The implementation of accrual accounting in central government : emerging and changing roles for the NAO

Abstract

Purpose: This study analyses the role of the Maltese National Audit Office within the context of the accrual accounting reform at central government level, and the impact of such reform on the Office itself. Design: The research adopts a qualitative approach and a case study research strategy to gather insights from the National Audit Office and other stakeholders directly involved in the accrual accounting reform. Findings: The key findings show that despite the fact that the National Audit Office was on board with the reform and encouraged the government to adopt full accrual accounting, its input was somewhat limited in the initial phases of the reform. However, its efforts drastically increased throughout the rest of the reform process. Officials are allowing connections to be made between their usual assurance related work and the initiative of the reform to aid the public service in establishing opening balances. Furthermore, the Office participates on three reform related working groups. A key issue that the auditors face in this regard is determining the extent to which they should be involved such that auditor independence is preserved. On another note, the reform requires the National Audit Office to add formal financial audits of the Central Government subsector to its portfolio. Accordingly, the Office is planning to reduce its compliance audit work to be able to assign more auditors to financial audits. Although the National Audit Office does not consider the latter to be an easy task, a major auditing reform within the Office seems unlikely. Conclusion: Overall, the Maltese National Audit Office can be regarded as one of those Supreme Audit Institutions which took on an active role in the implementation of accrual accounting in Central Government. Additionally, the Office acknowledged the need to change its traditional role and is making plans for such a change to occur seamlessly. Value: This study provides various practical recommendations for the Maltese National Audit Office drawn from academia and the experiences of other Supreme Audit Institutions.