A Matter of Record: Document Management as Part of Good Corporate Governance, Risk Management and Decision-Making

Good governance, risk management and decision-making are facilitated by a proactive approach to document management which includes keeping necessary records but goes beyond that in order to achieve efficient and effective organisational performance. This paper's focus is on organisational knowledge, which is increasingly facilitated by information technology, and communications to capture effectively the intelligence (broadly defined) and understanding of people within the organisation. Documentation of our knowledge assets is a major exercise in risk management and its associated control environment and essential for individual and collective accountability for performance.     

Respect for experience and organisational ability to operate in complex and safety critical environments

The role of experience has been shown to be critical for risk management. Yet, few studies have conceptualised and explained the organisational processes that determine how experience informs risk management. We present a case study examining how experience informs the risk-based decisions of employees in a safety critical industry. Data were gathered through 28 semi-structured interviews in a power utility. Experience contributed significantly to risk-based decisions, particularly those involving complex or dynamic risks, across all functional and hierarchical divisions. Further, collective experience between organisational divisions and a widespread respect for experience promoted the sharing of experiential knowledge. This deepened the extent to which experience was incorporated into risk-based decisions and facilitated coordination between operational and strategic risk management. Respect for experience and collective experience are important contributors to organisational ability for adaptive and coordinated behaviour in complex and high risk environments.     

Risk Management in Public–Private Partnerships

This study investigates the risk management in long‐term concession contracts known as public–private partnerships (PPPs). The M4 is the first Australian PPP road concession to reach the end of its concession cycle. It provides a unique and timely opportunity to examine the risk management process over its contract term and the efficacy of PPP contractual structures in managing uncertainties. Our specific research interests focus on two questions. First, what risk management approach was implemented? Second, has the risk‐allocation strategy defined in the contract facilitated or hindered the risk management process? The findings of the study suggest that under the incomplete contract approach, the risk management practices rooted in a strong contractual framework, allied with good relationship skills, has contributed to a positive outcome for the M4 PPP. The study provides generalisable insights into risk management in inter‐organisational long‐term contracts.     

Management controls and modern slavery risks in the building and construction industry: Lessons from an Australian social housing provider

Modern slavery presents a complex risk for organisations worldwide, with perpetrators continually adapting practices to maintain a veil of secrecy. While management controls may reduce modern slavery risks, little is known about how they optimally function across industries and organisational forms. To advance the state of knowledge, we examine an Australian not for profit housing provider using an interventionist research method. We draw on a combined conceptual framework of management controls and expectancy theory to analyse participant observations and document data collected over 24 months. Our findings show that despite constraints, the organisation reduced modern slavery risks. This outcome, informed by a social purpose within the organisation, was facilitated through the introduction and adaptation of cultural, personnel, action, and results controls. By discussing the changes this housing provider made, we add to the literature on management controls and modern slavery and provide theoretical insights into why they were adopted. We also highlight limitations in what the organisation could achieve that point to areas for future research.     

The Effects of Fraud Risk and Management Representation on Auditors' Hypothesis Generation

Hypothesis generation is considered to be critical to the effectiveness and efficiency of diagnostic processes in auditing. Using a between-subjects experimental design, this work examines the impact of fraud risk and the availability of a non-misstatement management explanation on auditors' hypothesis generation performance. The context is when managers undertake analytical procedures at the planning stage of the audit. The results indicate that auditors are sensitive to increased fraud risk by generating more fraud hypotheses, while the number of misstatement hypotheses generated is not affected by fraud risk. The availability of a non-misstatement management explanation was found not to interfere with auditors' hypothesis generation performance, but facilitated the generation of proportionately more misstatement and fraud hypotheses from the same transaction cycle as that indicated by the management explanation. Together, these findings provide some insights on the sensitivity of auditors' hypothesis generation to fraud risk and whether this sensitivity could be undermined by the availability of management representations.     

