#2910 - Topic 1 Reading Accounting And The Pursuit Of Efficiency - Accounting in the New Public Sector

Accounting records provide a way of freezing the decisions of the past (Bahmueller, 1981)

‘Facts’ can thereby be created out of dissent and disagreement

Accounting is already centrally implicated in the institutional frameworks, language and patterns of power and influence that characterize the public sector

The legitimacy and value of at least some State actions and prerogatives are now being questioned from the perspective of a very different ideological stance

A new way of examining and managing the State is emerging

• And accounting is being implicated in that process

Agencies of the State are now being asked to account for their, aims, actions and achievements

‘Value for money’ has now entered the vocabulary of government

New economic visibility

Economic calculations are now being seen as a way not only of reforming the management of the State but also of influencing the priorities which are given in policy determination and decision making

Organisations tend to increase their investment in economic calculation and visibility during periods of restraint

• ‘newly poor behavour’ (Olofsson and Svalander, 1975)

Financial standards, budgets and plans become both more detailed and more subject to change

Accounting in the United Kingdom has tended to flourish during just such periods of economic difficulty

Auditing profession – emerged in the latter part of the 19^th century as a product of attempts to reform the practice of bankruptcy administration

Cost accounting and the elementary practices of financial control started to play a more important role in manufacturing organisations faced with a rising real cost of labour at a time of general deflation and recession

The slump of the 1930s saw a dramatic rise in the role and status of accountants in industry as members of the auditing profession started to enter the upper echelons of manufacturing industry

Continued economic restraint has given a new urgency to demands to improve the efficiency of management in the public sector

Traditionalism and sluggishness of decision processes in the public sector is noted repeatedly

Efficiency remains a very real and persuasive dream

Appeals are made to the potential offered by improved costing procedures, more specific criteria for resource allocation, improved management information systems, investments of administrative efficiency and better audits

In the public sector, accounting has been implicated with the development of notions of stewardship and accountability

Accounting information has flowed from agencies of the State to Parliament and the public at large in recognition of the emerging constitutional requirement for the former to provide an account to the latter

1960s and early 1970s – notions of social, environmental and energy accounting and auditing were discussed and experimented upon

Concepts such as ‘freedom of information’ and ‘the right to information’ started to enter the language of political negotiation and debate

Accounting maintained its emphasis on the economic, and disclosure, rather than access, remained the vehicle by which information flowed

Recent discussions of the advance of public sector accounting in the UK continue to emphasise the narrowly economic

Efficiency and value for money, rather than effectiveness, are the focuses of attention

Administrative rather than public accountability appears to be the problem at issue

Increasing interest of the accountancy profession in expanding its sphere of influence and activity in all areas of the public sector

A rhetoric of economy, efficiency and value for money is now being used to call for a detailed concern with the specific accounting innovations that can service these wider ends

Ambiguity which pervades such notions as ‘efficiency’ and ‘value for money’ when used in public debate

Difficulties of accounting in practice

• It is often easy to arrive at a whole array of costs, efficiencies, and value for money assessments

Making visible what was previously unknown

Those with the power to determine what enters into the organizational accounts have the means to articulate and diffuse their values and concerns, and subsequently to monitor, observe and regulate the actions of those that are now accounted for

Neither organizational participants, nor interested parties outside, can every know the whole extent of organizational life

Direct observation can play a vital role in determining what is seen and value

However, in organizational hierarchies and in those circumstances where geographical distance and organizational boundaries restrict what is directly...