The impact of a changing financial climate on a UK local charitable sector: voices from the front line

Forced to compete with private and public sector providers, charities experience tensions as the quest for a more commercially-oriented position may conflict with their social imperative. Little attention has been given to understanding the experiences of local charities as service providers. This paper captures the reactions of those working on the charity front line.     

Attracting private sector participation in infrastructure investment: the UK case

This article examines the potential for private sector organizations to contribute to public sector innovation. Specifically, the study explores how partnering with the private sector can go beyond delivery and extend to development of new services and new markets. The term ‘commercialization partnership’ is coined for such partnerships and the article describes an exploratory investigation of this emerging form of innovation.     

Factors influencing the role of management accounting in the development of performance measures within organizational change programs

Many companies are undergoing organizational changes encompassing innovative approaches to organizing production processes, restructuring work practices and developing new planning and control mechanisms. This paper explores the role that management accounting played in the development of performance measurement systems within five organizations implementing change programs. The major case study is of a large manufacturing firm undertaking changes which included the development of team structures, the adoption of a customer-focused strategy and the implementation of new performance measurement systems. In this company, a lack of integration of operational performance measures with strategic priorities contributed to poor integration of team activities with overall strategy. The paper proposes five interrelated factors that may help explain the extent to which management accountants contribute to the development of integrated performance measures and change programs. Case evidence drawn from a further four firms is presented to provide some validation of conclusions drawn from the primary case study.     

The association between organizational culture and the use of management initiatives in the public sector

This paper examines the association between five factors in O'Reilly et al. (1991) Organizational Culture Profile and the use of Activity Management (AM), Total Quality Management (TQM) and Employee Empowerment within public sector organizations. The results show that the use of AM and TQM is lower in public sector organizations than in their private sector counterparts, and is facilitated by an organizational culture of Outcome Orientation and Attention to Detail. The extent of use of Employee Empowerment is similar across the two sectors, and is facilitated when public sector organizations exhibit higher Respect for People and Innovation.     

Directly-elected mayors and the austerity agenda: lessons from the German experience

This paper identifies the key factors that have affected the ability of elected mayors in some German cities to introduce austerity measures in response to serious financial problems. Drawing on a detailed study of six municipalities in North Rhine-Westphalia, it highlights how the mayor's managerial and/or legal experience, as well as the party-political make-up of the council, played a vital role in determining the success of savings initiatives. Such findings have important implications for countries such as England, where some have argued for the introduction of elected mayors in order to improve decision-making capacity within local government.     

Audit report lags in the Belgian non-profit sector: an empirical analysis

In the current study, we examine audit report lags (ARLs) among a large sample of Belgian non-profit organisations (NPOs). Doing so, we (i) add to the very recent, but rapidly growing literature on financial reporting and auditing in the non-profit sector; and (ii) test the generalisability of findings regarding the ARL from the for-profit sector to the non-profit sector. We note that ARLs for Belgian NPOs are substantially larger than those reported in prior studies based on for-profit firms, which can be explained by differences in reporting incentives (e.g. the absence of capital markets pressures). In addition to determinants of the ARL that have been identified in prior studies based on for-profit firms (e.g. auditor business risk), we find that also the way of funding the organisation (i.e. the degree of reliance upon donations and/or grants) and its specific area of activity are significantly related to the ARL. The requirement of an external financial statement audit (together with new accounting and financial reporting requirements) for Belgian NPOs was only recently introduced (i.e. from 2006 onwards). We do not observe a decrease in ARLs in the two years after the introduction of the new legal obligations.     

Smart work and hard work: explicating a learning orientation in strategic management accounting

This paper examines the skills and aptitudes necessary to undertake a strategic management accounting project. It argues that individuals involved in such projects are required to work both smart and hard. This argument is developed theoretically by reference to the work of educational psychologists who have identified two different types of goal orientation which people pursue in achievement situations: the learning orientation and the performance orientation. Evidence that strategic management accounting requires a learning orientation is provided by means of a case study which describes its use in a competitive tendering situation. This is followed by a discussion of the potentially symbiotic relationship of strategic management accounting and organizational learning. The discussion leads to the specification of a research agenda that may have significant implications for the practice and learning of management accounting.     