Management controls and their links with fairness and performance in inter‐organisational relationships

This study seeks to contribute to inter‐organisational management control literature by examining the impact of the use of management controls on fairness and performance. Findings from a survey of 232 Australian inter‐organisational relationships reveal that the use of social controls could improve procedural, distributive and interactional fairness. In turn, distributive and interactional fairness could lead to high levels of perceived relational performance. Additional analyses also confirm that formal and social controls are used as complements in managing inter‐organisational relationships.     

Management Controls in Public–Private Partnerships: An Analytical Framework

Drawing on transaction cost economics and organisational theory, this paper proposes a framework to analyse management controls in Public–Private Partnerships (PPPs). The paper contributes to the related literature at a conceptual level by showing how three control archetypes, namely market, bureaucratic and clan, in conjunction with two control strategies, namely performance evaluation and trust‐based strategies, could be used by public partners to minimise relational and performance risk, thereby achieving value for money. Practitioners could also use the linkages identified in this paper to develop management control systems for PPPs.     

The risk organisation: or how organisations reconcile themselves to failure

Over the last decade, the ideas, concepts and tools of risk management have colonised the way that organisations frame potential adverse outcomes associated with their activities. Intended as a means of optimising the tolerance, rather than elimination, of adverse organisational outcomes, risk management has been promoted as a means of challenging organisational practice, particularly in the context of heightened accountability pressures that can readily make organisations risk averse. Relatively little attention, however, has been paid to the extent to which risk ideas are able to challenge traditional organisational ways of understanding and responding to adverse outcomes. In this article, therefore, we examine the implementation of risk management practices in two contrasting organisational contexts; the UK Department for the Environment, Farming and Rural Affairs (Defra) and the English university sector. Our studies suggest that risk management processes can be readily filtered and reinterpreted through a series of ideological, methodological and organisational mechanisms to reflect and reinforce organisational understandings and practices. We build on this analysis to point to what might tentatively be termed ‘Risk Organizations’, which are distinctive, at least in principle, by the way in which they seek to identify, but also come to terms with, failure. As such, rather than providing a means of organisational challenge, the systematic application of risk management practices tends to act as a conservative force of organisational continuity.     

Performance Measurement and Management: Some Insights from Practice

This paper offers insights into developments in the practice of performance measurement and management through examination of three case studies. Analysis of the cases suggests a clear distinction between performance measurement and management. It clarifies the usefulness of implementing broad-based performance measurement frameworks, and the criticality of organisational culture to effective performance management.     

Management accounting as practice

In this paper we outline a distinctive practice theory approach to considering the role of management accounting in the constitution of organizations. Building on [Schatzki, T.R. (2002). The site of the social: a philosophical account of the constitution of social life and change. University Park, PA: Pennsylvania State University Press] notion of arrays of activity we emphasise the ways in which organisational members actively reconstitute their management control systems by drawing on them as a shared resource. By tracing the skilful practices through which social actors in a restaurant chain understand and mobilise accounting to contribute in specific ways to what they regard as the objectives of their organisational units, we develop a notion of situated functionality. Situating the interrelationships between technical and interpretive accounting processes in the wider field of organisational practices we elaborate the ways in which management control systems as structures of intentionality both shape and are shaped by shared norms and understandings.     

The paradoxes of risk management in the banking sector

This paper uses empirical evidence to examine the operational dynamics and paradoxical nature of risk management systems in the banking sector. It demonstrates how a core paradox of market versus regulatory demands and an accompanying variety of performance, learning and belonging paradoxes underlie evident tensions in the interaction between front and back office staff in banks. Organisational responses to such paradoxes are found to range from passive to proactive, reflecting differing organisational, departmental and individual risk culture(s), and performance management systems. Nonetheless, a common feature of regulatory initiatives designed to secure a more structurally independent risk management function is that they have failed to rectify a critical imbalance of power - with the back office control functions continuing to be dominated by front office trading and investment functions. Ultimately, viewing the 'core' of risk management systems as a series of connected paradoxes rather than a set of assured, robust practices, requires a fundamental switch in emphasis away from a normative, standards-based approach to risk management to one which gives greater recognition to its behavioural dimensions.     

