Reshaping Public Sector Accounting: An International Comparative View

Canadian Journal of Administrative Sciences, Dec 2003 by Pina, Vicente, Torres, Lourdes

Abstract

The aim of this paper is to study the governmental accounting transformations carried out in 16 member countries of the Organization for Economic Coordination and Development (OECD) and the European Community, taking the International Public Sector Accounting Standards (IPSAS) as a benchmark. To carry out the study we have used the de facto information disclosed by central government financial reports. The study shows that between the extremes of cash and full accrual accounting the countries studied have put numerous intermediate variants into practice. Accrual accounting developments seem more related to New Public Management (NPM) initiatives than to the cultural categories studied.

Resume

L'objectif de cet article est d'etudier les transformations effectuees dans la comptabilite publique dans 16 pays de l'OCDE (Organisation de cooperation et de developpement economiques) et des Communautes europeennes en prenant comme reference l'International Public Sector Accounting Standards (IPSAS). Pour mener a bien l'etude, nous avons employe Vinformation defait revelee par les rapports financiers du gouvernement central. L'etude prouve qu'entre la methode de la comptabilite de caisse et la comptabilite d'exercice pour toutes les operations, les pays etudies ont mis en place de nombreuses variantes intermediaires. Les developpements de la comptabilite en creances et dettes semblent etre plus en relation avec les initiatives du New Public Management (NPM) qu'avec les categories culturelles etudiees.

Since the 1980s, the public sector has been subjected to transformation in order to enhance the efficiency, effectiveness, and accountability of public service delivery (OECD 1993a, 1994). Hood (1995), Olsen and Peters (1996), and Gray and Jenkins (1995) describe the main features of the transformation brought about in government organizations including a wide range of changes such as deregulation, decentralization, outsourcing, replacement of input control by output control, management by results, assignment of responsibilities, and the introduction of private sector management techniques.

New Public Management (NPM) is concerned with the consequences of policy decisions over the past 20 years about the governance and management of the public sector (Barzelay, 2001). NPM principles have been growing in the Anglo-American administrative culture model (Aucoin, 1996; Hood, 1991; Pollitt, 1990) that has favoured the implementation of structural reforms in the public sector. Some authors such as Premfors (1998), Guyomarch (1999), Pollitt and Bouckacrt (2000), Kettl (2000), Lane (2000), and Christensen and Laegreid (2001) argue that there are significant differences, according to the type of administrative regime, that limit the extent of convergence.

The aim of public sector reforms is to overcome bureaucratic obstacles (Barzelay, 1992) so that managers can use their limited resources more efficiently. The quid pro quo for increased autonomy and discretion on the part of managers or subordinate levels of government is increased accountability for results and the emphasis on more extensive accounting practices (Pallot, 2000). Accounting plays a crucial role in NPM developments as the means by which measurements are made, achievements are documented, and negotiations take place so the language of accountancy assumes a new significance in public service organizations (Lapsley, 1999). Governmental accounting is considered an integral and vital part of public sector reforms (Norman, 1995).

Recently, significant accounting reforms have been taking place in many countries (Guthrie, 1999). Politicians, financial institutions, the media, management consultants, and scholars have all played important roles around the world in creating and maintaining the pressure for transformation, as have a range of supranational organizations and bodies, for example, the OECD, the International Consortium for Financial Governmental Management, World Bank, and the International Monetary Fund, which have spread the Anglo-American experience all over the world.

Under NPM, public sector bodies have transformed (or are in the process of transforming) their financial statements to incorporate accrual accounting principles (Olson, Humphrey, & Guthrie, 2000). NPM reforms include attempts to institutionalize accrual accounting for budgetary and external financial reporting purposes in order to provide useful information about liabilities, debt, usage of assets, and the cost of public services (Guthrie & Humphrey, 1996).

In several countries there is considerable debate about the scope and format of accrual accounting systems (Heald & Dowdall, 1999; Hodges & Mellett, 1999). NPM changes have not followed a consistent path internationally1 (Olson, Guthrie, & Humphrey, 1998; Rhodes, 1997). In the framework described by Hood (1995), some issues-such as the stress on private sector styles of management, measures of performance, or greater emphasis on output control-involve various conceptions of public accountability which lead to altered requirements of and responses from public sector accounting systems (Christensen & Yoshimi, 1999).