Why do some municipalities apply accrual-based rules more than others? Evidence from Turkey

In the last decades, public sector has been influenced by New Public Management emphasizing incentives, competition, and performance. With the effect of New Public Management, implementation of accrual accounting based rules in the local government level has been studied from different aspects and within different contexts. In this study, we seek to further delineate factors affecting the level of compliance to accrual based accounting rules in the local government level in an emerging country--Turkey. We shed lights on two new emerging country-like variables: implementation of European Union funded projects and newly founded municipalities with six control variables including municipal size, municipal wealth, citizen education level, staff education level, debt ratio and external audit. Data, to be analyzed, is gathered from 102 Turkish municipalities. We use compliance index, consisting of 39 items, in order to assess the level of compliance of the municipalities. Institutional theory and resource dependence theory have been employed in order to increase our understanding on the factors affecting the level of compliance to the accrual based rules. The results show moderate compliance, 61.2%, with the accrual based rules. Predictors that have clearly significant effect on the level of compliance are respectively, the external audit (b = .123, [beta] = .450, p = .000), implementation of EU funded projects (b = .074, [beta] = .267, p = .002) and being a newly founded municipality (b = .071, [beta] = .155, p = .031). Moreover, we found that coercive institutional pressure to implement accrual-based rules may become a potent force when a supreme audit institution has control and there is resource dependence on an international body.