Application of Accrual Accounting in the Australian Public Sector – Rhetoric or Reality

This paper presents a contextual. historical analysis of recent accrual accounting developments in the Australian Public Sector (APS). It takes a critical stance in that it questions the accrual accounting developments on a number of grounds. The paper examines changes in public sector financial management and accountability in four distinct settings, being: accrual financial reporting, accrual management systems, whole of government reporting, and accrual based budgeting. The findings show that already in Australia accrual accounting has made significant encroachments into some areas of annual financial and budget reporting. This influx has meant that terms such as 'deficit', 'debt', 'liabilities', 'operating results', 'assets', etc. have begun to change in meaning, which it is argued has important implications for the current process of transformation of aspects of the APS.     

The Withdrawal of Current Cost Accounting in the United Kingdom: A Study of the Accounting Standards Committee

Evidence from the archives of the U.K. Accounting Standards Committee (ASC) is used to trace the events leading to the withdrawal of the current cost accounting standard, SSAP 16, from 1980 to 1988. Three central issues are addressed. First, the ASC's role as a regulatory body is considered in the light of the failure to obtain compliance with SSAP 16 and to find an acceptable replacement. Second, the decline in support for SSAP 16 is explained in terms of changes in the economic environment. Third, the roles of different interest groups in the process are analysed.     

The Impact of New Zealand's Public Sector Accounting Reforms on Performance Control in Museums

Accounting by most New Zealand museums was subject to public sector reforms requiring private sector -style financial reporting, and service performance reporting. This study into the impact of the reforms on how museum managements pursue successful performance found museums adopting a more accounting-oriented approach to planning and evaluation. Service performance reporting has facilitated the periodic evaluation of non-financial targets by managements, but as currently constituted the reporting model is flawed, particularly in its implications for essential long-term resource capacity of museums. This threatens its effectiveness for promoting good performance. Non-accounting based professional practices also have a role in museum success.     

The Commercialization of Government's Departmental Accounting (AAS 29): Quasi Rents and Public Welfare

In the Australian public sector. departmental administrative reform is intent on producing lean. efficient. commercially orientated government entities. An accounting regulatory response is AAS 29. Financial Reporting for Governtizetzt Departments. which requires all government departments as reporting entities to adopt in principle much of the whole corpus of private sector accounting standards and statements including. importantly, current cost accounting. This paper explores the proposition that the commercialization of departmental accounting through AAS 29 or similar pronouncements is directly associated with a significant reduction in social and public welfare accountability. Accounting processes are powerful. value-laden agents of social change. Benston (1980) states that 'benefits (net of costs) of accounting standards to society' cannot be measured but can be specified for individuals. Here. accounting outcomes are identified to be the residuals of economic policies to eliminate quasi rents in government. Standardization in AAS 29 rests on the assumption that rights and obligations being equities of generations of participants can be periodically measured as A -L = E at current factor prices. This economic notion lacks cultural heritage in financial disclosure of continuing equities in government and may, for any generation of consumers. induce an excess of social costs over social benefits for the accounting standardization process under prevailing managerialist philosophies.     

An Empirical Investigation of Audit Pricing in the Public Sector: The Case of Greek LGOs

This paper investigates the associations between audit pricing and multidimensional characteristics of local governments by using a sample of Greek municipalities. The Greek institutional setting is interesting because it is politically pluralistic. Moreover, independent auditors appointed through a bid process exclusively perform the audits. Our results suggest a considerable variation on audit fees which is mainly driven by politically related factors indicating the importance of relevant theoretical anticipations in audit pricing in the public sector. Agency costs appear strong enough to explain audit pricing. We also confirm prior findings on the significance of audit complexity and size. Results also suggest that audit fees are reduced when an internal team dedicated to accrual accounting is appointed. Therefore, our conclusions offer practical implications for policy setters and regulators in the public sector in relation to audit quality.     

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.     

Examining the differences between United States Generally Accepted Accounting Principles (U.S. GAAP) and International Accounting Standards (IAS): implications for the harmonization of accounting standards

Current trends indicate continued movement towards the harmonization of accounting standards, but not without difficulty and concern. At times, the political and financial market pressure, push the movement in opposite directions. The paper discusses the conceptual framework used in establishing Global Generally Accepted Accounting Principles (GAAP) (International Accounting Standards, IAS) and U.S. GAAP. Numerous transactional examples are illustrated under both Global GAAP and U.S. GAAP treatment. Several country specific references are presented demonstrating the difficulty in achieving harmonization. Implications for harmonization of accounting standards include arguments “for” and “against” Global GAAP.     

