UNIVERSITI TEKNOLOGI MARA

THE PREPAREDNESS OF THE ACCOUNTANTS FROM THE MALAYSIAN ACCOUNTANTS DEPARTMENT IN MOVING TOWARDS ACCRUALS ACCOUNTING

MUHAMMAD IQBAL BIN MOHAMED AZHARI

Dissertation submitted in partial fulfillment of the requirements for the degree of

Master of Accountancy

Faculty of Accountancy June 2013

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ABSTRACT

The move from cash to accrual accounting in public sector was initially made by the Malaysian government in year 2011. When the government made the announcement, it gives a huge shock to the preparers of the governmental financial reporting. It is believed that by the year 2015, all public sectors in Malaysia would fully adopt the accruals accounting system. The time to prepare for the implementation process is short compared to other countries that have successfully implemented the accrual accounting in their public sector. This study is made to examine the preparedness of accountants in implementing the accrual accounting. The Lüder‟s Contingency Model was constructed to explain the contributing factors that lead to the accounting innovation in governmental accounting system. The Model was used in this study to identify the implementation barriers that will slow down the implementation process. As identified in the Model, factors such as the qualified accountants are one of the implementation barriers. Thus, the result of this study shows that the accountant‟s attitude and the amount of training provided to the accountant is positively influence their preparedness in implementing accrual accounting. Even though the results show that the accountants‟ attitude are positive towards preparing for the implementation of accrual accounting, but there are concerns over the implementation of accrual accounting in public sector. Most of the accountants are highly concern on the employees‟ lack of knowledge. This shows that there is still a long way before Malaysia public sector successfully adopts the accruals accounting system.

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TABLE OF CONTENTS

ABSTRACT..................................................................................................................................... ii LIST OF TABLES .......................................................................................................................... vi LIST OF FIGURES ....................................................................................................................... vii LIST OF ABBREVIATIONS ....................................................................................................... viii CHAPTER 1 .................................................................................................................................... 1 INTRODUCTION ........................................................................................................................... 1 1.1 1.2 1.3 1.4 1.5 1.6 BACKGROUND OF STUDY ................................................................................ 1 PROBLEM STATEMENT ..................................................................................... 2 RESEARCH OBJECTIVES.................................................................................... 4 RESEARCH QUESTIONS ..................................................................................... 5 SIGNIFICANT OF STUDY.................................................................................... 5 CONCLUSION ....................................................................................................... 6

CHAPTER 2 .................................................................................................................................... 8 LITERATURE REVIEW ................................................................................................................ 8 2.1 2.2 2.3 2.4 INTRODUCTION ................................................................................................... 8 CASH ACCOUNTING VERSUS ACCRUALS ACCOUNTING ......................... 9 THE DEVELOPMENT OF ACCRUAL ACCOUNTING IN PUBLIC SECTOR 10 IMPLEMENTATION BARRIERS ....................................................................... 14 2.4.1 Attitude towards Change of Accounting System .................................................. 15 2.4.2 Training on Accrual Accounting ........................................................................... 17 2.5 PREPAREDNESS IN IMPLEMENTING ACCRUALS ACCOUNTING IN PUBLIC SECTOR ......................................................................................................................... 19 2.6 2.7 RESEARCH FRAMEWORK ............................................................................... 19 CONCLUSION ..................................................................................................... 21

CHAPTER 3 .................................................................................................................................. 22 RESEARCH METHODOLOGY................................................................................................... 22 3.1 3.1 INTRODUCTION ................................................................................................. 22 METHODOLOGICAL APPROACH ................................................................... 22

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............3 Types of Training Used To Train the Preparers...................................................................................4 Descriptive Statistics for Training .........1 Section A: Demographic Information ....... 40 4.......4...... 37 RELATED TESTS .......3....................3........... 24 3...............................1 Descriptive Statistics .......................... 29 CHAPTER 4 ............................... 40 4................................... 39 4......................................2.............................2 Section B: Accountants‟ Preparedness in Implementing Accrual Accounting .3 Descriptive Statistics for the Degree of Attitude among the Accountants ........................4 Section D: The Nature of Training Provided to the Accountants............................3 Working experience ................................2 Normality Test ...................... 28 CONCLUSION .... 32 4.............................................2 3............2 Descriptive Statistics for the Level of Preparedness among the Accountants..................................6 3...........................................2.......................1 4..................................................................... 24 3.............1................1.........................................................................2...................................................................................... 29 FINDINGS AND DISCUSSIONS ......8 PILOT TEST ..5 3............................................................2... 30 4.........1 BACKGROUND OF RESPONDENTS............................. 30 4.................................................................................. 42 iv ............5 Section E: The Concerns of the Accountants in the Move to Accruals Accounting 26 3........................................ 23 QUESTIONNAIRE DESIGN AND MEASUREMENT OF VARIABLES ................. 26 3....................3........................... 35 4.............................................................................2........... 39 4........................................................3............3....... 32 4...................... 29 4................................................................................................ 36 Types of Trainers ... 27 SURVEY RETURN .......3........................1 Reliability Statistics ................... 23 3...........................................................................................7 3.. 32 4.................4 3.................................1 Salary Grades of the Respondents .3.... 27 DATA ANALYSIS ............................ 26 SAMPLING SELECTION ...................................................................................................................................4 Multicollinearity Test ........3.................................................3 Section C: Accountants‟ Attitudes toward the Transition to Accrual Accounting 25 3.......2.......................2 EMPIRICAL RESULTS ..........3 Correlation Test ..............3...........3 SURVEY METHOD ......................... 31 4............. 29 4......... 34 4............................................1........................................4......................2 Qualification Background of the Respondents ..................2 4..3.............

................................................... 58 RECOMMENDATIONS .......2 5............1 Results on Findings .....................................8....................................................2 The Accountants‟ Concerns in Implementing Accruals Accounting System ...6....................... 45 4..................................... 47 4................................................... 58 5........................ 65 v ........................................................................................9 CONCLUSION . 57 LIMITATION OF STUDY ...............................6.................... 53 CHAPTER 5 ........................................................... 55 CONCLUSION ....................4 ACCOUNTANTS‟ PREPAREDNESS IN IMPLEMENTING ACCRUALS ACCOUNTING ...........................................................................3 5. 50 4.7 ACCOUNTANTS‟ CONCERNS ON THE MOVE TOWARDS ACCRUAL ACCOUNTING ....................... 60 APPENDICES .................. 46 4....................... 59 REFERENCES ...................................................1 5.........................................................................................................5 ACCOUNTANTS‟ ACCEPTANCE IN THE IMPLEMENTATION OF ACCRUAL ACCOUNTING ..............................................................2 How to Improve the Methodology .......... 58 5.......................................... 55 IMPLICATION OF STUDY .............................................................................................. 55 SUMMARY OF RESULTS ...................... 50 4..........................................6 INTRODUCTION .........................8............................................................................................................................................................ 52 4.. 43 4.............................................................................................................8 DISCUSSION ON FINDINGS .............................................4........................................4 5.................................................6 FREQUENCY OF TRAINING PROVIDED TO THE ACCOUNTANTS .................................................................. 55 5.................................1 The Preparedness of the Accountants from Malaysia Accountant Department .....................................................................

1 Table 4.5 Table 4.4 Table 4.2 Table 4.11 Frequency of staff sent for training Accountants‟ concerns on the move towards adopting accruals accounting by rank 42 44 40 41 39 Page 25 30 31 36 37 37 38 vi .9 Coefficients table for the preparedness Opinion on whether accruals accounting should be implement in public sector Table 4.1 Table 4.8 Table 4.7 Multicollinearity test. Tolerance and Varianz Inflation Factors Table 4.6 Title Summary of Survey Return Descriptive Statistics – Level of preparedness Descriptive Statistics – The degree of attitude Reliability Statistics Normality test Guidelines for Interpreting Correlation Coefficients Correlations among the degree of public sector accountant‟s attitude and the level of preparedness in implementing accrual accounting in public sector accounting Table 4.LIST OF TABLES Tables Table 3.3 Table 4.10 Table 4.

2 Figure 4.LIST OF FIGURES Figures Title Page Figure 2.8 Salary Grades Qualification background Working experience Types of training Trainers for accruals accounting system In-house instructors External instructors Summary of findings 28 29 33 34 34 35 45 vii .1 Figure 2.3 Figure 4.6 Figure 4.5 Figure 4.4 Figure 4.1 Figure 4.7 Figure 4.2 Contingency Model of Public Sector Accounting Innovations Framework for the relationship between accountant‟s attitude and amount of training provided to accountants with the level of preparedness in implementing accruals accounting in the public sector 11 18 Figure 4.

LIST OF ABBREVIATIONS Abbreviations ABC GASAC IFAC IFRS IPN MIA MPSAS OECD Activity-Based Costing Governmental Accounting Standards Advisory Council International Federation of Accountants International Financial Reporting Standard National Accounting Institute Malaysian Institute of Accountants Malaysian Public Sector Accounting Standard The Organisation for Economic Co-operation and Development PSAC SPSS UiTM UKM UM VIF Public Sector Accounting Committee Statistical Packages for Social Science Institute Mara Technology National University of Malaysia University of Malaya Variance Inflation Factors viii .

2004). Australia and New Zealand (Connolly & Hyndman. 2004) and full accruals accounting are irrelevant to the assessment of the efficiency of „core‟ public sector activities since the performance measurement is different (Rowles. The change took them several years to complete and there were a lot of complications and challenges that they needed to confront with. public assets such as heritage type assets and environmental assets are known as „public‟ goods (Ouda.CHAPTER 1 INTRODUCTION 1. The evidence is seen when some developed countries have managed to grasp the benefits that accruals provide in terms of improving the public sector financial reporting. 2006. 2004). only the advantages of accruals accounting have been brought up and this is because the risks and disadvantages of accruals accounting in the public sector can only be assessed after the successful implementation the accruals accounting policy itself. Ryan. 2004. Being a non-OECD country. that acknowledges the benefits of accruals accounting in the public sector accounting. Some researchers argue that accruals accounting is irrelevant to the public sector because the nature of economic reasoning in that sector is different from that of private sector‟s. countries like the United Kingdom.1 BACKGROUND OF STUDY The move from cash accounting to accruals accounting in the public sector accounting has been a debate and widely discussed through times. accruals accounting focuses on matching concept which 1 . Despite being able to produce a true and fair view of financial report. Lye. there are researchers who are in the opinion that the reason public servants are reluctant to accept the changes of financial reporting method in the public sector accounting is because the process of changing from cash accounting to accruals accounting deemed to be unnecessary and due to uncertainty of risk that the government is unable to assess (Wynne. While in Malaysia. Even so. Up to this date. for example. the idea of implementing accruals accounting in the public sector arose in year 2000. 1998). Perera & Rahman. for example.

