Accounting and the Public Sector - Who Measures What and Why - Literature review Example

?Accounting and the Public Sector - Who Measures What and Why? Table of Contents Introduction 3 Review 3 Conclusion 6 Reference List 7 Introduction There are several studies in accounting that have emphasized on the introduction of accounting system in the public sector for sustaining and enforcing the mechanism of competition-based resource allocation. Public sector organizations have also introduced development measurement system and methodologies of performance improvement in order to demonstrate higher accountability. There has been a shift in the emphasis of the control from process and input to output control. The performance orientation is one of the major elements in the new public management concepts and the explicit standards for the performance measurement are seen to support this diffusion of new concepts. This study aims towards conducting a literature review of accountability in public sector. Review Catasu?s and Gro?nlund (2005) have conducted research on the accountability and measurement on the Swedish Armed Forces. There is a scale down observed in the Swedish public sectors and they are aiming to create a resemblance with the other European nations. New ideologies and organizational forms are replacing the welfare state, which emphasizes on the probity, process and managerial accountability. This dismantling of the division between the private and public allows the private sector discourses to be informed to the public administrative practices. “Reinvent” is the recent effort taken by the government in emphasizing the role played by measurement system in enhancing the effectiveness and efficiency of the governmental operations. However, the fundamental question still remains there, that is, whether the notion of accountability and performance management, which is followed in the private sector, is applicable to the public sector. This indicates towards the fundamental differences that exist between the public and the private sector. In recent year’s advanced development system and performance enhancement methodologies were implemented in the public sector, which showed higher degree of accountability. Therefore, the main aim of the research was to conduct an analysis of the changing accountability by evaluating the changes in the measurements. Thus, the study focused at the relationship between accountability and measurement by highlighting on the measurement. Another study regarding the unintended or intended outcome of performance measurement in the public sector was conducted by Adcroft and Willis (2005). In this context the study highlights on the regimes of performance management that fits to the purpose of the public sector and the intended outcomes for the public services and the workers of the public sector of the performance measurement system. The key issues that are answered by the research is that content or the text of performance management in the public sector with examples specific to the higher education and healthcare; the intended outcome and the limitation of the performance management system. While most of the literatures have emphasized on the introduction of accounting system in the public sector organization of the developed countries that would lead to organizational and cultural exploration, the research scholars Ballas and Tsoukas (2004) has raised the question regarding why the accounting system are not used in public bureaucracies, which should have implemented much before. In order to find the answer of this question, the study has focused on the absence of accounting and lack of systematic measurement in a public bureaucracy. The study has explored and explained the absence of developed accounting system in the Greek National Health System and compared with the Greek political system. The paradigm of the new public management is based on the central belief that the public service organizations should not only be accountable to the fiduciary matters but should be accountable to the objectives and the efficiencies too. A cluster of administrative values is seen to permeate the organizations. In today’s, public sector organizations, all types of accounting standards are required; some accountability system are connected to the measurement systems while some to the daily rules and routines. Catasu?s and Gro?nlund (2005) in their research have found that in Swedish Air force all types of accountability and measurement systems are incorporated. Omega accountability is also present in the Swedish Air Force. This indicates that the principal is having a weak link in the accountability relationship in a situation where the measurement agenda is in the hands of the agent. The problems are seemed to cross the limits of output and performance and are creating challenges for the public sector. Adcroft and Willis (2005) in their article have argued that the most common outcome of increased usage of performance measurement in the public sector organization is commodification of services that are delivered by the deprofessionalised workforce of the public sector. This outcome has been argued in the article because of two reasons. Firstly, there is a huge range of management and technical issues with the performance management system of the public sector that makes it unfit for the purpose. Secondly, there is large amount of difficulty in implementing management practices from the private to the public sector. Adcroft and Willis (2005) have suggested that the performance measurement system in the public sectors is less likely to create a significant impact on the enhancing the services. The intended outcome of the system is deprofessionalisation of the workers in the public sector and commodification of the services. However, the measurement system is seen to strongly impact the behavior of the managers. If the performance measurement system creates beneficial result then it worth investments by the organization. However, the experience of such system outside the public sector enterprise creates a less optimum outcome where the struggle within the organization is not compensated by the gains of the customers who are present outside. On the other hand, the finding of the research scholars Ballas and Tsoukas (2004) has suggested that the Greek political system is characterized by high politicization that tends to overshadow the managerial cum economic dimension of running the public bureaucracy, favoring the political evaluation of the organization as well as the individual performance. In such a situation, accounting system is seen to depict a low symbolic significance and its use creates marginal contribution towards the enhancement of organizational legitimacy. Conclusion The overall review suggests that performance measurement system is seen to crease a weak link with the accountability in a public sector organization. It is seen that it tends to create deprofessionalism among the workers and commoditize the services. Therefore, the impact of the performance management system is quite marginal. On the other hand, in countries where there is a high dominance of the political system, the political evaluation of the organizational outcome gains prevalence and overshadows the economic and managerial dimension. Reference List Adcroft, A. and Willis, R., 2005. The (un)intended outcome of public sector performance measurement. International Journal of Public Sector Management, 18(5), pp.386 – 400. Ballas, A.A. and Tsoukas, H., 2004. Measuring nothing: The case of the Greek National Health System. Human Relations, 57(6), pp. 661–690. Catasu?s, B. and Gro?nlund, A., 2005. More peace for less money: measurement and accountability in the Swedish Armed Forces. Financial Accountability & Management, 21(4), pp. 0267-4424. Read More