Accrual Accounting System Research Proposal

This paper has been prepared in order to have a proper understanding of the accrual accounting system and how this process can enhance the performance of a business. It is seen that the first section of the paper will look to understand the background of the topic and accordingly various aspects on the basis of which this process has enhanced has been discussed.

Running head: ACCRUAL ACCOUNTING SYSTEM
Research Proposal on Accrual Accounting System
Name of the Student:
Name of the University:
Author’s Note:

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Executive Summary
This paper has been prepared in order to have a proper understanding of the accrual accounting
system and how this process can enhance the performance of a business. It is seen that the first
section of the paper will look to understand the background of the topic and accordingly various
aspects on the basis of which this process has enhanced has been discussed. The problem
statement explains the issues and the aspects due to which the research has been undertaken. The
literature review in this manner explains what other researchers have suggested and the various
themes that can be known with the help of which the performance of the process can be
understood. The methodology determines the sort of data that is collected and the process that is
used with the help of which the analysis can be undertaken.

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Table of Contents
Chapter 1: Introduction....................................................................................................................4
1.1 Problem Statement.................................................................................................................5
1.2 Research Aims.......................................................................................................................6
1.3 Research Objectives...............................................................................................................6
Chapter 2: Literature Review...........................................................................................................7
2.1 Summary of the theory as well as progression......................................................................7
2.2 Common themes....................................................................................................................7
2.3 Various themes......................................................................................................................8
2.4 Managerial implications of the articles..................................................................................9
2.5 Limitations...........................................................................................................................10
Chapter 3: Research Methodology................................................................................................12
3.1 Introduction..........................................................................................................................12
3.2 Outline of the Method..........................................................................................................12
3.3 Research Onion....................................................................................................................12
3.4 Research Philosophy............................................................................................................13
3.5 Research Approach..............................................................................................................13
3.6 Research Design..................................................................................................................14
3.7 Data Collection Process.......................................................................................................14
3.8 Sample and Sampling Size..................................................................................................15

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3.9 Data Analysis Plan...............................................................................................................15
Reference List................................................................................................................................16
Appendix........................................................................................................................................19

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Chapter 1: Introduction
With the advent of time there has been an observation that the there have been several
changes in the operational activities of the accounting processes globally. There has been an
acknowledgement globally that there has been a transition in the development of the accounting
process in the public as well as the private institutions and the change has been from accounts
that are cash based towards accruals (Bellanca and Vandernoot 2014). There have been several
researches on public sector accounting and they have clearly admitted with the help of theoretical
and qualitative discussions and the key objective of accrual based accounting has been to provide
a clear, transparent and prominent idea about the non-financial and financial performance of the
public organizations, increased level of accountability and the ability to properly explain the
patrimony. As the public entities grow to become entrepreneurial entities, a procedural and
functional assessment is needed with the help of which incorporation of a managerial process
that is ideal for the business sector is completed (Jesus and Jorge 2016). Accrual accounting
process is a new process and there have been several studies that have explained that this process
enhances the principles like transparency, efficiency, accountability and effectiveness. There has
been an observation that when a comparison is made among the public sector and the private
sector with respect to the incorporation of accrual accounting system, it reveals that there is a
doubt in the efficiency of accrual accounting in making sure that effective financial performance
is maintained as any kind of scandals and failures in the private sector would reveal the same.
The incorporation of an effective performance management process explains direct public
liability. There are various opinions with respect to the benefits of accrual accounting for the
users externally. Some of the researchers address the key role of cash dependent information,

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which has been closed down to the consumption and resources and this is done mostly to the
users who are external (Capalbo et al. 2014). There are other resources who have considered
both external and internal users can gain benefit as an outcome of accrual based accounting,
which is significant for an effective performance management process and this based on a
precise objective, effective performance data and independence to handle properly.
It is seen that accrual accounting system is a new concept and there has been a rise in the
incorporation of this system. This paper would therefore look to assess the concept of accrual
accounting system and the benefits and the usage of this system in the development of the
economy (Hassan 2014). The problem statement of the paper as well as the aims and objectives
will be examined with the help of which the paper would move ahead in order to assess what
other researchers have suggested and the sort of data that would be collected in order to gain
knowledge about the development of accrual accounting system.
1.1 Problem Statement
There has been an observation that the companies have been looking for change with the
advent of time. In this manner the accounting processes have been changing as well. One of the
new accounting processes has been accrual accounting system and the management of the
companies have been reluctant in incorporating this system simply due to the fact that they do
not have what implications this system can have on the financial performance of the businesses.
It is due to this fact that this research has been undertaken in order to have an idea about the
process that is undertaken and the effectiveness of accrual accounting system in the current
business environment.

