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Eaa 2011 stamatiadis
1. “ Evolution of the Governmental Accounting Reform implementation in Greek Public Hospitals: testing the institutional framework ” 34th Annual Congress of the European Accounting Association Rome , 20-22 April 2011 F. Stamatiadis and N. Eriotis National and Kapodistrian University of Athens Department of Economics
19. Research Findings – Results of the compliance Index The total extent of compliance scores range from a high of 87.5 per cent of the maximum possible score to a low of 6.25 per cent . On average, each organization reported a 50.53 per cent of compliance, a moderate to low compliance level with the prescribed accounting reform requirements-objectives of P.D.146 six years after its official enactment .
20. Research Findings – Results of the compliance Index The findings suggest that financial accounting items show relatively higher scores and have receive more attention from hospitals management than cost accounting items (i.e. Calculation of Fixed and variable cost, Definition of cost centres/pools/ objects and structure, Accurate and updated costing system ) . From an institutional point of view : first, one could argue that the financial accounting related items are receive more attention because they are probably related with some coercive pressure to comply and, Second, the low compliance scores of cost accounting items clearly indicate that public hospitals are merely trying to fulfil the new regulatory requirements in search for legitimacy than to actually improve their decision-making processes. In general, the empirical research findings indicate that the level of adoption and the quality of the new accounting reform in Greek public hospitals are realised only to a limited extent. These findings are consistent with Comerford and Abernethy ( 1999) and Hill (2000) that supported the low adoption level of cost accounting systems in private and public hospitals. They reported that hospitals traditionally had little incentive or demand for cost accounting systems to be used as a management control tool. Hospitals primarily reported to external funding authorities, such as the government, and therefore only served as external reporting factors.
21. Research Findings – Factors affecting the compliance level Hypothesis testing OLS Linear regression model was applied to test the hypotheses formulated : Y = a + b1 EDUC + b2 TRAIN + b3 ITQUAL +b4 CONSUL + b5 ORGSUP + b6 CEOEDUC +b7 CONFLICTF + b8 SIZE + +b9 EXPER + e Where Y = is the : is a variable measuring the level of regulatory compliance with the accrual financial and cost accounting reform
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23. Research Findings Explanatory factors (Executive perceptions-interviews) In order to discuss and fine-tune the stated findings of this research, additional interviews were organized with six CFOs of the examined public hospitals randomly selected. Nearly all of the interviewees claimed a rather formal adoption or passive acceptance of financial accrual accounting and that the legislative requirements were pointed as the main drivers for adoption. 1. First, t he Funding process continues to be appropriated on a cash basis. 2. Another reason for which public hospitals are not very concerned with the possibility of non-compliance with the coercively enforced change is the fact that they are evaluated and controlled on the basis of reports related to cash basis accounting (i.e. yearly budget and actual yearly amounts) and not to accrual basis accounting as the control mechanism is more appropriate to the cash accounting practice.
24. Research Findings Explanatory factors (Executive perceptions-interviews) 3. the lack of an effective enforcement mechanism to actually mobilize the implementation process with budgetary cutbacks or explicit financial restrictions and penalties in case of no compliance for cost accounting system adoption 4. Parallel operation of two accounting principles create ambiguity and confusion to accounting officers 5. The lack of accounting framework customization to the public sector’s needs, as was exactly the same as for the private sector, without taking into consideration the considerable differences of the public sector in general, and the public hospitals in particular 6. The lack of guidance from the relevant authorities in relation to the the implementation of Accruals accounting and especially of cost accounting.
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26. Conclusions the present research reveals in practice that the level of accounting reform adoption in public hospitals is realized only to a limited extent and is restricted by both local organizational aspects and wider institutional influences (i.e. coercive pressure). Nonetheless, and contrary to the isomorphic influences (coercive pressure) observed in the case of accrual basis financial accounting adoption, institutional inertia or limited isomorphism seem to prevail as a tactical response to institutional pressures by the public hospitals in the case of cost accounting adoption. This finding is consistent with Institutional theory suggesting that organizations gain legitimacy by conforming to external expectations regarding new organizational and management practices in order to appear modern, rational, and efficient to external constituents, however, if a deviation from the legal expectations does not deliver the organisation a legitimacy problem, then institutional inertia or limited isomorphism is likely to prevail.