Showing papers in "Financial Accountability and Management in 2016"

New Public Management: The Story Continues

Abstract: New Public Management (NPM) has aroused significant interest amongst academe, policy makers and practitioners, since its first articulation in the seminal articles by Hood (1991 and 1995). However, in the 21st century, a body of opinion has developed which asserts that the NPM is passe. This paper seeks to determine the contemporary status of NPM in the context of the UK, one of the early adopters of NPM. Close inspection of UK Government policy underlines the importance of NPM ideas in the New Labour Government modernisation policy (1997-2010). Furthermore, the policy actions of the 2010–2015 UK Coalition Government reveal that the global financial crisis intensified the drive for NPM in the UK's public sector. This discussion reveals no evidence in support of the demise of NPM.

Managerialism Redux?: MANAGERIALISM REDUX?

Abstract: This paper argues that managerialism is still very much with us. NPM (one prominent manifestation of managerialism) is not dead. Alongside NPM, other species of managerialism have evolved. Across Europe patterns of management reform have been complex, with layers of traditional bureaucracy, NPM, other forms of managerialism and post‐NPM forms being sedimented on top of, or woven alongside, each other in a variety of national formations. The advent of austerity has led many governments to implement traditional, pre‐managerialist across‐the‐board cuts and freezes. Sometimes (as in the UK) these have been mixed with renewed NPM initiatives, and/or with post‐NPM ideas, such as partnership and networking. Overall, however, managerialism seems unlikely to offer a major part of any solution to problems of fiscal balance ‐ the sums that can be saved through greater efficiencies are substantial, but not large enough.

Public Sector Reforms: Changing Contours on an NPM Landscape

Abstract: 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.

Not What It Said on the Tin? Reflections on Three Decades of UK Public Management Reform

Abstract: Despite decades of research, we still need more long-term evidence of the effects of New Public Management (NPM) and accompanying changes in government over a generation. Looking at UK experience, a key case in NPM and digital-age developments, this paper evaluates administrative data to show what happened to indicators of fairness and consistency and of prudent management through limitation of running costs in public administration over three decades. The analysis shows that running costs rose substantially in real terms (contrary to the cost-cutting stereotype of NPM), while indicators of first-stage formal challenges to government suggest increased dissatisfaction with fairness and consistency in administration.

Italian Municipalities and the Fiscal Crisis: Four Strategies for Muddling Through

Abstract: Through a multiple case study of eight Italian municipalities, our paper identifies the main shocks perceived by the local management as a consequence of the recent fiscal crisis and the related organizational responses. The analysis roots current responses in longer-term municipal financial management and strategies. Even in a context where the shocks are described and identified as being much the same, there is not a single pattern of response, but (at least) four different ways of reacting to shocks can be identified: reorientation, buffering, continuous adjustment, avoiding problems and catching opportunities.

Theorising Interdisciplinary Public Sector Accounting Research

Abstract: Asbtract While the volume of interdisciplinary public sector accounting research has expanded, there has been a call to deepen the theorisation. This paper explores the theorisation of the most highly cited interdisciplinary public sector accounting as a tool to understand better what constitutes the dominant or doxic theoretical approaches. Accountability, New Public Management (NPM) and Habermasian theorisation were the three most significant and dominant approaches which could be seen as examples of what Llewellyn (2003) classifies as grand theory (Habermas) and conceptual innovation (accountability and NPM). Much of the accountability work presents the notion of a clash between different forms of accountability, particularly associated with managerialist NPM characteristics. Despite Llewellyn's (2003) criticism of grand theoretical approaches, there are many examples of Habermasian elements being combined with other theoretical approaches to assist exploration of both micro practices and the broader social and societal impact of public sector changes. As such, there is an endorsement of theoretical approaches which address both the micro behaviour and the macro impact of accounting practices in the context of the public sector.

A Private Sector Failure, a Public Sector Crisis – Reflections on the Great Recession

Abstract: The Great Recession from 2007/08 to date (2016) has challenged policymakers in significant ways. The initial challenge became a mission to rescue the banking sector, which had major implications for public services. The severe constraints on public finances after the rescue resulted in cutbacks in public services; an example of financial conservatism in action. Neoliberalism is the dominant mode of thinking by central governments, but its application has been questioned both on its rigour and on the evidence which is available to inform this policy. This paper examines the UK experiences of financial conservatism by mobilising ideas of failure, hope and bricolage.