However. 2007). . recognition of non-current assets. According to the UK National Audit Office announcement in 1993.2 PROBLEM STATEMENT Cash-based accounting is said to have the virtues of simplicity and objectivity which is preferable in the public sector accounting. 1. in implementing accruals accounting system in the public sector.also results in better resource management. According to Lüder‟s Contigency Model. there are a few studies on the challenges faced by developing countries. it is important to examine the human resources factor. involvement of the top management in the process. based on the UK experience. stimuli is an event that occurs at the initial stage of the innovation process and creates a need for improved information on the part of the users of accounting information and increases the producers‟ preparedness to supply such information. This is because the determinant of a successful implementation of accrual accounting in the public sector is the efficiency of human resources. and most importantly. Previous studies on accrual accounting adoption in the Malaysian public sector only focus on the factors influencing the government to change their accounting system (Saleh. It is inevitable that the most contributing factor in certain failure is because of the lack of preparedness to improve the accounting system. this method shows that it lacks the effective accounting reports because with cash-based accounting system. To this date. „A full analysis will only be possible once the new systems have been working for a number of years‟. However. the benefits of better resource management are too early to be identified at the preliminary stage of the implementation. the availability of IT. The successful implementation of accruals accounting depends solely on the factors such as human resources. Besides. it does not reflect the true value of public sector performance (Hepworth. accounting records in the public sector seem to be easy and less complex where there is no recognition of non-current assets. p253) asserts. 2 . Due to those virtues. before such system is being implemented. the realization of the benefits may take time. As Likierman (2000. like Malaysia. 2003). receipts and payments when there is actual cash received and paid.

the present study examines the human factors such as attitude and training that influence the preparedness in adopting the accrual accounting system. it has forced the accountants of governmental financial reporting to set up strategies to implement accruals accounting system. Based on previous experiences from countries that have implemented accrual accounting in their public sector. Sweden and the UK took more than 10 years (Lye et al. Thus. However. This poses an interesting question of whether the period given by the Malaysian government is sufficient for the accountants of financial reporting to be prepared in implementing accruals accounting. which made them to give up on the idea. Since then. this 3 . Therefore. Nonetheless. In previous study.The Malaysian government has made an announcement in January 2001 to change the accounting basis in the public sector from cash accounting to accrual accounting. the government has made it into their national agenda. Thus. Australia took a longer time to fully implement accruals accounting system which is almost 20 years (Barton. suggests that the important pre-conditions for implementing accrual accounting in the public sector are the willingness by the public sector employees to accept the fact that the reform of accounting system would change the role for those responsible for financial management in the government and the need for comprehensive training from the top management to the lower ranked staff on the information of an accrual based accounting system. Connolly and Hyndman. For example. 2005. technical capacity and system software development. so far the government in Malaysia only gives a period of not more than 4 years. Wynne (2007). political ownership. 2010). it takes a longer period of time to fully adopt the accrual accounting into their system. Meanwhile. countries such as New Zealand. in 2015 to fully implement accruals accounting in the public sector. The present study is trying to fill the gap in Saleh (2007) study which to assess the acceptance of major changes in the accounting system among the government accountants. From another researcher‟s point of view. 2005). the motivation to change the accounting system did not last long. Khan and Mayes (2009) identify the pre-conditions in implementing accrual accounting in the public sector.. which is. but their study focused on improving existing accounting system prior to adoption of accrual accounting. in May 2011.

3 RESEARCH OBJECTIVES The difference between the motive of users of financial statements in the public and the private sectors is to require its accountants of financial statements from respective sectors to present the financial statements differently. will bring benefit to the public sector. if implemented carefully and successfully. this study helps to identify the right type of training needed for the public sector employees especially the accountants of financial reporting to adopt the accruals accounting. There are many factors contributing to the failure of implementation which are the lack of qualified accountants. In addition. lack of training and resistance from the existing staff. 4 . Australia and the United Kingdom to implement accruals accounting system in their financial reporting will require drastic changes. the government must take into consideration the problem that they may face before the adoption of accruals accounting in their accounting system. This study will look into their attitude towards the change and if the training provided is sufficient enough to educate them about accruals accounting.study can help to improve Malaysian policies in the innovation of accounting system in the future. This research looks into the preparedness of the accountants of governmental financial reporting in implementing the accruals accounting system. The present study also aids in determining the concerns of accountants toward implementing accruals accounting in the public sector. The decision of the Malaysian government to follow the footsteps of New Zealand. 1. in terms of presenting information that is only valuable to its users. The move from cash accounting system to accruals accounting system. Nevertheless.

Are the accountants sent for accruals accounting training? 4. the objectives of the study are as follows: 1) To examine the relationship between the accountants‟ attitude and the frequency of the trainings given with the level of their preparedness in implementing accrual accounting in the public sector.4 RESEARCH QUESTIONS This dissertation is aimed in providing insights on the pre-implementation diagnose affecting the level of preparedness of the accountants in implementing the accruals accounting system in the Malaysian Public Sector accounting system by year 2015. 2) To examine the accountants‟ attitude towards the adoption of accruals accounting system in the public sector. Thus. this study provides the research questions as below: 1. 4) To look into the concerns or worries of the public sector accountants on the move from cash accounting to accrual accounting system in the public sector. Will the attitude of the accountants towards the application of accruals accounting facilitate the implementation of accruals accounting system in the public sector? 2. Are there any concerns from the accountants on the implementation of accruals accounting in the public sector? 1.5 SIGNIFICANT OF STUDY This study is conducted to contribute to the Malaysian public sector. The attitudes of employees. 1. whether positive or 5 . the professional accounting bodies in Malaysia and the top management of the government in assessing the attitudes of its employees in the public sector on accepting the change from cash accounting to accruals accounting. Have the accountants accepted the idea of moving towards accruals accounting in the public sector? 3.Thus. 3) To find out if the accountants are sent for training to be given clarification on accruals accounting.

whereby they found that the fear of being burdened with the responsibility of carrying out new procedures may be the concern of some government officials who resist on such changes in the accounting system. 1984). especially in developing countries (Ouda. this study is carried out to identify if the training given to accounting personnel by the top management in each department is sufficient to enhance their knowledge in accruals accounting concept. Whether accountants are willing to participate in the training depends on the motivation from the top management to encourage their staff to learn about accruals accounting and the accountants‟ attitude in accepting the implementation of accrual accounting in public sector. 6 . One of the steps is to provide training to the accountants of financial reporting. to fill in the loopholes and to increase the level of preparedness to adopt accruals accounting into the system. 1.6 CONCLUSION This chapter provides the background of this study on the preparedness of the accountants from the Malaysian Accountants Department in moving towards accrual accounting system. This is supported by a research conducted by the United Nations in 1984. Personnel with advanced knowledge in the government accounting are scarce. The government should set up a strategic implementation plan in order for the implementation process to run smoothly. According to Patchen (1965). To achieve the full adoption of accrual accounting in the public sector. the government needs to investigate the preparedness of the accountants in implementing the accruals accounting.negative. Therefore. Due to lack of qualified accountants operating the government accounts. The most common problem that arises during the implementation of accruals accounting in the public sector is the employees resistance to accept the accruals accounting concept. employees with no accounting background might find it difficult to understand the procedure of accruals accounting concept (United Nations. the attitude of members involved in the organizational change is a crucial factor in determining whether a person chooses to support or resist a change. 2004). symbolize their willingness to change to accruals accounting.

The present study will examine the relationship between the accountants‟ attitude and the frequency of training in changing the public sector accounting system with the level of their preparedness in implementing accrual accounting in the public sector.Besides. whether the period given by the government to fully implement accruals accounting is sufficient for accountants to implement accruals accounting remains a question. 7 . This study also examines if the accountants have accepted the concept of accruals accounting in the public sector and if the accountants have gone for training to prepare themselves with knowledge of accruals accounting.

where most of their services are not evaluated in terms of profits earned and losses incurred. It is argued that the accounting system leads to improved performance measurement. Not only that. rather than simply the cash paid and therefore. Previously. 8 . accountability and control and therefore. Canada. This is encouraged by the public sector committee of the International Federation of Accountants (IFAC) to adopt the accruals accounting system. reflect the full cost of service provision. it is the opposite case for the public sector. for example. public monuments. the problem lies in classifying and valuing the wide range of assets that exist in the public sector. Accruals accounting focuses on the resources consumed in each accounting period that have been provided services. 1992). Jones. However. accruals accounting was considered to be compatible with the private sector because it is assumed that the users of financial statements need relevant information which provides a periodic measure of an entity‟s financial performance (income statement) and financial position (balance sheet) that can only be satisfied by the use of accruals accounting.CHAPTER 2 LITERATURE REVIEW 2. IFAC is also the body responsible for developing international public sector accounting standards. the UK and the USA. The publication of financial statements itself is not in the public interest because the public has no interest (R. national parks and also including infrastructure assets such as roads.1 INTRODUCTION Following the footsteps of the New Zealand government in adopting accrual accounting in year 1990 were a few countries such as Australia. cultural and heritage such as art and museum collections. encourages the efficiency of resources usage.

or the services provided. there are many critics on the effectiveness of accruals accounting in the public sector. profits and losses. transactions that have taken place are counted when the order is made. accruals accounting is used internally within departments for decision making and discusses the potential for resource accounting and budgeting to improve management. the government recognises the need for the principles of accruals accounting to be adopted in public sector. The characteristics of cash accounting are ease of use. That seems to be the case back in those days. The accrual-based system enables a timelier recording of revenues and expenses. The aim of implementing accruals accounting in the public sector is to facilitate management control by permitting the full cost of resources consumed to be clearly shown. reduced implementation costs and simpler presentation of the financial statements. Some argue that cash accounting gives better benefit despite its simplicity (Wynne. providing users of financial reports with several assumed benefits. the manager can anticipate the total cost of his operation.2. So cash accounting helps to simplify financial information for manager making decisions. Therefore. Thus. In other words. Therefore. Robinson (1998) argues 9 . regardless of when the money for the receivables is actually received or paid. The aim of implementing accruals based accounting in the public sector is to facilitate management control by permitting the full cost of resources consumed to be clearly shown. But.2 CASH ACCOUNTING VERSUS ACCRUALS ACCOUNTING Accruals accounting is a method that takes into consideration the income earned but not collected and the expenses incurred but not paid. As Likierman (2000) claims that besides for public accountability purposes. the manager can anticipate the total cost of his operation. 2007). accruals accounting provides better financial information for decisionmaking compared to accounting system based on cash basis. Therefore. with the emerging public awareness for transparency in governmental financial reporting. the item is delivered. data intelligibility for a wide range of users. this shows that accruals accounting also provides another purpose in the public sector accounting which is in management accounting. Therefore. the accountants need to prepare financial statements that show true and fair value of equity financial situation. but now.

