Government accounting reforms in Sub-Saharan African countries and the selective ignorance of the epistemic community: A competing logics perspective

Highlights

• Accrual accounting and IPSASs dominate government accounting reforms.

• Competing logics overshadow good existing accounting and reporting practice.

• Relational power of the epistemic community leads to the ignorance of local practice.

• An application of existing accounting systems can strengthen accountability.

Abstract

The objective of this paper is two-fold. First, it assesses existing local accounting and financial reporting practices in Sub-Saharan Africa (SSA), focusing on the extent to which recent government financial statements published by ten selected countries adhere to mainstream qualitative features of public sector reporting. Second, it investigates the multiple institutional logics at play in the context of government accounting reforms (GARs) in SSA, involving international organisations, epistemic community members, policy makers and local actors. Data for the study are drawn from a content analysis and disclosure scoring of ten SSA government financial statements, supplemented by forty semi-structured interviews carried out in Nigeria and Tanzania. Our findings demonstrate how the generalised assumptive logics of international organisations, coupled with the market and professional logics of epistemic community members and state logics of local politicians, have led to the marginalisation of ‘good’ existing accounting and financial reporting practice in SSA (as reflected by the extent to which government financial statements adhere to mainstream features of public sector reporting) - while providing the countries with a strong impetus for undertaking a transition towards large-scale GARs involving accrual accounting and IPSASs. The role of the epistemic community in selectively ignoring the positive aspects of local accounting practice is a significant impediment. In this way, members of this epistemic community continue to execute their ‘relational power’ generated through professional knowledge, expertise and elite connections over the local actors, hence upholding the generalised assumptive logics. The paper argues that public accountability and transparency can be strengthened in SSA countries provided there is an ‘intelligent’ application of existing regulations and accounting systems, rather than seeking to merely replace them with externally imposed large-scale GARs.

Introduction

Over the last two decades or so, critical accounting researchers have been investigating the causes, strategies, and consequences of accounting reforms in developing countries, mainly as part of the World Bank’s (WB) and the International Monetary Fund’s (IMF) deployment of neo-liberal development discourses and programmes (Hopper et al., 2017, Hopper et al., 2009, Van Helden and Uddin, 2016). Within the recent development discourses and public sector reforms of the WB and the IMF lies the notions of ‘good’ governance and government accountability. According to these organisations, developing countries need to realise these aspirations by pursuing major reforms in their public financial management, public sector accounting and financial reporting (Hopper et al., 2017). Given the largely ‘technical’ nature of these improvements, technical experts such as professional accountants from developed countries, their professional associations and accountancy firms have been employed by the WB/IMF to disseminate and implement ‘best and/or global practice’ as part of wider public sector accounting reforms (Adhikari & Jayasinghe, 2017). These experts have, over time, evolved into an ‘epistemic community’ (Christensen, Newberry, & Potter, 2019) on account of their prior experiences and expertise. Rather than being merely a group of experts or an interest group (Christensen et al., 2019, Irvine et al., 2011), an ‘epistemic community’ is “a network of professionals with recognized expertise and competence in a particular domain and an authoritative claim to policy-relevant knowledge within that domain or issue area” (Haas, 1992, p. 3). Admittedly, the role played by epistemic communities in diffusing new accounting models (mainly accrual accounting and International Public Sector Accounting Standards (IPSASs)) that correspond or are compatible with a neo-liberal worldview and their material interests have been previously discussed in studies that focused mainly on developed countries (Irvine et al., 2011, Himick and Brivot, 2018, Christensen and Skærbæk, 2010).

More recently however, the International Federation of Accountants (IFAC) has emerged as a global organisation for the accounting profession and a key public sector accounting standards setter, namely the International Public Sector Accounting Standards Board (IPSASB). The IFAC is supported by Western/global professional accounting associations (e.g., Association of Chartered Certified Accountants (ACCA) and the Chartered Institute of Public Finance and Accountancy (CIPFA), large accounting firms (e.g., the so-called Big Four), and professional accounting organisations (PAOs) from SSA developing countries (e.g., the Tanzania’s National Board of Accountants and Auditors; the Mauritius Institute of Professional Accountants; the Zambia Institute of Chartered Accountants). These organisations interface with a network of global consultants, most of whom are qualified accountants, and some have occupied influential positions in shaping public sector accounting (Adhikari, Kuruppu, Grossi, & Ambalangodage, 2019). This network is the backbone of the existing government accounting reform (GAR)-epistemic community. Although some of its members are driven by an ambition to promote their expertise and protect their standing, others (e.g. large accounting firms and consultants) have a vested interest to create additional markets and employment opportunities for their members such as the delivery of training and consultancy services (Ashraf & Uddin, 2013). Notwithstanding, there is little in the way of empirical insights in terms of the implications of their ‘work’ within the SSA context.

