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.     

The Implementation and Use of Benchmarking in Local Government: A Case Study of the Translation of a Management Accounting Innovation

Benchmarking is a management accounting innovation (MAI) that can be used for performance measurement and management in both the private and the public sectors. Although public sector accounting researchers have reported some success with the use of benchmarking, frequently charged problems exist in implementing and using this management technique. To look beyond the technical and institutional explanations, this paper takes a translation approach and presents a case study of a local government benchmarking network. We conclude that there is a link between benchmarking implementation problems and initiators’ failure to build a strong network of benchmarking allies. Implementation is facilitated if actors, other than the initiators, recognize the possibility of making benchmarking more relevant and less cost focused. However, even when a network of actors has a favourable attitude towards benchmarking, benchmarking may still appear as an unruly ‘actant’. Furthermore, the perception of implementation failure and success is heterogeneous and connected to various actors’ adoption of benchmarking. We also conclude that there is a connection between the use of benchmarking and 1) actors’ possibilities to use benchmarking in the struggle for resources and 2) the perception of benchmarking information as ‘factual’ or ‘factual enough’. However, the perception of benchmarking information as ‘factual’ or ‘factual enough’ seems not only a matter of correct or incorrect ratios but also of whether such information serves actors’ interests. A final conclusion is that the use of benchmarking increases when actors other than the initiators complement the original idea and ‘counter interest’ the initiators.     

Pedagogical cases in the strategic development of management accounting systems

Discussion of the ‘lost relevance’ of management accounting and the ‘gap’ between theory and practice has focused the criticism that management accounting education is built round a set of techniques applied in simplified settings. One reason for this may be the scarcity of case studies, discussing management accounting practices, which may be adopted in classroom situations. The recent promotion of ABC, throughput accounting, just-in-time (JIT) methods and performance measures to support modern manufacturing provide additional educational challenges relating to the integration of these into the accounting curriculum. There is a danger that these may also be developed as other techniques to be learned in isolated situations rather than to be applied selectively by organizations in appropriate situations. This paper offers two case studies which support class discussion of accounting requirements within a modern manufacturing and commercial environment. The cases emphasize that any one technique is inappropriate to all situations. They force examination of manufacturing and marketing policy and strategy in the development of appropriate management accounting information. The authors' experiences of using the case studies is evaluated, to determine the strengths and weaknesses of using the non-numerical cases as a basis for class discussion of contextual factors in accounting system design.     

Strategic management accounting in close inter-organisational relationships

This paper provides a conceptual comparison between the ‘mainstream strategic management accounting’ literature, the ‘accounting and strategising’ literature and ‘strategic management accounting (SMA) in close inter-organisational relationships’. It concludes that ‘SMA in close inter-organisational relationships’ shares some important characteristics with the ‘accounting and strategising’ literature. Important differences were found, too, though. These mainly concerned the need to understand individuals working for close partners as preparers of strategic information; the need for disaggregated accounting information about unique connections to close partners and about the role of indirect benefits that follow from close connections and the need for the company to not only collect information but also disperse diverse information within close inter-organisational relationships. Through an intensive case study of a global robot manufacturer, Robotics, this paper also provides novel empirical evidence on ‘SMA in close inter-organisational relationships’. For instance, SMA practices included indirect benefits, something mainly neglected in the existing literature on SMA. These indirect benefits involved a close customer's willingness to invest time and effort in Robotics’ technological development, thereby contributing to Robotics’ ability to attain revenue gains in its interactions with other customers. Our findings also have important implications for the ‘inter-organisational accounting’ literature, for instance, by highlighting the need to link more explicitly strategic decision-making with the current interest in the role of accounting in inter-organisational dynamics.     

