DIGITAL TRANSFORMATION READINESS, SERVICE COST ACCOUNTING AND ISLAMIC PUBLIC SECTOR ACCOUNTABILITY: A CONCEPTUAL FRAMEWORK FOR DEVELOPING COUNTRIES

(Kesediaan Transformasi Digital, Perakaunan Kos Perkhidmatan dan Akauntabiliti Sektor Awam Islam: Suatu Kerangka Konseptual bagi Negara Membangun)

Abstract

Public sector organisations in developing countries are under increasing pressure to improve financial transparency, service efficiency, and accountability. However, many governments still face difficulties in implementing effective service cost accounting systems due to fragmented information systems, limited digital competency, weak operational integration, and institutional resistance. This conceptual paper examines the role of digital transformation readiness in facilitating effective service cost accounting implementation in the public sector. The paper adopts a conceptual review approach by synthesising literature on public sector accounting, digital transformation, operations management, digital accounting systems, and collaborative public sector innovation. The proposed framework suggests that digital transformation readiness, comprising digital infrastructure readiness, employee digital competency, integrated information systems, organisational adaptability, and leadership support, can enhance service cost accounting implementation. Collaborative governance is positioned as a supporting factor that strengthens the relationship between digital transformation readiness and implementation effectiveness. The framework further suggests that stronger digital readiness may improve information accuracy, operational coordination, financial transparency, and public sector decision-making. This paper contributes to the public sector accounting literature by integrating digital transformation readiness into the discussion of service cost accounting reform in developing-country contexts. It also provides practical guidance for policymakers and public sector managers seeking to modernise accounting systems through digital transformation.