Relatedly, Meyer and Molyneux-Hodgson (2010) argue that the problematisation of existing/local accounting and financial reporting practice is a crucial strategy for such epistemic communities, since it enables them to convince others of their competence and of their authority in offering solutions to specific accounting problems. Locally developed accounting systems or processes seem to be ignored or are not given any prominence since these do not ‘fit’ with the mainstream justifications underpinning calls for GARs: poor governance, opaque accounting and weak accountability (Hopper et al., 2017, Lassou and Hopper, 2016, Lassou et al., 2018). Contrastingly, accrual accounting and IPSASs ‘emerge’ as a near-panacea for all governance, accounting, accountability, and even sustainability-related challenges faced by developing countries (Adhikari et al., 2019). Although the critical accounting literature (Hopper et al., 2009, Hopper et al., 2017, Jayasinghe and Uddin, 2019) has extensively highlighted the unintended and problematic consequences of such public sector accounting reforms (or in some cases, their ineffectual nature), there has, so far, been a limited investigation of existing local accounting and financial reporting practices. These practices seem to be either ‘selectively ignored’ or where convenient, they are seen as ‘deficient’ by the GAR-epistemic community.

Informed by the above, our paper has the following two objectives. First, we assess existing local accounting and financial reporting practices by focusing on the features of recent government financial statements published by ten selected SSA countries¹. We draw on work examining public/third sector accountability reporting practices (e.g., Coy and Dixon, 2004, Wei et al., 2008: Verbruggen et al., 2011, da Cruz et al., 2016, Yusuf and Jordan, 2017) to develop a disclosure scoring framework. This scoring framework highlights the extent to which existing SSA government financial statements adhere to ‘generally accepted’ characteristics of useful public sector financial information (i.e., timeliness, understandability, openness, relevance, faithful representation and comparability). This approach, albeit limited to the case of central government financial statements, nonetheless provides some evidence of existing good accounting and financial reporting practice, which appears to be overlooked by the GAR epistemic community. Second, we investigate the multiple logics at play involving the GAR epistemic community members, policy makers and local actors in the context of GARs in SSA; a context where the detrimental consequences of public sector accounting reforms remain wide-ranging and significant (Hopper et al., 2017, Nyamori et al., 2017). The institutional logics perspective (ILP) (Friedland and Alford, 1991, Thornton et al., 2012, Jamali et al., 2017) enables an analysis of the competing and congruent institutional logics and orders (profession, market, state and community) in the SSA field. We rely on semi-structured interviews of actors in two SSA countries (Nigeria and Tanzania) who support and oppose GARs, based on their views of existing local accounting and financial reporting practice. These two countries are selected due to their ‘frontrunner’ status in SSA, in terms of introducing accrual accounting and IPSASs reforms at the central government level (Goddard et al., 2016, Bakre et al., 2017, Mbelwa et al., 2019), in line with the WB/IMF’s generalised assumptive logics (Jamali et al., 2017) of good governance and accountability. In doing so, we are able to gather more detailed and experienced views from actors in the field. The paper thus contributes to the literature by teasing out the multiple logics embedded in GARs in SSA and the way the dominant logics have led to the marginalisation of existing ‘good’ accounting and financial reporting practice. We also develop a relatively novel scoring framework for central government financial statements (Van Helden and Reichard, 2019, Sellami and Gafsi, 2019, Jordan et al., 2017, Yusuf and Jordan, 2017, da Cruz et al., 2016), which is not exclusively tied to global/best practice prescriptions (accrual accounting and IPSASs).

The remainder of the paper is structured as follows. Section two outlines our literature review and is followed by the theoretical framework incorporating the ideas of competing institutional logics and orders. We then present our research methods and data considerations. Subsequently, in section five, we provide the detailed results from the analysis of government financial statements, as well as analyse the views of epistemic communities and those of local actors who are either supporting or questioning the purpose of accrual accounting and IPSASs. Finally, we bring forward conclusions and research contributions to delineate the directions for future research on government accounting practices and reforms in SSA and beyond.