The persistence of international accounting differences as measured on transition to IFRS

The international accounting classification literature emphasises the importance of understanding how institutional factors shape accounting regulations and practices. With the mandatory adoption of International Financial Reporting Standards (IFRS) in the European Union and Australia in 2005, our empirical study examines whether three international accounting classification systems relating to equity financing, law and culture still had merit as measured on transition to IFRS and explore whether they are effective in grouping accounting systems. Using IFRS as the yardstick, we find statistically significant differences in the measurement of shareholders’ equity as between strong (Class A) versus weak (Class B) equity financing systems, common law versus code law systems and cultural systems based on ‘Anglo’, ‘Nordic’ and ‘More Developed Latin’ cultural groups. With regard to the measurement of net income, however, we find statistically significant differences only in respect of strong (Class A) versus weak (Class B) equity financing systems. Our findings demonstrate that traditional international accounting system differences still persisted at the time of IFRS adoption even after long periods of harmonisation and growing international accounting convergence.     

Tainted portfolios: How impairment accounting rules restrict security sales

Contrary to claims that fair value accounting exacerbated banks’ securities sales during the recent financial crisis, we present evidence that suggests – if anything – that the current impairment accounting rules served as a deterrent to selling. Specifically, because banks must provide evidence of their ‘intent and ability’ to hold securities with unrealized losses, there are strong incentives to reduce, rather than increase, security sales when market values decline to avoid ‘tainting’ their remaining securities portfolio. Validating this concern, we find that banks incur greater other‐than‐temporary impairment (OTTI) charges when they sell more securities. We then find that banks sell fewer securities when their security portfolios have larger unrealized losses (and thus larger potential impairment charges), and these results are concentrated in banks with homogenous securities portfolios, expert auditors, more experienced managers, and greater regulatory capital slack. Overall, our results suggest that – contrary to critics’ claims – the accounting rules appear to have reduced banks’ propensity to sell their securities during the financial crisis.     

ACCOUNTING REFORMS: DETERMINANTS OF LOCAL GOVERNMENTS' CHOICES

The introduction of accrual accounting in Italian Local Governments has been mandated in a way that permits, and in fact encourages, a merely formal compliance. Local Governments must produce accrual‐based financial statements, but double‐entry bookkeeping is not mandatory, nor may traditional budgetary accounting be abandoned. Why, then, should they bother to introduce an integrated system of budgetary and accrual accounting? In this paper, we empirically investigate the determinants of Local Government's choices of accounting innovation. According to our results, ‘rational’ elements such as complexity, types of activities performed, presence of surpluses, and access to capital markets are seemingly unhelpful in explaining why a Local Government decides to introduce accrual accounting. What counts are ‘institutional’ and cultural explanations, such as the perceptions of CFOs and the North‐South divide.     

Getting management accounting off the ground: post-colonial neoliberalism in healthcare budgets

Taking Modell's [(2014) The societal relevance of management accounting: an introduction to the special issue. Accounting and Business Research, 44 (2), 83–103] ‘societal relevance of management accounting’ agenda forward, and based on a cost accounting initiative in a Sri Lankan hospital, this paper examines how management accounting is implicated in societal relevance. It reports on a post-colonial neoliberal state's use of cost-saving experiments and the resultant emancipation of the individuals involved. It conducts a bottom-up analysis, from micro events in the hospital to policymaking at the level of the Provincial Council. This analysis suggests that cost accounting acts as a mediating instrument: it begins to loosen the old Keynesian post-colonial bureaucratic budget confinements, creates a social space for individuals to consider cost-saving experiments, and addresses wider policy concerns about hospital resource management. The story is illuminated by Gilles Deleuze's and Zigmund Bauman's ideas on post-panoptic societies: old confinements are being problematised and new flexible, ‘liquid’ spaces created, in which individuals are emancipated in terms of their ability to influence resource management within and beyond the organisational constituency.     

Modernizing government accounting standards in Greece: a case of ‘garbage can’ decision-making

This paper examines the standard-setting process during the recent reform of government accounting standards in Greece. The process is viewed through the lens of the ‘garbage can’ model, informed by interviews, informal discussions and archival data. Findings indicate a lack of effective monitoring of the process by politicians and external lenders (the ‘Troika’), and an outcome that favoured the bureaucrats and consultants involved.     