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1.2 Research Aims
The aim of the research explains what the researcher wants to attain with the help of
which the performance of accrual accounting system can be known. The aim of the research has
been to understand the effectiveness of accrual accounting system and how this process is helpful
in enhancing the financial performance of business.
1.3 Research Objectives
The objectives of the research have been laid down as follows:
 To understand the effectiveness of accrual accounting system over cash based accounting
system
 To gain an understanding of the level of transparency accrual accounting system brings
within the financial system of a company
 To understand how this system can gain efficiency in the overall performance of the
business

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Chapter 2: Literature Review
2.1 Summary of the theory as well as progression
It have been found that the Accrual accounting system allows the organization for cash
outflows as well as inflows along with the future expected inflows and outflows, so that the
present financial position of the firm is properly pictured. The accounting has been taking place
in many NSW s public sectors where there are huge number of evidence provided by the
committees. Accrual accounting system is that method of accounting which is known to record
the revenues as well as the expenses when the money is being traded. As the accrual accounting
system is taking place, the public sectors of New South Wales will be having huge responsibility
(Chow and Aggestam Pontoppidan 2019). The accrual accounting can be referred to an
accounting method which will help to measure the position and the company’s performance
which recognizes the economic events hat takes place when the cash flows takes place. When
this particular type of Accrual accounting system is implemented, some of the governments of
the state known to have faced some economic woes as well as electoral routes very similar to
New South Wales during 1988.
2.2 Common themes
‘Using ideas to advanced professions: Public sector accrual accounting’ known to have
examined the accrual accounting system idea and also found out how it affected the various
public sectors. This particular paper is known to have developed the relationship between the
accrual accounting system of the public sectors of New South Wales and the finance statistics of
government. The article ‘The emergence of an accounting practice: The fabrication of a
government accrual accounting system’ states the understanding of accrual accounting system

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with the examination of thee controversial as well as dynamic process. With the help of this
paper, the author have tried for reinforcing the implementation ideas of the accrual accounting
system. In this particular article the importance of the accrual accounting management in the
government operations is known to be highlighted. The third article ‘Indonesian public sector
accounting reforms: dialogic aspirations a step too far?, implementing the accounting
=reformation process in the public sector is known to be highlighted. It have been found out that
based on the political history and Indonesian regulatory history, the idea of reforming accounting
is known to have a strong impact on the public sectors (Agasist et al 2015). The accrual
accounting system therefore known to play an important role in the workplace. The fourth article
‘Enabling global accounting change: Epistemic communities and the creation of a 'more
business-like' public sector” states the contribution of Accrual accounting system for improving
the situation of the working community. In this particular article the cash basis of accounting in
case of public sector have been traditionally used. However, in the last period, there have been
discussion taint on the advantages of change based on accrual accounting system. For this reason
the accrual accounting system is considered to be the best accounting system that is known to
measure the present income more appropriately compared to cash method.
2.3 Various themes
By evaluating the four articles it can be stated that the first article is known to consider
the political environment as well as the perspective of the institutional theory as the influential
factor which will be driving the present accounting practice. For brining any kinds of
improvements in the public sector, the accounting process based on technology is been showed.
Conducting the research, it have been found out that the researcher have only used thee
secondary sources. This has indicated the fabrication and the improvisation process in case of

