Individual and Organisational Influences on Managers' Use of Accrual Accounting for Decision Making in Indonesian Public Sector

The thesis examines the factors influencing the use of accrual accounting for decision making by managers in the Indonesian public sector. The Supreme Audit Board of Indonesia and the Indonesian Vice Minister of Finance have raised concerns regarding the slow progress of the adoption of full accrual accounting in Indonesia and its low level of use for decision making, which prompt the need to examine which factors may influence the use of accrual accounting for decision making by Indonesian public sector managers. Such concerns also echo the calls for more research on the factors influencing the use of accrual accounting for decision making. Drawing on the theory of planned behaviour and relevant public sector accounting and administration literature, this thesis examines the role of individual factors and organisational characteristics in influencing the use of accrual accounting for decision making. This thesis employs a two-stage mixed-methods research approach. Stage 1 involves semi-structured, in-depth interviews with 45 participants from 11 Indonesian central government ministries. Stage 2 entails a questionnaire survey conducted with a sample of 507 respondents from 34 ministries. The interview findings provide input into the development of the questionnaire survey, and the questionnaire data are analysed using the partial least squares method. The analysis reveals a low level of accrual accounting for decision making by managers. The findings indicate that individual factors and organisational characteristics influence managers' intention to use and actual use of accrual accounting for decision making. Specifically, managers' attitudes, perceptions of stakeholder pressures and perceived abilities to control their use of accrual accounting (perceived behavioural control) influence their use of accrual accounting for decision making. Perceived behavioural control is found to have the strongest effect on managers' intention to use accrual accounting for decision making, as well as having a direct effect on their actual use. Further, organisational characteristics (comprising structure, culture and strategy) influence both intention and behaviour, and moderate the relationship between managers' intention to use and behaviour in using accrual accounting for decision making. Among the three characteristics, actual use is largely driven by organisational culture. The results also reveal differences in managers' use of accrual accounting for decision making between managers who use the International Public Sector Accounting Standards and managers who use the Government Finance Statistics. This thesis contributes to the theoretical literature relating to the public sector accounting by integrating the behavioural perspectives and organisational influences to examine managerial decision making in the public sector. The findings of this thesis highlight the importance of integrating individual and organisational factors in understanding which factors may encourage public sector managers in Indonesia to use accrual accounting for decision making. The thesis also provides empirical evidence to inform Indonesian policymakers and the central government in improving accrual accounting system in general, and increase its use for decision making in particular