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Finance, Accounting and Business Analysis 
Volume 6 Issue 2, 2024 

http://faba.bg/       
ISSN  2603-5324 

DOI: https://doi.org/10.37075/FABA.2024.2.03 

 

Evaluating the Reality and Prospects of IPSAS Implementation in Algeria 

 

Widad Benzine  
Department of Finance and Accounting, University Abdelhamid Mehri Constantine2, Constantine, Algeria  
 
 

Info Articles   Abstract 
 

History Article: 

Submitted 4 August 2024 

Revised 1 November 2024 

Accepted 9 November 2024 
 

 Purpose: This study aims to illuminate the current state of public sector 

accounting in Algeria and explore the prospects for transition to 

International Public Sector Accounting Standards (IPSAS) by 

investigating the potential advantages and challenges as critical factors 

affecting implementation. 

Design/Methodology/Approach: The study adopts quantitative 

approach. Data were collected through questionnaires from a sample of 

163 participants working in the financial and accounting departments of 

government departments across five provinces in eastern Algeria.  PLS-

SEM was employed to analyze the data and test the proposed model. 

Findings: The study revealed that international harmonization, 

structural and organizational transformation, and skills significantly 

impacted IPSAS implementation in Algeria. However, the findings 

showed that the effect of the accrual basis poses a challenge due to a skills 

gap. 

Practical Implications: This study provides important insights for 

officials, highlighting the need to strengthen the regulatory and legal 

framework for government accounting, develop employee skills through 

comprehensive training programs, and adopt a gradual implementation 

to ensure a smooth and successful transition to IPSAS. 

Originality/Value: This study provides an original and timely 

contribution to understanding the factors driving the successful 

implementation of IPSAS in Algeria. By analyzing the potential 

advantages and challenges, this study provides valuable practical, 

context-specific insights for officials and contributes to understanding the 

path of international accounting reforms. 

Paper Type:  Research Paper 
 

 

Keywords:  

IPSAS implementation,  

Accrual Basis,  

Governmental Accounting 

Reforms, Algeria  
 

 

JEL: M41, G38, H83.  

* Address Correspondence:   

E-mail: widad.benzine@univ-constantine2.dz  

 

 

  

http://faba.bg/
https://doi.org/10.37075/FABA.2024.2.03
mailto:widad.benzine@univ-constantine2.dz
https://orcid.org/0000-0002-8164-382X


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INTRODUCTION 

 

In recent years, many countries have increasingly adopted International Public Sector Accounting 

Standards (IPSAS), viewing this transformation not only as an accounting practice but also as a strategic 

policy that significantly affecting government performance. International organizations advocate the 

application of these standards because they enhance public sector reporting, improve financial management, 

and increase government professionalism (Polzer et al. 2021; Al-Kharabsheh 2021). IPSAS adoption is 

entirely voluntary, with some countries fully adopt the standards, while others adapted them to their context 

(Amiri and Hamza 2020; Christiaens et al. 2010). Accrual accounting has emerged as a pivotal element in 

public sector reforms, primarily led by developed countries, underscoring its role in enhancing transparency 

and accountability (Jones and Pendlebury 2010). Developing countries have also increased their interest in 

transitioning from cash accounting to the accrual basis of accounting to enhance the credibility of financial 

information and improve governance (Tawiah 2023; Alshujairi 2024; Miraj and Wang 2019).  

 Similarly, Algeria has taken a decisive step towards reforming its public sector accounting framework 

through two main pillars: enhancing budget transparency and improving public administration performance 

(Cheurfa 2022). The aim is to adopt IPSAS, which are expected to making better decisions, allocating 

resources, reducing corruption, and increasing coordination among various stakeholders (Boumediene and 

Benramdane 2024). However, this transformation faces challenges due to Algeria's specific economic and 

political context, characterized by using laws inspired by French regulations since independence. This places 

Algeria in a transitional phase that requires effective management of change.   

The implementation of IPSAS is a relatively recent topic in Algeria, and studies have begun to explore 

this new path. Bouabbana (2020) revealed that the project to modernize public accounting will achieve many 

economic benefits, but the pace of reforms is slow due to the lack of readiness in the Algerian environment. 

Acha and Ghouini (2020) noted that the cash accounting method used is not suitable for modern public 

finance management practices and concluded that Algeria faces challenges, such as poor training and a legal 

and technical gap in the public accounting system, impeding the IPSAS application. Khechaimia (2022) and 

Boudjellal (2024) indicated that these reforms are part of a new governance approach in the public sector, 

progressing towards adopting IPSAS, where the success or failure of this process is linked to effective change 

management measures. Bey (2022) asserts that the significant challenge to the success of this transformation 

hinges on Algeria's capacity to integrate into the international environment. 

These studies have provided important insights. However, the current state of the public sector 

remains interesting and deserves further research. Rather than analyzing new laws or soliciting general 

opinions, this study aims to illuminate the current landscape of public sector accounting and explore the 

prospects for Algeria’s transition to IPSAS by evaluating critical factors affecting implementation, 

categorized as advantages that facilitate and challenges that hinder the process. This research employs a 

quantitative approach, utilizing a survey of 163 public sector employees in eastern Algeria and analyzing the 

data with PLS-SEM.  

The paper contributes to provide a comprehensive understanding of the complexities involved in 

transitioning to IPSAS, which enriches international literature and offers valuable insights for policymakers 

and managers. 

