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.     

Public sector reforms and public private partnerships: Overview and research agenda

The purpose of this editorial paper is to introduce the special issue and outline its majorthemes. This special issue of Accounting Forum aims to stimulate interdisciplinary and critical research on public sector reforms, particularly in the context of Public Private Partnerships and other public sector organisations. The editorial also seeks to provide a research agenda and new directions for more research in the field, considering the ambiguities of this hybrid organisational forms and the complexity of accounting and accountability reforms.     

A snapshot of public finance research from immediately prior to the pandemic: IIPF 2020

As the COVID-19 pandemic has shaped public policies and government finances, it has also influenced the topics that public finance economists are researching. Because the 2020 International Institute of Public Finance Congress featured papers that were submitted prior to the start of the pandemic, the Congress allows us to reflect on the state of research prior to the pandemic’s shock to both fiscal policies and our worldview. In this article, the Editors of International Tax and Public Finance reflect on interesting papers that were presented at this internationally representative conference in public economics. The exercise provides insight on where the field of public economics was heading prior to the pandemic and will provide a yardstick to see how the field evolves in the coming years afterward.

     

Public service ethics in a changing world

The past 25 years have seen profound changes in the management and delivery of public services throughout the UK and elsewhere. Such developments, known as New Public Management (NPM) have taken hold, to a greater or lesser extent, in many OECD countries. These developments have had an impact upon the ethics of public service in a number of different ways. This paper explores four themes arising from these developments, i.e. (1) regulatory regimes and performance; (2) changing organisational structures, relationships and partnerships; (3) the public service ethos and (4) individual virtue.The themes are located within a complex set of mutual relationships involving individuals, organisations, government and society. Ethical behaviour will reflect a balance between these relationships, expressed in decisions taken within a ‘problem space’ characteristic of public services.     

Accounting control,governance and anti-corruption initiatives in public sector organisations

This special issue focuses on the interactions between accounting, public sector organisations and the socio-economic and political environments in which they operate, with a specific focus on the critical analysis of policy and practice in the fight against corruption. The aim of the special issue is to disseminate knowledge to enable a more sustainable, accountable and less corrupt public sector, regardless of where it is located in the world. It presents the work of a global community of scholars engaged in research projects on policies and strategies related to accountability, transparency, auditing, regulatory disclosure, governance, investor protection and anti-corruption initiatives in public sector organisations. The papers presented here address many different angles of corruption and aspects of the way in which it is reported using a broad range of methodologies, theoretical frameworks and research locations. Collectively, these papers demonstrate that more attention needs be given to investigating the human cost associated with illegal activity that leads to human suffering, inequality, and lifetime costs. They further emphasise that we have much to learn about regulatory disclosure and jurisprudential practice in the fight against fraud and corruption.     

RESTRUCTURING THE NHS AGAIN: SUPPLY SIDE REFORM IN RECENT ENGLISH HEALTH CARE POLICY

Introducing market-like structures to public services is a key aspect of New Public Management. The restructuring of the NHS into an internal market of the 1990s is an example. Recent policies have further developed this notion. A new aspect of the restructuring is a focus on increasing the diversity of types of provider of healthcare organisations. The objectives of the restructuring policy entailing the increase in supply side diversity are examined, and the challenges raised by these changes are discussed. It is argued that the government is too optimistic about the benefits, and insufficiently concerned about possible undesirable consequences.     

Loosely Coupled Results Control in Dutch Municipalities

This paper analyses the implementation of the ‘dual system’ in Dutch municipalities which was part of a package of New Public Management‐reforms. This system was stimulated by Dutch central government and called for more accountability for performance of municipal managers and the board of mayor and aldermen, as well as for the use of more output and outcome information. Interviews of participants on four different hierarchical levels in 12 municipalities show that the practices of output management at different hierarchical levels are only loosely coupled to each other (‘vertical loose coupling’). We also found some degree of ‘horizontal loose coupling’ at each hierarchical level between result orientation, the development of output indicators and the use of output information for performance evaluation. The paper analyses the reasons why municipalities encounter difficulties in designing a comprehensive and coherent performance management system.     

The effects of environmental,social and governance disclosures and performance on firm value: A review of the literature in accounting and finance

This paper not only attempts to survey the burgeoning literature on environmental, social and governance disclosures and performance and their effects on firm value, but its focus also lies on highlighting stylised observations coming from the most recent work that has not yet become part of the ‘conventional wisdom’ in the field. In addition, it outlines some of the crucial knowledge gaps and interesting questions that have not, as of yet, been addressed and thus outlines a potential agenda for future research on socially responsible investing. Lastly, it introduces the papers published in this special issue of the British Accounting Review.     