Trust for accounting and accounting for trust

This paper combines insights from the sociology of knowledge and the emerging practice-based literature on learning and knowing to extend the institutional framework of accounting change developed by Burns and Scapens [Burns, J., Scapens, R.W., 2000. Conceptualising management accounting change: an institutional framework. Manage. Acc. Res., 11, 3–25]. In particular, it explores how management accounting systems (MAS) can be implicated in processes of learning and culture change, and used to identify ‘trustworthy’ solutions in the face of organisational crises. A case study of an Italian company, which was subject to massive change following its acquisition by General Electric, is used to discuss how, when crises arise and organisation members find themselves under intense pressure for change, their rationales and routinised behaviour, which are driven by the existing knowledge and cultural assumptions, are challenged. The case illustrates how MAS can act as sources of trust for the processes of change – i.e., accounting for trust; while at the same time being socially constructed objects of trust – i.e., trust for accounting. Drawing on the concept of personal trust and the notion of roles as access points to organisational (expert) systems, the paper discusses how, in this case, finance experts facilitated the acceptance and progressive sharing of new rationales and routines. Clearly, this does not guarantee that change will occur or occur in some ‘desired’ direction in other cases, but it increases the possibility of replacing trust in the predictability of routines with feelings of trust for change.     

The making of the management accountant - Becoming the producer of truthful knowledge

In this paper, we analyse the practices through which the management accountant is constructed as a knowing subject and becomes a producer of truthful knowledge. We draw on a case study of an automobile equipment manufacturer in which management accountants play a central role. The centrality of their role is evidenced, among other aspects, by their participation in online reverse auctions, wherein they commit themselves and their company to long-term projects. This commitment is constitutive of their identity as knowing subjects and organisational truth tellers. However, the “validity” of the truth they produce can only be assessed over time. We argue that, in this firm, monthly performance review meetings constitute “accounting trials of truth” during which peers and senior management cross-examine the accounting truth presented. Preparations for these trials of truth constitute a form of subjectivation whereby management accountants act on their ways of being in the firm and become the producers of truthful knowledge.     

The effect of board‐manager agency conflicts on non‐profit organisations’ earnings and cost allocation manipulations

Taking into account agency problems between board and management within non‐profit organisations, for the first time a comprehensive formal model of earnings manipulations is developed. Both organisational earnings as well as disaggregated financial performance indicators are looked at, the last ones being affected by possible indirect cost allocation manipulations. The model takes into consideration the impact of disclosed earnings and performance indicators on externally raised funds, and assumes risk‐neutral managers. In the last section, it is generalised by introducing risk‐averse managers.

The conditions for optimal manipulation levels (from a managerial point of view) are derived. Depending on the (dis) utility parameters involved, different solutions emerge. As to the agency problems, it is shown that, at least for all interior solutions, a single mechanism is at work in all the situations analysed: more agency problems lead to more manipulations, both at the organisational level and the disaggregated level.     

Strategic Enterprise Management Systems: new directions for research

In a world obsessed with performance, many organisations welcome systems that claim to offer a structured solution to improving performance, such as Strategic Enterprise Management (SEM). But while much has been written about how to measure performance, little is known about the interaction between performance measurement and management (PMM) and the many ways in which organizations strive to improve their performance. This paper studies the interrelationships among SEM systems, PMM and organisational change programmes within Pettigrew’s “context, content, process” model. The problems of SEM design, implementation and use are explored using the insights of several theories, following the arguments of Hammersley [Handbook of Qualitative Research Methods, The British Psychological Society, 1996] that such an approach permits a richer understanding of management practice. Having also identified potential solutions for the design, implementation and use of SEM systems, we develop a number of research questions to be explored in future research.     

