Editorial

This article analyses the ways that Spanish public water companies communicate sustainability information to their stakeholders and explores whether distinctive and more progressive accountability is possible in the public sector in comparison with private sector organizations. Two distinct activities are identified in sustainable accountability: public organizations are engaged in informal as well as formal reporting activity, and their reporting seems to be coupled with real organizational strategies and operational activities.     

Research horizons for public and private not‐for‐profit sector reporting: moving the bar in the right direction

The examination of public and private not‐for‐profit sector financial reporting has been a topic of interest on a cyclical basis in Australia over the last 30 years. Traditional topics have included examinations of the intended and unintended consequences of specific standards, the accountability value of financial reports, transaction neutrality, compliance with the accounting standards, and more recently, the prospective implications of new, differently focused reporting standards considering such issues as income measurement and outcomes reporting. With increased recent attention from standard setters and regulators, and greater data availability, the opportunities for undertaking impactful research in these and related areas are increasing. In this paper, we focus on research that has examined the following questions: (i) Which private and public NFPOs lodge financial reports and what is reported; (ii) Who are the users and what are their information needs? (iii) Which private and public NFPs should lodge financial reports and what should be included in them; and (iv) How should the accounting frameworks for NFP sector reporting be set? For each of these issues, we identify the research gaps and opportunities for further research.     

Government Accounting: An Assessment of Theory, Purposes and Standards

Government accounting and financial reporting aims to protect and manage public money and discharge accountability. These purposes, and the nature of public goods and tax financing, give rise to differences with commercial accounting. This is not yet reflected either in government accounting standards in English–speaking developed nations or in international public sector accounting standards. All of these are heavily influenced by private sector practices, which favour the accrual basis and consolidated reporting. This article argues for a gradual symmetric approach to accruals and a combination of government–wide and fund reporting. The author also proposes some broad accounting principles to promote political and economic accountability.     

The public accountability index: crafting a parametric disclosure index for annual reports

The methodology used to craft a disclosure index with parametric statistical properties is described and explained. The index is developed from a public accountability perspective using stakeholder opinions captured via a delphi exercise. Named the Public Accountability Index (PAI), the index is applied to the annual reports of the New Zealand universities, 1985–2000. This was a period of radical change for the public sector, and the index scores reflect the wholesale changes in reporting over the period. PAI is offered as a generic stakeholder approach for the development of disclosure indices to measure annual reports of groups of organisations in any of the private, public or so-called third sectors.     

An Assessment of the Impact of IFRS Adoption on Public Sector Audit Fees and Audit Effort – Some Evidence of the Transition Costs on Changes in Reporting Regimes

While many countries have adopted International Financial Reporting Standards (IFRS) for private sector enterprises, New Zealand (NZ), Australia and the United Kingdom adopted IFRS for all sectors, including the public sector. This approach is consistent with the concept of sector‐neutral accounting standards that gained wide acceptance in NZ and Australia in the early 1990s. Although a number of studies have assessed the impact of IFRS adoption in the private sector, and the public sector has provided some evidence as to the effects of IFRS adoption on financial statements, the costs of adopting IFRS have not been examined. One measure of cost is the change in audit fees in an IFRS reporting environment. The authors examine the impact of IFRS adoption in the NZ public sector on audit fees and audit effort. They obtained data regarding audit fees and audit effort in the NZ public sector and compared the pre‐adoption year with the first year of adoption for all segments. Their results indicate a substantial increase in audit fees and audit effort in the first year of IFRS adoption for all segments, with some variation across the segments. Two sectors, local authorities and energy companies, have had significant increases in audit fees and audit effort. These findings provide some empirical evidence regarding the cost of transition to IFRS and are of interest to researchers and regulators in countries that are currently considering transitioning to IFRS or IFRS‐based International Public Sector Accounting Standards standards in reporting for the public sector.     

