The reluctance of a developed country to choose International Public Sector Accounting Standards of the IFAC. A critical case study

A movement towards internationally standardized public sector financial reporting started at the end of the 1990s. This standardization process is led by the non-governmental organization the International Federation of Accountants (IFAC). The IFAC has published International Public Sector Accounting Standards (IPSAS standards) for all public sector entities from national central governments to local governments. This article analyses the reasons why a developed country refused to adopt IPSAS standards. The analysis is done in the country context of Finland, where the national government accounting board (FGAB) took a negative stand on IPSAS standards. The method of this article consists of a literature review, interviews, a documentary review and of participatory observation in the FGAB. The article describes the reasons for the FGAB's decision and presents an interpretation supported by institutional theory. The choice of the FGAB is compared to the situation regarding the IPSAS adoption in European and especially in Nordic countries.

► Why did a developed country reject International Public Sector Accounting Standards.
► The fair value and the balance sheet approach was considered unsound.
► The standard setter's decision was interpreted in the institutional context.
► The accounting tradition resisted pressures to change the accounting institution.