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From the analysis of the interview data ‘Confidence’ emerged as a major theme in the diffusion of accrual accounting standards throughout Local Government. The participants commented that learning and education, combined with a product champion would give them the confidence to ensure the quick adoption of the accrual basis accounting standards. The majority of Local Government departments experienced a lack of knowledgeable in-house personnel which produced difficulties in accessing and gaining the necessary information and education. The data derived from the questionnaire reveals how respondents at Local Government level become aware of new accounting practice including training and education to gain technical knowledge about new accounting practice from CFOs’ perspective.

7.5.1 Diffusion of awareness about accrual basis accounting

The awareness of a new accounting practice could motivate potential adopters to seek further information and learning opportunities in order to improve their confidence regarding the new practice. The participants were asked whether they had the opportunity to participate in the development of the innovation in order to become familiar with the new accounting practice. The respondents commented that Local Government participants had various levels of participation ranging from an opportunity to participate in the innovation process to ‘active participation’ and a one-off ‘awareness seminar’. Among the different types of awareness-producing methods, the majority of respondents confirmed that either they actively participated in the innovation process

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through continuous discussion and meetings, and/or participated in an awareness activity such as seminars.

In order to see how significant the awareness is in the diffusion process, Chi square analysis was conducted with the level of ‘contribution’ as the independent variable and the ‘adoption level’ as the dependent variable. The null hypothesis in these two variables was ‘independent’ or ‘no association’. The contribution types were categorised into four groups: (1) individuals who had neither actively been involved in innovation process nor participated in an awareness program; (2) individuals who had been involved only in some sort of activity in the innovation process but not in an awareness program; (3) individuals who had who participated only in an awareness program but had no active involvement in the innovation process; and (4) individuals who had been actively involved in the innovation process and had participated in an awareness program. The adoption level was categorised into two groups: (1). fully or partially adopted; and (2) not adopted, which included all other groups (i.e. adopted in 1-2 years’ time, adopted in more than 2 years’ time, and not sure).

The results found that variables were not independent (P=0.000) and had an effect on the rate of adoption. The Chi Squire generated a table with a number of responses falling into each contribution type at different adoption levels. These results are given in Table 7.9.

Table 7.9: Awareness and adoption

Adoption level Contribution level 1 2 3 4 Total Adopted 0 6 4 75 85 Not adopted 27 0 3 0 30 Total 27 6 7 75 115

According to Table 7.9, the majority of individuals who adopted accrual basis reporting had actively participated in awareness programs in the introductory phase. On the other hand, the majority of

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individuals who had not adopted accrual basis reporting had not actively participated in awareness programs.

7.5.2 Diffusion of technical knowledge about accrual basis SLPSAS

The question considered here is how Local Government officers gain access to up-to-date technical knowledge about a new accounting practice. The questionnaire was designed to discover what was the most effective channel/s used by Local Government participants to acquire practical knowledge about a new accounting practice. The effectiveness of these channels is subjective and depends on individual characteristics. The channels are ranked according to the number of responses. The preference is identified as both government choice in delivering knowledge about accounting innovation and individual personal choice in acquiring knowledge about accounting innovation. The number of responses and percentage of the total responses for all the communication channels are listed in Table 7.10. Two columns were identified separately for the communication channels that were most used by government promoters and communication channels that were preferred by individual adopters. These two columns help to identify any difference between the promoter channel and the adopter channel. The communication channels were ranked based on the number of responses.

Table 7.10: Diffusion of technical knowledge

Communication mode Rank Government Rank Individual

Number % Number %

Workshop at training centre 1 104 90 1 100 87

Seminars and conferences 2 103 90 2 97 84

Practical training on-Site 3 80 70 3 82 71

Government publication (e.g. Circulars) 4 76 66 4 55 48

Gaining professional qualification 5 28 24 9 5 4

In-house training facility 6 12 10 5 28 24

Audit training 7 6 5 8 6 5

Professional publications (e.g. journal ) 8 2 2 10 2 2

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Networking 10 9 8 6 23 20

The sheer diversity of information sources utilised by the respondents was notable and these sources were popular across the board. Largely, government policy is normally diffused via government publications such as circulars. However, in this case, only 66% of respondents identified government publications as a source of information about new accounting practices. Workshops and seminars were identified as the most common communication channels for acquiring knowledge about an accounting innovation (90%). The majority of these workshops were organised by SLILG and ICASL with training and seminar programs known as ‘capacity building programs’. In addition to the training sessions, on-site training was available upon request with the support of the SLILG. Seventy-one per cent of Local Government respondents agreed that on-site training was the most useful which is similar in number to the Local Governments who were practising modified accrual basis accounting. The results indicate that regarding the first three communication channels used for diffusing knowledge about new accounting practice throughout Local Governments there was difference between the promoters’ choice of channels and individual preferences.

In order to see how these individual sources of communication for the acquisition of practical knowledge affect the adoption of accounting innovation, Ordinal Logistic regression analysis was conducted. Logistic regression measures the relationship between the categorical dependent variable and one or more independent variables by estimating probabilities using a logistic function, which is the cumulative logistic distribution. ‘Y’ is the dependent variable in the ordinal scale (Y= adoption level) whereas ‘X’ represents the independent variable (X = knowledge gaining source). When a binary outcome variable is modelled using logistic regression, it is assumed that the outcome variable (adoption level) has a linear relationship with the predictor variable (knowledge gaining source). Adoption level is regarded as significant (linear) with the source of diffusion of practical knowledge, if P- values are less than 0.05 (P< 0.05). Table 7.11 shows the P value and Odds

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ratio in relation to each source of technical knowledge diffusion. The odds of success are defined as the ratio of the probability of success over the probability of failure (Odds ratio).

Table 7.11 : Diffusion of technical knowledge and adoption level of SLPSAS

Source of knowledge diffusion Odds

ratio P value Decision

Government publication (i.e. Circular) 0.57 0.373 No Significant Workshop organized at training center 3.02 0.106 No Significant

Practical training On-Site 5.24 0.004 Significant

Seminars/conferences (lecture type) 1.38 0.513 No Significant Gaining professional qualification 2.08 0.473 No Significant

In-house expert knowledge 0.37 0.05 No Significant

The results of the regression analysis found that the adoption level has a linear relationship with on- site practical training which confirms the significant impact that this source has on the adoption of accounting innovation. In-house training is on the P-value border line but most of Local Government has no in-house training team. The Odds ratio of 5.24 in relation to practical on-site training indicates that the individuals who gain practical knowledge via on-site training are five times more likely to fall in a lower adoption level (where as 1= adopted; 2= partial adopted; 3= adopted in 1-2 year time; 4= adopted in more than 2 year time; and 5= not known) compared with other individuals who never use on-site training.