Trust and accountability in UK charities: Exploring the virtuous circle

Public trust and confidence in charities is essential for the achievement of their missions. However, recent evidence suggests that trust in UK charities has been damaged, potentially affecting charities' and the charity sector's sustainability and effectiveness. This paper constructs accountability as an important means of developing, maintaining and restoring trust in charities. Through a series of interviews with charity managers, it investigates the public and private mechanisms used in discharging accountability to, and building trust with, charities' main stakeholder groups. The paper identifies the use of a wide range of mechanisms, often highly tailored to particular stakeholders' perceived information needs, which are seen as critical in this process. It is argued that the use and interplay of these can create a ‘virtuous circle’ of accountability and trust, where each reinforces the other. It is argued that where this is achieved, trust in individual charities, and the sector as a whole, can be enhanced.     

EXAMINING ACCOUNTABILITY DIMENSIONS IN STATE‐OWNED ENTERPRISES

This paper examines accountability in the context of New Zealand's state‐owned enterprises (SOEs), and considers an accountability framework which extends beyond traditional (upward and outward) dimensions. While traditional accountability dimensions are clearly detailed in the legislation, less clear are the dilemmas and contradictions faced by SOEs, balancing multiple interests, and at times, conflicting objectives. These issues are explored through interviews conducted in two phases over a two year period with senior executives from 12 of the then 17 SOEs operating in New Zealand. Findings reveal a number of dimensions of accountability that extend beyond current conceptualisations of accountability in the public sector, often including multiple directions of accountability. Implications suggest the need for a more explicit framework of accountability relevant to the SOE context, which may serve useful in identifying potential pathways to conflict mitigation.     

Establishing the representational faithfulness of financial accounting information using multiparty security,network analysis and a blockchain

This paper aims to develop a design for an accounting information system that will enhance the representational faithfulness of financial reporting information. One of the functions of financial reporting is to aggregate and report the entity's private data. This paper shows that recognizing that some of the firm's private data is already shared with others allows the methods of multiparty security to be applied to the reporting and audit processes. We contend that using both public key cryptography and network analysis allows the identity of an entity to be modelled as a place on a network. We also develop accounting recordkeeping techniques to balance public access with privacy using a blockchain. Taken together, these three design ideas can enhance the representational faithfulness of financial reporting systems because they use shared data from independent entities, a transparent system, and open-access immutable storage. Faithful representation is enhanced because information from this system can be used by auditors to support their audit opinion or by stakeholders who need credible information about the entity.     

A comparative study of cross-selling practices in public and private sector banks in India

This paper is a study of cross-selling practices in Indian public and private sector banks through the case study method. The study revealed that cross-selling practices in public sector and private sector banks are quite different. These differences emerge mainly from their different philosophy, background and distinct target customer segments. However, both sectors can learn from each other; public sector banks can introduce specialised training and incentives, whereas private sector banks need to introduce appropriate control mechanisms and avoid indiscriminate cross-selling. The paper also brings out the elements of successful cross-selling in India.     

The impact of an independent inspectorate on penal governance,performance and accountability: Pressure points and conflict “in the pursuit of an ideal of perfection”

This paper examines the impact of an independent Inspectorate on the enactment, of and accountability for, penal reform in the Australian State of Western Australia. Intended to improve system wide custodial outcomes through the introduction of a privately managed operator acting as standard bearer and innovator, the reform agenda was predicated on an overhaul of governance, performance, systems and reporting practices in the sponsoring department and the state's public prison network. Insights from three credos of imprisonment, theorizations of ‘hierarchical’ and ‘intelligent’ governance and accountability, the interplay of values in changing practice, and the ways in which inspectors establish particular inspection regimes, frame analysis of reform implementation and the inspection regime in action over a ten year period. Using archival material, this research examines how the Inspectorate, in making things auditable, altered perceptions and organizational realities of a network of actors. It is contended that the governance and accountability tensions inherent in managerialism, exemplified in its reliance on ‘neutral’ accounting technologies to incentivise, manage and monitor custodial outcomes, privilege instrumental hierarchical governance and accountability regimes that ignore the rehabilitative aspects of imprisonment. Further, conflicting publicly espoused and privately held values play vital roles in moulding performance in a penal setting, and are fundamental to changing outcomes in networks. The Inspectorate's public values and intelligent accountability regime resonate with the Department's policy objectives and public values, but are shown to have been initially inconsistent with network actors’ hidden private values. The research concludes that the appointment of an independent Inspectorate has facilitated the accountability of those responsible for prison quality and positively influenced the treatment of prisoners. A secondary concern is investigating conflicting propositions about the relative governance, performance and accountability of privately and publicly operated prisons.     

