Reaping the Benefits of Two Worlds : An Exploratory Study of the Cash and the Accrual Accounting Information Roles in Local Governments

Purpose: The current research study explores the coexistence of cash accounting and accrual accounting systems through an investigation of the roles they fulfill in Greek municipalities. Design/Methodology/Approach: Our survey results are based on the answers of the financial department principals of 106 municipalities to a structured questionnaire. The roles of accounting investigated are informed by Ansari and Euske's (1987) model.Findings: It appears that cash accounting information prevails in the major function of decision making with accrual accounting information playing a secondary role. Larger municipalities seem to use accounting data more extensively than smaller ones for negotiations both in accrual and cash terms. Moreover, our empirical evidence reveals that the use of accrual accounting information within a public sector organization setting influences its management's attitude towards cost.Originality/Value: Our study sheds light on the actual use of accrual accounting information in a public sector setting where customarily decisions were based on cash accounting considerations