The paper is structured as follows: Section 1 presents the theoretical foundations of IPSASs, examines 

the current status of public accounting in Algeria, and provides a literature review and the factors affecting 

IPSAS implementation. Section 2 outlines the research methodology and tools used. Section 3 presents the 

results and discussion, while the final section presents conclusion, implications, and limitations. 

 

LITERATURE REVIEW AND HYPOTHESES DEVELOPMENT 

 

Theoretical foundation of IPSASs 
The issuance of IPSASs traces back to the Public Sector Committee (PSC) of the International 

Federation of Accountants (IFAC), which later evolved into the International Public Sector Accounting 

Standards Board (IPSASB) (Polzer et al. 2021). IPSASB, as an independent board, aims to enhance global 

public financial management by elevating the quality and transparency of public sector financial reporting 

(IPSASB 2022).  

The standards developed in two phases: from 1996 to 2002, when the IPSASs follow International 

Accounting Standards/International Financial Reporting Standards (IASs/IFRS) with minor adjustments 

in terminology, definitions, and commentary (Polzer et al. 2021). Since 2003, the IPSASB has prioritized 

issues specific to the public sector, such as non-exchange transactions and budget implications on financial 

reporting (Chan 2006).  

The IPSASB issues accounting standards and recommended practice guidelines that promote 

applying the accrual basis. To support the accuracy and transparency of financial statements, the IPSASB 



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continuously updates these standards. IPSASs are designed to address the unique characteristics of public 

sector entities whose mission is to serve the public, primarily fund their activities through public resources, 

and do not aim to generate profits (IPSASB 2022). A conceptual framework supports applying IPSAS by 

defining the primary elements of financial statements and ensuring consistency in accounting practices. The 

framework comprises an integrated set of concepts and principles that clarify the objectives of general-

purpose financial reporting (GPFRs), which are primarily to provide information useful for accountability 

and decision-making. It specifies the qualitative characteristics of information that support achieving these 

objectives, the criteria for recognition of elements, the measurement bases for assets and liabilities, and the 

presentation of information in GPFRs (IPSASB 2023). The IPSASB's approach, through standards, 

guidance, and a conceptual framework, emphasizes enhancing the quality and comparability of financial 

information to meet user needs and promote transparency and accountability in the public sector (Kicová 

2017; IPSASB 2022).  

 

The current situation of the public accounting system in Algeria 

Algeria has repeatedly reformed its accounting system. In 1995, it adopted the “State Accounting 

Plan” project, which was quickly abandoned due to incompatibility with international practices. In 2005, it 

embarked on the “Modernization of Budget Systems Project” which aimed to develop public sector 

accounting through effective public expenditure management, cost analysis, and asset accounting to improve 

information quality and budgetary transparency (Kissi 2012; Khechaimia 2022). However, the 

implementation of the project faced problems in practice because the legal framework was not changed in 

parallel. 

 

Issuance of Organic Law 18-15 

Organic Law 18-15 was issued on September 2, 2018, replacing Law 84-17, the first budget law. The 

previous law used a means-based management approach, overlooking performance results. The budget 

lacked homogeneity, and its preparation method was not appropriate for strategic projects requiring multi-

year planning (Daddi-ddoun and Oudai 2013; Benkouider 2023). Conversely, the new law incorporates 

results-based management to direct public spending, bestows greater flexibility upon managers in 

reallocating funds, and restructures the budget to encompass a multi-year perspective (Fahas et al. 2022).  

 

Issuance of Law 23-07 of the rules of public accounting and financial management 

It was important to change the previous Law 90-10 because it used statistical records to record 

transactions and prepare government financial statements on a cash basis, and it collected information at 

the central level with the aim of monitoring flows and implementing the budget, and it did not evaluate 

assets (Cheurfa 2022). To overcome these limits, Law 23-07, issued on June 21, 2023, introduced significant 

reforms, including the adoption of three accounting types- budgetary, general, and cost accounting- and 

shifted towards a management style focused on goals and achieved results. The law mandated the 

preparation of financial statements recommended by IPSAS. Furthermore, Law 23-07 enhanced control 

mechanisms and emphasized the integration of information and communication technology in public 

accounting practices (Loi n° 23-07 2023).  

 

Advantages of implementing IPSAS 
The numerous advantages of IPSAS have encouraged widespread recognition and implementation 

by countries. The literature review suggests that transparency and accountability, accrual basis, and 

international harmonization are the main perceived advantages of these standards, which are important 

drivers for their implementation because they add value to public sector financial and reporting. 

 

Transparency and accountability  
Transparency and accountability are features that have always been associated with IPSAS. 

Transparency involves easily accessible information about government policies, budgeting, and accounting, 

enabling a clear understanding of government performance (Krah and Mertens 2023). Accountability, as 

described by Rodríguez, encompasses the responsibility of managers to report on resource utilization and 

the capacity of citizens to hold them accountable. Williams and Hussein (2019) emphasizes the inherent 

relationship between these concepts, as transparency, through its commitment to responsibility, fosters 

citizen participation and enhances accountability. Research supports the idea that implementing IPSAS 

enhances transparency and accountability. Ogbuagu and Onuora (2019) and Tawiah (2023) explained that 

adopting these standards in developing countries will improve the quality of financial reporting and increase 

transparency and accountability between government and citizens. Bolívar et al. (2015) highlighted how 

IPSAS accounting measurements enhance transparency and accountability by improving information 

quality, understandability, and timeliness. Accordingly, the study hypothesizes that greater awareness of the 



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importance of these features is a powerful driver of IPSAS implementation in Algeria.  