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designing the accounting system with the fragile process of networking (Modugno. and Di Carlo
2019.). By employing the accrual accounting, one can maximize the effects of the competition
process which is known to enable the public management efficiency so that it can be achieved
with the possible minimum cost in the society. These articles have therefore highlighted the
accounting process of the public sector. The third article have been purely developed based on
public sectors in Indonesia. In this particular article, the author has known to describe about the
process of reformation of accounting by improving the process of community contribution. The
article has also highlighted the revolutionary changes of the process of accounting in 1988
(Chow and Aggestam Pontoppidan 2019). The fourth article, the historical assessment of the
system of accounting from the six decades has known to be highlighted. The author has known
to highlight the effect of the process of accounting for increasing the business terminology. In
this article, the debate between the epistemic community and the enhancement based on accrual
accounting has been mentioned. In this case, the author have known to highlight thee epistemic
community contribution in bringing changes in the process of accounting.
2.4 Managerial implications of the articles
The first article states the importance of the accounting system which helps in improving
the operations of the government. The author, through this paper have highlighted the wave the
reforms to the public sectors in Australia. The public accounting system in Australia has changed
a lot in the past thirty years. In that case, it can be said that the theoretical perspective of the
institutional accounting will be implementing the theories of accounts in the process of
operations (Christensen , Newberry Potter BN 2019). In case of second article, the accounting
process have been implemented with the help of technological methods. The article also states
that in the cases which are based in the process of designing, the rest of the organizations will be

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developing an effective design in accounting in the workplace. The third article is known to work
on the Indonesian public sector and then have thrown light on the various evidences of
Indonesian industries which will be helping the entrepreneurs that aims in developing business in
this particular country. In this particular article the cash basis of accounting in case of public
sector have been traditionally used. However, in the last period, there has been discussion taint
on the advantages of change based on accrual accounting system. Various patterns of the
colonial history in case of Indonesia and the accounting process will be helping the organizations
for taking affective management decisions. In case of the fourth article, the international
dimensions as well as the international public sector accounting reformation system will be
helping to enable effective solutions in accounting in case of accrual accounting solutions
2.5 Limitations
The articles above might help in providing managerial improvement, still these articles
might have limitations that is known to create a gap in the literature. The first article states the
importance of Accrual accounting process. Although, the writer did not mention the process of
implementation in an organization. In case of the second article, the information of accounting
had been introduced with the help of innovation of technology. In this article the author has
mentioned about the design based on the accounting information process perform. The
accounting designs have been developed based on governing operation. However, in this
particular case, the application of the similar design in all the sectors cannot be assured. The
public sector operations in Indonesia have been described in the third article, however as a result
of the specification, the formation of the article cannot be applied in the global context. A topic
based on epistemic communities has been mentioned in the fourth paper where the possibilities
have been shown based on NPM types of the process of reformation. In that case it can be very

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well said that the collected information will not be able to be applied in the global context which
are based on the country’s needs.

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Chapter 3: Research Methodology
3.1 Introduction
This section of the paper has the intention of collecting the data and the information with
the help of which the performance of accrual accounting system can be known. there are several
kinds of data that can be taken into consideration, however the collection of the data is based on
the researcher as well as the results that are deemed to be discovered. The methodology section
of the paper will be constructed based on the selection of a philosophy, research onion, the
approach that will be selected and the design with the help of which the collection of data is
completed. In the same manner, the sort of data that will be collected and the process of data
collection will be highlighted as well so that an effective idea can be attained about the same.
The analysis process which will be conducted will be addressed as well so that the paper can
proceed to the next chapter.
3.2 Outline of the Method
The process that will be undertaken in the collection of the data will be explained. The
selection of the data is dependent on the topic that has been selected as well as the factors that
has a key impact on it. The techniques and the methods that will be used in the selection of the
philosophy as well as the approach and the design will be taken into consideration. It is even
seen that the researchers are looking to attain the most precise data with the help of which
analysis can be completed.
3.3 Research Onion
The onion has a significant role to play in the efficient utilisation of the tools that are
available for research. The onion assists the researcher to gain their objectives and tasks with the

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help of six various techniques (Goncharov and Jacob 2014). The layers are directly associated to
the research techniques and processes, which can be utilised for the research. The onion even
assists in the effective utilisation of the time line and the strategies with the help of which the
entire research can be completed.
3.4 Research Philosophy
The philosophy of the research assists the researcher to recognise the research essence
with the help of which the data can be collected. There are four sorts of philosophies that are
available for use and they are known to be positivism, realism, interpretivism and pragmatism.
Each of the philosophies has their own features and the selection of the philosophy is dependent
on the topic (Biondi and Lapsley 2014). The researcher in this research has chosen the
philosophy of interpretivism mainly due to the fact that the experiences and the understanding of
the human responses will be considered with the help of which the performance can be
enhanced.
3.5 Research Approach
The approach of the research explains the sort of models and theories that will be applied
by the researcher with the help of which the data that is feasible with the research can be
collected. There are two kinds of approaches that can be selected by the researcher and they are
known to be deductive and inductive approach. In this manner, it can be stated that the researcher
has chosen deductive approach as this process selects theories and models that have been
previously used in other researches (MacKenzie 2016). Inductive approach has not been chosen
as the researcher will not be constructing any new model and theory in order to complete this
research.

