Balancing Books

This research is inspired by the complexities of the adoption of accrual accounting, whichhave been widely explored in public sector accounting literature. This research intends toexplore the adoption of accrual accounting in the Indonesian public sector.Using case-based research the research is underpinned by theory to interpret the process ofaccrual accounting adoption in Indonesia and adopts qualitative research methods,including in-depth interviews with senior regulators of public sector reform in Indonesiaand extensive reviews of documents and archives, to construct a historical analysis ofpublic sector accounting in Indonesia.Paper one identifies events that stimulated the adoption of accrual accounting inIndonesia. In-depth interviews were conducted with senior accountants involved in settingthe regulations of these public sector reforms in order to gain insight into the motivationsfor adoption and the decision-making process of implementation. These interviews revealtwo milestones in the process of public sector accounting reform in Indonesia. The firstwas the ratification of the Law of State Finance No. 17/2003, in which there was astipulation that governments (both central and local governments) should implementaccrual accounting in 2008. Interviewees stated that this implementation of accrualaccounting was motivated by a desire to avoid sanctions from the International MonetaryFund (IMF). The Government of Indonesia expected the IMF to provide bailout funds torestore the Indonesian economy, which had been devastated by the 1997 Asian FinancialCrisis.