Public Accountability, Audits and Performance-Based Indicators - Coursework Example

Public Accountability, Audits and Performance-Based Indicators Name Course Tutor Date Are public accountability, audits, and performance-based indicators necessary for maximizing efficiency and cost effectiveness? Introduction In the recent past, the issue of public accountability and auditing has drawn a lot of public interest due to its obvious significance in the public sector (Greiling, 2006). Over the past two years, news outlets have disseminated distressing stories of corporations who lack business ethics. Some of the corporations that have attracted the headlines include WorldCom, Enron, Anderson, Qwest Communications, and Adelphia Communications and Computer Associates, to name a few (Pulakos & O’Leary, 2011, p. 147). Scandals have involved public officials such as corporate failures, falling stock markets, dubious accounting practices, and abuses of corporate power. These cases have induced signs of stress, which have destabilized investors’ confidence. Based on this evidence, this essay argues that public accountability, audits, and performance-based indicators are necessary for maximizing efficiency and cost effectiveness. Public accountability Accountability has grown in the past years as the major way to tackle both the democratic deficit and developmental failures (Hughes, 1998). In the context of development, the claim is that strong accountability can mend the loopholes of inefficiency and corruption, as well as effectively channel aid, and consequently, development programs will produce more visible and greater results (Wanna, O'Faircheallough & Weller, 1999). A general description of this method is that accountability is all about exercisizing authority well and be able to justify that when auditing is carried out (Bradley & Parker, 2006, p. 91). Such public organizations where officials are expected to exercise their authorities according to public expectations include government ministries, schools, and police and military services, among others. Bradley & Parker (2006, p. 90) explain accountability as the “duties of government and its representatives in the public to realize previously set goals and to justify them in public.” It is also considered a commitment required from public officials collectively and individually to acknowledge public responsibility for their personal actions. In this situation, every public functionary is equally accountable to operate in the interest of the public and in accordance with their conscience, and to provide explanations on how the use public resources (Taylor, 2009, p. 855). Given the previous scandals, citizens are now urging governments to run public organizations like private companies. A major factor in the success of public organizations is the creation of an organizational culture that look like those in private which seems to promote efficiency and effectiveness. Also to ensure existing resources create the greatest impacts in line with their objectives (Hughes, 1998). When things happen as expected in these organizations, everybody is able to perform his or her work, thereby achieving efficiency and effectiveness. Pulakos & O’Leary (2011, p. 153) claim that public organizations’ accountability is about quality, output, and cost effectiveness of the results and influence of the public sector’s activities, as gauged by the goals and priorities set by the public sector leaders. This is contrary to cases in which public funds are embezzled to make a few individuals rich Greiling (2006, p.457). In organizations that exercise no accountability, three two impacts are inevitable. First, the organization will not be able to perform its function and will finally fail. Second, the public will not be able to reap the value of their taxes. In a public organization, the practices of public accountability aspire to enhance the internal principles of on organization both personal level and group level which can then be reflected iun the performance of the organization (Wanna, O'Faircheallough & Weller, 1999). While accountability first comes from the inner self, in the public sector, it is also enshrined in law set by the constitution and the organization’s code of conduct. Individuals who breach the accountability laws risk arrest and may be charged in a court of law. Numerous governments have to establish different independent oversight institutions, such as the Inspectors General, Ombudsmen, Public Accounts Committees in Parliament, and Auditors General, among others. Such agencies assist in monitoring and controlling the ethical conduct of the public officers (Wanna, O'Faircheallough & Weller, 1999). However, they require the institutional capabilities such as written laws to perform their mandates. Unfortunately, most often than not, such institutions have protested, claiming that they are understaffed and underfunded, amongst other hardships that prevent them from working effectively. These laws are there to ensure control, monitoring, efficiency and cost effectiveness. If money is embezzled, the management will be forced to provide extra space in the budget to cover it up. Greiling (2006, p.457) states that when public servants are well managed and employ the right systems of accountability, like monitoring, integrity strategy, sound HRM practices, and broad disclosure procedures, then efficiency and cost effectiveness can be realized. The public sector must note that corruption has numerous roots, but can normally be associated with poor institutional design. Open information also plays a big part in running organizations. Data prioritization, monitoring, and release increases the value obtained from these information resources in many ways (Bradley & Parker, 2006, p.93). The consumers of the information will be capable of accessing it and benefiting directly from utilizing it personally to understand whether their taxes are benefitting the public sector appropriately. Public administrators can apply information