The Role of Governance and Accountability in Public Sector for the Well Being of Society - Essay Example

Accountability and Governance Name Course Lecturer Date Governance and Accountability in the public sector fundamental to the well being of our society Introduction In recent years, public finance and principally the financial accounting and management of public institutions have become significant. As such, the matter has continued to received global attention and fiscal reforms and substantial innovation have been introduced. Indeed, governance and accountability in the public sector is one of the major management that has undergone various reforms. Governance refers to the processes and structure that are used to govern or direct the affairs of an organization. It refers to those mechanisms that are set in place for overseeing and directing the management of an organization. Therefore, the organization is in a position to effectively fulfill its objectives. Accountability is defined as the requirement of individual, group or entity to account to an entity, group or individual for a responsibility conferred upon them. Simply, accountability is a responsibility of an individual to another for the performance of a particular task that has been entrusted to them. It is important to note that accountability goes beyond reporting on a performance (Allan, p.140). Of important to note is the relationship between governance and accountability. In an organization, the governing body ought to be accountable to an entity or individual for the governance of the organization to give an incentive to govern such an organization effectively. Essentially, there is always an accountability regime as a part of a governance framework in which a governing body is accountable for the running and performance of an organization. Despite the fact that governance and accountability in the public sector is complex, it is fundamental to the well being of the society. The noted financial reforms are the adoption of budgeting and accounting and implementation and development of output and outcomes framework. Indeed, these reforms did result to the development of a federal budget on an accrual basis. The outputs and outcomes framework was developed alongside the government accrual budget. Of importance to note is that the government introduced particular legislation in order to support the reform agenda alongside adoption of accrual budgeting and accounting and the implementation of an outputs and outcomes framework (Cameroon, p.60). The Australian Commonwealth public service has established significant changes in financial and non-financial reforms in the past years. This has been done in an effort to improve its effectiveness, efficiencies and accountability. The main reasons for the financial reforms are to encourage a culture of performance and assisting the public sector to become a responsive to the requirements of the government. According to Cameroon (p.65) the financial reforms were effectively implemented to increase focus on the elements being produced, the achievements, the cost of individual services and goods, and reporting of performance. Importance of governance and accountability to the society Accountability does ensure that the decisions and actions taken by the public sector are subject to oversight in order to guarantee that the initiatives started by the government meet the objectives as stated. Still, it will assist in responding to the needs of the society so as to benefit the community. Accountability is significant to governance. It is applied in the evaluation of the ongoing effectiveness of public bodies and public officials in order to ensure that they are performing to their potential, giving value to the money in their provision of public sector and instilling full confidence in the government. In addition, the public sector will portray a responsive attitude to the community that it service (Cameroon, p.64). As Loizos (p.160) maintains there is a need for the public sectors to maintain accountability and sound governance in it activities. This is attributed to the fact that the public sector has to ensure that the value of the taxpayers’ money is well utilized. Indeed, efficiency does encompass value-laden expectations and qualitative of the society. It is obvious that the public sector serve the society. Therefore, it may be argued that accountability is a significant prerequisite for averting the abuse of power and ensuring powered indeed directed to the achievements of effectiveness, efficiency, transparency and responsiveness. Accountable, open and transparent government is a crucial prerequisite for a community oriented service deliver to the public and without it, it may result to unethical behavior. Good governance will ensure that each public agency is aware of its purpose and role in the institution and the intended services to the society. As such, the society will indeed receive high quality services as per the laid rules in the organization. In addition, clarity of responsibilities and roles will result to accountability in the public sector. Good governance and accountability will result to transparent and informed decisions and management of risks. As such, transparent decisions will adhere to the required policy of providing the correct information while consulting the stakeholders. As a result the significance of accountability and governance in the public sector to the society will be experienced through the quality of services offered (Loizos, p.166). Accountability and governance in the public is significant to society as it will create a room for the engagement of the citizens. The society will be in a position to voice out their concern. This will hold the public servants accountable for their services they offer. This will call for development of systems of interaction among the stakeholders and reporting of performance to b made at every level of the organization. Excellent governance ensures that the leaders of every level of