December 2010, Vol.6, No.12 (Serial No.67) Journal of Modern Accounting and Auditing, ISSN 1548-6583, USA 1 Accounting regulation and IPSAS implementation: Efforts of transition countries toward IPSAS compliance  Gorana Roje 1 , Davor Vašiček 2 , Vesna Vašiček 3 (1. The Institute of Economics, Zagreb, Trg J. F. Kennedy 7, Zagreb 10000, Croatia; 2. Faculty of Economics, University of Rijeka, Ivana Filipovića 4, Rijeka 51000, Croatia; 3. Faculty of Economics and Business, University of Zagreb, Trg J. F. Kennedy 6, Zagreb 10000, Croatia) Abstract: The need for high quality standards to enhance sound and consistent financial reporting and the fact that the inefficiency and ineffectiveness of public sector extended to a belief that public and private sectors did not have to be managed in fundamentally different ways, fostered a wide-ranging discussion about the harmonization of public sector accounting systems and their convergence towards the private sector financial reporting standards. This paper discusses the state and perspective of public sector accounting and financial reporting in transition countries. Precisely, this paper aims to examine the adequacy of governmental accounting and financial reporting model, reflecting the existing accounting regulation and financial reporting framework in Slovenia, Croatia and Bosnia and Herzegovina. The motivation for this paper emerges from international discussions about IPSASs development and adoption, and the fact that the topic is becoming more and more relevant as many countries are moving towards adopting full accrual accounting using IPSASs as their method of financial reporting. Our results show that the degree and dynamics of government accounting systems’ transformation in transition countries depends upon several specific factors which have to be taken into account when evaluating the systems and making comparison between government accounting system reforms in countries in the analysis. Thus, the study distinguishes certain similarities but also discrepancies regarding the status and possible further development of governmental accounting in countries examined. Key words: government accounting; financial reporting; budgeting; IPSASs; transition countries 1. Introduction Even though there has been controversy in the literature about whether the introduction of private sector management and accounting techniques into the public sector is appropriate, taking into account the specific non-for profit nature of general government sector, precisely a non-financial nature of public sector resources, the move to accruals in government financial reporting and budgeting, followed by the IPSAS adoption has gained  This paper is the result of the research funded by the Ministry of Science, Education and Sports, Croatia, as a part of two scientific projects: (1) No. 081-0811272-1274, titled Koncepti i metode financijskog računovodstva u javnom sektoru Republike Hrvatske (engl. The concepts and methods for public sector financial reporting in Croatia); (2) No. 067-0811272-1074, titled Perspektive primjene upravljačkog računovodstva u javnom sektoru Republike Hrvatske (engl. The perspectives of the managerial accounting implementation in Croatian public sector). Partially, this paper represents further development of the paper presented at the 12 th Biennial CIGAR Conference, 2009, that has not been published. Gorana Roje, research assistant, The Institute of Economics; research field: accounting. Davor Vašiček, Ph.D., assistant professor, Faculty of Economics, University of Rijeka; research field: accounting. Vesna Vašiček, Ph.D., full professor, Faculty of Economics and Business, University of Zagreb; research field: accounting.