019.1632467.

Notes

1 For a very recent plea to reject the implementation of EPSAS accrual accounting standards on central state level see the special report of the German Federal Court of Auditors (2017).

2 E.g. German parliamentary resolutions in June 2013 (DS 17/14148) or March 2015 (DS 18/4182).

3 I.e. ‘Gemeindeprüfungsanstalt Nordrhein-Westfalen’ (municipality audit and research institute (public-law institution) of the German federal state North Rhine-Westphalia).

4 Nobes and Stadler (2013) acknowledge also other ways to categorize, for instance a split between common and code law countries. Germany and France represent typical code law countries; Anglo-American countries represent mainly common law countries.

5 See also for a call for binding concepts Nowak and Keilmann (2015, p. 432).

6 The exact query for the data bases was ((public AND sector AND accounting AND objectives)) OR ((public AND sector AND accounting AND purposes)) OR ((public AND sector AND accounting AND aims)) OR ((governmental AND accounting AND objectives)) OR ((governmental AND accounting AND purposes)) OR ((public AND sector AND accounting AND aims)) OR ((öffentliche AND Rechnungslegung AND Ziel)) OR ((öffentliche AND Rechnungslegung AND Zweck)) OR ((öffentliches AND Rechnungswesen AND Ziel)) OR ((öffentliches AND Rechnungswesen AND Zweck)). We limited the output to journal articles and articles from edited volumes only. If necessary, we cut the results for each data base after the most relevant 50 articles.

7 For an overview on the state of the art of German PSA see also Müller-Marqués Berger and Heiling (2015).

8 Through the notes, the German law enables entities to give a comprehensive view of themselves which depends much more on individual judgement and interpretation of the management than items in the balance sheet do (Haller, 2003, p. 106).

9 However, the unofficial CF-P prioritized purposes over other purposes in a confusing way (protection as a ‘main’ purpose and accountability as a ‘superior’ purpose) (GPA NRW/ HCA, 2015, p. 5).

10 ‘For governments that prepare biennial budgets, interperiod equity encompasses that two-year period. Multiyear information may also be used to assess interperiod equity over the longer term’ (GASB, 1987, p. 18 fn. 3).

11 As the original trigger for the creation of EPSAS was the European debt crisis the need for harmonized and comparable standards emerged. Therefore, we assume that an EPSAS CF should assist to create consistent accounts instead of giving room for too much flexibility.