organization are accountable to the society. Lack of accountability in the public sector especially among the leaders will breed corruption which is a threat to good governance. Corruption will result to the misuse of the citizens’ resources and money. Therefore, both elements are significance in the well being of the society as is the major contributor of resources requires in the public sector. It is important to note that society is now being involved in the running of the activities of the public sector in order to ensure accountability and good governance. One of the visible efforts done is an introduction of developing and publishing individual services charters. The charters will provide the society available services within a specific public sector. As such, the public will have the information that they require in case of any services. This will improve service delivery especially for the low income earners (Sionnenfeld, p.45 ) Financial Management Reforms in Australia The Commonwealth public sector over the last decade has experienced significant reforms especially in relation to taxation and financial management. The reason behind the financials reforms is attributed to the need to improve competitiveness and productivity in response to the increase globalization. For instance, the establishment of accrual-based budgeting, increased financial management and use of market based tools are some of the main reasons of these public sector financial reforms (Groom, p.2). The crucial public sector financial reforms were developed with two major objectives. The first objective complements was directed at promoting a culture of performance while second objective aimed at increasing public sector organizations’ efficiency, accountability and effectiveness in order to make them respond to the basic needs of the government. The introduced culture of performance was a response to the increased accountability of the Australian government. Accrual accounting is one of the key financial reforms in the Commonwealth public sector. This element has been used by the private sectors for over 250 years. One reasons for its continued use in the private sector is that it has been able to continually meet the changing information requirements of an organization. Accrual accounting entails the recognition of expenses and revenues when they have been incurred instead of when cash has been paid or received. According to Sionnenfeld (p.47) accrual is essentially based on the notion of matching income to cost. The accrual budgets match the flows of the economic benefits over a given period to the basic flows of economic costs. As a result, information would be incorporated on revenue arising and expenses accruing from the current policies (Sullivan, p.44) Before the implementation of accrual accounting in the Commonwealth public sector, budgeting and accounting was mainly based on a cash basis. This mainly involved recording and budgeting actual cash outflows and inflows, that is, expenses and revenues are recognized after cash is paid or received. This flow is evident in the organization that are funded by the government whereby the government receive capital and operating funds to offer specified outcomes and outputs (Mulgan, p.89). One of the benefits of accrual accounting is that it gets rid of the distortions in surplus that is caused by repayments of advance and assets sales and cash based budged deficit. This would also include the asset depreciation and costs incurred in accruing employees. As a result, the resulting budget would be more transparent than the cash based budget (Adams, p.334). Another benefit of accrual accounting is that the Australian government and its organization are at a position to minimize cost. This is attributed to the fact that accrual accounting gives a cost base that cost service and products delivery accurately. It is therefore, obvious that accrual budgeting expands the extent of information available for efficient and effective management of public finances. This reform has indeed promoted excellent financial accountability because it allows the users of the reported financial information to make consistent financial and performance comparisons amid reporting phase and between private and public sector organizations. Indeed, accrual information may be used to establish standard ration analyses whereby measures may be observed and compared within an organization and with other organizations (Carr, p.10). Despite the benefits of accrual accounting in the financial sectors, it has raised confusion and concern for some organizations. These include the public servants in the finance and non-finance roles. These changes have had a critical operational impact. The public sector managers were obliged to focus on outcomes and outputs instead of inputs. At first, the managers were questioning the significant of this reforms and the contribution it had in improving the delivery of services to the public. The confusion is complicated by the main policy that necessitates unused appropriations be refunded to consolidate revenue at the ending of a financial year. Outcomes and outputs is another key financial reform that was introduced parallel to accrual accounting. The former accounting method, that is, cash accounting, mainly focused on the control of expenditure and inputs while accrual accounting basically focuses on outputs and outcomes (DOFA, p.10). An outcome is defined as an impact that is desired as a result of an implementation of a government policy. The Australian government does assign funds to various organizations based on particular outcome statements. This is because outcome statements offer specific legal role by describing the main purpose of the appropriate funds. The outcome statement has two function; defining the impact of the expectations of the government and provide a clear purpose of the relevant appropriations. Nevertheless, the outcomes are said to ambiguous and are quite difficult to measure. This indeed, presents a crucial