New development: The IPSASB project on accounting for social benefits—IPSAS 42

ABSTRACT

This article explores the work undertaken by the International Public Sector Accounting Standards Board (IPSASB) in developing IPSAS 42 on ‘Social Benefits’, which was probably the IPSASB’s most challenging project to date. The authors explains IPSAS 42’s approach to liability recognition with the overriding considerations behind the IPSASB’s final decisions. In 2012, the EC identified the lack of a standard on social benefits in the IPSASB’s suite of standards as one of the arguments against the application of IPSASs in the EU, so this article is important in terms of the IPSASs being used as the basis for EPSASs (European Public Sector Accounting Standards).     

From Privatised to Hybrid Corporatised Higher Education: A Global Financial Management Discourse

Abstract: This study addresses the emerging financial management focus of publicly and privately funded universities in the global marketplace, focusing on their financial management strategies. Despite regional and national differences, both public and private universities are found to exhibit a global trend towards operating as predominantly market funded commercial organisations. In many countries this reflects the insinuation of New Public Management philosophies into university missions and strategies. University objectives show signs of serving an underlying financial imperative often driven by constrained government funding of higher education and the expansion of private higher education institutions. Revenue expansion through mass education and engagement in the education export trade emerge as primary financial management strategies for a self‐generating profit oriented business model of higher education.     

Towards democratic governance of uncertainty? Contesting notions of participation,control and accountability

Managing risk in international society has posed a new challenge not only to states and international organisations, but also to experts, scientists and citizens. It has generated a demand for new sets of laws, regulations, instruments and governing bodies to tackle various risks such as natural disasters, economic and financial crises, and unintended consequences of policy reforms. Accordingly, new modes of interactions between states, experts and citizens seem to be emerging across countries and in different high-risk sectors. Little research has been done to illuminate interactive and dynamic aspects of emerging governance and regulatory arrangements and their impact on participation, control and accountability in liberal democracies. This special issue has assembled research papers and commentaries from practitioners and academics which critically examine these themes and explore what future research on the ‘world risk society’ could offer to political science and beyond.     

e‐Government in the Irish Revenue: The Revenue On‐Line Service (ROS): A Success Story?

The Revenue Online Service (ROS) is one of the first e‐government initiatives introduced in Ireland. The primary purpose of this paper is to examine this reform initiative in the Irish Revenue, assess it through the lens of the New Public Management (NPM) and e‐government literatures and to critically assess whether its implementation can be deemed ‘a success story’. Many of the components of NPM were evident in the introduction of ROS which facilitated its implementation: decentralisation, the use of private sector styles of management, an emphasis on performance measurement and a search for efficiencies. ROS has, inter alia, transformed both access to taxation information for taxpayers and their agents, and the system of tax payment and filing in Ireland. Assessing its implementation in terms of the objectives of an e‐government initiative, ROS is ‘a success story’, and the Irish Revenue organisation has clearly benefited from its introduction in many ways. Indeed, there is evidence to suggest that tax/accounting practitioners are also beneficiaries of this e‐government initiative. However, a critical analysis of the findings of this study contests the idea that ROS is an unqualified success story.     

公共价值创造与政府会计改革研究

新公共管理理论自提出以来,对削减成本、提高效率等起到了重要的作用,但是难以反映政府提供公共服务的其他价值内涵。公共价值管理模式解决了新公共管理理论过于强调技术理性的缺陷,对政府活动、政策制定和服务提供产生重大的影响,政府会计作为信息收集、价值判断和管理矫正的重要工具,其改革应以公共价值为导向,充分发挥其在公共价值创造中的重要作用。     

Public Sector Reforms: Changing Contours on an NPM Landscape

Previous studies suggest that public sector accounting has moved from Public Administration (PA) to New Public Management (NPM) ideas and, more recently, towards a New Public Governance (NPG) approach. These systems are presented as mutually exclusive and competing. Focusing on accounting changes in the UK central government, this paper explores whether movements towards NPG ideas can be identified at the level of political debate. No evidence is found that NPM is a transitory state. Rather, the findings demonstrate that political debate continues to utilise predominantly NPM arguments, with the three systems viewed as containing complementary, rather than competing, schemes.     

What role for social scientists in risk expertise?