H1: Transparency and accountability have a significant impact on the implementation of IPSAS. 

 

Accrual Basis 
IPSAS encompasses both accrual basis standards and a cash-based standard. The cash-based 

standard, however, is not intended as a target, but is applied as a transitional step towards applying the 

accrual basis (IPSASB 2017). Cash-based accounting has shown its limitation, because it only recognizes 

transactions when cash is exchanged, which hindering the decision-making, and leading to inaccurate 

financial positions; such as because it records properties and inventories as expenses within a single financial 

year and does not account for provisions unless emergency liabilities arise (Ashoka and Aswathy 2020). 

Conversely, accrual accounting emerges as the best approach, because of its ability to describe the reality of 

government activities and determine their costs (Shehadeh 2022), as it recognizes revenues and expenses as 

they occur, regardless of the receipt or payment of money. By recognizing assets and liabilities, accrual 

accounting facilitates better management and control of government resources, and improves the reliability 

and comparability of financial reports (Narsaiah 2019; Saleh et al. 2021). This approach aids in waste 

reduction and combatting fraud and corruption, ultimately contributing to social and economic development 

(Correa Silva et al. 2022; Alshujairi 2024; PWC 2012). Consequently, this study hypothesizes that the 

benefits achieved by applying the accrual basis will be a strong motivation for implementing IPSAS.  

H2: Accrual basis has a significant impact on the implementation of IPSAS. 

 

International harmonization 
IPSAS plays a crucial role in achieving harmonization in government accounting practices, 

enhancing the state’s interaction with individuals, groups, and countries as partners within a global 

economic network (Amiri and Hamza 2020). Harmonization under IPSAS encompasses the convergence 

of accounting principles, rules, and methods, as well as the content of financial statements (Kicová 2017), 

which helps to reduce differences, eliminate additional reporting obligations, and ultimately foster an 

environment conducive to attracting foreign investment (Narsaiah 2019; ACCA 2017). 

 Furthermore, the adoption of IPSAS aligns with the recommendations of international organizations 

and countries that grant financial aid and loans by adopting best practices in financial reporting and 

promoting accountability and transparency (Amiri and Hamza 2020). Abu Haija et al. (2021) confirmed that 

countries adopt IPSAS to enhance their economies, gain global recognition, and attract capital investments. 

Salia and Atuilik (2018) emphasized the positive impact of IPSAS on financial reporting quality, which in 

turn increases opportunities for foreign aid and foreign direct investment, supporting national development 

goals. Implementing IPSAS will establish a common global language and confer international legitimacy 

(Bouabbana 2020; Correa Silva et al. 2022). 

The study assumes that implementing IPSAS will support the harmonization of government 

accounting in Algeria with international practices, leading to more qualitative and comparable financial 

statements.  

H3: International harmonization has a significant impact on the implementation of IPSAS. 

 

Challenges of implementing IPSAS 

IPSAS implementation poses several challenges as it demands comprehensive adjustments, 

encompassing legal and structural changes, technical capabilities, investment in infrastructure, 

implementation strategies, and associated costs (Ahmad and Nasseredine 2019). 

 

Cost  
The promised benefits of IPSAS do not justify the high costs associated with their implementing 

(Ahmad and Nasseredine 2019). International organizations recognize the significant financial burdens that 

accompany adopting IPSAS, which includes developing new information systems and extensive training 

programs on accrual accounting practices, as well as the costs of getting help from external consultants, and 

translation expenses (PWC 2012; ACCA 2017; IPSASB 2014). Schmidthuber et al. (2020)  found that high 

costs as one of the major barriers to implementing IPSAS. PWC (2014) emphasized that governments with 

lower maturity in accounting and IT systems, such as those using cash-based accounting, will need to invest 

in modernizing their system, facing higher costs relative to GDP compared to governments with more 

mature systems. Similarly, Salia and Atuilik (2018) noted that the cost of transitioning to the standards in 

Liberia poses a threat to the realization of their potential benefits of their implementationIn Ghana,  

Agyemang (2017) found that research costs, training, acquisition of software and hardware, and IPSAS 

maintenance significantly affect the adoption of these standards. Whitefield and Savvas (2016) reported that 

high costs negatively affected the adoption of standards in Kenya. Redmayne et al. (2019) focused on audit 

costs and found that they have increased after the IPSAS were adopted in New Zealand.   



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This study assumes that implementing IPSAS necessitates substantial investments in human 

resources development, infrastructure preparation, and organizational resources. These costs are considered 

a major challenge that affects implementing the standards in Algeria. 

 H4: Cost has a significant impact on the implementation of IPSAS. 

 

Skills 

Accrual accounting requires high skills because it is more complex compared to cash accounting (Haji 

Din and El Haron 2023; Shehadeh 2022), so the successful implementation of IPSAS is linked to the 

presence of qualified individuals with the necessary skills and knowledge. Skills encompass a range of 

factors, including knowledge, qualifications, and training, which together contribute to determining the 

competence and capabilities of individuals. According to Tanjeh (2016), the greater awareness and 

knowledge lead to a more profound understanding of IPSAS, facilitating its adoption. As for training, it 

ensures a better scenario for adopting standards because it meets the needs of employees, as it helps identify 

the new system, share information, and accommodate changes (Shehadeh 2022). Several studies highlight 

the importance of skills in IPSAS implementation. For example, Wang and Miraj (2018) found that South 

Asian countries suffer from a significant shortage of skills and capabilities, which has caused slow 

implementation of standards. Al-otoom and Alrabba (2022) concluded that employees' lack of self-efficacy 

led to resistance in Jordan. 