ACCOUNTING STANDARDS FOR THE PUBLIC SECTOR IN AUSTRALIA

The need for better financial reporting by public sector entities as a means towards greater accountability has been widely canvassed. This paper discusses the development and application of accounting standards in Australia in this context. The responses of the accounting profession, through its standard setting process, and of the Commonwealth and several State governments are described and the conclusion reached that these developments will mean significant improvement in the information content of public sector financial reports.     

Consumerism and control: evidence from Swedish central government agencies

This article examines whether the control practices associated with public sector consumerism, such as devolved performance management and accountability, enhance organizations' responsiveness to customer needs and preferences. The research highlighted the need for trade-offs between resource allocation and customer needs and how this affects rationing of services. This is a serious dilemma as the public sector comes under the dual pressures of the consumerist movement and a tightening funding situation.     

Do Not‐For‐Profits Need Their Own Conceptual Framework?

This paper raises the issue of whether not‐for‐profit (NFP) oganisations require a conceptual framework that acknowledges their mission imperative and enables them to discharge their broader accountability. Relying on publicly available documentation and literature, it suggests the current Conceptual Frameworks for the for‐profit and public sectors are inadequate in meeting the accountability needs of NFPs. A NFP‐specific conceptual framework would allow the demonstration of broader NFP‐specific accountability and the formulation of NFP‐appropriate reporting practice, including the provision of financial and non‐financial reporting. The paper thus theoretically challenges existing financial reporting arrangements and invites debate on their future direction.     

An International Comparison of Materiality Guidance for Governments, Public Services and Charities

The annual report is promoted and regarded as the primary medium of accountability for government agencies. In Australia, anecdotal evidence suggests the quality of annual reports is variable. However, there is scant empirical evidence on the quality of reports. The aim of this research is to gauge the quality of annual reporting by local governments in Queensland, and to investigate the factors that may contribute to that level of quality. The results of the study indicate that although the quality of reporting by local governments has improved over time, councils generally do not report information on aspects of corporate governance, remuneration of executive staff, personnel, occupational health and safety, equal opportunity policies, and performance information. In addition, the results indicate there is a correlation between the size of the local government and the quality of reporting but the quality of disclosures is not correlated with the timeliness of reports. The study will be of interest to the accounting profession, public sector regulators who are responsible for the integrity of the accountability mechanisms and public sector accounting practitioners. It will form the basis for future longitudinal research, which will map changes in the quality of local government annual reporting.     

公共财务管理与政府财务报告改革

本文根据政府财务报告主要反映政府财务受托责任和财务受托业绩 ,并为上级政府、政府主要官员、审计机关、监督机构提供政府财务信息 ,以及近年来公共部门存在一系列财务管理问题的客观现实 ,拟从报告主体内部管理的需要出发 ,阐述公共 (部门 )财务管理对政府财务信息的需求 ,提出改革政府财务报告的基本思路 ,以促进公共 (部门 )财务管理水平的提高 ,并推动政府对外财务报告的改进     

New development: Alternative reporting formats: a panacea for accountability dilemmas?

ABSTRACT

The need for accountability has given rise to new formats of reporting for public sector organizations. This article discusses the relative strengths and weaknesses of the main formats and concludes with a proposal for the adoption of an ‘Integrated Popular Report’ (IPR) to connect public sector organizations with ordinary people and encourage democratic participation in decision-making.     

A Two-country Comparison of Public Sector Performance Reporting: The Tortoise and Hare?

Recent Australian and Japanese second tier public sector performance measurement changes are compared and contrasted. The case analyses are presented within a theoretical structure derived from Hood's depiction of NPM which predicts an increased emphasis on explicit performance reporting. Significant differences and similarities are identified in terms of performance reporting effort and output; motivation for changed performance reporting; role of central agencies; and degree of resultant accountability discharge. NPM is a useful analytical framework and is enhanced by Luder's Contingency Model, epistemic community influence and governance. The explanatory factors identified reinforce views that NPM is a term best used solely in the context of the governmental traditions of each relevant public sector.     