resources to improve service delivery and enhance customer satisfaction. Information resources can bring efficiency and effectiveness to public services to enhance performance (Bradley & Parker, 2006, p.96). Such information and system aid may strengthen attempts to identify and avoid illegal payments. Hughes (1998) contends that risk assessment and internal activities will focus on revealing and removing the systemic weaknesses that result in flawed payments. Investing in advanced technology can create a platform for the assessment of prospective fraud with extraordinary speed and efficiency (Hughes, 1998). Measuring the efficiency and effectiveness of the public sector is largely based on how public servants carry out their work as required and how they can hold themselves accountable for the utilization of public funds. Auditing In the current business climate, an internal audit role has turned out to be a key player in ensuring the responsibility of the management, company auditor, company board of directors, and other major stakeholders (Bradley & Parker, 2006, p.91). According to Hughes (1998), public organization auditing is defined as an impartial assessment and valuation of the operations and financial performance of a firm. This can be conducted internally by the manager or externally by the public. Enhancing the effectiveness of the duties in the public sector is a critical component in creating and maintaining public confidence (Hughes, 1998). The auditing of these organizations is thought to offer significant services to organizational management. These comprise detecting and checking fraud, appraising internal controls and monitoring consistency with government regulation and organizational policy. Large public companies may need these roles, even more than smaller ones. Large public organizations have many levels, which could make information flow and reporting more difficult. Wanna, O'Faircheallough, and Weller (1999) posit that creating an internal audit job offers a crucial measure in the growth of these organizations. As observed earlier, public companies lose billions of dollars annually to staff theft because of an ineffective system of auditing. Forms of fraud committed by employees include the skimming of payments from clients, cash theft, check tampering, mishandling organization credit cards, and inappropriate payroll transactions (Wanna, O'Faircheallough & Weller, 1999). A stated policy of auditing operations and financial payments for fraud could inhibit a staff member from misusing the organization’s resources. Taylor (2009, p. 863) said that assessing procedures and policies on a daily basis ensures that the organization reduces its exposure to losses and fraud. The audit role can play a major role in supporting and supporting effective governance of the organization. In the public sector, the auditors normally have the role of expenditure regulation and complying with laws, regulations, and rules (Taylor, 2009, p.857). They report to Parliament on the adequacy in collections of revenue and any waste of public funds. While the internal auditors determine how finance is used, the external auditor determines the mechanism of use (Pulakos & O’Leary, 2011, p.153). In the recent past, the capacity of auditors has been extended from a financial auditing to an evaluation of whether the public services offered provide value for the taxpayers and whether the money is used effectively, as well as where it should be used (Pulakos & O’Leary, 2011, p. 159). Assessing the relative value of services and cost has become a recent extension in the auditing scope. In the case of Malaysia, as affirmed in the Audit Act of 1957, the Auditor General performs audits to examine whether public money has been used for the functions for which it was appropriated, and to determine whether the services related to those purposes were conducted in a resourceful way with the objectives of benefitting the economy, preventing extravagance, and minimizing waste (Greiling, 2006, p.461). This implies that instead of just being a “waste-watcher,” the Auditor General is required to perform the role of “quality police” to verify the public service performance (Greiling, 2006, p.464). This actually means that if the audit is carried out properly, then efficiency and cost effectiveness is achieved. Operational audits scrutinize the organization’s operations, as opposed to its finances. Inefficient operations will lead to higher expenditures with no profits. According to Bradley and Parker (2006, p. 94), conducting an operational audit in the public sector may disclose the inefficiencies or identify any redundant paperwork. If the company carries out an internal audit, management can determine whether the company complies with the relevant governmental regulations before the government itself determines that fact, which would hold someone responsible for the actions, e.g., through fines (Taylor, 2009). It also presents an opportunity for the organization’s employees to discuss results and create an objective report which explains how public resources are used. An informal practice assists employees in understanding that the internal audit role presents an opportunity for the organization to perform well and grow (Wanna, O'Faircheallough & Weller, 1999). The way in which public organizations maintain internal control and the manner in which they are held accountable has changed to necessitate more transparency from these institutions that use taxpayer and investor funds. This trend has considerably influenced how management executes, reports, and monitors the internal control of an organization. Hughes (1998) maintains that the influence of the audit report on the third parties, like the parliamentarians, the media, and the public, is significant, since it contributes to ensuring government accountability. They act as whistle-blowers by offering information to accountability agencies of the government for further investigation. Third parties may simply access the