This study assumes that implementing IPSAS is complex and requires more skills than those applied 

in current accounting, which will be a major challenge to implementation. 

H5: Skills have a significant impact on the implementation of IPSAS. 

 

Structural and organizational transformation 

Implementing IPSAS requires changing local regulations and laws to provide the appropriate legal 

and regulatory support in line with international requirements. The interpretation of public sector reform by 

governments can range from minimal legislative adjustments to substantial transformations of accounting 

practices. Roje et al. (2010) noted that countries with developed national accounting systems have made 

significant progress in implementing accrual accounting, which has supported their compliance with 

standards and harmonization of their accounting practices, while those using cash-based or modified cash-

based systems experience slower transitions. PWC (2014) further suggests that national legislation plays a 

crucial role in driving accounting maturity, which countries with mature accounting systems require fewer 

structural changes to implement IPSAS, whereas those with lower maturity face substantial legislative and 

organizational obstacles, requiring significant reforms to meet IPSAS standards practices. This process is 

complex and time-consuming, often spanning several years (ACCA 2017). Studies such as those by 

Aboukhadeer et al. (2023) on Libya and Salia and Atuilik (2018) on Liberia underscore that conflicts 

between national legal frameworks and IPSAS requirements present significant obstacles to successful 

adoption. 

Brusca et al. (2016) and Zibaghafa and Okpolosa (2024) argue that updating accounting systems and 

infrastructure is essential because traditional government sector accounting technologies and structures are 

no longer suitable. This development will facilitate the implementation of standards and improve accounting 

practices and the quality of financial statements (Haji Din and El Haron 2023; Maruf 2024). Abu Haija et 

al. (2021) and Whitefield and Savvas (2016) support the idea that investment in technology is a potent 

motivator to implement IPSAS.  

This study recognizes the critical role of legal reform and infrastructure development in the transition 

to IPSAS in Algeria, highlighting them as significant challenges to successful implementation. 

H6: Structural and organizational transformation has a significant impact on the implementation of 

IPSAS. 

 

 

RESEARCH METHODOLOGY 

 

Instrument construction 
The questionnaire is the most appropriate tool to study this topic. It enables the collection of data in 

a coherent and internally consistent manner (Roopa and Rani 2012). Closed-ended questions were used 

because they have greater uniformity in answers, reduce errors in understanding questions and variation in 

answers, and allow comparison between respondents (Auriacombe 2010; Meadows 2003). The 

questionnaire, consists of seven variables, was formulated based on relevant studies, with some modified to 

suit the current situation in Algeria, and then it was presented to arbitration for revision (Appendix1). A 5-

point Likert scale was used as a tool to measure and understand the attitudes of respondents (Tanujaya et 

al. 2022).  



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Data collection and sample description 

The research targeted employees of financial and accounting departments in government 

administrations in eastern Algeria, specifically in the provinces of Annaba, Skikda, El-Tarf, Guelma, and 

Tebessa, according to the effort and time of the researcher. These individuals were intentionally selected 

because they are concerned with public accounting implementation and have characteristics and knowledge 

that align with the research objectives. 163 questionnaires were collected as the employees were very 
discreet. The sample included 13 accountants, 31 financial managers, 60 administrators, and 59 other 

positions such as administrative assistant or engineer. 33.1% of them have a bachelor’s degree, 42.3% have 

a master’s degree, and 24.5% have other non-university degrees or mostly university degrees in other 

specializations such as statistics and computer science. 71% of respondents have more than 16 years of 

professional experience, while 77% of them have 11 to 15 years of experience, and the rest have less than 5 

years of experience. 

 

RESULTS 

 

Partial least structural equation modeling (PLS-SEM) was used; which is considered a predictive 

analysis tool that helps forecast causal relationships for designed structural models (Sarstedt et al. 2020; 

Purwanto and Sudargini 2021). The data were analyzed in two stages according to several procedures 

defined by Hair et al. (2021). The first stage was to examine the quality of the reflective measurement model, 

and in the second stage, the structural model was evaluated. 

 

Assessment of Measurement Model 

Indicator Reliability  

It is important that the measurement model is satisfactory so that the structural model is properly 

evaluated (Wong 2019). Examination of indicator loadings revealed that some of them were below the 

recommended threshold of 0.708, so the items were removed. According to Hair et al. (2017), the basic rule 

is that the latent variable contains at least 4 indicators with a factor loading greater than 0.7, as this allows 

explaining a significant part of the variance of the indicators. Removing the mentioned items achieved this 

rule in the final model as shown in following figure: 

 

 
Source: Data processed (2024) 

Figure 1. Measurement Model 

 

Internal consistency reliability 

Internal consistency reliability is an important property that shows the consistency of responses that 

measure the same construct (Ursachi et al. 2015; Collier 2020). Cronbach's alpha values, as shown in Table 

1, exceeded the recommended value of 0.7, indicating an ideal level of reliability (Souza et al.2017). 

