Development of Estonian local government accounting: the stages of evolution during the years 1991–2013
Development of Estonian local government accounting: the stages of evolution during the years 1991–2013

Summary/Abstract: During recent decades Estonia has simultaneously experienced many economic, social and political changes. As a result of the environmental shifts, the country’s local government system has also under-gone both financial and management reform. All these changes have implications for the nature and practice of accounting and budgeting systems in local governments. The paper develops a framework for understanding the accounting changes in Estonian local government units, using an integrated theoretical framework including the phased approach developed by Bailey (1998), the PDCA cycle (Deming, 2000) treating accounting and budgeting issues within a continuous feedback loop management cycle, and the contingency approach developed by Lüder (1992, 2002) to explain the contingencies that have influenced the accounting reform in Estonian local governments. The focus is on the introduction of accrual-basis accounting and budgeting principles in the Estonian local government system and the factors which have influenced this process. The factors of the local government accounting reform are analysed using the example of Estonian municipalities during the four stages of the Estonian accounting reform: the intro-ductory, system-building, system improvement and integrated financial management stages.

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