Digital transformation and the accounting for intangible assets in the public sector

Jens Heiling

Journal of Public Budgeting, Accounting & Financial Management, 2025, vol. 38, issue 1, 134-155

Abstract: Purpose This paper aims to examine the accounting and financial reporting treatment of intangible assets under International Public Sector Accounting Standards (IPSAS) in light of the digital transformation that takes place in the public sector.Design/methodology/approach This paper presents an empirical analysis of financial reporting practices for intangible assets, focusing on selected public sector entities.Findings The paper identifies challenges in the accounting for agile software development, for cloud computing as well as artificial intelligence (AI) systems and assesses whether the principles in IPSAS 31, Intangible Assets are sufficient to address the identified challenges. The paper concludes with a discussion of the findings and provides some recommendations not only for the IPSAS Board (IPSASB) but also for other accounting standard setters.Research limitations/implications Due to the limited number of entities subject to the empirical part of the paper, the study’s findings are subject to limitations regarding generalizability. This paper addresses only a subset of the current accounting issues related to the digital transformation of public sector entities.Practical implications The study enhances the understanding of financial reporting for intangible assets by public sector entities in the digital age and offers insights that are of interest to accounting standard setters both in the public and the private sector.Originality/value The digital transformation of public sector entities presents significant challenges for the accounting profession. A key contribution of this paper is to highlight some of the reporting and accounting issues currently under discussion, offering insights that may guide accounting standard setters in identifying areas where future guidance is needed.

Keywords: Digitalization; Financial reporting; Intangible assets; International organizations; IPSAS 31; Local governments; National governments (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jpbafm:jpbafm-09-2024-0177

DOI: 10.1108/JPBAFM-09-2024-0177

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