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Two contested issues

Two issues related to public accounting are still under debate and scrutiny. Research is ongoing, evaluations and studies are underway, and action is undertaken, but it is still unclear under what circumstances these two action points will have the desired effect in curbing corruption in public accounting. These issues are:

  • Can reforms and the introduction of standards be helpful? The example of the introduction of Integrated Financial Management Systems (IFMIS) in Kenya is inconclusive.
  • What is the role of the international accounting and auditing firms? Evidence from the Luanda Papers and the embezzlement scandal involving the daughter of the former president of Angola demonstrates that international firms have played a facilitating role.

Effectiveness of Reform

In many countries, the introduction of Integrated Financial Management Systems (IFMIS) has become a core component of financial reforms to promote efficiency, security of data management, and comprehensive financial reporting. The scope and functionality of IFMIS can vary, but sub-systems normally include accounting, budgeting, cash management, debt management and related core treasury systems. Some countries have also chosen to expand their IFMIS with tax administration, procurement, asset management, human resource and pay roll systems, pension and social security systems and other modules.

The adoption of International Public Sector Accounting Standards (IPSAS), in particular Cash Basis IPSAS, is now a priority for the World Bank and other donors in less developed countries. The Bank has also been at the helm of the adaptation of IFMIS around the world from 1984, and IFMES systems have been rolled out in more than 87 countries between 1984 to 2015 (Koitumet et al. 2019: 136). A 2019 study of OECD countries found that corruption is reduced as governments advance in public-sector accounting reforms, adopting International Public Sector Accounting Standards and implementing accrual-basis systems – an accounting method that records income and expenses.

However, a study from 2015 (Lundu & Shale 2015) indicated that only 11% of the IFMIS projects worldwide achieved their intended operational and technical performance, the remaining 89%, mostly in Africa, have failed to reach their operational level. Thus, the effect of public-sector accounting reforms is hotly debated, and it is still unclear under what circumstances such reforms can have an effect of reducing corruption.

Hepworth (2017: 141), for instance, says that for developing countries, “the implementation of the accrual-based IPSASs […] is not an appropriate reform unless preceded or accompanied by other, essentially managerial, reforms”. Polzer et al. (2019) argue that IPSASs, with their emphasis on enhancing transparency and accountability, might run counter the objectives of powerful groups, and that the (re)distribution of rents to certain groups in power might be the incentive for their peaceful cooperation within the existing order. Introducing the IPSASs might be at odds with the political equilibrium, and therefore implementation incentives could be low.

The institutional context in developing countries might be unsuitable for introducing IPSAS. IPSAS (pushed by international donors) might be hitting the targets of donors, but remain superficial, or might even be detrimental to development. A decoupling between reform ‘talk’ and ‘walk’ would be the consequence.

Lassou concluded in a recent study that formal government accounting reforms, including the implementation of IPSAS, have been used in Benin and Ghana as a façade to hide ‘patronage and clientelism abound within an informal setting, which make adopted accounting rules and procedures redundant; hence the observed limited role of accounting in improved accountability, governance, and ultimately development (Lassou 2017: 502).

Another recent study on the unintended consequences in implementing public sector accounting reforms in emerging economies (Adhikari et al. 2019) also found that factors like informal and interpersonal networks and power disparity resulted in resistance, internal conflicts and unintended consequences, including the fabrication of results (Egypt, Nepal and Sri Lanka). This study also concluded that there is no evidence that the reforms yielded better results for public sector governance and accountability in the three countries studied.

Example: IFMES in Kenya

In Kenya, all government departments and ministries are by law required to make all transactions involving public funds through the Kenyan IFMES system. A study from 2019 (NDZOVU and NG’ANG’A 2019) found that electronic budgeting, automated cash management, electronic procurement and automated financial reporting had a positive and significant influence on financial performance in Kwale County Government in Kenya. However, the IFMES has also shown some significant weaknesses in Kenya, and even the Kenya’s auditor general claimed that IFMIS was doing a poor job of oversight (Wawire 2020: 24). The weaknesses are also seen from the many recent newspaper headlines:

International accounting and auditing firms

The role of the ‘Big Four’ of the international accounting and auditing business (Deloitte, KPMG, PWC, and EY) is now hotly debated as they have been involved as middlemen in one of the world’s biggest corruption scandals. These firm’s dominant role has also been questioned in the USA, where a petition is going on to have them broken up and better regulated (see: the Anti-Corruption Digest International Risk & Compliance News ).

Example: Luanda papers

According to the investigations and various articles published by the International Consortium of Investigative Journalists (ICIJ), several Western consulting, accounting and law firms played a key role in helping Africa’s wealthiest woman amass and shield a fortune. Leaked documents (the so-called Luanda Papers) allege that Isabel dos Santos and her husband amassed an empire of more than 400 companies and subsidiaries in 41 countries, including at least 94 in Malta, Mauritius and Hong Kong, with support from international consulting, accounting and financial firms including KPMG, PwC, Boston Consulting Group and Accenture. These firms have apparently been ignoring red flags along the way, and regulators around the globe have virtually ignored the key role Western professionals play in maintaining an offshore industry that drives money laundering and drains trillions from public coffers.

See, for instance:


Adhikari, P. et. al. 2019. Unintended consequences in implementing public sector accounting reforms in emerging economies: evidence from Egypt, Nepal and Sri Lanka. International Review of Administrative Sciences.

Cuadrado-Ballesteros, B., Citro, F. and Bisogno, M. 2019. The role of public-sector accounting in controlling corruption: an assessment of Organisation for Economic Co-operation and Development countries. International Review of Administrative Sciences.

Hepworth, N. 2017. Is implementing the IPSASs an appropriate reform? Public Money & Management, Vol. 37 No. 2, pp. 141-148.

Koitumet, W.T., Kinanga, R., and Ombasa. B. 2015. Effect of staff competencies and skills on the effectiveness of Integrated Financial Management Information System (IFMIS) in Kajiado County, Kenya. International Journal of Science and Research (IJSR), vol. 8, no. 10.

Lassou, P. 2017. State of government accounting in Ghana and Benin: a ‘tentative’ account. Journal of Accounting in Emerging Economies, Vol. 7 No. 4, pp. 486-506.

Lundu, B. L. and N. Shale. 2015. Effect of Integrated Financial Management Information System (IFMIS) Implementation on supply chain management performance in the devolved government systems in Kenya: A case of Nairobi City County Government. International Academic Journal of Procurement and Supply Chain Management, vil. 1, no. 26.

Plolzer, T., Gårseth-Nesbakk, L. and Adhikari, P. 2019. 'Does your walk match your talk?' Analysing IPSASs diffusion in developing and developed countries. International Journal of Public Sector Management, November 2019.

Wawire, N. H. W. 2020. Constraints to enhanced revenue mobilization and spending quality in Kenya. CGD Policy Paper 163 January 2020


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