paradox in that the Australian government implemented outputs and outcomes framework for a better focus on evaluating what is produced, achieved and the full cost of individual services and goods and a reporting on performance. Yet, how can one measure accurately greater community and social engagement, economic and self reliance for the Indigenous Australians? An answer to this question is partly dealt with through an identification of particular outputs that are defined as tangible presence of an agency amongst its stakeholder, customers and clients (DOFA, p.12). Based on outputs and outcomes framework and accrual budgeting the government organization do prepare budget estimates that are applied in determining the exact fund that an organization require to achieve the determined outcomes in a given financial year. Financial Management Reforms and Governance and Accountability Indeed, the introduction of accrual accounting and budgetary and other financial reforms in Australia was mainly aimed at establishing a public sector that is more efficient and the undergoing processes transparent. It is obvious that various improvements have been observed in the public sector. This is despite the claims by several commentators that in order for an organization accrual accounting concepts, the government agencies ought to have operated as business entities. This may be described as an observed speculation with no established form in the financial and public sector in Australia. Still, other critiques argue that the accrual accounting and budgetary systems that have been adopted by the Australian government will result to distortion of the nature of accounting measurement especially in the areas where such measurements have proven to be difficult. However, the adoption of an accrual based system in the public sector has had a positive effect through the enhancement of accountability, effectiveness, efficiency and allowing better cost of services and programs that are provided by the government Sionnenfeld (p.43) asserts that much the required framework has been completed but there is a need to work more in the financial reporting section. In addition, there is a need to ensure that financial management and accrual budgeting framework is part of the normal public sector working environment, that is, accountability, good governance, decision making and financial resources. The financial reforms have increased accountability as information is available to the public. As a result of these changes in the society calls for accountability has been enhanced in most public sectors. The ever-increasing demand by citizens for transparency and information concerning the use of their public resources is being achieved. Indeed, accrual accounting is offering better information compared to the previous financial regime for accountability mechanisms and decision makers. It is obvious that having excellent reporting and financial management in the public sectors is a significant contributor in gaining greater accountability, transparency and fiscal responsibility which results to improved governance (DOFA, p.11). Essentially, governance and accountability in the public sector is fundamental to the society. The society has continued to advocate for accountability, transparency and good governance in the public sector. The recent financial management reforms in Australia instigated various contextual and operational changes for the public sector. These reforms include introduction of outputs and outcomes framework and accrual accounting. The reporting of these changes has continued to increase significantly. It is obvious that accrual accounting is an effective tool in providing an excellent set of information for making decisions and an integral part of good financial information to the Australian government. The financial reforms may appear superficially to have indeed improved financial accountability and subsequently governance within the Commonwealth public sector. The main objectives of the reforms include the promotion of a culture of performance and promote public sector organization’s efficiency, accountability and effectiveness resulted to accountability. However, it is important to note that the complexity of the financial reforms, discharging mechanisms and reporting requirements have decreased the level of accountability in an organization. With these understanding, the public sector is entirely facing intense scrutiny from the society that expects the sector to comply with the set rules. Indeed, there is no doubt that the changes in the area financial management has resulted to good governance and accountability in the public sector. Works Cited (DOFA), Department of Finance and Administration. The outcomes & Outputs Framework: Guidance Document. Sydney: Australian Government, 2000. Adams, Carol. "Engaging with organisations in pursuit of improved sustainability accounting and performance." Accounting, Auditing, Accountability Journal (2007): 20(3): 333-335. Allan, Barton. "Profssional Accounting Standards and the Public Sector- A Mismatch." Abacus (2005): 41 (2): 138-158. Cameroon, Wayne. "Public Accountability: Effectiveness, Equity, Ethic Australia." Journal of Public Administration (2004): 63 (4) 59-67. Carr, Sarah. "Achieving Transparency the Right Balance between Reaponsiveness, Tra nsparency and Accountability in Policy Advice and Implementation." Australian Journal of Public Administration (2003): 63 (3) 3-11. Groom, Michael. "Corporate Governance." IOSCO Conference. London: Institute of Chartered Account, 2002. 7. Loizos, Heracleous. "What is the impact of corporae governance on organizationsal performance?Corporate Governance." An International Review (2001): 9(3) 165-173. Mulgan, Richard. "comparing Accountability in the public and Private Sectors." Journal of Public Administration (2000): 89. Sionnenfeld, Jeffrey. "What makes great boards." Havard Review (2002): 40-45 Sullivan, Mark. "Beyond Financial Disclosure." Australian CPA (2002): 72 (11): 44. Read More