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3.6 Research Design
The design explains the kind of plan and policy that will be selected with the help of
which the collection of data is possible. It is seen that the design highlights the process and
guideline within which the data will be collected and accordingly the performance of the
research will be understood (Anessi-Pessina et al. 2016). There are three types of design and
they are explanatory, exploratory and descriptive. The researcher in this research will select
exploratory research design as examinations and investigations will be made with the help of
which outcome of the research can be attained.
3.7 Data Collection Process
This is one of the key aspects that have been discovered in completion of the
methodology. It is seen that there are two kinds of data that can be selected and they are primary
and secondary data. Primary data is the data that is collected from the human responses and their
feelings and this data is used for the purpose of analysis. On the other hand, secondary data is the
data that is collected from external sources like books, journal articles, website sources and
internet (Alstadsæter et al. 2016). This is the data that has been used by other researchers earlier.
In accordance to this paper, primary data quantitative data has been collected and therefore
responses from the selected respondents have been chosen from whom the data has been
collected. Questionnaires are designed and the questions are close ended so that it is easier for
the respondents to answer them (Aletkin 2014). The questionnaires are provided to the
respondents via mail and are asked to fill in the form and reply back within 5 days. The collected
data is used for the purpose of data analysis.

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3.8 Sample and Sampling Size
Sampling is the process with the help of which the respondents who will be selected will
be taken into consideration. A total of 50 respondents from the overall population of the finance
managers have been chosen with the help of which the collection of the data is possible. The
sample is selected with the help of simple random sampling and this assists the researcher to go
ahead with the research.
3.9 Data Analysis Plan
The data that has been collected will undergo analysis with the help of several kinds of
statistical tools after which the assessment can be completed. In this manner, it is observed that
the collected data will be transferred into SPSS software where the data will be segregated with
the help of which the information that is required in order to attain the effectiveness of accrual
accounting system can be known and accordingly the research can be completed.

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Reference List
Agasisti, T., Catalano, G., Di Carlo, F. and Erbacci, A., 2015. Accrual accounting in Italian
universities: a technical perspective. International Journal of Public Sector Management, 28(6),
pp.494-508.
Aletkin, P.A., 2014. International financial reporting standards implementation into the Russian
accounting system. Mediterranean Journal of Social Sciences, 5(24), p.33.
Alstadsæter, A., Jacob, M., Kopczuk, W. and Telle, K., 2016. Accounting for business income in
measuring top income shares: Integrated accrual approach using individual and firm data from
Norway (No. w22888). National Bureau of Economic Research.
Anessi-Pessina, E., Barbera, C., Sicilia, M. and Steccolini, I., 2016. Public sector budgeting: a
European review of accounting and public management journals. Accounting, Auditing &
Accountability Journal, 29(3), pp.491-519.
Bellanca, S. and Vandernoot, J., 2014. International public sector accounting standards (IPSAS)
implementation in the European Union (EU) member states. Journal of Modern Accounting and
Auditing, 10(3).
Biondi, L. and Lapsley, I., 2014. Accounting, transparency and governance: the heritage assets
problem. Qualitative Research in Accounting & Management, 11(2), pp.146-164.
Brusca, I., Caperchione, E., Cohen, S. and Rossi, F.M. eds., 2016. Public sector accounting and
auditing in Europe: The challenge of harmonization. Springer.

