Transforming Fiscal Governance: AI-Based Assessment of Accounting Standards for Transparency and Accountability in Public Finance

Rajeswaran Ayyadurai and R Padmavathy
Journal of Production and Industrial Engineering
Volume 2: Issue 2, December 2021, pp 81-92

Author's Information
Rajeswaran Ayyadurai1 
Corresponding Author
1Login Services, Coimbatore, India
rajeswaranayyadurai@arbpo.com

R Padmavathy2
2Anna University, Coimbatore

Research Article -- Peer Reviewed
Published online – 31 December 2021

Open Access article under Creative Commons License

Cite this article – Rajeswaran Ayyadurai and R Padmavathy, “Transforming Fiscal Governance: AI-Based Assessment of Accounting Standards for Transparency and Accountability in Public Finance”, Journal of Production and Industrial Engineering, RAME Publishers, vol. 2, issue 2, pp. 81-92, December 2021.
https://doi.org/10.26706/jpie.2.2.20211208

Abstract:
The imposition of debt, coupled with inefficient public financial management, subjected the ability of governments to manage their fiscal operations to global scrutiny for fiscal transparency and accountability. With almost ineffective standardization of fiscal accounting systems, inconsistencies in disclosure and diminished controls have permeated fiscal reporting. Previous studies have mostly neglected the practice of quantitatively determining the impacts of accounting reforms on fiscal performance and stakeholder perspectives following reforms. In order to address these issues, the paper implements a mixed-method approach that combines fiscal quantitative indicators with qualitative stakeholder insights to evaluate both the GFS reforms and the IPSAS adoption. A major contribution of this study is the construction of a Fiscal Health Score (FHS), a composite index combining Net Lending/Borrowing, Net Operating Balance, and Debt-to-GDP ratio, and the application of a Difference-in-Differences (DiD) framework in segregating the effects attributed to the reforms. The results reveal an improvement post-reform: Net Lending/Borrowing recorded 18.4% improvement on average, Net Operating Balance indicated a 12.9% increase on average, and FHS rose by 21% on average, showing better fiscal discipline. Qualitative feedback from 76 respondents confirmed increased accountability and transparency; however, some problems remain in the caseloads, such as limited training resistance on the local level. This integrated approach allows comparing fiscal reforms with a stronger and more empirical basis than prior approaches. By linking objective financial outcomes with subjective consideration, this study demonstrates the measurable benefits of standard accounting while putting in place meaningful considerations for refining policy and sustainable practices for public finance.
Index Terms:
Public Sector Accounting, Fiscal Health Score, GFS Reforms, Accountability, Financial Transparency.
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