Researchers also advocate reporting composite reliability because it is more accurate and provides higher 



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reliability estimates (Garson 2016; Hair et al. 2020). The results in Table 1 show that both the composite 

reliability values “rhoc” and the exact reliability coefficient “rhoA” were greater than 0.70, which enhances 

the strength of the reliability of the measures used. 

 

Convergent Validity 
Convergent validity, which reflects the extent to which indicators measure the same trait are related 

(Byrne 2016), was assessed through the average variance extracted (AVE). As shown in Table 1, all AVE 

values exceeded 0.5, indicating that constructs explain over half of the variance of their indicators (Hair et 

al. 2017). This finding is considered strong evidence for the convergent validity of the measurement model.   

 

Table 1. Reliability estimates 

Variables Cronbach's alpha rhoA rhoC AVE 

ACC  0.794 0.838 0.861 0.609 

HRM  0.859 0.867 0.899 0.640 

COS  0.852 0.859 0.900 0.693 

IMP  0.867 0.873 0.900 0.601 

SKL  0.819 0.821 0.880 0.647 

STR  0.823 0.837 0.882 0.653 

TRN  0.833 0.835 0.889 0.666 

Source: Data processed (2024) 

 

Discriminant validity 
Discriminant validity refers to the extent to which items relate to each other in a way that distinguishes 

each construct from other constructs (Zaiţ and Bertea 2011). The Fornell-Larcker criterion was used, 

comparing the square root of the AVE of each construct with the squared correlation between the constructs. 

The results in Table 2 show that the square root values of AVE for each construct were the highest, providing 

evidence that the constructs are distinct and supporting discriminant validity. 

 

Table 2. Fornell-Larcker criterion 

Variables ACC  HRM  COS  IMP  SKL  STR  TRN  

ACC  0.780  
      

HRM  0.171  0.800  
     

COS  0.371  0.266  0.832  
    

IMP  0.201  0.365  0.360  0.775  
   

SKL  0.661  0.269  0.477  0.474  0.804  
  

STR  0.390  0.348  0.336  0.392  0.466  0.808  
 

TRN  0.203  0.451  0.466  0.360  0.363  0.355  0.816  

Source: Data processed (2024) 

 

Another measure recommended as a better alternative is the heterotrait-monotrait ratio (HTMT), which 

examines the correlation between indicators across constructs compared to the correlations within each 

construct (Collier 2020). The results in Table 3 show that all HTMT values did not exceed the threshold of 

0.85 (Henseler et al. 2015), further confirming the discriminant validity of the measurement model.  

 

Table 3. Heterotrait-monotrait Ratio 

Variables ACC  HRM  COS  IMP  SKL  STR  

HRM  0.202  
     

COS  0.446  0.311  
    

IMP  0.220  0.415  0.408  
   

SKL  0.821  0.308  0.572  0.546  
  

STR  0.490  0.420  0.410  0.454  0.575  
 

TRN  0.256  0.530  0.563  0.415  0.448  0.442  

Source: Data processed (2024) 

 

Good results obtained regarding internal consistency reliability, convergent validity, and discriminant 

validity are considered indicator of the quality of the measurement model and construct validity, allowing 

the transition to structural model evaluation. 

 



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Evaluation of the structural model 
The structural model was evaluated to estimate the relationships established through a set of steps. 

First, it was important to examine linear relationships between constructs to identify potential multi-

collinearity problems; which result from strong correlations between independent variables, which 

subsequently affects the reliability of test results (Garson 2016). The variance inflation factor (VIF) was used 

to evaluate these relationships. All VIF results, as shown in Table 4, were below the required threshold of 3 

(Hair et al. 2021), suggesting that multi-collinearity is not a critical issue. 

The second step was to evaluate the significance and importance of the path coefficients. 

Bootstrapping analysis was performed with 10,000 subsamples to estimate the weights of the indicators. 

Table 4 shows the path coefficients and their corresponding t-values at the 5% significance level.  

The results confirm that international harmonization, skills, and structural and organizational 

transformation have a significant positive impact on the implementation of IPSAS, while the accrual basis 

has a significant negative impact on the implementation of the standards. These findings support the 

acceptance of hypotheses H1, H2, H4, and H5, respectively. However, cost, accountability and transparency 

were not statistically significant, leading to rejection hypotheses H3 and H6.  

 

Table 4. Hypotheses results 

Hypothesis: Path  VIF Path coefficient t-values P values Decision 

H1:  ACC -> IMP 1.835  -0.227 2.880 0.004 Supported 

H2: HRM -> IMP 1.325  0.175 2.313 0.021 Supported 

H3:  COS -> IMP 1.508  0.111 1.318 0.187 Not Supported 

H4:  SKL -> IMP 2.177  0.426 4.335 0.000 Supported 

H5:  STR -> IMP 1.430  0.161 2.172 0.030 Supported 

H6:  TRN -> IMP 1.556  0.064 0.710 0.478 Not Supported 

Source: Data processed (2024) 

 

The next step was to evaluate the explanatory power and predictive power of the model using several 

measures. First, the coefficient of determination R2 was calculated to evaluate the effects of the independent 

variables on the dependent variable (Al-Marsomi and Al-Zwainy 2023). According to Hair et al. (2021), the 

R2 values of 0.75, 0.5, and 0.25 are respectively great, moderate, and weak. Alternatively, Chin (1998) 

suggests R2 values of 0.67, 0.33, and 0.19 are strong, moderate, and weak, respectively. The obtained R2 

value of 0.346, shown in Table 5, indicates that the explanatory power of the model is moderate.  
To further evaluate the predictive ability of the model, the effect size f2 was also calculated. According 

to the established standards, values of 0.02, 0.15, and 0.35 indicate a small, medium, and large effect size, 

respectively (Hair et al. 2020). The results in Table 5 show that the accrual basis, international compatibility, 

and structural and organizational transformation have a small effect size, while skills demonstrate an effect 

size approaching the average. 

