The impact of Accrual Accounting implementation on quality of financial information in public entities : a case of The South African Social Security Agency, North West Regional Office

Abstract

Purpose of the study - The purpose of this study was to establish the impact of accrual accounting on the quality of financial information within the public sector. The focus of the study was the South African Social Security Agency, North West Province, South Africa responsible for administrative functions of the social assistance grants. The Agency is an extension of the Department of Social Development in the Republic. Problem statement - Upon its inception, the Agency was classified as a Schedule 3A entity and consistent with legislation, required to report its financial affairs and prepare financial statements under the Generally Recognised Accounting Practice framework of accrual basis. The legislative requirement was therefore contravened for two consecutive financial years post-inception of the Agency. This was not in accordance with Section 55(1)(b) of the Public Financial Management Act, requiring migration from the legacy modified cash basis to accrual basis of financial accounting reporting. Non-compliance to the financial accounting framework result in financial statements not being credible and qualitative. Research methods - A quantitative research approach was used in conducting the study, a close-ended questionnaire used to collect data. Qualitative and quantitative approaches to enquiry differ extremely win terms of data analysis, with the latter requiring reducing a phenomena to numerical values for purposes of statistical analysis and the former relying more on data collection through naturalistic verbal reports. The Statistical Package for the Social Sciences (SPSS) was used to analyse quantitative data Cronbach's alpha for reliability coefficient. Results - The results revealed that accrual accounting was developed to ensure continuous enhancement of completeness and qualitative financial information. Poor financial