2006. To reduce the risk of failure. Mellet. In order to evaluate the public goods and services costs. the users demand for more transparent financial statements (Oly. 10 . Despite after successfully implemented the full accrual-based accounting system. 2007).that accruals accounting give information on full cost of services that is essential for the purposes of monitoring performance. The need to provide true and fair information of the public sector‟s financial statements to the users of the information and political influenced organisation is to mitigate the risk of fraudulent accounting and to make it more accountability (Hepworth. political manager‟s performance. Accruals accounting allows the government to do costing better and to provide some kinds of measurement for outcome-based budgeting. 2007) although some argue that an assessment of cost-benefit may not be possible (Funnell & Cooper. In UK. reduction of corruptions or prevention of financial crises. Wynne. there has been no cost-benefit analysis conducted prior to the introduction of accruals accounting in the public sector (Hansard. 2003. is deficient for this purpose because of its failure to measure resources consumed at its full cost (Salleh and Pendlebury. 2007). 2. 2002). Cash accounting on the other hand. the government should use the cost-benefit analysis. which has not been done by any other countries that have adopted accruals accounting (Wynne. 1996). 2007). 2006).3 THE DEVELOPMENT OF ACCRUAL ACCOUNTING IN PUBLIC SECTOR Since the past few years. 2003). situations in the public sector accounting have changed. the country did not made any compliance cost assessment even with the significant costs involved during the implementation and the claimed benefits on which the accruals accounting is based may not materialize (Chow and Humphrey. The risk of implementing the accruals accounting in the public sector and costs that may arise during the adoption is unforeseen and the actual result might leave a huge impact on the government (Connolly and Hyndman. Some researchers argue if accruals accounting system will provide such traits in the public sector reporting (Wynne. benchmarking and preparing the costing of inhouse bids for competitive tendering purposes. 1998).

after the clarification on the importance of cost-benefit analysis prior to the implementation of accrual accounting in public sector.Meanwhile in Norway. This may lead to various opinions on the benefits of accrual accounting that might not outweigh the significant cost incurred while implementing the accrual accounting system in the public sector. the accrual accounting project was established in 2004 (Nesbakk. the development in governmental accounting system is influenced by its environmental factors that comprises of contextual variables. The purpose of the project is dedicated to developing and experimenting with accruals accounting. provide further support on the finding where due to difficulties of measuring the actual benefits of accruals accounting this rules out a conventional cost-benefit analysis. 11 . This can be explained by using the Lüder‟s (1992) Contingency Model of accounting change in the public sector. With the use of Lüder‟s Contingency Model. Saleh and Pendlebury (2006). 2010). The result is derived after two years and with the conclusion that too little information on the usefulness of the new accounting model. based on these previous researches it showed that the cost-benefit analysis is something impossible to do as the benefits of accruals accounting depends on how the users perceived the accounting system to be effective. The project continued for another two years and they found out that there are still no major changes due to mixed experiences amongst users concerning the usefulness of accruals accounting in public sector (Nesbakk. As for why the government changes their accounting system method is due to several factors that contribute to the change in government accounting system. 2010).1). Therefore. These variables define the innovation process of governmental accounting systems (see Figure 2. a set of behavioural variables and a dependent variable.

“stimuli are events which occur at the initial stage of the innovation process and these events create a demand for improved information on the part of the users of accounting information and increase the producers‟ preparedness to supply with such information”. p 109) The contextual variables may be classified into three categories. K. which are important factors in affecting the innovation process.FIGURE 2. „stimuli‟. Based on Lüder (1992. p108). structural variables and implementation barriers. (1992. 12 .1: CONTINGENCY MODEL OF PUBLIC SECTOR ACCOUNTING INNOVATIONS Source: Lüder.

First. The result depends on the events described above. The accountants. either it is by shortage of qualified staff or due to lack of skill and knowledge to manage accruals accounting in the public sector. The accountants were given until year 2015 to complete the implementation process. are their basic attitudes and secondly. Jones. These behavioural variables are important as they determine whether accruals accounting would be adopted smoothly or not in the public sector accounting system. The dependent variable for this model is the „conceptually different accounting systems‟ (Lüder. then the result of accounting innovation would be successful. The behavioural variables are divided into two categories. The implementation barriers are conditions that prevent the implementation of the innovation process. the stimuli that exist at the beginning of the change. the expectation of change from users of information and the change of behaviour from the producers of information (willingness to change). since the government has announced the move towards accruals accounting system as their national agenda in May 2011. If there is a strong stimulus for change. It is a period of not more than 4 years.The structural variables consist of characteristics of the social environment (external variables) and politico-administrative systems (internal variables) that influence the basic attitudes of its users and producers of information towards improved public sector accounting information. the innovation is a failure. especially the top management. which are influenced by two factors. One of the major contributing factors in reducing the probability of successful implementation of accruals accounting is insufficient human resources. The debate has shifted to implementation difficulties (R. it has become the stimulus for accountants of governmental financial reporting to change the accounting system. 1992). 1994. The doubts over the effectiveness of accruals accounting will slowly be faded into the background with the wide adoption of accruals accounting in the public sector (Carlin 2005). need to assess if their implementation strategies are able to overcome the implementation barriers in order for the implementation process to run smoothly. 13 . p3). thus hamper the creation of an improved accounting system which is in principle desirable. As mentioned earlier. Otherwise.

These people are the key factors of facilitating the change in the government accounting system. However. Each training module and the information provided should be adequate to train the public sector employees to be highly skilled workers. and the fourth variable. This is supported by a study conducted by Saleh and Pendlebury (2006) and they found that for developing countries. He also said that for a developing country. H. Tickell (2010) added that even after the employees have been well trained and informed 14 . which is the implementation barriers could have a negative effect on the implementation process (Chan. and some of them emphasis on the importance of the accountancy profession. under the contextual variables are several categories of which two of them were found to have positively influenced the attitude and behaviour of the users and producers of governmental financial information (Stimuli and Structural variable).As explained earlier. they believe that the majority of the qualified accountants are attracted to greater incentives given by the private sector. Jones and Lüder. personnel training is required more rather than changing the accounting software due to lack of highly skilled human resources. the government needs to provide comprehensive management training towards the departmental managers. R. Accrual accounting training programme should provide information such as the basic financial concepts underlying accrual based accounting. 2004). according to Tickell (2010).4 IMPLEMENTATION BARRIERS The European Federation of Accountants (2003) has identified a few essential conditions for success introduction of accruals accounting in the public sector accounting system. and general understanding of the accounting information system (Wynne. Meanwhile. such as Malaysia. a shortage of professionally qualified accountants in the public sector requires extensive training programme to educate the employees. low-skilled employees and insufficient infrastructure will impair the implementation of accruals accounting system compared to highly skilled employees. And in addition. 2. people who are from the accounting background have a clearer image on what exactly is accrual accounting. 1996). Relatively. how accrual based accounting allows rooms for improvement.

15 . This shows the importance of assessing the attitude of the public sector accountants will determine their preparedness to accept the change in the accounting system. An attitude is referred to as a hypothetical construct representing an individual‟s level of like or dislike for an item (Faghihi & Allameh. 2. Elias (2009) states that the attitude is considered as positive when the employee perceived that the changes would give them benefit and vice versa. thus impairing the successfulness of the implementation process. Based on the definition given by the authors.in accruals accounting. and the knowledge in accruals accounting are important in eliminating the barriers. personnel with knowledge in accruals accounting. then the employees would not likely want to participate with the system change. have more positive basic attitude to the introduction of the informative system. ability to understand how to operate the accounting system. Thus human element implication in changing policy is very important for the success of any reform because people are affected by such changes. Factors such as the qualification of accountants. a member‟s attitude can play an important role in determining whether the person chooses to support or resist a change. if the attitudes are positive.4. there is a chance that he or she will leave the public sector and go to the private sector for larger salaries. 2012). whether through past working experience in the private sector or from education. thus lead to shortage of staff in the public sector. According to Lüder‟s Contingency Model. Elias (2009) defined attitudes towards organisational change as an employee‟s positive or negative reaction in judging the change initiat ive implemented by their organisation. In most cases. Therefore. then the change would most likely be successful. But if the attitudes are negative. implementation barrier are perceived as obstacle to the successfulness of implementation within the public sector.1 Attitude towards Change of Accounting System This study examines the effect of accountants‟ attitude on the preparedness of implementing accrual accounting in the public sector accounting system. Furthermore.

1986. The cognitive focuses on the opinion of advantages and disadvantages. Cummings. Tiron Tudor and Blidisel (2007) find that public sector accountants who employed accrual-based accounting system during their professional career in the private sector have a positive attitude in the application of accrual accounting compared to those who are working in entities which employ cash accounting. they categorised attitude towards change into three aspects. 1997). Meanwhile. namely. 16 . Grube. most likely. The affective aspect refers to feelings associated with dissatisfaction and concerns in making changes. the public sector accountants are willing to prepare towards changing the accounting system (behavioural). if the public sector accountants believe that the change to accruals accounting may give benefit to their department (cognitive) and the changes does not give them any major concerns (affective). benefits and knowledge needed to manage change. (1989) theory on attitude towards change. Thus. and Pierce (1989) which in their study. they found that the members‟ attitude tend to be positive if they acknowledge the benefit of the change and they have the knowledge to implement the change. In their findings. Jones and Puglisi. Based on Dunham et al. affective and behavioural. a hypothesis was developed to test the relationship between accountants of governmental financial reporting attitudes and the level of their preparedness towards implementing accruals accounting as follows: H1: There is a significant positive relationship between accountants‟ attitudes with their level of preparedness in implementing accrual accounting. In previous literature suggests that accountants and finance officers working in the public sector departments who employed accrual accounting have a positive attitude towards the implementation of accruals accounting (Lapsley. S.Attitude towards change is based on the model by Dunham. cognitive. The behavioural aspect refers to the action taken or to be taken in the future whether to support change or resist the change.