Accounting for the Public Sector at a Time of Crisis

This Special Issue is based on papers initially presented at the ‘Accounting for the Public Sector at a Time of Crisis’ Conference at the Centre for Not-for-profit and Public-sector Research, Queen's University Belfast, UK in 2018. The public sector consists of organizations that are owned and operated by government; organizations that exist to provide goods and services for a country's citizens. What is particularly distinctive about such organizations, and what makes them different from businesses, is that they are (or, at least perhaps, should be) not-for-profit. In addition, they frequently have wide social and cultural goals that are central to what they do. They are pervasive in most societies. Yet, it is argued, they face crisis on a number of fronts: in terms of the influence of potentially inappropriate, business-like new public management ideas related to performance management and the embracing of related accounting and budgeting approaches; and in terms of the impact of austerity, following the Great Recession in 2008. In such a context it is suggested that public sector governance, accounting, and accountability systems are heavily involved. The papers included in this Special Issue present an opportunity to reflect on aspects of this crisis in terms of how it connects with accounting systems and accounting changes. Key arguments of these papers, and overarching themes of this Special Issue, are explored in this editorial.     

Managing the performance of arts organisations: Pursuing heterogeneous objectives in an era of austerity

This study provides insight into how two national arts organisations located in London manage their performance in the pursuit of heterogeneous objectives, within the confines of external influences. These organisations significantly rely on the government for funding and are therefore required to implement policy initiatives, albeit at arm's length from the government. Performance management systems (PMSs) were primarily designed to enable trustees to discharge their statutory duties of collecting, preserving, and displaying objects and works of arts, which were reflected in a management agreement containing the government's strategic priorities. The findings show that the changing politico-economic climate has subtly started to change values, accountability relationships and realities in the field of arts and culture. Whilst arts organisations emphasised socio-cultural objectives in strategic planning and operational processes, external pressures arising from austerity have subtly started to displace socio-cultural values. Business language, vocabularies, and tools commonly used in the private sector are insidiously taking root in arts organisations. Austerity provided a signal to executives that the survival of their core activities was at stake, and they have to engage in income generating activities to support their core activities.     

Public sector reform implications for performance measurement and risk management practice: insights from Australia

In 2013, the Australian Public Service was subject to a process of governance, accountability and performance reform. The implications of these reforms for micro-level practices are unknown. The authors’ empirical findings show that the reforms developed in three stages, each of which has significant implications for embedding performance measurement and risk management within a broader management control system.     

Management accounting and the challenge of strategic focus

The paper presents a case study of management accounting in a company that had been a highly diversified conglomerate but was implementing a new strategy of product market focus combined with a more multinational scope. Formerly subject to a simple but rigorous form of financial control, the new organizational identity of becoming a high-growth, high-technology company posed fresh challenges for its control style and, in particular, for the role of management accounting. The paper draws on self-referential systems theory in order to analyse the paradox that while an organization can become more focused on particular markets and technologies, its management accounting seems to become more diffuse and differentiated. As the company sought to develop a different corporate epistemology through the reproduction of a fresh identity, it established new forms of corporate communication through its quality and performance management systems. Autopoietic theory would acknowledge that management accounting should provide some system guidance but would warn against the possible danger that some forms of performance control may damage company self-production.     

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.     

There may be trouble ahead: exploring the changing shape of non-profit entrepreneurship in third sector organizations

This paper explores the challenges and benefits of managing non-profit organizations and social enterprise activities in an increasingly complex and difficult environment of austerity, reduced public sector funding, and higher competition for resources. It draws on the experience of women senior managers within the context of small/medium third sector organizations in Wales. Findings indicate diverse perspectives, but a consensus on the relevance of entrepreneurial behaviour to the third sector, and the importance of relationship-building and collaboration within gendered entrepreneurial practice.     

