Determinants of compliance with accrual-based IPSAS in the local government of Ghana

Purpose This study aims to investigate whether contextual and institutional factors influence the levels of IPSAS compliance by local government entities in Ghana, combining the contingency model and the public accountability theory. Design/methodology/approach Data were collected from the annual financial statements of the Metropolitan, Municipal and District Assemblies (MMDAs) and the Government Auditors Report for the period of 2019–2021 (three years after the application of IPSAS became mandatory in 2016). Variables were empirically examined with the panel-corrected standard errors (PCSE) approach. Findings Our findings highlight the importance of combining different factors to explain the compliance level. The level of IPSAS compliance in the previous year matters for the current year. Financial irregularities by the producers of information act as a catalyst for strong IPSAS compliance, highlighting the crucial role of auditors and controllers (promoters of change) in eliminating financial irregularities to enhance levels of compliance. The results also prove the strong, positive effect of meeting deadlines for reporting on the IPSAS compliance level. Furthermore, greater investment in education and training will lead to better compliance behaviour. Originality/value The study focuses on the determinants of IPSAS compliance within the context of Ghanaian local government, an emerging economy, which has rarely been explored in prior literature. By exploring the roles of different actors in advocating for the change to the new IPSAS-based system (controllers and auditors, politicians, managers …) and the implementation barriers (technological skills, accounting expertise and financial dependence), this study helps to understand the gaps between formal obligations and actual compliance, providing relevant insights into regulatory bodies and politicians in the redesigning of public financial management in Ghana. These insights have the potential to be applied to similar emergent economies on the African continent, much of which remains to be studied.