KPMG and many others.4. One of the ways of overcoming the implementation barrier is to get the support from professional and academic bodies because the nature of public sector and its environment are important in determining its financial reporting objectives. (2013) clarify that the members‟ opinion on preparedness are influenced by personal factors (attitudes and beliefs.2 Training on Accrual Accounting Support from professional and academic bodies is important in order to create the conditions appropriate for successful introduction accrual accounting. PricewaterhouseCoopers (PwC). the nature and schedule of training sessions).2. In Malaysia. 1994). In the Malaysian context. which was later named as „Public Sector Accounting Committee‟ (PSAC) to help develop professional guidelines for public sector accountants to improve governmental financial reporting (Miah. Both parties are responsible for developing the accounting policies appropriate for the Malaysian public sector.. shows evidence of strong support from the Society of Accountants who played an important role in creating the conditions appropriate for implementation of accrual accounting in the public sector. It is clear that the government should seek help from external consultant to provide training to the existing staff who is involved in preparing the financial statements. principles and standards of the governmental accounting that should be understood (Chan. Participating in a training session will make the 17 . 1991). In a country that has fully adopted accrual accounting basis such as New Zealand. Aalbers et al. there is the Malaysian Institute of Accountants (MIA) that governs the accounting policies and also from private sectors such as Ernst and Young (E&Y). the society created a public sector called „Study Group‟. planning and organization. personal learning style) and external factors (top management support. a core team consists of professional accountants is set in 2011 and they team up with the Governmental Accounting Standards Advisory Council (GASAC). According to Khan and Mayes (2009). In 1981. one of the key strategies in developing the implementation plan of accrual accounting reform is to establish communication among staff during training programme.

members feel prepared because training helps them to understand and learn the accruals accounting concept. Any uncertainty or resistance towards the benefits of accruals accounting in the public sector will fade away after a series of training. As per Saleh and Pendlebury (2006) suggest if accruals accounting is introduced by the Malaysian government then a well planned training programme need to be conduct by learning from other countries experience. Accounting changes first took place in Nepal during the 60s, when cash basis accounting system was introduced in the government of Nepal. The UN and the USAID offered help in the reform process in terms of resources and expertise to conduct training to government officers and accountants (Adhikari and Mellemvik, 2009). As a result, more than 4000 government officials were given accounting knowledge making it possible to institutionalize the cash accounting system across the country (Donnalley, 1967). After years later, in 1987, a government accounting and auditing improvement project was established and the team proposed a new accrual accounting manual comprising accounting codes, classifications, and formats and then submitted to the government to accommodate the weakness of cash based accounting system (FCGO, 1988). In 1989, the government announced the launch of new accounting codes using the accrual principle in some development projects. However, due to lack of training, resources and professional expertise has forced the government to stop the experimentation with the new accounting system after just a few months (Adhikari, Kuruppu and Mellemvik, 2009). Thus, a hypothesis was developed in examining the relationship between the amount of trainings provided to accountants with the level of preparedness in implementing accrual accounting in the public sector disregarding the type of training: H2: There is a significant positive relationship between the amount of accruals accounting training provided to accountants of governmental financial reporting and the accountants‟ level of preparedness in implementing accruals accounting system.

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2.5

PREPAREDNESS IN IMPLEMENTING ACCRUALS ACCOUNTING IN PUBLIC SECTOR

Change is a step to solve the problems and challenges of an organisation. Cash accounting is seen as a problem in the public sector accounting system due to its lack of transparency and easy to be manipulated. To solve these problems, the government has planned to change the accounting system indicating that they are ready to provide financial report that is transparent and higher in quality. But it all depends on the preparedness of the overall system. Preparedness is a state of being able to act immediately. One of the key in ensuring the successfulness of accruals accounting adoption in the public sector is the preparedness of the accountants and users of financial information in accepting the change. This is supported by Jarra, Smith and Dolley (2007), in their study regarding the likelihood of successful Activity-Based Costing (ABC) in a university setting that depends on the preparedness of the accountants and the users of financial information. The preparedness to implement accruals accounting depends on the accountants‟ perceptions that the change will benefit both themselves and the system. This is because a change in the existing system will significantly affect the accountants‟ attitudes and behaviour (Shah and Shah, 2010). Such changes can bring uncertainty, anxiety and ambiguity to the accountants because of the differences in knowledge and behavioural patterns among them.

2.6

RESEARCH FRAMEWORK

The main objective of this study is to examine the relationship between the accountants‟ attitudes and frequency of training in changing the public accounting system and the level of their preparedness in implementing accruals accounting in the public sector. Derived from previous research, Jarra et al. (2007) assert that the accountants‟ preparedness is classified as dependent variable.

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Based on the study conducted by Faghihi and Allameh (2012), they found that accountants‟ attitudes towards change influenced their preparedness in the implementation. Thus, accountants‟ attitudes can be the independent variable. The second independent variable is the amount of training provided to the accountants, which is in line with Aalbers‟ et al. (2013) study on the factors affecting the preparedness of implementation. Figure 2.2 illustrates the relationship between the accountants‟ attitudes and the amount of training received by the accountants with the level of their preparedness in implementing accruals accounting in the public sector.

Independent Variables Attitude

Dependent Variable

Preparedness Training

Figure 2.2: Framework for the relationship between accountants‟ attitudes and the amount of training provided to accountants with the level of preparedness in implementing accrual accounting in the public sector.

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legal system. 21 . Otherwise. The number of qualified and skilful accountants is an important factor too. the successfulness of implementation process would be hampered. The government must emphasis on the trainings provided to the staff and ensures that they are willing to participate to increase their knowledge and skills accompanying with a positive attitude to guarantee a smooth implementation process. if their attitude is negative and they perceive that the cost of implementing the accruals accounting is higher than the benefit derived from the new accounting system.7 CONCLUSION This chapter provides the literature review of this study which examines the preparedness of accountants in implementing accruals accounting system. If the attitude of members is positive then they are likely willing to participate in the change towards accruals accounting in public sector. The use of Luder‟s Contingency Model will explain the factors of the innovations in public sector accounting taking place and the successfulness of its implementation. Implementation barriers are factors that will affect a successful implementation. organizational characteristics. qualifications of accountants. To prepare for adoption of accrual accounting. and the size of jurisdictions. which are. there must be a change in attitudes of members which would lead to change in their behaviours.2. Implementation barriers can be divided into several categories.

The next section explains the survey method used in the data collection. 1998).1 METHODOLOGICAL APPROACH For the purposes of this study. In section four. In the next section. The first section of this chapter details out the research methodology that is used in conducting the study. a description on the data collection is presented. a pilot test questionnaire is discussed. The aim of this research approach is to test hypotheses while looking at the cause and effect by answering questions such as: how much. The respondents were also asked on the type of training that should been conducted and who is responsible in the training of the accountants in governmental financial reporting. Besides. this study examines the feedback received from the respondents related to the research objectives derived from a set of questionnaire. The fifth section explains the sampling selection which specifies the population and the sample of the study. This type of research is appropriate to test the main objective of this 22 . The third section covers how the questionnaire had been designed and the measurement for each of the variables for this study. 3. how often and to what extent (Hancock. Furthermore. added to this research are questions that probe the concerns in implementing the accrual accounting in the public sector that is to be executed by 2015. how many.CHAPTER 3 RESEARCH METHODOLOGY 3.1 INTRODUCTION This chapter explains the research methods used to answer the research questions and to address the research objectives. which is to examine the relationship between the accountants‟ attitudes and the frequency of training in changing the public accounting system with the level of their preparedness in implementing accrual accounting in the public sector. The respondents were asked questions based on the objective. a quantitative research is conducted.

The dependent variable will be the main interest of this study. which is to examine the relationship between accountants‟ attitudes towards accounting system change and the level of their preparedness to implement accruals accounting in the public sector accounting system. provide faster feedback from the respondents. The tool that was used to conduct the survey is a set of questionnaire as questionnaire is a method that can reach wider geographical area and larger proportion of the group. 3. A survey is an appropriate method to collect information from sample which represents the whole population. the variable used in this study was divided into two. the objective of this study is to examine the relationships between the accountants‟ attitudes towards changing the accounting system and their perceptive on the level of accountants‟ preparedness within the public sector in implementing accrual accounting system besides identifying the nature of training.3 QUESTIONNAIRE DESIGN AND MEASUREMENT OF VARIABLES As mentioned previously. 23 .study. 3. The respondents‟ confidentiality is also guaranteed when they were only needed to answer questions related to the objective of the research without disclosing their personal information. dependent and independent variables. The questionnaires were distributed directly to the respondents and therefore.2 SURVEY METHOD This study used primary data as its source of data in gathering information regarding accountants‟ attitudes toward change and the level of preparedness in implementing accruals accounting in the public sector. The limitations discovered in using this type of survey are that when the responses might not have been the true answer and the format of the questionnaire design makes it difficult for the researcher to examine complex issues and opinions. By referring to the research framework in Chapter 2.

The following sub-sections provide explanations on the questionnaire development and measurement of each of the variables used in this study. Section B: Accountants’ Preparedness in Implementing Accrual Accounting 3. In order to meet the objective of the questionnaire. which is Section A. These factors may positively or negatively influence the dependent variable. The last remaining two sections cover the second and the third subobjective of this study. while the accountants‟ attitudes will be the independent variable. 2003). Based on the main objective.1 Section A: Demographic Information The questionnaire had open-ended questions for the purpose of gathering information related to their background such as gender.2 In this study. education and their qualification background and their Salary Grade in the public sector.3. The respondents were asked about the short term and long term appraisal on the costs and benefits analyses when accruals accounting is implemented in the public sector. working experience. 3. On the other hand. 24 . The second section. section C focuses on the accountants‟ attitudes toward the transition to accrual accounting in the public sector. this research tries to indentify the factors (independent variables) that influenced the dependent variable. is about the demographic information of the respondents. age.3. the accountants‟ preparedness in implementing accrual accounting in the public sector will be the dependent variable. focuses on the level of accountants‟ preparedness in implementing accrual accounting in the public sector. This information is important to determine the reliability and the quality of the overall response to the questionnaire. The first section. four sections were designed. which is the nature of training provided to the accountants of governmental financial reporting and the concerns of the accountants in the move towards changing the public sector accounting system.Furthermore. preparedness was measured by appraising the costs and benefits of implementing accrual accounting in the public sector (Dalton & Gottlieb. Section B.

25 3. if the attitude moves toward the opposite (negative). Thus.3. Attitude can be determined if a person chooses to support or resist a change (Dunham et. 1989). According to Vijayasarathy (2004). In his research. While Hallgrimsson (2005) added that a member‟s attitude is positive when he or she is free from any feelings of uncertainty or resistance. If the attitude moves towards positive. The 7 items selected consist of the benefits and costs of accruals accounting to their department and the whole government based on a 5-point Likert scale that ranged from 1 to 5 referring to “strongly disagree” and “strong agree” respectively. feeling of uncertainty and resistance were part of the questions in the questionnaire.According to Dalton and Gottlieb (2003). al. The attitude of a member can be classified as positive or negative. a member‟s attitude is positive if he or she believes that a product or a concept is a good idea. Questions such as a member‟s willingness to participate. The questions for the questionnaire were adopted from a study conducted by Hallgrimsson (2005). Section C: Accountants’ Attitudes toward the Transition to Accrual Accounting This section explores the accountants‟ attitudes toward the change from cash accounting to accrual accounting in the public sector. then the implementation of accrual accounting will become smooth. the 7 items were selected to determine the accountants‟ attitudes with scale ranging from “1” to “5” representing “strongly disagree” to “strongly agree” respectively. The questions in the questionnaire were adopted and adapted from a study carried out by Aamir & Farooq (2010) because of the similarity in their research and this study.3 . it will slow down the implementation. whereby the respondents were requested to give their opinions on the benefits of implementing the International Financial Reporting Standard (IFRS) in SMEs. this proves that the accountants are prepared for the change. However. the questions were constructed in a way that it measured the employees‟ attitudes towards change. when the accountants think that accounting innovation is deemed to bring more benefits than costs.