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Brusca, I., Caperchione, E., Cohen, S. and Rossi, F.M., 2015. Comparing accounting systems in
Europe. In Public Sector Accounting and Auditing in Europe (pp. 235-251). Palgrave Macmillan,
London.
Capalbo, F., Frino, A., Mollica, V. and Palumbo, R., 2014. Accrual-based earnings management
in state owned companies: Implications for transnational accounting regulation. Accounting,
Auditing & Accountability Journal, 27(6), pp.1026-1040.
Chow, D. and Aggestam Pontoppidan, C., 2019. The United Nations'(UN) decision to adopt
international public sector accounting standards (IPSAS). Journal of Public Budgeting,
Accounting & Financial Management, (just-accepted), pp.00-00.
Christensen M, Newberry S, Potter BN. Enabling global accounting change: Epistemic
communities and the creation of a ‘more business-like’public sector. Critical Perspectives on
Accounting. 2019 Jan 1;58:53-76.
Christensen, M. and Parker, L., 2010. Using ideas to advance professions: public sector accrual
accounting. Financial Accountability & Management, 26(3), pp.246-266.
Goncharov, I. and Jacob, M., 2014. Why do countries mandate accrual accounting for tax
purposes?. Journal of Accounting Research, 52(5), pp.1127-1163.
Hassan, M.M., 2015. Transformation to more-accrual-based accounting practices in Indonesian
government. Journal of International Business Research, 14(1), pp.147-174.
Hyndman, N., Liguori, M., Meyer, R.E., Polzer, T., Rota, S., Seiwald, J. and Steccolini, I., 2018.
Legitimating change in the public sector: the introduction of (rational?) accounting practices in
the United Kingdom, Italy and Austria. Public Management Review, 20(9), pp.1374-1399.

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Jesus, M.A. and Jorge, S., 2016. Accounting basis adjustments and deficit reliability: Evidence
from southern European countries. Revista de Contabilidad, 19(1), pp.77-88.
MacKenzie, D., 2016. Producing accounts: finitism, technology and rule-following.
In Knowledge as social order (pp. 113-132). Routledge.
Modugno, G. and Di Carlo, F., 2019. Financial Sustainability of Higher Education Institutions: A
Challenge for the Accounting System. In Financial Sustainability of Public Sector Entities(pp.
165-184). Palgrave Macmillan, Cham.
Newberry, S., 2014. The use of accrual accounting in New Zealand’s central government:
Second thoughts. Accounting, Economics and Law, 4(3), pp.283-297.
Rossi, F.M., Cohen, S., Caperchione, E. and Brusca, I., 2016. Harmonizing public sector
accounting in Europe: thinking out of the box. Public Money & Management, 36(3), pp.189-196.

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Appendix
Application for Ethics Approval
Student Details
Name :
Student Number :
Email :
Subject (Code/Name) :
Supervisor Details
Name :
Email :
Proposed Research Details :
Topic: Accrual Accounting System
Summary of the proposed research project, including brief description of methodology (bullet points
where applicable)
 The research looks to have an understanding of the impact of accrual accounting system and
the development it has created on the financial performance of the business organizations.
 The research has created an idea about how this system has developed and what changes it
has brought in the accounting system.
 The literature has highlighted various themes associated to the topic and what other
researchers have suggested regarding this topic.
 The methodology has highlighted that primary data will be collected with the help of deductive
approach and exploratory design has been selected.
Ethics Checlist (Participants)

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How do you propose to select your participants ?
The selected participants have been selected with the help of simple random sampling where the
financial managers of the companies of the overall population have been selected randomly.
Will your research involve adults who might be identified by you or anyone else reading the
research ? (Yes/No). If yes, how will you obtain their consent ?
The research will not involve any adults who can be identified by anyone as the data will be collected
with the help of close ended questionnaires.
Does your research involve children under eighteen years old ? (Yes/No)
No
Ethics Checklist (Participants)
Will your research take place in an institution ? (Yes/No)
No
Are in a position of power over participants ? (Yes/No), if yes, describe any ethical implication an

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dhow you deal with them
No, not in a position to power over the participants
Describe any risk or harm to participants which might be associated with yoru research and how
would you propose to minimize these risks
There are no risks related to the participants as their confidentiality will be maintained.
Privacy and Confidentiality
How will you protect the confidentiality and privacy of your participants ?
The confidentiality and privacy will be maintained as their records will be kept in proper database that
can be accessible only by me.
Will it be possible to identify participants from published data ? (Yes/No), if yes, is there any ethical
issue which may arise from such identification.
No
Data Collection and Storage
Who will have access to the data ?
Only the researcher
How will you store the data in order to ensure its security
A separate database will be maintained with the help of which all the data will be secured and will not
be available to anyone as it is coded with password.