The role of organisational concern for workplace fairness in the choice of a performance measurement system

Prior studies linking performance management systems (PMS) and organisational justice have examined how PMS influence procedural fairness. Our investigation differs from these studies. First, it examines fairness as an antecedent (instead of as a consequence) of the choice of PMS. Second, instead of conceptualising organisational fairness as procedural fairness, it relies on the impression management interpretation of organisational fairness. Hence, the study investigates how the need of senior managers to cultivate an impression of being fair is related to the choice of PMS systems and employee outcomes. Based on a sample of 276 employees, the results indicate that the need of senior management to cultivate an impression of being fair is associated with employee performance. They also indicate that a substantial component of these effects is indirect through the choice of comprehensive performance measures (CPM) and employee job satisfaction. These findings highlight the importance of organisational concern for workplace fairness as an antecedent of choice of CPM. From a theoretical perspective, the adoption of the impression management interpretation of organisational fairness contributes by providing new insights into the relationship between fairness and choice of PMS from a perspective that is different from those used in prior management accounting research.     

Accounting, hybrids and the management of risk

This essay addresses the implications of accounting and hybrids for the management of risk. We argue firstly and most generally for a definition of hybrids that extends beyond organisational forms. The existing literature, we suggest, has been too focused on organisational forms, and has largely neglected the hybrid practices, processes and expertises that make possible lateral information flows and coordination across the boundaries of organisations, firms, and groups of experts or professionals. Secondly, we argue that the management of organisations is rapidly being transformed into and formalised around the management of risk, while much of the management of uncertainty occurs through a variety of hybrids that reside beyond the formalised practices of risk management. Thirdly, we argue that accounting practices are central to these issues, in so far as accounting is constantly engaged in a dual hybridisation process, seeking to make visible and calculable the hybrids that it encounters, while at the same time hybridising itself through encounters with a range of other disciplines. We address these issues in three main stages. The first section considers the ‘discovery’ of hybrid organisational forms by researchers on management and organisations over the course of more than two decades. The second section examines the ways in which economists, lawyers and other social scientists have considered the issue of hybrids. Here, the preoccupation with hybrid organisational forms largely continues, with its attendant neglect of hybrid practices, processes and expertises. The third section considers the discovery of a wider range of hybrids by researchers in accounting, and examines two specific arenas in which the hybridising of accounting expertise has been central: the microprocessor industry, and the various encounters between medical and financial expertise in the context of the ‘New Public Management’ reforms. The essay concludes with a discussion of the implications of this broader definition of hybrids for accounting and the management of risk.     

The Role of Performance Management and Control Systems in Public-Sector Reform: Victorian Health Care Networks

This paper examines the way organisational responses to public-sector reform initiatives shape the nature and extent of achievable outcomes. The mandated creation of multi-hospital networks in Victoria is used as a representative example of amalgamation initiatives observed in both the private and public sectors. This study explores the extent to which performance management and control system choices made by two hospital networks enhance or stymie the achievement of intended amalgamation objectives. The study indicates that the evaluation of amalgamation and other public policy initiatives at a sector level cannot be made independently of the discretion left to management regarding means of implementing these initiatives.     

Managing the accountability–autonomy tensions in university research commercialisation

This article investigates organisational responses to emerging concerns about how accountability–autonomy tensions can be managed within the context of university research commercialisation. The findings suggest that changed expectations of university research practices, which result from the introduction of a commercialisation logic, can be managed via the homogenisation of research goals and strategies. The successful management of accountability–autonomy tensions also depends on utilising the various structures and cultural contexts that can be facilitated by decoupling and bridging strategies. Further, while adopting symbolic systems may enhance legitimacy, failure to implement material practices and provide the appropriate cultural context to manage conflicting relationships may put university commercialisation ambitions at risk.     

Management Information Needs and Perceptions in Smaller Charities: An Exploratory Study

This article explores the extent and nature of management information needs of trustees, as perceived by selected trustees of smaller charities. It links these perceptions to questions concerning charity performance, drawing on assumptions in the literature (often implicit) that the quality of management information can be gauged. Also, that there is a corresponding link between meeting management information needs and improving organisational performance. The research methodology comprised a general pilot study and trustee survey, followed by accounts analysis and in-depth interviews in selected charities. From this, vignettes of trustees' perceptions were drawn up and case study accounts of three charities' approach to trusteeship, management information handling strategies, and self-assessment of performance were developed. The study discovered the existence of an 'expectations gap'between what charity trustees are supposed to do and what they can actually achieve.