The respondents were asked of the types of training that should be provided. 26 .798 for the degree of attitudes and the level of preparedness respectively.3. 3. The questionnaires were distributed among public sector accountants attending a workshop on preparation of MPSAS slides.3.748 and 0.3.4 Section D: The Nature of Training Provided to the Accountants This section was designed to explore the nature of training provided to the accountants of governmental accounting report. who should provide the training and the frequency of the training held in a year and also who should go for training (see Appendix A). The government will gain benefits by identifying the concerns of accountants of accounting report. The pilot test was conducted on 10th April 2013. The questions were adopted from a research conducted by Booz-Allen & Hamilton (2002) because it provides the suitable measure for the frequency of training and if the training affected the level of preparedness among the accountants for a change in the accounting system.5 Section E: The Concerns of the Accountants in the Move to Accruals Accounting In this section. This may aid the top management to resolve problems faced by the lower ranked staff on the difficulties in implementing accrual accounting in the public sector. this study tries to identify the concerns or worries of accountants regarding the move from cash to accruals accounting in the public sector. 10 questionnaires were distributed in the morning and they were returned in the afternoon. A reliability test was conducted based on the 10 responses.4 PILOT TEST The purpose of conducting a pilot test was to identify if the questionnaire posed any problems to the respondents such as ambiguity over the questions. The results of the internal consistency of each variable were excellent with Cronbach‟s alpha resulting in 0. 3.

These employees. 3. a sampling method known as convenience sampling is used.3. because it permits to gather large amount of information faster and the respondents are readily available at the place of research. whereby most of them are accountants. In the study. graduated from accounting background while others have other than accounting background such as Science and Information Technology (IT). It would be ideal to test the entire population. A set of questionnaires were distributed during a public sector accounting seminar held on 23rd April 2013 in the Palm Garden Hotel. All the questionnaires were collected at the end of the seminar.6 SURVEY RETURN This study took place in the Malaysian public sector environment in which 270 qualified public sector employees were selected. 27 . As this study focuses on the accountants‟ of governmental accounting reporting. only 199 responses were gathered and only 133 responses were able to be used for the purpose of this research. By the end of the day.5 SAMPLING SELECTION The main objective of this study is to examine the relationship between the accountants‟ attitudes and the frequency of training in changing the public accounting system with the level of their preparedness in implementing accruals accounting in the public sector. A total of 270 accountants from the public sector were used as sample for this study and some of them are qualified accountants. were part of various departments in the government sector who are involved in the implementation of accrual accounting system in the public sector accounting by the year 2015. Putrajaya. thus the public sector accountants are suitable to be chosen as the population. Most respondents play an integral part in preparing the public sector accounting reports. but the population of public sector accountant is too large. This is why convenience sampling is applied. Convenience sampling is defined by Castillo (2009) as a non-probability sampling technique where subjects are selected because of their convenient accessibility and proximity to the researcher.

1: Summary of Survey Return Number of respondents Total questionnaires distributed (-) Unreturned questionnaires Incomplete responses Total questionnaires for the use of study 3. The survey return is summarised as in Table 3. Thus. Normality test was conducted to determine if the data are normally distributed. a correlation analysis was conducted to report the relationship between each variable. The following model is used to test the hypotheses from Chapter 2: P= β0 + β1A + β2T + ε P = Accountants‟ level of preparedness A = Accountants‟ attitudes towards change T = Amount of training provided to the accountants 28 .1 below: Table 3. standard deviation. reliability test. normality test. Next.7 DATA ANALYSIS 270 71 66 133 The data collected from the questionnaires were analysed using Statistical Packages for Social Science (SPSS) version 21.A total of 66 questionnaires were not able to satisfy the needs for this research because some of the information was not completed by the respondents and some were left blank. maximum and minimum value. these questionnaires were excluded from this study. A reliability test was administered to examine the internal consistency of each measurement of the variables. a regression analysis was carried out to test the hypotheses of this study. There were five tests conducted: descriptive analysis test. while lastly. correlation analysis test and regression analysis test. A descriptive analysis was conducted to explore each of the variables mean.

Putrajaya. 29 . These accountants were part of various departments in the government sector who were involved in the implementation of accrual accounting system in the public sector accounting that should take place by the year 2015.8 CONCLUSION The main objective of this study is to examine the relationship between the accountants‟ attitudes and the frequency of training in changing the public accounting system with the level of their preparedness in implementing accruals accounting in the public sector. the respondents were classified according to their salary Grade. All the questionnaires were distributed and collected on the same day. Only 133 questionnaires were used for this study and the data were analysed using SPSS 21. only 199 responses were gathered and only 133 responses were able to be used for this research. This study fulfilled the requirement of a quantitative research which examined the causal relationship among the variables. a set of questionnaires was used to gather information on the accountants‟ attitudes and the preparedness towards implementing accruals accounting in the public sector.3. Due to large population of respondents.1 BACKGROUND OF RESPONDENTS This study took place in the Malaysian public sector environment whereby 270 qualified public sector accountants were selected. By the end of the day. The questionnaires were distributed to the public sector accountants who are mainly the accountants of governmental accounting report. Questionnaires were distributed during a public sector accounting seminar held on 23rd April 2013 in Palm Garden Hotel. qualification background and working experience. CHAPTER 4 FINDINGS AND DISCUSSIONS 4. Based on the 133 responses gathered.

1. 11% 6% Financial (W) Information Technology (F) Others 83% Figure 4. undergraduate or postgraduate from the accounting background.1 below shows that most of the respondents were public sector accountants. There were also personnel from the IT department.1: Salary Grades 4. but they are important in assisting the accountants to ensure successful accruals accounting system implementation. Figure 4.2 Qualification Background of the Respondents In Figure 4. there were a few them who had graduated from other courses than 30 . which made up 11% (14 respondents) of the total respondents with salary grades of F41 and the rest 6% (8 respondents) were others personnel with salary grades ranging between M52 (Administrative and Diplomatic Officer) and E41 (Economics). The salary Grade indicates how wellinformed are the accountants on the effectiveness of implementing accruals accounting in public sector based on their level of education and experience in accounting. it was found that most of the respondents were well equipped with accrual accounting concept with 86% (114 respondents) of the total respondents having graduated either with diploma. there were personnel from the IT department and top management who were not involved directly in the implementing of the accruals accounting.4. However. Their salary Grades ranged from W27 (diploma holders).2 below. Based on the information gathered.1 Salary Grades of the Respondents From the data collected. W48 to W54 (senior accountants). which made up 83% (111 respondents) of the total respondents. W41 (fresh undergraduates).1.

The differences in working experience may give different opinions on the acceptance of accruals accounting in public sector by the respondents.1. These 5% 37% 58% Below 2 years 2 to 10 years More than 10 years Figure 4.3. The rest of the respondents.3: Working experience 31 . respondents had working experiences in the public sector between 2 to 20 years. There are 5% (7 respondents) who have worked below than 2 years in the public sector and these respondents are most likely diploma holders and fresh graduates.accounting such as Science and IT with 4% (5 respondents) and 11% (14 respondents) from the total respondents respectively. the result shows the difference of working experiences between each respondent. 4% 11% Accounting Science 86% Others Figure 4. which are 95% of the total respondents (126 respondents) have worked more than 2 years until up to 20 years in the public sector.3 Working experience In Figure 4.2: Qualification background 4.

enabling departments to cost the resources and match them with the outputs they deliver (Likierman.2 Descriptive Statistics for the Level of Preparedness among the Accountants Table 4. The respondents were asked if the implementation will bring benefit to the overall accounting system in the public sector. descriptive statistics were used to explain the types of training for accruals accounting which were chosen by the public accountants and also a description on their opinions on who should have been trained on the new accounting system. The initial cost of implementing the accrual accounting system in the public sector accounting is perceived as costly by 32 . In relation to the third objective.1 below shows the descriptive statistics for the level of preparedness among the public sector accountants based on 133 responses. based on the range of 1 to 5. SD = . in which “1” indicates that the respondent s thinks that accruals accounting did not bring any benefit to the public sector accounting and “5” for accruals accounting being beneficial to the public sector accounting system. whereby descriptive statistics were used to summarise the data. averagely the public sector accountants agreed that accrual accounting does give benefit to the public sector accounting and they were prepared for the change of the accounting system in the public sector (M = 4.1.4.2.2 EMPIRICAL RESULTS 4. 1997). which is the degree of attitude of the public sector accountants towards the change from cash to accruals accounting system in the public sector. The descriptive statistics for the second objective.2.14. this study examined the level of preparedness of the public sector accountants towards implementing accruals accounting system in the public sector. were also reported in this study. The benefits that accruals accounting are such as providing more relevant information towards resource allocation and it allows a more strategic approach to public expenditure.1 Descriptive Statistics Based on the main objective. Based on the result derived from Table 4. 4.435).

582 . 5 out of the 7 items were agreed upon at a great extent that the accruals accounting system will bring greater benefit than cost after the implementation with mean between 3.653 .86 and 4. Table 4.571 .22 4.435 133 133 133 133 133 133 133 133 3 3 2 1 2 2 3 3 5 5 5 5 5 5 5 5 4. The result is consistent with Dunham et al.69. SD = .86 4.33 4. Thus.14 33 . They also agreed at some extent that there was clear planning from the top management in preparing the change in accounting system (M = 3.54 3. Deviation . As Saleh and Pendlebury (2006) stated in their research the accounting and administrative costs related to accruals accounting will be much higher during the initial implementation.33. Max. the result is consistent with Shah and Shah (2010) findings in which their findings found that the public sector accountants who have a positive attitude towards changing the accounting system are prepared to change the existing accounting system.642 .54 and standard deviation of .1 Descriptive Statistics – Level of preparedness N Increase the quality and comparability of the financial statements Initial stage will cost more time and resources Top management have a clear plan/vision Generate more benefit in later stage rather than initial cost incurred Department will be able to perform better Principle of accrual accounting will help to improve overall accounting system Give benefit to the department Overall Average for level of preparedness Min. Mean Std.898).17 4.571.898 . (1989) in their study they found that the members‟ attitude is positive if they acknowledge the benefit of the change and they have the knowledge to implement the change.17 4. However.790 .the public sector accountants at a great extent with mean of 4.547 .69 3.