An Analysis of Concepts and Evidence on the Question of Whether IFRS Should be Conservative

Do international accounting standards require conservative accounting? The IASB's conceptual framework suggests that they should not, while the research literature is largely silent on the matter, typically presuming conservatism to be an outcome of private contracting rather than standardized, public, general purpose financial reporting. In this paper, we analyze the actual requirements of IFRS. We find multiple examples of recognition requirements that lead to unconditional conservatism, measurement requirements that lead to conditional conservatism, and also presentation/disclosure requirements that further support a conservative reporting environment. These findings complement, support and deepen existing evidence in the empirical literature that accounting is in practice conservative. We show, however, that the requirements for conservatism in IFRS conflict with, first, the IASB's stated position in its conceptual framework that accounting should not be conservative and, second, the private contracting explanation for conservatism that is generally accepted in the literature. What is missing, and lies behind both conflicts, is an acknowledgement and understanding of the role of an agency/contracting perspective in enhancing the decision‐usefulness of general purpose accounting standards, given the information/incentive asymmetry and uncertainty that characterizes the real‐world context in which those standards operate. From a policy perspective, such an understanding would reconcile the IASB's conceptual framework with the actual requirements of IFRS. From a research literature perspective, such an understanding would re‐position accounting standards as central to the practice of accounting conservatism, which would in turn require revision to the generally accepted theory of a private contracting explanation for the empirical evidence of conservative accounting practice.     

IPSAS or IFRS as the Framework for Public Sector Financial Reporting? New Zealand Preparers’ Perspectives

The last 30 years have seen public sector accounting in many countries undergo considerable change. More recently, some governments adopted accrual accounting and International Public Sector Accounting Standards (IPSAS), some adopted modified International Financial Reporting Standards (IFRS) while others continued with cash‐based accounting. New Zealand (NZ) has, for more than two decades, followed a sector neutral approach to financial reporting and standard setting where the same accounting standards were applied to all entities in all sectors: for‐profit, not‐for‐profit and the public sector. This period included the adoption of IFRS by for‐profit entities with minor modifications for the public sector. The suitability of IFRS for the public sector has been questioned and, recently, standard setters in NZ decided to adopt a sector‐specific standard‐setting approach with multiple tiers for each sector. The for‐profit sector will continue to follow IFRS but reporting standards for the public sector will be based on IPSAS. In this period of change we sought the views of preparers of public sector financial reports regarding the users of such reports and their preferences for the public sector reporting framework. We also sought the views of the preparers regarding the usefulness of each financial statement for users, and whether the benefits of reporting by their organisations exceeds the costs. The findings indicate support for maintaining IFRS as a basis for reporting in the NZ public sector. However, IPSAS modified to NZ conditions is also perceived as an acceptable option by respondents in this study. The income statement is, in the opinion of the respondents in this study, the most useful statement while cash flows appear to hold little value. A high proportion of respondents believe that the benefits of reporting exceed the costs, which contradicts the view that such reports are mainly compliance documents that provide little value. This finding contributes to the continuing debate on costs versus benefits on the recent introduction of IPSAS as the reporting framework for the public sector and the perceived appropriateness of IPSAS in public sector reporting.     

Joined‐Up Government and the Challenges to Accounting and Accountability Researchers

Abstract: Collaborative working between public sector bodies in the UK, sometimes involving partnerships with private sector and not‐for‐profit organisations, was promoted heavily by the Labour Government (1997–2010) under what is sometimes labelled ‘Joined‐Up Government’. The Conservative – Liberal Democrat Coalition Government, elected in 2010, appears likely to continue to promote such policies. The objective of this paper is to raise awareness of what may be seen as an important and developing agenda in public services in which accounting and accountability researchers are barely visible. The paper reviews the meanings and motivations of joined‐up government and its development in the UK. A number of challenges are presented, including the need to refocus research from an entity to a network perspective; to assess whether joined‐up government delivers value‐for‐money services; to join the debate on the development of related accounting techniques; to seek precision in specifying accountability mechanisms and to adapt our research methods.