Institutionalization of Accrual Accounting in the Indonesian Public Sector

Harun HARUN, Karen Van Peursem, Ian Eggleton

Research output: Contribution to journalArticlepeer-review

50 Citations (Scopus)


Purpose - The purpose of this paper is to evaluate the institutionalization of an accrual accounting system in the Indonesian public sector.

Design/methodology/approach - The authors undertake a case study to gain insights relating to the critical features of the institutionalization process of the accrual accounting system (AAS) in one Indonesian public sector municipality. The data are drawn from official documents of the Indonesian Government and from publicly available information about the accrual adoption processes. The authors also interviewed key actors who were involved in the accrual accounting policy formulation, standards development and implementation. The data under investigation cover the period from 1983 to 2010.

Findings - The IPM of Dambrin, Lambert and Sponem is employed to evaluate the process by which an AAS was idealized, standardized, implemented and used in one Indonesian municipality. Scott's pillars of legitimization also inform rationales behind practice. This study reveals how the decision of the Indonesian Government to adopt accrual accounting in 2003 was part of greater political and economic reforms following the financial and political crisis that occurred in 1998. Idealized in the early 1980s by technocrats in the Ministry of Finance, accrual accounting practices were deferred and then enabled by a series of national political events. Their ultimate internalization into our municipality was led by new legislation but also influenced by the habits and histories of the Indonesian local context and was as a result decoupled in many respects from ideals, discourses and techniques established for it.

Research limitations/implications - The findings should be understood in the economic, social and historical context of Indonesia. Findings offered here may differ from other applications due to the nature of the economic, social and political contexts.

Originality/value - Uniquely employing the IPM model, and drawing from a context which has undergone significant political change but which has benefitted from little research, this study contributes to an understanding of the institutionalization and legitimization process of an accrual accounting system in an emerging-economy public sector. Findings demonstrate how notions of politics and power inform the complexity of institutionalization in this unique political-economic environment
Original languageEnglish
Pages (from-to)35-49
Number of pages15
JournalJournal of Accounting Organizational Change
Issue number3
Publication statusPublished - 2012
Externally publishedYes


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