036 change the accounting system* Support the changes made to 133 3 5 3.2 Descriptive Statistics – The degree of attitude N Minimum Maximum Mean Std.937 accounting* Resist on changing the current 133 1 4 3. Deviation Acceptance of full accruals accounting 133 1 5 4.57 3.54 .998 accounting system* Feel irritated when there is a need to 133 1 5 3.2.98 .359 *Note items were reversed before analysis 34 . The scale represents by “1” which indicates the respondents have a negative attitude towards the implementation of accruals accounting in the public sector accounting and “5” for positive attitude towards the implementation of accruals accounting in the public sector accounting.621 accounting system Overall Average for Attitude 133 2.02 .28 .2 below presents the descriptive statistics for the degree of attitude among the public sector accountants towards implementing accruals accounting based on 133 responses.16 .29 1. Table 4. Based on the questions with scale ranging 1 to 5.696 system in the public sector accounting Feel optimistic towards implementing 133 2 5 4.542 current accounting system Uncertain with the benefits of accrual accounting system in public sector 133 1 5 3.3 Descriptive Statistics for the Degree of Attitude among the Accountants Table 4.40 .716 accruals accounting Likely to be involved in changing the 133 3 5 4.29 4.4.71 . the respondents were asked of their opinions which reflected their attitude on the idea of moving from cash to accruals accounting in the public sector accounting system.

71 and 3. The result is supported by most of the public sector accountants‟ attitudes which were rated with mean between 3. SD = .2.28.54. 35 . employees with high levels of uncertainty show a lower level of preparedness. Before deriving at the actual results. Based on the derived result of this study. 4. SD = .Based on Table 4. It can be concluded that the overall attitude of the public sector accountants mean was 3.40. According to Hallgrimsson (2008).29 respectively. This indicates that the respondents are prepared in implementing the accruals accounting. most of the respondents show low level of uncertainty which mean their attitude is more towards positive.4 Descriptive Statistics for Training The descriptive statistics summarises the information on the types of training that is provided for preparation of accruals accounting and the trainer who is responsible in training the accountants who were mainly accountants in the public sector. In addition.02. followed by “Likely to be involved in changing the current accounting system” ( M = 4. “Resist on changing the current accounting system” and “Feel irritated when there is a need to change the accounting system”. The respondents showed that they disagreed with the negative attitude questions with mean 3. These questions are “Uncertain with the benefits of accrual accounting system in the public sector accounting”.542) and “Feeling optimistic towards implementing accrual accounting” (M = 4. the result shows that the respondents had a positive attitude towards the implementation of accrual accounting in the public sector accounting system. than those who show low level uncertainty. 3.40.02 and 4. they showed positive result because “Acceptance of full accrual accounting system in public sector accounting” was ranked the highest ( M = 4.16.696). there were 3 questions with negative wordings being reversed.2.716). SD = .

1 Types of Training Used To Train the Preparers Figure 4. Meanwhile.4. 96% (128 respondents) out of the total respondents chose classrooms and seminars for accruals accounting training. 15% (20 respondents) of the respondents chose video training and surprisingly.4 show the types of training that were chosen by the 133 respondents.4: Types of training 36 .study manual as a guide because it is convenient for them and they could bring back materials to study at home. as for 31% (41 respondents) out of the total respondents chose to use self. 5% (7 respondents) of the total respondents chose other training methods such as mentor-mentee programme.4. 140 128 120 100 80 65 60 41 40 20 20 7 0 Classroom/ Seminar Home study manual Computer based training Video Others Figure 4. The respondents were allowed to answer more than one type of training which they preferred.2. Apart from that. 49% (65 respondents) of the total respondents picked computer based training as a medium to learn accruals accounting. As shown in the graph below.

Figure 4. However. As a matter of fact. 76% (101 respondents) favoured an external instructor to train them with the accruals accounting system.4. in-house instructors were the second choice. some respondents (6% of total respondents) suggested that trainers from the computer service department and system integrator teach them with regards to accruals accounting software system.4.5: Trainers for accruals accounting system 120 101 100 86 80 60 40 20 0 In-house instructors External instructors Others Don‟t know 8 11 37 .5 shows the summary on the information for trainers who should provide the training to the public sector accountants. The respondents were allowed to answer more than one type of trainer if they had preferred. Based on the results.2. most respondents.2 Types of Trainers Figure 4. Both types of in-house and external instructors will be explained thoroughly in the next paragraphs. where 65% (86 respondents) of the respondents relied on their own department to train them the accruals accounting system. while 8% (11 respondents) of the respondents reported that they are not clear of who should train them.

25% 51% 19% 5% Accountant General National Institute of Accountants Finance Department Figure 4. there is a need for a strong support from the professional bodies and private sector accounting firms.6. Ernst & Young. UKM and UM to provide training module for the public sector accountants who are involved in the preparation of changing the public sector accounting system.Information on each type of in-house trainers is summarised in Figure 4. the remaining 32% (32 respondents) chose researchers from universities such as UiTM. 38 . KPMG and Delloitte to provide consultancy for the application of accruals accounting system in the public sector. On the other hand. The result of the study supports findings from Saleh (2007). while 19% (16 respondents) of them chose National Institute of Accountants.6. As for the rest of the respondents. a total of 86 respondents who chose in-house instructors as the trainer selected Accountant General (AG) to provide the man power to train other public sector accountants with 51% of the respondents (44 respondents).6: In-house instructors Senior Accountant The types of external instructors is summarise in figure 4. Based on Figure 4. they chose their own top management to provide the training for accruals accounting with the Finance Department and Senior Accountants as their option. 25% and 5% of the respondents respectively. in which she indicates that in order for Malaysia to successfully implement the changes in governmental accounting. As a result. 68% (69 respondents) of them selected Big 4 audit firms such as PricewaterhouseCoopers (PwC).7. it shows that out of 101 respondents who chose external instructors as trainers.

3. It was conducted to examine the consistency of each measurement of variables if they measure the same thing (Field. From the test‟s result.759 for the attitude of accountants and the level of preparedness respectively. Variable A P Table 4.3. 2005).70.7: External instructors 4.3 4.1 RELATED TESTS Reliability Statistics A reliability test had been conducted based on the 133 responses.736 . Based on Field (2009).32% Big 4 audit firms 68% Others Figure 4.759 N of Items 7 7 Where A = Attitude P = Preparedness 39 . 2009.00. Pallant (2005) further states that the measurements are reliable when the Cronbach‟s alpha is more than . Pallant. the range of internal consistency is between 0 and 1. it is shown that the internal consistency for each variable is acceptable with Cronbach‟s alpha of . which can be summarized as in Table 4.736 and .3 Reliability statistics Cronbach’s Alpha .

Wiersma. both attitude and the preparedness have a skewness value of . According to Hinkle. Table 4.3. whereby kurtosis provides information about the “peakedness” of the distribution (Pallant. as referred in Table 4.3.805 . which meant that they were within the rule of thumb.4. As for kurtosis value.204 -. 2005). 2005).341 respectively. The results of the normality test for each variable were summarized as in Table 4.5. The rule of thumb for the values of skewness and kurtosis are normally distributed between -1 and +1. p.805 and . the distribution will be normal (Pallant.204 and -. and Jurs (1998. Skewness shows if the distribution is symmetry. both variables also reported to be within the rule‟s range of -1 to +1 which were . Based on Table 4. If the value approaches zero.3 Correlation Test Correlation analysis is used to determine the existence of a relationship between the two variables and how strong the relationship is (Pallant.4 – Normality test Skewness .2 Normality Test Skewness and kurtosis test were performed to test the normality of the data.341 4.4.164 respectively. 105) there are five ranks of correlation coefficient that explain the strength of relationship between variables.164 Variable A P A = Attitude P = Preparedness Kurtosis . 40 . 2005).4.

Table 4.50 . T (Training) represents the overall average of the frequency of training conducted. P (Preparedness) represents the overall average of the level of preparedness in implementing accrual accounting system. the level of preparedness in implementing accrual accounting system and the frequency of training conducted.90 to 1.30 Table 4.6 shows the correlations among the degree of public sector accountants‟ attitude.00 to .00 to -.70 -.70 . A (Attitude) represents the overall average of the degree of the attitude of the public sector accountants and lastly.5 – Guidelines for Interpreting Correlation Coefficients Range of Positive Type of relationship Range Negative Coefficient Coefficient .90 to -.50 to -.70 to .70 to -.50 .30 Highly correlation Moderately correlation Low correlation Little.50 to .30 to .90 .100 . 41 .00 Very highly correlation -. if any correlation -.30 to -.90 -. Firstly. Secondly.

(2-tailed) N Pearson Correlation A Sig. p < . A has a significant weak positive relationship with P at r (131) = . (2-tailed) N **.002 133 .01 level (2-tailed). This shows that as the degree of attitude increases.269** . The multicollinearity can be a problem when tolerance is less than 0. 4.Table 4.289** .01. p < . indicating that the level of preparedness increases as the frequency of training is increased. correlation matrices and variance inflation factors (VIF) were employed. the level of preparedness increases too. 133 133 133 1 . the tolerance for both independent 42 .001 133 1 .285 133 1 Where P = Preparedness A= Attitude T= Training Based on the results from Table 4.289.01. This is also the same with T that has a significant weak relationship with P at r (131) = .3.1 and VIF is greater than 10 (Norusis. Correlation is significant at the 0.093 .6 Correlations among the degree of public sector accountant’s attitude and the level of preparedness in implementing accruals accounting in public sector accounting P A T Pearson Correlation P Sig.7 below. 2005).4 Multicollinearity Test In order to test the existence of multicollinearity in this present study data analysis. Based on Table 4.269. (2-tailed) N Pearson Correlation T Sig.6.

7 Multicollinearity test . the model below explains the hypotheses of this study as stated in Chapter 2: P= β0 + β1A + β2T + ε P = Accountants‟ level of preparedness A = Accountants‟ attitudes towards change T = Amount of training provided to the accountants 43 . Table 4. therefore none of the correlation between the independent variables. For this study.1 and the VIF is almost equal to 1. the dependent variable is the level of preparedness among the public sector accountants in changing the public sector accounting while the independent variables are the degree of accountants‟ attitude and the frequency of training provided to the accountants.Tolerance and Variance Inflation Factors Tolerance VIF A T .variables is more than 0. the degree of attitude (Attitude) and frequency of training (Training) indicates severe multicollinearity.991 . In short.009 1.991 1.4 Regression analysis was used to examine the linear relationship between dependent variable and one or more independent variables.009 Where A = Attitude T = Training ACCOUNTANTS’ PREPAREDNESS IN IMPLEMENTING ACCRUALS ACCOUNTING 4.

