An 'Austrian' perspective on commercial accounting practices in the public sector

Abstract

Using an 'Austrian' economic framework, rather than the traditional neoclassical economic or progressivism framework, this paper explores the extent to which accrual based accounting measurement systems add to or detract from value relevant accounting information, in public sector settings. Austrian economics provides insights to this issue by offering a more nuanced theoretical account of the role of knowledge, institutions and subjectivism in analyzing economic phenomena, than do traditional neoclassical economics or progressivism. The paper concludes that Austrian economics are a potential framework that informs us about the problem of misuse of information in public, noncompetitive situations.

The ‘third hand’: Private sector consultants in public sector accounting change

“…Yet the pervasive change to accrual accounting has been dramatic since governments have recorded and reported their accounting transactions on a cash basis for centuries. Even though there is evidence of consideration of accrual accounting in the public sector Stalebrink and Sacco, 2003) as far back as 1828, that idea was rejected and cash basis accounting held solid. There had been applications of accrual accounting to government trading enterprises but cash-based accounting dominated in the general government sector.…”

Accounting innovations: A contingent view on italian local governments

“…LGs' likelihood to adopt accruals accounting (see also Stalebrink & Sacco, 2003). As accruals accounting is generally recognised to provide better information than budgetary accounting (Lueder, 1992), access to capital markets should be facilitated by its adoption.…”

Creative Accrual Accounting in the Public Sector: ‘Milking’ Water Utilities to Balance Municipal Budgets and Accounts

“…In the field of financial accounting, this can be seen in the application of accrual‐based accounting and financial reporting, including an income statement, a comprehensive balance sheet and a statement of financial inflows and outflows. The driving forces behind such reforms have been identified as the wish to instil greater financial awareness into public sector decision‐making, to provide comprehensive financial information to facilitate efficient and effective decisions, and to provide information that allows citizens and other stakeholder groups to assess the extent to which revenues meet the full costs of public service provision (Guthrie et al, 1999; Stalebrink and Stacco, 2003; and Connolly and Hyndman, 2006). Politicians, financial institutions, management consultants, scholars, the media, and international organizations have all been influential in bringing about these reforms (Pina and Torres, 2004).…”