Asset value management in the Portuguese real estate sector

This paper analyzes whether real estate investment fund managers use asset valuation discretion strategically to achieve financial reporting objectives. Portuguese real estate investment funds represent a unique opportunity to investigate executive behavior regarding accounting choice, as fund managers may choose to use historical cost, fair value or a mixed system (historical cost with internal revaluations) to value fund properties. We also investigate the factors that influence this strategic behavior. Empirical results confirm that fund managers manage asset valuations in order to avoid net asset value declines, particularly in a period of financial distress. We also observe that funds with a higher level of past unconditional conservatism are more likely to manage asset values. With respect to corporate governance issues, we conclude that audit quality reduces managerial discretion and that the conflicts that may arise between fund management company shareholders and fund participants due to management fees do not seem to have impact on fund managers’ opportunistic behavior.     

Risk management challenges of shared public services: a comparative analysis of Scotland and Finland

This paper analyses the risk management challenges of shared service provision in Scotland and Finland. Policy context and institutional frameworks largely determine the local choice of organizational arrangements and so the risks that arise and the way they are shared. Finnish municipalities have developed joint municipal arrangements for sharing services, whereas Scotland's shared service challenges are related to the historical separation of health and social care services and the search for cost savings while improving service effectiveness.     

Outcome,process and support: analysing aspects of innovation in public sector organizations

ABSTRACT

The authors present an analytical model to distinguish between different aspects and modes of innovation. By showing how innovation in the public sector differs from the private sector, this paper is an important stepping-stone to understanding and supporting innovation in the public sector.     

Management control packages: a literature review and guidelines for public sector research

ABSTRACT

The effectiveness of a management control (MC) element, such as performance measurement, may depend on other MC elements, such as organizational values and training activities. This is why MC elements should be studied ‘as a package’, instead of as isolated elements. Although examining MC elements as a package has the potential to make significant contributions to ongoing debates, this approach is largely absent in the academic public sector management literature. This paper reviews the MC package literature, examines its implications for public sector research and practice, and aids future research by discussing research design choices and research directions.     

Dynamic web server construction on the intranet using a change management framework

As organizations increasingly emphasize effective collaborative working through networked systems, the World Wide Web (WWW) server and associated intranet technologies are gaining wider acceptance as a new enterprisewide information systems paradigm. In an intranet collaborative working environment, data used in the web server are usually modified more frequently than are those used in a traditional Internet web server. Thus, to support synchronous collaboration without causing any inconsistency among multiple concurrent users, the intranet web server must provide users with synchronized and consistent views of shared data. However, current web technologies have limitations in supporting this, largely because the existing Hypertext Transfer Protocol (HTTP) is unidirectional and does not allow web servers to send messages to their web browsers without first receiving requests from them. This paper proposes a web-based change management framework that can overcome such limitations and support synchronous collaboration in an intranet computing environment. The web-based change management framework facilitates management of dependency relationships between shared data in the web server and dependent user views in the client web browser and allows the web server to actively propagate changing details of the shared objects to all users referencing them. On the basis of the change management framework, we propose a dynamic web server that can support synchronous collaboration in various intranet-based collaborative systems including concurrent engineering design systems and electronic approval systems. The prototype system of the dynamic web server is developed on a commercial Object-oriented Database Management System (ODBMS) called OBJECTSTORE using the C++ programming language. Copyright © 1999 John Wiley & Sons, Ltd.     

Defining spending reviews: a proposal for a taxonomy,with applications to Italy and the UK

After the 2008 global financial crisis, many governments introduced spending reviews (SRs). The paper provides a valuable definition of the concept of the SR by proposing a taxonomy of the main organizational and methodological aspects involved in the SR process. The paper identifies two different SR models, which feature alternative approaches to cutting back spending. The authors highlight some important considerations when looking to make sustainable and sensible cuts in spending.     

Performance management: a framework for management control systems research

This paper proposes a framework for analysing the operation of management control systems structured around five central issues. These issues relate to objectives, strategies and plans for their attainment, target-setting, incentive and reward structures and information feedback loops. Their central focus is on the management of organizational performance. Because the framework has been inductively developed, its application is `tested' against three major systems of organizational control, namely budgeting, economic value added and the balanced scorecard. In each case, neglected areas of development are exposed and fruitful topics for research identified. It is believed that the framework can usefully be developed further by its use in analysing other instances of management control systems practice, and that case-based, longitudinal studies provide the best route to this end.