TY - JOUR
T1 - Financial disclosure practices among Malaysian local authorities
T2 - a case study
AU - Teruki, Neilson Anak
AU - Nyamori, Robert Ochoki
AU - Ahmed, Kamran
N1 - Funding Information:
1. Basically, the councils operate based on their own Act, which is Local Government Act 1976 (Act 171). Besides, we do have several other laws such as The Street, Drainage and Building Act 1974 (Act 133); Town and Country Planning Act 1976 (Act 172) some other laws such as by-laws. These laws are created to help local council to run and operate their daily activities (Finance Director of Delta) 2. The general financial provisions are mainly explained by Act 171. This Act states that the local council must prepare their financial statements. However, the statement in the Act is very general. No detail requirement of the financial statements preparation and reporting are explained and mentioned in the act (Auditor of Beta) 1. The disclosure to the state authority is compulsory. It is provided in the Local Government Act 1976. For example, Section 60 (5) of Part VI states that “Acopy of the statements and accounts shall be forwarded to the State Authority which shall cause it to be laid on the table of the State Legislative Assembly and, in the case of the City of Kuala Lumpur, of the House of Representatives” […] Finance (Director of Omega) 2. State government is like our parents. Disclosure of financial information to the state authority means we want them to know our financial position and performance and we want them to know which councils are having financial difficulties. If we are having financial difficulties, we normally request a grant or other form of financial assistances from the State Government. If we want to request the grant, for example, development grant, it will consider our financial position and performance. If the financial position of the council is strong, normally no grant will be granted. If we have the financial difficulties, normally State Government helps us. That is why disclosure of the financial information to state authority is crucial (Finance Director of Alpha) 3. We only disclose to the Federal Government when they request them ( financial information). Normally, the request is made by Ministry of Housing and Local Government (MHLG). They normally request the information when they want to do the case study, to answer the question from Senate or National Hall and maybe for grant purposes. However, they normally request the information from the State Government, not directly from us (local council). We disclose our financial information to the state authority on monthly basis. Therefore, they (state authority) have all of our financial information. That is why they (MHLG) normally request the information from the state authority (Finance Director of Gamma) 1. In local council, we perform a lot of works and categories. So, to do all these jobs, we may have not enough staff and time. Therefore, from the administrative point of view, it stipulated in the Act 171 that the council needs to form the committees. These committees are chaired by the President and under him are the councillors. However, the councillors may sit on several other committees. One councillor may sit on three or four committees. The purpose of these committees is actually to expedite our work and decision-making. This means that we don’t have to bring all issues to Full Council Meeting (Finance Director of Delta) 2. We need first to get approval from the Finance Committee and the Mayor, who normally sit in the Finance Committee to disclose anything in our financial statements. Most of the decision regarding the disclosure of financial information are decided in this committee meeting […]. I must say most of the time the management and the Finance Committee do not have much problem on what we want to disclose. They are very co-operative as long as we disclose the information in line with the established procedures (Finance Director of Beta) 3. The numbers of councillors in Finance committee are twelve including the Mayor. There are a total of twenty five councillors in Beta City Council. Besides the Finance Committee, we also have other committees such as Infrastructure Committee, One Stop Centre Committee, Sustainability Development Committee, Tender Committee and another nine committees. Overall, we have a total of
Publisher Copyright:
© 2019, Emerald Publishing Limited.
PY - 2019/1/7
Y1 - 2019/1/7
N2 - Purpose: The purpose of this paper is to understand and explain the financial disclosure processes among Malaysian local authorities (MLAs). Design/methodology/approach: Employing semi-structured interviews, data were collected from 26 members in five case study organisations, and interpreted using Gibbins et al. (1990, 1992) framework of financial disclosure. Findings: The study finds that financial disclosure is influenced by a hierarchical structure consisting of accountants, the Financial Accounts Committee, the mayor and other managers. The decision to disclose or not disclose was influenced by how sensitive the issue was. External auditors and mediators influenced both the identification of issues, disclosure position and disclosure output. Though there are many laws governing financial accounting, MLAs opportunistically chose to apply the Federal Treasury Circular largely because the external auditors used it. Research limitations/implications: This study contributes to the literature by illuminating who makes disclosure decisions, what influences these decisions and how. The study reveals hitherto un-researched contextual factors that affect disclosure, namely, religion and external auditors and the opportunistic choice of which laws and regulations to apply in financial disclosure. Future studies might want to apply this approach in other contexts to see what we can learn from them. Originality/value: Using case studies in the study of financial disclosure provided valuable insights into the complex and multi-dimensional phenomenon of financial information disclosure. The application of Gibbins et al. (1990, 1992) framework in the public sector and in Malaysia is novel.
AB - Purpose: The purpose of this paper is to understand and explain the financial disclosure processes among Malaysian local authorities (MLAs). Design/methodology/approach: Employing semi-structured interviews, data were collected from 26 members in five case study organisations, and interpreted using Gibbins et al. (1990, 1992) framework of financial disclosure. Findings: The study finds that financial disclosure is influenced by a hierarchical structure consisting of accountants, the Financial Accounts Committee, the mayor and other managers. The decision to disclose or not disclose was influenced by how sensitive the issue was. External auditors and mediators influenced both the identification of issues, disclosure position and disclosure output. Though there are many laws governing financial accounting, MLAs opportunistically chose to apply the Federal Treasury Circular largely because the external auditors used it. Research limitations/implications: This study contributes to the literature by illuminating who makes disclosure decisions, what influences these decisions and how. The study reveals hitherto un-researched contextual factors that affect disclosure, namely, religion and external auditors and the opportunistic choice of which laws and regulations to apply in financial disclosure. Future studies might want to apply this approach in other contexts to see what we can learn from them. Originality/value: Using case studies in the study of financial disclosure provided valuable insights into the complex and multi-dimensional phenomenon of financial information disclosure. The application of Gibbins et al. (1990, 1992) framework in the public sector and in Malaysia is novel.
KW - Case study
KW - Financial disclosure
KW - Local government
KW - Malaysia
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U2 - 10.1108/IJPSM-05-2017-0138
DO - 10.1108/IJPSM-05-2017-0138
M3 - Article
AN - SCOPUS:85047974728
SN - 0951-3558
VL - 32
SP - 42
EP - 64
JO - International Journal of Public Sector Management
JF - International Journal of Public Sector Management
IS - 1
ER -