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)
DOI:
https://doi.org/10.32890/myjid2026.1.1.6Keywords:
Digital transformation readiness, service cost accounting, Islamic public sector accountability, public sector accounting, collaborative governanceAbstract
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.
Downloads
References
Acharya, C., Ojha, D., Gokhale, R., & Patel, P. C. (2022). Managing information for innovation using knowledge integration capability: The role of boundary spanning objects. International Journal of Information Management, 62, Article 102438. https://doi.org/10.1016/j.ijinfomgt.2021.102438
Alqudah, O. M., Mansor, N., & Mohd Salleh, S. I. (2022). Difficulties in accounting system implementation for service costs in the public sector. Cogent Business & Management, 9(1), Article 2150119. https://doi.org/10.1080/23311975.2022.2150119
Alsharari, N. M., & Ikem, F. (2023). Digital accounting systems and information technology in the public sector: Mutual interaction. Journal of Systems and Information Technology, 25(1), 53-73. https://doi.org/10.1108/JSIT-09-2021-0190
Ansell, C., & Gash, A. (2008). Collaborative governance in theory and practice. Journal of Public Administration Research and Theory, 18(4), 543-571. https://doi.org/10.1093/jopart/mum032
Basri, H., Nabiha, A. K. S., & Majid, M. S. A. (2016). Accounting and accountability in religious organizations: An Islamic contemporary scholars' perspective. Gadjah Mada International Journal of Business, 18(2), 207-230. https://doi.org/10.22146/gamaijb.12574
Bekiaris, M., Markogiannopoulou, A., Paraponti, T., & Spanou, F. (2026). Digital innovations for public sector accounting reforms: Comparative insights from collaborative efforts. Journal of Public
Budgeting, Accounting & Financial Management, 38(1), 36-58. https://doi.org/10.1108/JPBAFM09-2024-0181
Ben Slimane, S., Coeurderoy, R., & Mhenni, H. (2022). Digital transformation of small and medium enterprises: A systematic literature review and an integrative framework. International Studies of
Management & Organization, 52(2), 96-120. https://doi.org/10.1080/00208825.2022.2072067
Che Mat, A. S., & Abd Halim, M. N. (2025). Integrating Maqasid al-Shariah in the e-procurement system: A governance framework for Shariah compliance in Malaysia's public sector. Architectural Image Studies, 6(3), 347-368. https://doi.org/10.62754/ais.v6i3.226
DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2), 147-160. https://doi.org/10.2307/2095101
Emerson, K., Nabatchi, T., & Balogh, S. (2012). An integrative framework for collaborative governance. Journal of Public Administration Research and Theory, 22(1), 1-29. https://doi.org/10.1093/jopart/mur011
Farhana, I., Markham, C., & Basri, H. (2022). Implementing Islamic principles and values in public budgeting: A battle of mindset. Journal of Islamic Accounting and Business Research, 13(3), 444463. https://doi.org/10.1108/JIABR-01-2021-0015
Hasyim, A., & Jabid, A. (2019). Does cost accounting system contributes in supply chain operations? Uncertain Supply Chain Management, 7(2), 157-168. https://doi.org/10.5267/j.uscm.2018.10.009
Kamaruddin, M. I. H., & Auzair, S. M. (2020). Measuring Islamic accountability in Islamic social enterprise. International Journal of Islamic and Middle Eastern Finance and Management, 13(2), 303-321. https://doi.org/10.1108/IMEFM-04-2018-0134
Kay, A. (2024). The changing traditions of Islamic public administration: Observing processes of collision, absorption and adaptation. Asia Pacific Journal of Public Administration, 46(1), 13-30. https://doi.org/10.1080/23276665.2023.2275283
Mergel, I., Edelmann, N., & Haug, N. (2019). Defining digital transformation: Results from expert interviews. Government Information Quarterly, 36(4), Article 101385. https://doi.org/10.1016/j.giq.2019.06.002
Meyer, J. W., & Rowan, B. (1977). Institutionalized organizations: Formal structure as myth and ceremony. American Journal of Sociology, 83(2), 340-363. https://doi.org/10.1086/226550
Miraj, J., & Wang, Z. (2019). Factors influencing the implementation of international public sector accounting standards in Pakistan. International Journal of Business and Management, 14(9), 1522. https://doi.org/10.5539/ijbm.v14n9p15
Quesado, P., & Silva, R. (2021). Activity-based costing (ABC) and its implication for open innovation. Journal of Open Innovation: Technology, Market, and Complexity, 7(1), Article 41. https://doi.org/10.3390/joitmc7010041
Sagala, G. H., & Ori, D. (2024). Toward SMEs digital transformation success: A systematic literature review. Information Systems and e-Business Management, 22, 667-719. https://doi.org/10.1007/s10257-024-00682-2
Vial, G. (2019). Understanding digital transformation: A review and a research agenda. Journal of Strategic Information Systems, 28(2), 118-144. https://doi.org/10.1016/j.jsis.2019.01.003
Published
Issue
Section
License
Copyright (c) 2026 Malaysian Journal of Islamic Development
This work is licensed under a Creative Commons Attribution 4.0 International License.