Table 4.000.130) 133 Dependent Variable: Preparedness 3.8 shows if the results of these hypotheses are supported or otherwise. Based on the result in Table 4.245 .8 Coefficients table t 7.387.130) = 10.130.001.837 (. R2 F – Statistics (Sig.785 Sig.000) (2.130 10. The model is significant at 1% significant level with Adjusted R-squared of . p = . This is supported by the relationship in the correlation analysis between the degree of attitude and the level of preparedness which is found to be significant at 1% significant level. Therefore.8. it is found that the degree of attitude did significantly affect the level of preparedness.266 . p = .998 Where A = Attitude T = Training Based on the model developed earlier.143 . Based on the result. .8 below shows the regression analysis for the model based on 133 responses.) df N a. t (130) = 3.Table 4. it is suggested 13% of the variation in the level of preparedness could be explained by variation in the degree of attitude and the frequency of training. its purpose was to test H1 and H2.266.000 . b = .266. H1 predicts that there is a significant positive relationship between the public sector accountants‟ attitude and the level of their preparedness in changing the public sector accounting system.266 2.003 .001 . F (2. Table 4. Beta (Constant) A T R2 Adj. as 44 .

H2 is accepted. H1 is accepted. 45 . the relationship between the frequency of training and the level of preparedness is significantly positive. b = . This is because.8 also shows that the frequency of training did significantly affect the level of preparedness. a descriptive analysis was conducted to identify the number of respondents who agreed with the implementation of accruals accounting in the public sector. 126 of the respondents felt that the accounting innovation in the public sector is beneficial to the government as a whole. most respondents are public sector accountants and their level of knowledge in accruals accounting is high. Based on the results from Table 4.9 below. ACCOUNTANTS’ ACCEPTANCE IN THE IMPLEMENTATION OF ACCRUAL ACCOUNTING 4.6. thus.245.5 To meet the second objective.6. Furthermore. which an assumption that there was a significant positive relationship between the frequency of training and the level of preparedness. Therefore.003. Meanwhile. p = . it was found that most of the respondents agreed with the idea of moving towards accrual accounting in the public sector.1).stated in Table 6. This result is in line with the result from the correlation analysis in Table 4. Table 4. This is proven when the respondents were asked about the effectiveness of accruals accounting in public sector department majority of them agree that accruals accounting will bring benefit to their department (refer Table 4.998. Referring to Table 4. t (130) = 2. As the degree of attitude did significantly affect the level of preparedness.

0 46.10 below.9 Opinion on whether accruals accounting should be implement in public sector Number of respondents Strongly Disagree Disagree Neutral Agree Strongly Disagree Total 1 2 4 62 64 133 Percentage (%) .6 FREQUENCY OF TRAINING PROVIDED TO THE ACCOUNTANTS The third objective of this study is to explore the frequency of training provided to the accountants. they still represented the total 133 respondents. a descriptive statistic was conducted and the result is shown in Table 4. showing that the training programme was not made compulsory to the staff by the top management. 46 . Therefore.5 3.1 100 However. Although the number of respondents who disagreed was small. 4. the head departments should look into the matter of why there are some accountants who disagreed with the implementation of accruals accounting.Table 4. 11 respondents answered “Don‟t Know” for the question asking if their department sent them for accruals accounting training. However. It is important to know why they resist the changing of the accounting system because it may impair the implementation process.10 shows that 86% of the 133 respondents went to seminars for accruals accounting training. The result from Table 4. there were three respondents who disagreed with the idea of adopting accruals accounting in the public sector and four respondents neither agreed nor disagreed with the idea.6 48. In order to meet the objective. Surprisingly.8 1. there were still those who did not go for training (8 respondents).

The result also shows that the top management is slightly concerned about the employee‟s lack of knowledge (29 times). 11 times. it shows that the employee‟s lack of knowledge was ranked as the highest concern by a majority of the respondents. The concerns were then ranked from 1 to 13. Both the top management and the lower ranked staff share the same view about the applicability of new accounting software. Next.7 114 8 11 133 Percentage (%) 86 6 8 100 ACCOUNTANTS’ CONCERNS ON THE MOVE TOWARDS ACCRUAL ACCOUNTING The fourth objective of this study is to identify the concerns of accountants on the move towards accrual accounting. Table 4. Applicability of the new accounting software is in rank three.10 Frequency of staff sent for training Do you go to any accrual Number of respondents accounting training seminars Yes No Don‟t know Total 4. It was mentioned for 56 times by the respondents. the second highest concern is the timeliness of implementation with a total of 23 times chosen by the respondents. This showed that the top management was aware of the method in recording assets for the public 47 . the least concerned by the respondents. There are fourteen types of concerns that were listed down by the respondents. Both the top management and the lower ranked staff concern over the period given for implementing accruals accounting (11 times and 12 times respectively). which is the third highest for the concerns among the accountants over the implementation of accrual accounting. Based on the result. Ranked in four is the concern over insufficient accounting record for assets in the public sector was frequently mentioned by the top management.Table 4. 1 indicating the highest concern and 13. The result of this study was derived from the number of times the concerns were mentioned by the respondents.11 below provides the summary for concerns that have been ranked by the respondents.

the concern ranked as at the seventh place was the employee‟s resistance to change. Factors such as resistance to change and uncertainty can hinder an employee‟s preparedness. the top management is more concerned over the lack of knowledge in accruals accounting among the head departments (4 times). Next. The last two concerns that were least mentioned by the accountants were the revelation of revenue and 48 . Again. the top management‟s lack of motivation. the management should look into why the staffs resist the change of the accounting system. the employee‟s preparedness falls short after the employee‟s resistance that is 8th rank. showing that the lower ranked staffs competency was the lowest of their concern. Subsequently. This may be due to the fact that the senior staff feels compatible with cash accounting system. Thus. support and knowledge were ranked at 9th. Falling under number five is the concern over the recognition and measurement of assets. assets have become a major concern when moving towards accrual accounting system in the public sector. This also means that they need to acquire new knowledge.sector was not as efficient as the private sector. even though it was only mentioned 3 times by the top management. Over the past few years. However. Next. Both the top management and the lower ranked staff equally agreed with the concerns over the top management‟s lack of motivation and support. The concern over insufficient training for the lower ranked staff was ranked number six. This becomes a major concern because the lower ranked staff had frequently mentioned that the employee‟s do resist the change of the accounting system which will affect the implementation process. 10th and 11th places respectively. this indicated that the top management must provide more intensive training for their lower ranked staff. Employee‟s preparedness can be influenced by many factors such as attitudes and their understanding of the accounting concept. with most of the lower ranked staff frequently mentioning about the concern (8 times). Various researches were made to identify the possible way to overcome this problem. Employees will soon need to realise that they need to change their behaviour and habits to accommodate with the new accounting system.

expenditure and the concern over the lack of understanding from potential users. Table 4. Both were ranked at 12th and 13th places respectively.11 Accountants’ concerns on the move towards accruals accounting by rank Total Top Management Lower Staff Rank Concerns N N % N % 1 Employees lack of 56 29 52% 27 48% knowledge 2 Timeliness of 23 11 48% 12 52% implementation 3 Applicability of new 19 10 53% 9 47% software 4 Insufficient accounting 16 11 69% 5 31% record of assets 5 Recognition and 11 3 27% 8 73% measurement of assets 6 Insufficient training for 11 6 55% 5 45% lower staffs 7 Employee‟s resistance to 10 4 40% 6 60% change 8 Employees are not ready 9 3 33% 6 67% 9 Top management lack of 7 3 43% 4 57% motivation 10 Top management lack of 6 3 50% 3 50% support 11 Top management lack of 5 4 80% 1 20% knowledge 12 Recognition of revenue and 4 1 25% 3 75% expenditure 13 Users lack of understanding 1 1 100% 0 0% Note: N represents the number of time the concerns were mentioned by respondents 49 .

245** Frequency of training Note: ** significant at . The regression analysis was conducted to give insight on the relationship between the accountants‟ attitude towards change and the amount of training provided to them with their level of preparedness in implementing accrual accounting in the public sector. the present study examined the relationship between the accountants‟ attitude towards change and the frequency of training provided to them with the level of their preparedness in implementing accrual accounting in the public sector.266** Level of Preparedness H2=.8 shows the summary of findings for this study.01 level Figure 4.1 The Preparedness of the Accountants from Malaysia Accountant Department To meet the first objective.8 DISCUSSION ON FINDINGS 4.8 Summary of findings 50 . Two hypotheses were developed to help attain the results from the regression analysis.8. Attitude H1=.8. It was found that the accountants‟ attitude towards change has a significant positive relationship with the accountants‟ preparedness in implementing accruals accounting. It is also found that the amount of training provided to the accountants has a significant positive relationship with their preparedness in implementing accruals accounting.4. Figure 4. The result is summarised in Figure 4.

(2013) where they found that the members‟ preparedness is influenced by external factors such as the nature and the amount of training sessions given to the members. Based on the result of regression. referring to the Contingency Model (Lüder. the first hypothesis is accepted. the second hypothesis is accepted. It seemed that stimulus was not strong enough to make the accountants determined to change. some employees resisted in accepting the concept of accruals accounting in the public sector and some did not even go for 51 . The accountants have started to panic and this triggered the need to prepare for the implementation process. there were no stimulus that triggered the need of preparing the implementation process. The result of this finding is consistent with previous research conducted by Aalbers et al. However. If there is a strong stimulus for change. there is a significant positive relationship between the accountants‟ attitude and their preparedness. stimuli are events that create a demand for improved information from users and increase the producers‟ preparedness to supply such information. (1989) and Elias (2009) where they found that there is a significant positive relationship between its members‟ attitude and the likelihood of successful implementation. Besides. Based on the result of regression. the result from this study indicated otherwise. Therefore. then the result of accounting innovation would likely be successful. Hence. 1992). The second hypothesis (H2) assumes that there is a significant positive relationship between the amount of training provided and the accountants‟ preparedness in implementing accruals accounting in the public sector.The first hypothesis (H1) assumes that there is a significant positive relationship between the accountants‟ attitude and their preparedness in implementing accrual accounting in the public sector. There were still weaknesses in the management setting.. it was assumed that the announcement is a strong stimulus for the accountants to change the public sector accounting system. there is a significant positive relationship between the amount of training given and the accountants‟ preparedness. But since the announcement was made in May 2011. before the announcement was made by the government to make the move towards changing from cash to accruals accounting as their national agenda. Furthermore. This finding is consistent with previous research carried out by Dunham et al. In Malaysia.

