Accrual Accounting, Politics and Politicians

Abstract

Ten years ago, the Swedish Association of Local Authorities presented a new model for financial budgeting and accounting based on the idea of accrual accounting. Since the model was introduced, a set of accounting principles and regulations confirming the ambition to establish an accounting model based on accrual principles has gradually been developed. The dominant actors in the change process have been the accountants and the financial officers. However, recently the politicians interfered and decided that pension expenses and pension liability shall be calculated and reported in a very different and special way. The paper includes a description of the change process and comments on what we can learn from the Swedish case about how and why financial accounting models change. The questions which we focus on are: why did the politicians interfere? and why could the professionals not manage to defend the established norms and the financial accounting model based on accrual principles?

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