Trust and Control in Network Relations: A Study of a Public Sector Setting

Abstract: This study contributes to the literature by addressing the role of trust and control in public sector settings in which several organizations cooperate; its aim is to advance the understanding of trust and control in relations in which several parties are involved. The empirical study presented is a longitudinal case study of the relationships between organizational units within a municipality and a shared service center (SSC) that provides IT and administrative services. The main finding is that, compared to actors in previous studies of dyadic relationships in the private sector, actors in network relations seem to consider trust a risky option. It is less tempting to rely on a certain party when that party in turn is entangled with other parties. This situation causes a more intensive use of formal control. Another result is that increased trust between two parties might lead to more emphasis on formal control by a third party.

Democratic Accountability During Performance Audits Under Pressure: A Recipe for Institutional Hypocrisy?

Abstract: This study shows how the tensions between transparency and secrecy are likely to engender ‘institutional hypocrisy’ in the accountability process taking place during Supreme Audit Institutions’ performance audits. The examination of relations between the French Cour des comptes, Administration and Parliament has revealed gaps between Administration and Parliamentarians’ discourse and action, secrets and things left unsaid. This impression of Administration and Parliamentarians’ full participation in this democratic process may give to citizens a false sense of security leading them to believe that accounts are indeed rendered, which is not actually the case. Rather, the appearances of functional democracy have been preserved.

Numbers versus Narrative: An Examination of a Controversy

Abstract: Competing actor interpretations of Intellectual Capital Statements (ICS) may explain diverse opinions on their effectiveness in practice. Adopting Callon's (1986) moments of translation, we find that actors in our case study adapt ICS numbers and narrative to create specific inscriptions, privileging one over the other to suit their interests. This allows IC controversy to survive rather than be resolved or the network to fail.

Gaming, Accountability and Trust: DRGs and Activity‐Based Funding in Norway

Abstract: This paper examines a particular performance management instrument in Norway: DRGs used in conjunction with activity-based funding of hospitals. We ask whether this system creates opportunities for undesirable gaming practices, how accountability arrangements deal with gaming, and how trust and institutional logic may help to explain anomalies and their resolve. From an instrumental and cultural perspective, we examine six Norwegian cases of gaming and two governmental assessments of coding and activity-based funding. Current solutions do provide gaming opportunities, in a highly complex accountability setting. Accountability arrangements highlight tensions between trust and distrust, rather than resolving the balance between individual goals and collective norms.

Risks, Challenges and Value for Money of Public–Private Partnerships

Abstract: This study examines the unique issues, challenges and risks emerging at the end of a public-private partnership (PPP) concession. The M4 motorway is the first Australian PPP that has reached the end of its concession. The absence of formal guidance on contractual closure created challenges for the partners in interpreting contract ambiguities, and in reaching agreement on the processes needed to close the contract. These challenges had posed several relational risks, the mitigations of which were supported by the relational contract partners developed over the concession term, and their reciprocity and ethical motivations. The reintegration risk emerged in the handback exemplifies the limits of controls designed for legitimacy concerns to resolve coordination problems. The political settlement for value for money was gestured by lifting the toll after the concession ended. In providing unparalleled empirical evidence against the long-term ‘myths’ of PPPs, the study counters the criticism over PPPs’ impossibilities to handle uncertainties and to transfer risk.

Cost Management in the Public Sector : Legitimation Behaviour and Relevant Decision Making

Abstract: This paper presents a case study where a cost management project was implemented using action research methodology at two Finnish organizations working in a purchaser–provider relationship. While the study demonstrates the efficiency-seeking motive behind the implementation of the management accounting tool, subsequent investigation found that tool remained partly unused despite showing its potential relevance for practice through user involvement. However, this does not necessarily signal legitimation-seeking behaviour. Reasons for not using some parts of the tool point to an overestimation of the functionality and an underestimation of implementation problems during the design process. The case also highlights the relationship between relevance and decision making.

Value Capture: A Valid Means of Funding PPPs?

Abstract: This paper considers the use of value capture (VC) as a means of financing public-private partnerships (PPPs) in the United Kingdom (UK). Although some VC techniques are used in the UK, they are employed more widely in the United States of America. After considering the traditional approach to financing UK PPPs, this paper describes the main VC finance instruments. The findings of a series of case studies are then presented and conclusions drawn. While VC financing may prove unpopular with those bearing the cost of infrastructure improvements, it is recommended that such instruments are considered by UK policy makers.