The third measure was Q² assessing the predictive relevance of the model (Janadari et al. 2016). The 

procedure for assessing out-of-sample prediction (PLSpredict) was conducted with ten repetitions and k= 10 

folds. According to Hair et al. (2020), Q² values of 0.25 and 0.50 are moderate and large, respectively, so the 

obtained Q² value of 0.291, presented in Table 5, suggests moderate predictive importance. 

 

Table 5. Explanatory power evaluation 

Path R square f square Q square 

ACC -> IMP  0.346 0.043 0.291 

HRM -> IMP 0.035 

COS -> IMP 0.012 

SKL -> IMP 0.127 

STR -> IMP 0.028 

TRN -> IMP 0.004 

Source: Data processed (2024) 

 

The mean absolute error (MAE) and the root mean squared error (RMSE) obtained with the same 

procedure also represent important prediction statistics. The lower values for these statistics compared to the 

naïve LM criterion indicate a good indicator (Hair et al. 2021). The results, presented in Table 6, demonstrate 

that all indicators meet the criterion, suggesting that the model has high predictive ability. 
  



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Table 6. Predictive power evaluation 

Items PLS-SEM_RMSE PLS-SEM_MAE LM_RMSE LM_MAE 

IMP1  0.600 0.484 0.662 0.523 

IMP2  0.599 0.484 0.621 0.488 

IMP3  0.665 0.537 0.712 0.555 

IMP4  0.594 0.479 0.638 0.511 

IMP5  0.573 0.474 0.622 0.510 

IMP6  0.537 0.424 0.565 0.430 

Source: Data processed (2024)  

 

DISCUSSION 
 

This study highlights advantages and challenges as latent variables affecting IPSAS implementation 

in the Algerian context. Model analysis using PLS-SEM revealed that although transparency and 

accountability are recognized benefits associated with IPSAS, it had no impact on implementation (β=0.064, 

P=0.478), which is contrary to similar studies conducted in Iraq (AL-Quraishi and Boumediene 2023) and 

Jordan (Al-Kharabsheh 2021). A likely explanation for this result is that transparency and accountability do 

not constitute a strong motivation for implementing standards, as they may be overshadowed by other 

political, economic, and cultural factors that are more important in the Algerian context. For example, 

according to Brusca et al. (2013), political support backed by laws was a major factor in accelerating the 

adoption of IPSAS-aligned standards in Spain. According to Ahmad and Nasseredine (2019), Alshujairi 

(2024), and Babatunde (2017), the financial burden constitutes the greatest obstacle to implementing IPSAS 

in developing countries. Correa Silva et al. (2022) found that national culture and dominant ideology play a 

crucial role in implementing standards. Therefore, this result reflects the local context in which the study 

was conducted and testing of the hypotheses has already proven that there are other more influential factors 

that make it superior to accountability and transparency. 

The study found a negative impact of the accrual basis on IPSAS implementation (β=-0.227, 

P=0.004). This result was unexpected because the accrual basis is an important feature associated with the 

standards. The appropriate explanation for this relationship is that the study was conducted early in the 

transition to IPSAS. During this period, the budget was modified into a single document as the first step 

towards change. However, Algeria's current public accounting system is still subject to the code-law system, 

applies the cash basis, and works according to the commitments-based budget as a system of parliamentary 

appropriations (Brusca et al. 2013). Therefore, negative perceptions are likely due to the lack of experience 

and knowledge necessary to apply accrual accounting. Gkouma and Filos (2022) highlight that 

implementing the transition to IPSAS for the first time in Greece required a deep understanding of the 

principles and practices of the standards. Saleh et al. (2021) also confirms that the lack of specialized 

employees in finance and accounting impedes the implementation of standards because the change in 

accounting techniques from simple cash accounting to accrual basis requires specific skills. This aligns with 

some observations about the study sample, as some participants possessed specializations in fields such as 

automation and statistics, or had lower educational levels than required, as their field experiences alone will 

negatively affect the understanding of accrual accounting. 

International harmonization has a significant impact on IPSAS implementation (β= 0.175, P=0.021). 

This result aligns with previous research that has confirmed the harmonization of accounting practices and 

financial statements as one of the main reasons for IPSAS implementation, ultimately aiming to enhance 

comparability across different levels of government (Brusca et al. 2013; Christiaens et al. 2015; Schmidthuber 

et al. 2020; Ben Amor and Damak Ayadi 2019). In Algeria, implementing IPSAS represents the adoption 

of a unified global language for government accounting, fostering understanding and trust with international 

partners and organizations. This harmonization will facilitate integration into the global economy by 

streamlining cross-border transactions and attracting investors. Moreover, IPSAS implementation will 

improve financial management practices and ensure adherence to international disclosure requirements. 

Boumediene and Benramdane (2024) assert that implementing IPSAS in Algeria will legitimize the 

government's financial operations, aligning them with international practices. Since international 

harmonization implicitly improves accountability and transparency, this supports the results of the first 

hypothesis that its impact has overshadowed the impact of accountability and transparency.  

