Academy of Accounting and Financial Studies Journal (Print ISSN: 1096-3685; Online ISSN: 1528-2635)


Feasibility of Transformation to Accrual Basis of Accounting in the Public Sector: Kingdom of Bahrain Context

Author(s): Abdalla Elmezughi, Amal Abdel Wakil

This study aims to identify the benefits and difficulties related to the transformation in the Kingdom of Bahrain public sector financial reporting, ranging from the current modified cash basis accounting to the full accrual basis required by the International Public Sector Accounting Standards (IPSAS) as a benchmark for reporting. The developed world has so far, to some extent, successfully implemented the transformation as researches have highlighted difficulties encountered the implementation process. However, there is a severe lack of such transformation related studies in the developing countries. Thus, this study aims to examine the benefits and difficulties related to the transformation, in the Kingdom of Bahrain public sector financial reporting. The study adopted questionnaire based survey methodology which was distributed to public sector employees in a number of ministries and government agencies in the Kingdom of Bahrain. Then descriptive analysis and crosstab analysis was applied to answer the research question. Crosstab analysis of the responses indicated that the transformation could have several benefits such as more effective cost management, better financial accountability, improved decision making and better performance measurements, yet the achievement of these benefits could be hindered by the existence of some implementation problems, such as lack of employees knowledge about accrual basis and difficulties with valuing fixed assets including infrastructure and heritage assets.Generalizability of the findings could be limited to the sample studied and then the replication of the study could reinforce the results. Interviews with a selection of survey respondents were not conducted a matter which could provide more in-depth interpretation of the questionnaire. The study found that policy makers in the Kingdom of Bahrain consider the possibility of adopting a more refined modified cash basis of accounting which could lead to the desired outcome of an improved financial reporting by the public sector instead of the transformation to full accrual basis of accounting. The paper concluded with having this study pioneer in examining the benefits and difficulties of transformation to the full accrual basis of accounting in the Kingdom of Bahrain.

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