International Public Sector Accounting Standards and Quality of Financial Reporting in the Public Sector of Pakistan: Moderating Role of Accounting Information System

Abstract

Strengthening governmental accountability is a crucial consequence of governmental policies which could enhance the quality of reporting. International public sector accounting standards have been perceived as a step towards enhancing quality reporting of state owned entities. The study investigated the impact of transparency, financial statement disclosure and comparability on the quality of financial reporting in state owned administration in Pakistan. Also, the study employed the use of accounting information system as a moderator to assess the moderating effect of AIS. The research methodology is based on a questionnaire sent to state owned entities. Regression Analysis was employed to determine the relationship among the variables. The results indicate that comparability, financial statement disclosure and transparency are all positively and significantly associated with the quality of financial reporting, providing evidence of the impact of explanatory variables on the quality of reporting in Pakistan. The moderation results indicate that AIS positively and significantly moderates the relationship among transparency and quality of reporting and comparability and quality of reporting. Notwithstanding, AIS was found to have an insignificant moderating effect on the relationship of financial statement disclosure and quality of reporting. The finding of the study implies that government of Pakistan needs to adopt a more robust approach to improve quality of financial reporting.