When it comes to risks – health and environmental risks, like those linked to the use of nanotechnologies, pesticides, etc. – three main groups of actors are easily identified, brought together through boundary organisations such as environmental and sanitary risk agencies: the natural and technical scientists, who provide their expertise to assess risks (especially toxicologists, epidemiologists and microbiologists); the policy makers, who take decisions regarding risk management and risk regulation; the lay public, who are more and more involved in participatory frameworks. Sometimes three other groups of actors are added: the ‘economists’ who can for instance conduct cost–benefit assessments or multi-criteria analyses (especially ecological economists, public economists, political economists and social economists); the ‘philosophers’/‘ethicists’ who can use ethics to highlight moral choices and responsibilities in face of risks; and the ‘jurists’/‘legal experts’ who can justify authorisation or interdiction according to law. Inversely, there is a group of actors which is not clearly identified, that of social scientists, even though a considerable quantity of social science knowledge on risk has been produced. Why is there such a discrepancy? This article, based on a critical review of the literature, aims to make sense of the fuzziness surrounding the involvement of social scientists when it comes to risk expertise. The article shows that one reason for this puzzling situation is to be found in the gap between what social scientists often want to do when they are called in as risk experts and what natural scientists and public policy makers actually expect from them.     

Back to basics: What do we mean by environmental (and social) accounting and what is it for?—A reaction to Thornton

This paper seeks to explore whether mainstream financial accounting when it appears to genuflect to the ‘environment’ actually has anything substantive do with – or to say about – the natural world. It seems important to remember that conventional financial accounting is a predominantly economic – and not very internally logical – practice which has no substantive conceptual space for environmental or social matters per se. It has no space for what Thielemann calls ‘market alien values’ – values such as environmental concern. The paper re-examines why we might account at all and revisits why accounts which explicitly recognise environmental (and social) issues can be potentially very important indeed. What seems clear is that whilst any account that sought to reflect environmental and social exigencies might choose to use the technologies of accounting – notably debits and credits – there is no essential reason why they must do so. If we wish to account for an environment, we almost certainly would not start with the somewhat bizarre and tortured foundations of conventional financial accounting.     

The prophecy of Ulrich Beck: signposts for the social sciences

Abstract

This special issue on the legacy of Ulrich Beck is aimed to stimulate reflection both on the specific uses to which Beck’s conceptual and theoretical apparatus can be put within risk studies and the wider significance of his academic project for the social sciences. In this end-piece, we draw out the key themes which surface in the different contributions relating to five particular areas: the nature of risk; advancements in methods; issues of non-knowledge and uncertainty; the development of cosmopolitan risk communities; and the situated character of individualization. We discuss the implications of the accounts contained in this special issue and reflect on the impact and influence of Beck’s sustained engagement with colleagues around the globe, concluding that the concepts and methods that Beck bequeathed the social sciences are set to live on and thrive.     

Councillor ethics: a review of the Committee on Standards In Public Life’s ‘Local Government Ethical Standards’

ABSTRACT

The Committee on Standards in Public Life’s (CSPL) 2019 report Local Government Ethical Standards presents a detailed review of local government ethics in England, aiming to highlight both best practice and areas for improvement. In so doing, it makes 26 recommendations ranging in importance. Likely to be one of the most important, and most controversial, is a recommendation to allow local authorities to suspend democratically-elected councillors for up to six months. This paper presents a review of the report and its recommendations, with a particular emphasis on the ‘values-versus-compliance’ distinction in ethical regulation.     

Financing the public library service

Charging for certain services to the public is one way of increasing the funding for public organisations. But how far does charging distort the purposes and management of those organisations? A critique of the recent consultative paper ‘Financing our Public Library Services: Four Subjects for Debate’ clarifies some of the issues.     

The Seven Deadly Sins of Performance Auditing: Implications for Monitoring Public Audit Institutions

Performance auditing is a longstanding feature of democratic government in many countries. It aims to lift the efficiency and effectiveness of public sector organisations, but numerous authors have voiced scepticism about its ability to do so. From three decades of performance auditing literature, this paper distils seven critiques of performance auditing: ‘anti‐innovation’, ‘nit‐picking’, ‘expectations gap’, ‘lapdog’, ‘headline hunting’, ‘unnecessary systems’ and ‘hollow ritual’. The paper concludes that the critiques are not valid in all cases, but serve to categorise risks to be managed in the design of performance audit programs and associated institutional arrangements. In light of the critiques, the paper proposes desirable elements of frameworks for monitoring and reporting the performance of institutions with performance audit mandates.