auditing report from these agencies’ websites when the report is already publically available and even tabled in Parliament (Hughes, 1998). The media also has the right to raise concerns over the audit report to ensure that it meets the public’s expectations. In a nutshell, the media also carries out its own audit of the audit report. The Public Audit Committee follows the mandate to call up agencies or ministries to explain the issues that are raised over the report (Hughes, 1998). All these are vital contributing factors to ensure better transparency, efficiency, and cost effectiveness of governmental services. Additionally, the Auditor General’s office has also contributed to audit management, which consists of auditing the management of public organizations, budget controls, loan and investments controls, and expenditure and revenue controls (Pulakos & O’Leary, 2011, p.159). This also extends to store and assets control of public agencies. The performance is reported to the Minister who is responsible to provide the agencies with first-hand accounts of the general performance of these agencies (Hughes, 1998). This can assist in promoting efficiency, since the governmental institutions are to be questioned if any faults are established in their control or management. If the institutions want to defend themselves from condemnation, they must maintain a sound internal control so as to keep away from any situations that could lead to queries in their management audit results. Moreover, the Auditor General’s office focuses and reports on results of organizational targets by auditing the organization’s performance (Pulakos & O’Leary, 2011, p. 161). Key performance indicators, if used to audit the agencies of ministries, can assist in finding accountability in every level of these agencies. Since most people are afraid of being found incompetent and subsequently sacked, they maintain a high level of accountability, which makes them work more effectively (Bradley & Parker, 2006, p.90). Some governments even ensure that the employees sign performance contracts to assure the public of accountability and competence performance. when performance contract are in place, the staffs are monitored over a certain period to see if they confirm to the terms of the contract. Hughes (1998) posits that a periodic performance measurement in a transparent and objective way would help hold every one of these entities trusted with public resources accountable to the same public. Performance-based indicators Public organizations have huge impacts on the country’s development, as well as increase the public satisfaction by offering governmental initiatives and several services that the country requires. These public organizations are run by people who are paid by citizens’ taxes (Bradley & Parker, 2006, p.89). As such, they are responsible for providing proper services that ensure the public value for their taxes. To realize this objective, the public uses performance-based indicators to measure their competence. Greiling (2006, p. 449) asserts that to prosper and make public services more effective in the current economy, public organizations should no longer use financial measures only, but also keep check on non-financial measures, such as product quality, speed of response, consumer satisfaction, and brand preference. To do this, performance-based indicators like Key Performance Indicators (KPIs), Balanced Scorecard, and performance contacting are used. They ensure that employees’ work is measurable and generally tied to the organization’s strategy (Bradley & Parker, 2006, p.97). Most objectives are accomplished by efforts of individuals who contribute to a team. In essence, people are employed as individuals, not as a group. When the company’s productivity falls, normally, individuals are held responsible, and no one wants to be in that situation (Hughes, 1998). As a result, they will work to avoid getting fired. Adopting key performance-based indicators typically ensure that: The organization converts its corporate objectives into practical operational goals, which can be communicated to staff; These objectives are related to personal performance goals, which are evaluated on a recognized periodic basis; Internal processes like auditing are employed to fulfil and surpass the strategic objectives and consumer expectations; and Finally, major performance-based indicators are assessed to make recommendations to enhance future organizational performance to promote effectiveness in various departments. Conclusion In conclusion, the public sector plays an important role in the growth of a country’s economy based on the massive facilities and services it provides to its citizens. However, it must be accountable and attain the standards of good governance to realize the major goals and steer clear of conflicts of interest, and learn important lessons from private organizations in terms of efficient service delivery. All in all, the public must also audit and become a watchdog on how their taxes and resources are used. References Bradley, L. & Parker, R. (2006). Do Australian public sector employees have the type of culture they want in the era of new public management? Australian Journal of Public Administration, 65(1), pp. 89-99. Greiling, D. (2006). Performance measurement: a remedy for increasing the efficiency of public services? International Journal of Productivity and Performance Management, 55(6), pp. 448-465. Hughes, O. (1998). Public management and administration. Melbourne: Macmillan. McNeil, M. & Mumvuma, T. (2006). Demanding Good Governance: A Stocktaking of Social Accountability Initiatives by Civil Society in Anglophone Africa. Washington DC: WBI Working Paper No. 37261. Taylor, J. (2009). Strengthening the link between performance measurement and decision making. Public Administration, 87(4), 853-871. Wanna, J., O'Faircheallough, C. & Weller, P. (1999). Devolution, discretion and delivery. Public Sector Management in Australia, (2nd ed.). Sydney: Macmillan. Read More