Some of the accountants of the governmental financial reporting may have a little or no accounting background. The employees also might think that preparing for the change of accounting system was not a priority to them because there was no strong urge from the management to change the accounting system in their department.2 This study also made an attempt to determine the concerns or worries of the public sector accountants (preparers) in the implementation of accruals accounting in the public sector (refer Table 4. Thus. they found that there was little support from the external users of financial reporting to change from cash to accruals accounting.11). Generally. It is still uncertain if Malaysia public sector will be able to adopt the accruals accounting within that short period of time. Furthermore.accruals accounting training. the accountants from the governmental financial reporting consist of accounting and non-accounting staff. The second highest concern among the accountants was the timeliness of the implementation process. Based on the findings by Salleh and Pendlebury (2006). This concerns them on the acceptance of the employees on the idea of moving to accrual accounting since they have no knowledge on the benefit of accruals accounting. This may give the reason why the accountants of governmental financial reporting were reluctant in changing their accounting system. The Accountants’ Concerns in Implementing Accruals Accounting System 4. the time to train the non-accounting staff will take a longer period and some of the existing staff who is used to cash accounting might 52 . developed countries such as New Zealand. most of the respondents were concerned about the employees‟ lack of knowledge. Australia and the UK took more than 10 years to implement the system. Based on previous experience.8. The accountants think that the period is too short as not more than 2 years left to implement accruals accounting. The effective date of full accruals accounting in the public sector is in year 2015 as set by the government. This shows that the staff is still not convinced with the appropriateness of accruals accounting in the public sector accounting system. They may feel that the change is a burden as they need to learn new things just as they have adapted with the existing accounting system.

mainly regarding the assets. therefore. it is difficult to provide the opening balance for each of the assets. There were also concerns over the recognition and measurement of non-current assets within the public sector.9 CONCLUSION This chapter provides the findings and discussion to meet the objectives of the present study. the users lack understanding on accrual accounting. even if the government is able to adopt the accrual accounting information. The result from the findings showed that the accountants‟ preparedness in implementing the accruals accounting system is significantly influenced by their 53 . The respondent felt that the implementation of accruals accounting in the public sector accounting might not be beneficial to the users since the government is not a profit oriented organisation and the users have no interest. The respondents think that not only the lower staff need to be trained but the top management also need to play their role in enhancing their understanding of the accruals accounting concept and providing support to the lower ranked staff. there is no one who will use the information. This study examines the preparedness of the accountants in the Malaysia Accountant Department in moving towards accrual accounting and to explore the accountants‟ acceptance towards adopting accruals accounting in Malaysia public sector. it was also found that a majority of the respondents mentioned the reason that hinders the implementation of accrual accounting. insufficient or improper accounting record in the government. On the other hand. which is. In addition. the same manner practised as the private sector. this study is also determined to find out the concerns of the accountants on the move from cash accounting to accruals accounting. 4. Besides. With the wide range of assets within the government. In relation to the preparedness. this study looked into the matter if the accountants were sent for training.resist the change to accruals accounting system. Besides that. another research conducted by Mack and Ryan (2007) found that the government agencies in Australia are beginning to use annual report to communicate with their stakeholders. a respondent mentioned about the concern over the acceptance of the users of the public sector financial report. According to Connolly and Hyndman (2006).

54 . Most accountants were concerned with the lack of knowledge on governmental financial reporting and believed that the period given to fully implement accruals accounting system is not sufficient. It is also found that the amount of training provided also had a significant influence on the level of accountants‟ preparedness. there is still concern over the implementation of accruals accounting in Malaysia public sector.attitudes. Up to now.

The barrier can be categorised as the availability of qualified accountants in the public sector. (1989) and Elias (2009). the implementation process shall become much easier and faster. many researchers support the idea and showed that accruals accounting can bring out the objective of new public management to the surface. Based on past experience from other countries that have successfully implemented accruals accounting in the public sector accounting showed many challenges and complications they need to overcome. For a developing country such as Malaysia. the implementation barrier is the factor that may impair the result of implementation. whereby their results showed that there is a significant positive relationship between 55 . As for the first hypothesis.1 INTRODUCTION The introduction of accruals accounting in Malaysian public sector accounting reveals a clear determination to move towards new public financial management. By lifting this barrier.. This research tends to study the effect of accountants‟ attitude towards change with their preparedness in implementing accruals accounting in Malaysian public sector. this may require several more years of researches and studies so that the implementation processes run smoothly. the results showed that there was a significant positive relationship between the accountants‟ attitude and the level of preparedness. 5.CHAPTER 5 CONCLUSION 5. This result is consistent with researches carried out by Dunham et al. Despite being criticised about the relevance of adopting accruals accounting in the public sector.2 SUMMARY OF RESULTS In relation to the main objective of this study which is to examine the relationship between the accountants‟ attitude towards change and the frequency of training provided to them with the level of their preparedness in implementing accruals accounting in the public sector. Based on the study conducted by Lüder (1992).

Furthermore. If the users demand for more proper accounting information from the government.members‟ attitude and the likelihood of successful implementation. If there is a strong stimulus for change. then the result of accounting innovation would likely be successful. Next. 56 . Besides. The trainings were not made compulsory to all employees involved in preparing the governmental financial reporting and there were a few who resisted the change of the accounting system. based on the Contingency Model (Lüder. But it is considered as a weak stimulus since the accountants from the governmental financial reporting are moving in a slow pace to prepare themselves for the implementation of accruals accounting in the public sector. If the users are not interested in the accounting system change. this study was able to obtain feedback from the respondents related to their concerns about the implementation of accruals accounting in the public sector. the accountants might feel that there was no use for them to implement the change. that show that the members‟ preparedness is influenced by factors such as the nature and amount of trainings given. These events create the demand and the supply for improved accounting information. The stimuli occur when the government made the announcement in May 2011. it will force the accountants to implement the change. Similar findings were found in Aalbers et al. the implementation of accruals accounting in the public sector will be achieved in time. Before the announcement was made by the Malaysia government to change from cash to accrual accounting as their national agenda. the results for the second hypothesis showed that there was a significant positive relationship between the amount of training provided and the level of preparedness. Maybe a strong stimulus would come from the users of governmental financial information.. 1992). stimuli are events that occur at the initial stage of the innovation process. there were no stimulus that triggered the need to prepare the implementation process. If the accountants‟ attitude is positive. (2013). Most of them mentioned that the employees‟ lack of knowledge as a major concerns followed by timeliness of implementing accruals accounting system in the public sector.

This may be due to the short period given to the accountants from the governmental financial reporting in preparing for the implementation process. in order to overcome the inadequate skill competency among the public sector accountants. The concerns from the accountants need to be acknowledge and if possible solved to make sure that the implementation process runs smoothly within the given time period. 5. Even so. Improper record of accounting information makes it hard to provide the opening balance at the beginning of the period. the accountants need to work extra hard for retrieving the information and this may take a lot more of their time. This is because they can perceived the benefits of accruals accounting in achieving the objective of accountability and good governance in managing public funds. 57 . the implementation of accruals accounting in the public sector will be achieved in time. If the accountants‟ attitude is positive. Based on the result. this should require a substantive amount of training in accrual accounting. With some of the staff are from non-accounting background. The study was conducted in Malaysia in order to study the effect of the accountants‟ attitude and the amount of training provided to them with the level of preparedness in implementing accrual accounting in the public sector. this study proves that public sector accountants with the knowledge of accruals accounting have a positive attitude towards the implementation of accrual accounting system in Malaysian public sector. Thus. there is a need for comprehensive training and ongoing skills learning and relearning to ensure benefits of accruals accounting can outweigh the cost of implementing them in public sector accounting system.3 IMPLICATION OF STUDY This study provided the evidence on the preparedness of implementing accrual accounting in the public sector. This study also helped to identify the responses from the accountants about the concerns of implementing accruals accounting in the public sector.

as mentioned by Salleh and Pendlebury (2006).5. which are the attitude of the accountants and the amount of training provided but the study did not examine any other factors that influenced the preparedness of accountants in implementing accruals accounting in the public sector. the opinions of those who are not from the public sector were not taken into consideration. the management should identify their problems by distributing questionnaires or interviewing the employees on how to attract them in participating with the implementation process by giving them a better picture of what accruals accounting is about. Since the date for fully adopting accruals accounting is due in early year 2015. This study only focused on two factors. In this study. Besides. 58 . the Malaysian government provides incentives for its accounting employees to obtain professional qualifications.6 5. there are still some employees who did not go for any training on accruals accounting. The management should find out why they resist the change. Seminars and talks on accruals accounting can give them the information but it all depends on the employees‟ willingness to participate. Another limitation for this study is that information related to training is only for descriptive purposes and not to investigate which type of training provided more benefit to the accountants. This can be a motivation for the accountants to improve their knowledge.4 LIMITATION OF STUDY There were several limitations in relation to the present study. most of the respondents were public sector accountants with accounting knowledge. Some of the non-accounting staff is also part of the team in preparing the governmental financial reporting and they might offer different sets of opinions. 5. Therefore.6.1 RECOMMENDATIONS Results on Findings The results showed that there were weaknesses in the management setting to educate the employees on accruals accounting knowledge. Thus. The reason may be because the employees resisted on changing towards accrual accounting.

The non-accounting staff should be provided with other incentives because they are also part of the accounting team in the governmental financial reporting. Plus. Example of incentive is such as sending them to undergo a training programme on basic of accruals accounting fully sponsored by the government.6. In addition. interview should be the suggested method. Thus. to investigate further on other factors that may have influenced the accountants‟ preparedness in implementing accruals accounting in the public sector such as the applicable of system software. It is suggested that to get the actual response and the opinion from the respondents regarding the implementation of accruals accounting in the public sector. the future research can also assess the acceptance from the users of governmental financial information and if they are prepared in using the accruals based financial reporting. The sizes of sample also need to be increased and accountants from other departments should be included in the study too. regulation and guidelines. problems such as why the employees resist and ways to overcome the problem in lifting the implementation barriers should be given importance and solved. It is recommended for future researcher to examine the attitudes of non-accounting staff who is involved in preparing the governmental accounting. But this method failed to identify the reason of why the respondents chose the answer. 5. and top management support. It is also suggested for future researcher to conduct a study on how to mitigate the implementation barriers prior to the implementation phase. The respondents were required to choose the answers that suited their best interest.2 How to Improve the Methodology The present study used questionnaire as its method of collecting data. 59 . Further research on the cost and benefit analysis of the accrual accounting implementation in public sector is suggested.

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APPENDICES 65 .