Cost does not significantly impact on the implementation of IPSAS (β= 0.111, P=0.187). This result 

diverges from several studies (Alshujairi 2024; Babatunde 2017; Ahmad and Nasseredine 2019), which 

found that costs are one of the main obstacles facing the adoption of standards. One possible reason for this 

result is that the IPSAS implementation process follows a gradual approach (Mazhambe 2021), allowing for 

phased transformation that takes into account capabilities and resources, thereby managing costs in phases. 



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Although implementing IPSAS is associated with financial burdens, these are largely one-off costs spread 

across the project’s duration and ultimately outweighed by long-term benefits that are expected to be 

significant PWC (2014). Diniz et al. (2015) found that understanding that the benefits of IPSAS are higher 

than the costs contributes to the implementation of the standards. Additionally, this result may suggest that 

government support, driven by Algeria's political will, has a crucial role in implementing IPSAS, as the state 

provides the necessary funding to cover the transfer burden, which reduces employees' perceptions of costs. 

This finding is clearly related to the local context, where costs are still unclear in the initial phase of IPSAS 

implementation. 

The study indicates that skills have the most significant impact on the implementation of IPSAS (β= 

0.426, P= 0.000). This skills gap is a common issue in many countries. For instance, (Alshujairi 2024) found 

that Iraq suffers from a lack of qualified accountants and trained human resources to implement IPSAS. 

Similarly, Ahmad and Nasseredine (2019) revealed that employees in Lebanon face practical difficulties in 

implementing the standards. The successful implementation of IPSAS relies heavily on the requisite skills 

and knowledge. In Algeria, the great challenge will be transforming the mentality of employees who have 

been accustomed throughout their careers to implementing balance sheet tasks. These employees will need 

to develop their financial and accounting knowledge to understand standards, work on an accrual basis, and 

evaluate assets. Takarli and Ghrissi (2024) assert that the changes associated with the application of the 

accrual basis in Algeria will challenge established employee. This result also suggests the difficulty of 

integrating employees with lower levels of education or irrelevant diplomas to understand the rules of accrual 

accounting, as this challenge was highlighted in the result of the second hypothesis. 

Structural and organizational transformation has a significant impact on IPSAS implementation 

(β=0.161, P=0.030), which highlights the critical role of laws and infrastructure in facilitating the 

implementation of these standards in Algeria. Gkouma and Filos (2022) points out that the implementation 

of IPSAS requires legislative reforms to integrate it into state law. Similarly, Boumediene and Benramdane 

(2024) emphasized that the application of IPSAS in Algeria requires the preparation of political and legal 

factors. The recent legislative reforms in Algeria are a first step in encouraging the adoption of IPSAS 

(Boudjellal 2024). The regulatory framework for implementing the standards remains incomplete, requiring 

further guidelines and practical rules. Moreover, the results of this study support Zibaghafa and Okpolosa 

(2024) and Ademola et al. (2020) studies that confirmed that infrastructure and technology are important 

factors in meeting the requirements of IPSAS. 

 

CONCLUSION 
 

This study examined the reality and prospects of implementing IPSAS in Algeria, highlighting the 

significant factors affecting it. The findings underscore the significant roles of skill development, legislative 

and infrastructural improvements, and enhanced international harmonization in driving successful IPSAS 

implementation. Interestingly, the study revealed other unexpected findings that were traditionally 

considered crucial for implementation. The lack of a significant impact from cost considerations, 

transparency and accountability, coupled with the negative impact of the accrual basis, highlights the 

importance of considering the environmental differences and the stage of implementation.  

To the best of our knowledge, this paper is the first to identify and model the relationships between 

key factors affecting IPSAS implementation in Algeria. This paper contributes to the theoretical discourse 

on public sector reforms and the evolution of government accounting, as the findings provide an informed 

understanding of the potential factors impacting IPSAS implementation and illustrate their role in achieving 

international accounting convergence. 

The findings present important practical implications. The study underscores the importance of 

structural and organizational reforms to facilitate IPSAS implementation. Specifically, strengthening the 

regulatory framework of public accounting is crucial. Achieving this will involve introducing laws and 

regulations that support Organic Law 18-15 and Law 23-07, in alignment with the principles of the 

standards. Equally important is enhancing the Accounting Board's role as an internal body including 

specialists and experts, to define the IPSAS implementation roadmap, monitor the process, and address 

challenges facing it. Furthermore, the findings indicate that the transition to accrual accounting, despite its 

advantages, is complex and requires the development of accounting knowledge to move away from 

traditional cash-based practices, and underscores the need to develop employee capabilities. These 

implications shed light on the importance of supporting educational curricula by teaching IPSAS. Algeria 

has recently taken this step partially at some university levels, but a broader application is necessary. Finally, 

these practical insights underscore the value of a phased approach to change management, which provides 

time to adapt to new systems and face challenges. To explore potential implementation barriers, a pilot 

program applying IPSAS within a specific sector would be beneficial. The significance of these findings 

extends beyond the local context of Algeria, as they provide valuable strategic insights for countries with 



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similar circumstances. 

This research presents limitations that open avenues for future discussions. Future research could 

expand its scope by including other additional institutional, organizational, and individual factors. 

