This case study aims to provide an illustrative example of the divergence of public sector accounting from international harmonising pressures. This is demonstrated by a specific financial statement presentation standard issued by the International Public Sector Accounting Standard Board (IPSASB) for leases, against which the national accounting regulator has deliberately issued a differing guideline for municipalities. Based on the evidence from our case context, we also assess whether a country’s unique practices might be more cost-effective than the lease standard while still satisfying users' informational needs.
Our case study supports the institutional theory perspective on the significance of entrenched accounting culture and the resulting resistance to institutional change in the face of accounting harmonisation pressures. Based on document and interview data, national financial statement regulation exhibits characteristics of both path-dependency and rational decision-making, related both to the cost-benefit considerations of financial statement presentation and, undoubtedly, to the self-interests of financial statement preparers. This connection to the positivist accounting theory does not contradict the institutional explanation but rather reinforces it.