Public sector accrual accounting: institutionalising neo‐liberal principles?

Abstract

PurposeThe purpose of this paper is to examine the role of public sector accounting in implementing neoliberal reforms.Design/methodology/approachThe proposition that the adoption and development of accrual accounting in the public sector is a technical development intended to improve transparency and accountability is investigated. The paper compares the development and use of accrual accounting in public sector financial management reforms in the UK and New Zealand.FindingsThe findings in this paper suggest that in both countries, accrual accounting, as developed, also provides a means to reduce the government's role to that of procurer of services and enforcer of rules set by others, thus advancing a controversial privatisation and trade liberalisation agenda which is consistent with neo‐liberal principles.Research limitations/implicationsThe paper shows that in contrast to more usual claims about the need for accrual accounting to provide a “read across between the sectors” or that public interest motives assure the neutrality of accounting, seemingly technical accrual accounting developments seem to function as a political tool to aid a controversial political agenda. There is a need to look at the overall effect of public sector financial management reforms and the role of, and implications for, accounting standard‐setters.Originality/valueThe information in the paper applies to accounting the new political economics literature on agenda control and information based structures where control is achieved through information asymmetries.

Implementing IFRSs in the UK devolved administrations

“…Furthermore, government proclamations regarding anticipated benefits associated with accounting change are often not based on any systematic analysis of effect, and tend to include unproven assertions of advantages while underplaying any emerging problems. Indeed, there have been persistent and consistent warnings about the differences between the public and private sectors and the dangers of applying private sector accounting standards to the public sector (Barton, 2004;Mack and Ryan, 2006;Arnaboldi and Lapsley, 2007), together with calls for caution when extending business accounting to public sector entities in order to avoid 'perverse outcomes' (Ellwood and Newberry, 2007;Broadbent and Guthrie, 2008).…”

EPSAS and the Unification of Public Sector Accounting Across Europe

“…Such an approach leads to erroneously consider public sector accounting as a neutral technology (Ellwood & Newberry, 2007;Newberry, 2014). On the contrary, public sector accounting is a tool of commensuration that has a strong influence on the economic and political life of national and local communities since it generates interpretative categories and contributes to change social relationships and values prioritization (Biondi, 2013).…”

Editorial

“…Accounting is not an end in itself (Burchell et al, 1980), nor a neutral tool (Ellwood and Newberry, 2007). Public sector accounting systems serve different purposes and how they are constructed can have consequences (Ellwood and Garcia-Lacalle, 2012).…”