Budget rules and flexibility in the public sector: Towards a taxonomy

Abstract: The practices and norms of public budgeting have often been seen as a brake on the flexibility needed of government organisations. This remains true despite historically significant financial management reforms designed around budgetary devolution. Seeing flexibility as operating along two dimensions – devolution and discretion – this paper revisits the underlying features of traditional public budgeting to develop a taxonomy of six generic ‘budget rules’. By isolating key properties of budget control, the paper uses two of the more prominent rules – annuality and purpose – to illustrate how the rules interact to generate control capacity, as well as the scope for rule variability in promoting increased flexibility.

The Impact of Transparency on the Cost of Sovereign Debt in Times of Economic Crisis

Abstract: This paper analyses which factors determine the cost of debt, specifically in the light of the deep economic crisis the world is facing today. We evaluate the impact of transparency, financial indicators and sovereign ratings on public debt interest. We consider several measures related to transparency: transparency index, corruption index and public trust in politicians’ financial honesty index. We work with 2008 (the beginning of the economic crisis) and 2012 data for OECD and BRICS countries. Our results show that all measures connected with fiscal transparency negatively impact the cost of sovereign debt, increasing therefore the financing costs of the government in 2008. A comparison of 2008 with 2012 reveals a substitution effect. On the one hand, transparency, corruption and public trust indexes explain interest rates in the first year considered. On the other, in 2012, when the crisis started to be overcome, the fiscal situation, rather than transparency indexes, explains interest rates. In the whole time window, sovereign rating holds its explanatory power.

Delegation in Hard Times: The Financial Management of Arm's Length Bodies in the UK

Abstract: This paper explores the effectiveness of financial management tools in regulating the use of resources by arm’s length bodies (ALBs) in a period of fiscal stress. The paper presents research undertaken into the implementation of a new financial management tool for ALBs in the UK since the 2008 financial crisis. Drawing on conflict ambiguity theory, the paper shows how the effectiveness of such tools is affected by deep-rooted tensions implicit within arm’s length governance. This gives rise to micro-level conflict over the means of achieving fiscal regulation, underpinned by macro-level ambiguity over the logic of governance pursued by the government.

Precarious Investments and Blame Gaming – Adverse Effects and the Inherent Danger of Simplification

Abstract: This blame game study reports on attempts by eight municipalities to recover money in the wake of financial losses resulting from the financial crisis. Actor‐network theory helps unravel which actors were involved in creating the blame game and those who were mobilized to facilitate it, which resulted in judicial losses and substantial advisory service fees. The evidence suggests that punctualization can be costly when dealing with precarious investments and engaging in blame gaming, as simplifications might evoke adverse effects. Contributions relate to group formation and the use of experts in blame gaming and addressing related strategies as heterogeneous network effects.

Does an Agency-Type of Audit Model Fit a Stewardship Context? Evidence from Performance Auditing in Dutch Municipalities

Abstract: The degree of auditor independence is an important issue in the performance auditing literature However, little attention has been paid to the influence of the context in which an audit body operates This paper investigates how an audit model with a high degree of auditor independence, which is consistent with agency theory’s rather formal view of relationships in organizations, functions in a context with more informal relationships, as implied by stewardship theory Based on two case studies and a survey, the paper concludes that Dutch councilors are more satisfied with audit reports if in their municipality there is a fit between context and audit model

Changes in the Public Accounts Committee of a Less Developed Democratic Country: A Field Study

Abstract: This paper complements prior studies on the public accounts committees (PACs) by considering the notions of ‘agency’ and ‘structure’ of institutional theory in tandem in understanding the changes in structures and activities of the PAC of a less-developed democratic country – Bangladesh. While prior studies examined ‘external’ institutional pressures on the development and operation of the PAC in various settings, the role of internal and external institutional agents in this context has not been their primary focus. Our empirical evidence from a qualitative field study indicates that over the past two decades, Bangladesh's PAC underwent significant changes to its internal governance structures and administrative processes. While these changes were indirectly driven by pressures from international donor agencies, PAC members and the national audit office played a key role as institutional agents in initiating and institutionalising the changes in PAC governance and operation.