The First Quarter Century of the GASB (1984–2009): A Perspective on Standard Setting (Part Two)

The Governmental Accounting Standards Board (hereafter GASB or Board) was established in April 1984 as the authoritative accounting standard‐setting body for state and local governmental entities in the United States. There are over 87,000 state and local entities in the country and for the most part these entities are required to comply with the generally accepted accounting principles established by the GASB; hence, the standards promulgated by the GASB are significant. On 30 June 2009, the GASB completed its twenty‐fifth year of standard setting. Because of the Board's influence and the importance of its mission, an increased understanding of the GASB and its accomplishments during its first 25 years of existence is important. This is the second of two papers which together provide a complete sequential treatment of the GASB's operational history through the end of its first quarter century. The first part provided an historical perspective about municipal accounting issues from colonial times to 2009 and included appendix materials identifying the composition of the Board and biographical material on key personnel. The first paper concluded with a review of the relationship of other governmental standard setting bodies at the Federal and the International level. This paper provides an overview of the future challenges faced by the Board and supplies a digest of the standards including appendix and a synoptic summary of the standards the Board has promulgated by topic and by standard number.     

The First Quarter Century of the GASB (1984–2009): A Perspective on Standard Setting (Part One)

The Governmental Accounting Standards Board (hereafter GASB or Board) was established in April 1984 as the authoritative accounting standard‐setting body for United States state and local governmental entities. There are over 87,000 state and local entities in the country, and for the most part these entities are required to comply with the generally accepted accounting principles established by the GASB; hence, the work of the GASB is significant. On 30 June 2009, the GASB completed its twenty‐fifth year of standard setting. Because of the Board's influence and the importance of its mission, an increased understanding of the GASB and its accomplishments during its first 25 years of existence is important. This is the first of two papers which together provide a complete sequential treatment of the GASB's operational history through the end of its first quarter century. This first paper begins with an historical perspective about municipal accounting issues from colonial times to 1934. The origin of professional self‐determining standards is the feature of the next section, identifying standard‐setting bodies that contributed to municipal accounting from 1934 to 1984. The early activities of the Board are then reviewed. Two appendices are provided to detail the composition of the Board during its first quarter century, along with biographical information about the early Board members and later Chair and Vice Chair personnel. This segment concludes with a review of the relationship of other governmental standard setting bodies at the federal level and the international level.     

Agricultural Accounting in the Nineteenth and Early Twentieth Centuries: The Case of the Noble Rucellai Family Farm in Campi

This paper was inspired by the discovery of some accounting books relating to the 'Rucellai' Family Farm (in Tuscany), and examines accounting in proprietorship farming in the nineteenth century. By conducting a source recognition, it was possible to demonstrate the role of agricultural accounting in the management control process. The authors first trace the historical context and accounting theory which characterised Tuscan rural areas during the nineteen and twentieth centuries, then utilises the Family Farm book to analyse agricultural accounting practices. From this analysis also emerges the important role of the farmer as administrator, who was held accountable for the yield of the estate.     

Constituent Participation in the Australian Public Sector Accounting Standard-Setting Process: The Case of ED 55

The Australian public sector has recently undergone a period of intense reform including a comprehensive reform of financial reporting policies. A major aspect of this reform is the involvement of the Australian accounting profession in the formulation of financial reporting standards through the Public Sector Accounting Standards Board (PSASB). Despite this extensive change, scant research has examined constituent participation in the Australian public sector accounting standard-setting 'due process'. This paper considers the regulatory model adopted for accounting standard-setting in the public sector in Australia and identifies the implications of this model for constituent access to the 'due process'. In particular, the co-operation between the PSASB and the various regulatory bodies in each Australian jurisdiction suggests that these bodies may have more direct influence over the standard-setters than other constituents. The submissions made on ED 55 Financial Reporting by Government Departments are examined as a case study of the 'due process' as it operates in the public sector. Different constituent groups were found to respond in varying proportions, to hold conflicting positions on some issues contained in ED 55 and to use different strategies to present these positions. The research identifies a lack of input by the major group affected by the proposed standard, the account preparers (government departments). In addition, account preparers which did respond to ED 55 were found to use less sophisticated lobbying strategies than other respondents who weighted their responses by commenting on a greater number of issues and by supporting their position with conceptual arguments. These results support the contention that some constituents have favourable access to the 'due process' and that standard-setters may not have received all pertinent information from affected and/or knowledgeable constituents.     

The contract,accounting and trust: A case study of an international joint venture (IJV) in the United Arab Emirates (UAE)

This paper reports on the results of a case study that examines the effect of the contract and accounting on inter-organisational trust in an international joint venture (IJV). The empirical setting of the research was an IJV relation between a United Arab Emirates (UAE) firm and its western partner. Data were gathered from multiple sources, including documents, observations, interviews and discussions with managers. The paper aims to explore the process of trust development and the role of the contract and accounting in this. We find that trust developed differently for the partners. Moreover the trust concerns of the partners were not the same. Based on this we conclude that trust was not automatically reciprocated. Instead it needs relating to other items such as the contract, accounting and also the institutional environment. The open-book accounting we observed could only be termed ‘partial’ because the western partner had access to the local partner's books but not the vice versa. But this partial open-book accounting created conflicts between the partners. We argue that developing one kind of trust through one particular medium may help one party but may damage the relationship between the partners.     

