Study concerning the level of closeness between the Romanian public accounting system and IPSAS referential.

• Author: Nistor, Cristina Silvia
• Position: Report

1. INTRODUCTION

   The excessive limitation of the financial resources in all activities and areas, which has been emphasised by the present economic crisis, makes it necessary, more than ever, the implementation and application of corporative governance principles also for the public sector. Therefore, the organization and management of the activity of a public institution should have as reference point the economic and financial performance, respecting at the same time, the communication and transparency standards required by this process.

   That's how this puzzle of reorganizing the public institutions has as main pieces the combination of the knowledge from a lot of domains--social sciences, management, sociology, accounting, psychology, mathematics, IT (Mitu, Dracea si Popa, 2007) so that the final form should ensure the guidance of public institutions by the principles of private organizations.

   Therefore, the accounting plays an essential role in ensuring the substitution of the resources management with the result management (Biot-Paquerot si Rossignol, 2006), in order to offer useful accounting information for planning, decision making and controlling and last but not least, in providing through financial statements the necessary information to the users.

   Through the accounting techniques of performance measuring the accounting system can be found within the public institutions under one of its main forms, namely: cash accounting and accrual accounting. In accrual basis accounting, income is reported in the fiscal period it is earned, regardless of when it is received, and expenses are deducted in the fiscal period they are incurred, whether they are paid or not. In other words, using accrual basis accounting, you record both revenues and expenses when they occur. The cash basis accounting reports transactions only when cash is received or a payment is made.

   The use of accrual accounting should permit, at least in theory, the accurate measurement of the financial performance of a public sector entity (Goldman and Brashares, 1991; Guthrie, 1998; Hodges and Mellett, 2003; Hoque and Moll, 2001). Empirical evidence indicates that accrual accounting could provide a more accurate measurement and a more comprehensive communication of public sector entities' financial position (Chan, 2003; Guthrie, 1998) and performance (Goldman and Brashares, 1991; Hodges and Mellett, 2003; Hoque and Moll, (2001), improve accountability (Gillibrand and Hilton, 1998; Perrin, 1998; Ryan, 1998) and transparency (van der Hoek, 2005; Yamamoto, 1999), and encourage ongoing monitoring of assets (Hodges and Mellett, 2003; Pallot, 2001).

   Throughout time, in European and international context, cash accounting lost ground to accrual accounting. The main reason is the number of benefits of the financial information users because: The accrual accounting is more complex than the cash accounting; it imposes to public institutions to keep track of assets, liabilities, equity, incomes and expenses; it provides a clearer image of assets and liabilities of public institutions; it emphasises the transparency and accuracy; it allows the measuring of the costs of programmes and activities; it offers information regarding the performance and nonperformance achieved by public institutions on economic terms and not only of the existence of cash availabilities, etc So, the accrual accounting offers a better image of the business's dynamic financial performance than the cash accounting (Collier, 2003:32).

   At international level, even from the beginning of the 80s the governments became overwhelmed by the multitude of changes at financial and organizational level. It appeared therefore the increasing need for reforming the public system, a need that led the world states to adopt in the public sector some accounting and managerial instruments that were widely used in the private sector. Moreover, once the development of the capital markets and under the influence of globalisation from the last decades, it became more evident the creating of a set of international accounting standards for public sector. Humphrey et al. (1993:7) establish a link between neo-liberalist ideology and the rise of accountable management in the public sector. Accountable management is characterised by management accounting techniques "concerned with the setting of plans and objectives, specification of performance targets, calculation of costs, the production of budgets and the provision of information on resource usage for the purposes of local or central management decision making".

   In this context, the appearing of IPSAS represents a way of achieving a public reconcile accounting systems of the member countries IFAC. As it results from the reports published by IFAC (the last one being published in September 2008), over 53 countries recognise the importance of reforming the public accounting system, choosing, most of them, to pass from the accounting in cash basis to accounting in accrual basis. This is the reason why in the present study we will use as reference point the IPSAS to define the characteristic elements of a pure accrual accounting system.

   At national level, through the Document of position at chapter 11 "The Economic and Monetary Union", Romania took responsibility for reporting the data of public finances according to the provisions of the European Accounts System (SEC 95), and for adopting the accrual accounting.

   Such a changing process cannot be achieved without a great support from the legislative system. It is stated therefore the aim of the paper, namely the pursue of the way in which the characteristics and specificity of the new accounting system correspond to the content of the issued normative documents, whose declared goal is exactly its implementation.

   Puxty et al. (1987:275) argue that 'the institutions and processes of accounting regulation in different nation states cannot be understood independently of the historical and political-economical context of their emergence and development'.

   Therefore, in the present study, we organized the succession of the main pillars as follows:

   * Identifying the effects of Romanian public accounting normalization, depending on the historical periods determined in the process of passing of the public accounting system from cash accounting to accrual accounting;

   * Checking the stability of the legislative system through analysing the intensity of legislative changes within studied historical intervals;

   * Establishing the degree in which the Romanian legislative system was able to implement within the public institutions a pure accrual accounting system (IPSAS).

   There are few studies in the national and international literature that discuss the transition between two accounting systems which are part of the public accounting system from the point of view of the legislative impact on the elements subject to change and than continuing with analysing the degree in which the legislative intentions juxtapose with the practice realities.

   Napier (2006:3) sums up the relationship between accounting past and present: 'we cannot gain a full understanding of accounting in its current manifestations without knowing how accounting has come to be what it is'.

   A review of historical studies in accounting reveals an emphasis on accounting in specific countries or regions of a country. Collections of historical articles pertaining to specific countries or regions, for example Parker (1990) on Australia, Boyns et al., (1995) on Britain, and Walton (1995) on Europe, provide important databases for future researchers. From legislative point of view, Johnson and Caygill (1971) explored the development of accounting links in the British Commonwealth, Briston (1978) examined the spread of British and American accounting concepts and procedures to developing countries, Walton (1986) investigated the export of British accounting legislation to Commonwealth countries, Parker (1989) discussed the British experience in importing and exporting accounting institutions, techniques and concepts, and Carnegie and Parker (1996) examined the case of William Butler Yaldwyn, a peripatetic accountant and accounting author, in the transfer of accounting technology to and within the southern hemisphere.

   In conclusion, Turner (2006) considers that: "At the same time, history serves as a teacher of lessons to be learned and, by doing so; it provides us with a glimpse into the future. Often, the lessons of the past have provided a roadmap to what might lurk ahead if similar roads were travelled. And if the lessons of the past are ignored and...