GAAP,GFS and AASB 1049: perceptions of public sector stakeholders

Efforts by Australian standard‐setters to harmonise public sector financial reporting resulted in AASB 1049, which sought to bridge the divide between generally accepted accounting principles (GAAP)‐based and government finance statistics (GFS)‐based financial statements. However, whether AASB 1049 has resulted in information that is considered appropriate for the public sector has not been examined. We explore this issue by comparing the requirements of AASB 1049 with the responses from a survey of public sector stakeholders on the appropriate accounting treatment and presentation of selected financial items. The analysis suggests consensus with AASB 1049 on presentation issues but less consensus on accounting treatments.     

Framing public governance in Malaysia: Rhetorical appeals through accrual accounting

In government, the challenges of governance and anti-corruption are exacerbated by accounting not being fit for purpose. In developing countries, many governments adopt accrual accounting as a panacea. Drawing on Goffman's frame analysis, and rhetorical appeals to logic, credibility and emotion, this paper examines the adoption of accrual accounting in Malaysia. It was found accrual accounting has potential for keying governance and anti-corruption. However, rhetorical appeals that attempt to legitimate neo-liberalism and engender public support in the name of progress were hindered by perceptions of endemic corruption and relatively weak democratic institutions of ‘good’ governance common to developing countries.     

Legitimating the standard-setter of public sector accounting reforms

ABSTRACT

This paper shows how the Brazilian Treasury has developed strategies to build legitimacy in a civil law context where the legislature left a vacuum regarding the accrual accounting standard-setting mandate. While the accounting ‘rule-enforcers’ neglected to require compliance with the rules, the ‘rule-makers’ co-operated with each other to build normativity for accounting rules and eventually attempted to develop new forms of enforcement, which the ‘rule-appliers’ lobbied against.     

从美国成本会计准则看我国军事采购成本会计准则的构建

美国联邦政府采购成本会计准则建立的根本原因在于美国联邦政府采购中成本类型合同的使用.其与我国军事采购过程中成本类型合同的使用相似.为加强我国军事采购合同成本的管理,有必要构建我国军事采购成本会计准则,而美国联邦政府采购成本会计准则涵盖的内容、豁免条款和范围层次的使用,以及披露报表的编报,对于建立我国军事采购成本会计准则具有积极的借鉴意义.     

THE CONSTRUCTION OF MATERIALITY IN GOVERNMENT ACCOUNTING: A CASE OF CONSTRAINING FACTORS AND THE DIFFICULTIES OF HYBRIDIZATION

This paper illuminates materiality features during experimentation with central government accounting in Norway. Data was collected using observations, interviews, informal conversations and documents. We found that materiality was constrained by numerous factors, including: time, disagreement, coordination and communication difficulties, actors’ background, standardizing and thinking ahead. Moreover, a mixture of theoretical accounting approaches and construction forms was found, indicating a hybridization‐based experimentation and materiality construction. Therefore, construction came about as an effect; materiality was often constructed implicitly, and not aligned with its defined elements. Finally, we comment on associated implications for accounting complexity and endeavors to make accounting changes.     

Interpreting the European Union’s IFRS Endorsement Criteria: The Case of IFRS 9

EU Regulation requires that any international accounting standards (International Financial Reporting Standards, IFRS) and interpretations (IFRIC) pronounced by the International Accounting Standards Board (IASB) meet three sets of criteria before they become binding for EU-based companies: a ‘true and fair view’ criterion, a list of qualitative criteria, and a ‘European public good’ criterion. During the endorsement process, EU institutions evaluate each standard or interpretation’s compliance with these three criteria. Nevertheless, despite plenty of past endorsement decisions, there is still disagreement about a unanimous interpretation of the criteria in the literature. In this study, we interpret all three criteria against the background of European accounting law and academic accounting research. Then, the paper illustrates for the case of the new IFRS 9 standard on accounting for financial instruments how these criteria can be applied in the endorsement practice. We conclude that the standard cannot reasonably be rejected on grounds of the IAS Regulation. We also explain that the vagueness of the endorsement criteria and the inherent discretion in the eventual endorsement decision help maintain the EU’s political influence on the IASB’s standard-setting ex ante.     