Furthermore, it would be beneficial for subsequent research to be conducted across different stages, such as 

pre-implementation and post-implementation periods. Moreover, the study' focus on a few provinces 

underscores the need for future research to use a larger, more representative sample. 

 

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Appendix 1. Questionnaire 

Research variables and measurement items References 

Implementation 

of IPSAS 

 

IMP1 

 

- Implementation of IPSAS is one of the priorities of the 

Algerian government. 

Whitefield 

and Savvas 

(2016) 

 
Abu Haija et 

al. (2021) 

 

IMP2 

 

- There is a clear political direction for implementing 

IPSAS. 

IMP3 

 

- The state is making efforts to provide the necessary 

support to implement IPSAS. 

IMP4 

 

- The government is undertaking important legal reforms to 

move towards implementing IPSAS. 

IMP5 

 

- The government is adopting a clear roadmap to move 

towards full accreditation of IPSAS. 

IMP6 - Our administration applies the laws established by the 

country in order to implement IPSAS. 

Transparency 

and 

accountability 

 

TRN1 

 

 

- IPSAS implementation improves the quality of financial 

information and supports transparency in government 

financial practices. 

Alshujairi 

(2024) 

 

Al-Kharabsheh 

(2021) 

 

Christiaens et 

al. (2010) 

TRN2 

 

 

- IPSAS provides a suitable measurement basis for financial 

reporting which improves government financial 

transparency. 

TRN3 

 

 

- IPSAS raises the level of disclosure and comparability of 

information, which increases the transparency of 

government financial reports. 

TRN4 

 

- IPSAS improves accountability for public sector 

performance. 

TRN5 - IPSAS improves external oversight and accountability. 

 

TRN6 

 

-IPSAS promotes information transparency and 

government accountability to citizens and the general 

public. 

Accrual basis 

 

ACC1 

 

- Implementing IPSAS contributes to the strong adoption of 

the accrual basis in public sector accounting. 

Shehadeh 

(2022) 

 

Al-Kharabsheh 

(2021) 

 

Alshujairi 

(2024) 

 

ACC2 

 

 

- Accrual accounting is more effective than cash accounting 

in giving reliable information about the financial position 

and performance of the government. 

ACC3 

 

- Accrual basis enhances the management of expenses and 

receivables. 

ACC4 

 

- The accrual basis is considered more useful for managing 

assets and liabilities. 

ACC5 

 

- The accrual basis provides financial information to 

monitor performance and public funds against corruption. 

ACC6 - Implementing the accrual basis improves the quality of 

financial reports. 

International 

harmonization 

 

HRM1 

 

-IPSAS implementation achieves international accounting 

harmonization for government agencies. 

Alshujairi 

(2024) 

 

Al-Kharabsheh 

(2021) 

 

Salia and 

Atuilik (2018) 

 

Ademola et 

al. (2020) 

 

HRM2 

 

 

-IPSAS implementation facilitates the consolidation of 

financial statements better than the current accounting 

system. 

HRM3 

 

- IPSAS implementation ensures that financial reporting is 

consistent and globally comparable. 

HRM4 

 

 

- IPSAS implementation helps align with the requirements 

of international organizations and development aid 

providers. 

HRM5 

 

- IPSAS implementation enhances the inflow of foreign 

direct investment. 

HRM6 - IPSAS implementation facilitates the flow of foreign aid. 

Cost 

 

COS1 - IPSAS implementation is associated with high costs. Ahmad and 

Nasseredine 

(2019) 
COS2 

 

- Seminars and training courses for IPSAS implementation 

are expensive. 



Widad Benzine / Finance, Accounting and Business Analysis, Volume 6, Issue 2, 2024 

135 

 

COS3 

 

- The hardware and software required for IPSAS 

implementation involve significant expenses. 

 

Whitefield 

and Savvas 

(2016) 

 

Agyemang 

(2017) 

COS4 

 

- Replacing of previous accounting packages incurs high 

costs. 

COS5 - IPSAS maintenance costs are high. 

COS6 - Estimating the overall cost of IPSAS implementation is 

difficult. 

Skills 

 

SKL1 

 

- IPSAS implementation requires a high level of specific 

knowledge and skills. 

Agyemang 

(2017) 

 

Miraj and 

Wang (2019) 

 

Abu Haija et 

al. (2021) 

 

SKL2 

 

- There is little general knowledge of IPSAS among 

employees. 

SKL3 

 

- There is a low level of awareness of the importance of 

IPSAS. 

SKL4 

 

- Training on IPSAS is necessary to enable employees to 

understand it. 

SKL5 

 

- The current skills of public sector employees are 

insufficient to implement IPSAS. 

SKL6 - Training courses available to employees regarding IPSAS 

implementation are insufficient. 

Structural and 

organizational 

transformation 

 

STR1 

 

- IPSAS implementation requires changing legislation and 

regulations. 

Ahmad and 

Nasseredine 

(2019) 

 

Abu Haija et 

al. (2021) 

 

STR2 

 

- Current local legislation is not sufficient for implementing 

IPSAS. 

STR3 

 

 

-IPSAS implementation requires modifying accounting 

records and practices and modernizing the public 

accounting system. 

STR4 

 

- IPSAS implementation requires preparing the 

infrastructure and having integrated ICT systems. 

STR5 

 

-Current hardware and software are insufficient to 

implement IPSAS. 

STR6 -Government entities lack sufficient internal and external 

networks to facilitate the implementation of IPSAS. 

 

 