The Timing and Subsequent Performance of Initial Public Offerings (IPOs) on the Johannesburg Stock Exchange

Companies that have listed on the Johannesburg Stock Exchange by means of a public offering between 1980 and 1991 have subsequently performed poorly. This long run post issue performance is remarkably consistent with the South African evidence for seasoned rights issuing companies and the international evidence for both initial public offerings (IPOs) and seasoned equity offerings (SEOs). Over the four years post issue, the newly listed companies earned an average return of 18.0% as opposed to 81.5% for a size-matched sample of seasoned companies. This study adds to the increasing body of international evidence suggesting the IPO under performance 'puzzle' referred to by Ibbotson (1975), Loughran and Ritter (1995) and Spiess and Affleck-Graves (1995) is not simply sample or country specific.     

Ownership and Production Costs: Choosing between Public Production and Contracting‐Out in the Case of Swedish Refuse Collection

Many comparisons of public and private firms use a public/private ownership dummy variable to capture cost differences. If, however, public and private firms use different production technologies, the dummy‐variable approach is misspecified. Data from public and private firms should not be pooled. Secondly, selectivity bias may arise, making it more difficult to identify cost differentials that actually exist. Thirdly, if data should be pooled, the resulting empirical model may be logically inconsistent. This paper compares public and private firms using the refuse collection costs of 170 firms in 115 Swedish municipalities. First, public production costs were 6 per cent lower than private production costs. Secondly, cost differences did not affect producer choice. It is crucial to adjust for selectivity. Data for private and public firms should not be pooled. The dummy‐variable model is misspecified.     

The Effect of Regulatory Harmonization on Cross‐Border Labor Migration: Evidence from the Accounting Profession

The paper examines whether international regulatory harmonization increases cross‐border labor migration. To study this question, we analyze European Union initiatives that harmonized accounting and auditing standards. Regulatory harmonization should reduce economic mobility barriers, essentially making it easier for accounting professionals to move across countries. Our research design compares the cross‐border migration of accounting professionals relative to tightly matched other professionals before and after regulatory harmonization. We find that international labor migration in the accounting profession increases significantly relative to other professions. We provide evidence that this effect is due to harmonization, rather than increases in the demand for accounting services during the implementation of the rule changes. The findings illustrate that diversity in rules constitutes an economic barrier to cross‐border labor mobility and, more specifically, that accounting harmonization can have a meaningful effect on cross‐border migration.     

The Evolution of Client‐Consultant Relationships: A Situational Analysis of IT Consultancy in the Public Sector

This research proposes a situational understanding of the role of con‐sultants. The analysis is grounded on a case from Italian local government over a ten year period. The case is one of the earliest adopters of an ERP system in the public sector. The paper extends current understanding of client‐consultant relationships by developing a specific picture of changes in the role of consultants over time. In the case analysed, multiple changes in client‐consultant relationships occurred. They were due to particular historical contingencies in the evolution of the structure of expertise in the field. The case contributes to knowledge on consultants by contrasting bilateral and instantaneous accounts of client‐consultant relationship with a perspective that overcomes the distinction between context and individual action.     

Govern(mentality) and Accounting: the Influence of Different Enlightenment Discourses in Two Spanish Cases (1761–1777)

New perspectives in accounting history have uncovered previously unattended relations between accounting and government. Earlier Foucauldian analyses of governments have not explained sufficiently the relations of accounting practices to governmental discourses in order to manage populations.
This work uses the governmentality frame to analyse the role of accounting in two organizations located in the south of Spain in the second half of the eighteenth century: the New Settlements of Sierra Morena and Andalucia (NSs) and the Royal Tobacco Factory of Seville (RTFS). The period studied is remarkable because it was the apogee of the Enlightenment in Spain. From the standpoint of government, this period facilitated a new way to manage populations. The present work has drawn on Foucault's concept of governmentality in order to discover how accounting worked in two government-supported organizations independently of the discourses that pervaded each one. Drawing on the reticulation of the space, the use of rules and accounting from the governmental perspective, we analyse those institutions.
The article concludes that the reticulation of space is an essential apparatus to exert action at a distance; the rules are a type of government technology; and, overall, accounting is a practice for the mastery of the population independently from the discourse of the institution.     

The impact of quantitative easing (QE) on the cost of debt in project finance investments

Recession-driven low inflation and high spreads have increased the cost of debt in public sector project finance investments, therefore reducing private sector profits and bankability. This paper investigates the impact of quantitative easing by central banks, showing that it can stimulate economic growth producing shared public and private benefits.     

Public Pension Reform in the United Kingdom: What Effect on the Financial Well‐Being of Current and Future Pensioners?*

Unlike many tax and benefit changes, reforms to public pension programmes take many years to have their full effect. This paper examines the effect of reforms to the public pension programme in the United Kingdom on the state retirement incomes of current generations of pensioners and on the prospective state incomes of future generations of pensioners. We show that, for an individual with lifetime earnings close to male average earnings, the UK pension system is at its most generous to those reaching the state pension age around the year 2000, but that the introduction of the state second pension and the pension credit postpones this peak for individuals on lower incomes and for those with substantial periods out of paid employment spent with caring responsibilities. We also consider how the ‘mix’ of benefits, particularly between the contributory and income‐tested sectors, could change over time, and the impact that this would have on incentives to save for retirement.