Accountability and Transparency in English Local Government: Moving from ‘Matching Parts’ to ‘Awkward Couple’?

Although excessive transparency and accountability demands can have a counterproductive effect on organisational performance (Bovens, 2005), longstanding hierarchical accountability structures to ensure financial conformance in English local government continue to endure. Interestingly however, the previously top‐down regime for performance accountability in English local government has been replaced by bottom‐up mechanisms such as greater transparency and a more open market for public services. Using the framework developed by Hood (2010), this paper will show how such reforms mean that transparency and accountability are moving from being ‘matching parts’ to an ‘awkward couple’, and how this has significant implications for public services.     

Participatory and incremental development in an African local government accounting reform

Despite significant donor funding, government accounting reforms seeking transparent and effective management of public resources often fail or have limited success, especially in Africa, prompting questions about donors’ implementation approach and calls for studies of successful reforms. This paper investigates a local government accounting reform in Benin supported by a German development agency–perceived as successful due to the participatory, pragmatic, and incremental approach reinforced by conditionalities in the face of neo‐patrimonial leadership.     

MANAGEMENT ACCOUNTING CHANGE AND NEW PUBLIC MANAGEMENT IN LOCAL GOVERNMENT: A REASSESSMENT OF AMBITIONS AND RESULTS — AN INSTITUTIONALIST APPROACH TO ACCOUNTING CHANGE IN THE DUTCH PUBLIC SECTOR

Dutch municipalities and provinces, denoted here as local government, have seen a succession of changes in their management accounting systems and have also introduced other changes related to New Public Management (NPM) in the last twenty years. This paper examines accounting changes, such as the introduction of accrual accounting, output and outcome budgets and performance measurement, from an institutionalist point of view. The paper presents experiences of 23 politicians and professional managers with the various changes over a period of fifteen to twenty years. The interviewees, just like various researchers in the field of NPM, were critical of the accounting changes and their effects. However, several of them also made clear that, seen over the long run, the changes did have some effects that they liked and seem to be in line with the ‘ideals’ presented in NPM literature. The paper suggests that an institutionalist perspective is helpful for studying change processes in organizations and for observing factors and developments that might not be noticed when a more functional and short‐term perspective is adopted.     

Accounting for crime in the neoliberal world

This paper examines the recent European public sector accounting reform which introduces controversial calculative practices for the recognition of criminal activities in national accounts. Namely, accounting for unlawful drug production and drug trafficking, and accounting for prostitution. Challenging the presumption of accounting neutrality, this study analyses this “accounting for crime” policy from a semantic and an epistemological view point as a cognitive system of creation of meaning and formation of knowledge. The analysis reveals the polyhedrality of neoliberalism, and the way it exerts its influence on society through its circuitous discursive process of social construction and transfiguration of reality which flows crosswise its multiple dimensions. At the macro level this policy operates as a ‘hegemonic project’: It bonds together the economic and political interests of different ‘historical blocs’, making the implementation of these practices a matter of ‘common sense’. At the micro level this policy functions as an ‘apparatus of governmentality’: It encapsulates the cognition of crime within a panoptic logic of economic rationality, transforming its outcome into a contributory value of a country's prosperity. In this context, this study outlines the centrality of accounting practice as a pivotal tool of the neoliberal ideology: It permits extending the realm of calculative methodologies to the commodification of human weaknesses, addictions, and sexuality, in a rational process of accounting to balance the supply and demand of sex and drugs, between prostitutes and clients, pushers and addicts.