Cost information in the new public sector environment : cost accounting change in a state-owned hospital

This paper reports on a case study of the utilisation and users of cost information in a state-owned teaching and research hospital in Australia. The findings indicate that the current utilisation of the cost information resides primarily at higher executive and managerial levels of the organisation. Organisational change, particularly pressure for improved productivity and competitiveness driven by public-sector reforms in Australia, is significantly filtering down throughout the subject hospital. Various productive and unproductive ways that cost information is used, and impediments to the use of costing information in the hospital setting, are identified.

Relevance of traditional management accounting in the public sector

 The major reforms that the Australian public sector went through in the early 1980s were characterised by a stress on efficiency and effectiveness. The reforms led to the import of a private sector mangement philosophy to the public sector, including private sector based management accounting techniques. It is this import that motivated the critical theoretical discussion presented in this paper concerning the applicability of traditional private sector management accounting techniques in the public sector. The paper sets out the pros and cons of such application and provides directions for future research.

Australian government budget balance numbers: the hybrid nature of public sector accrual accounting

Purpose - The purpose of this paper is to analyse the nature and comparability of budget balance (surplus/deficit) numbers headlined by the Australian Commonwealth Government and the governments of the six Australian States and the two Australian Territories. It does this in the context of the transition to Australian accounting standard AASB 1049 Whole of Government and General Government Sector Financial Reporting. Design/methodology/approach - A case study research method is adopted, based on a content/documentary analysis of the headline budget balance numbers in the general government sector budget statements of each of the nine governments for the eight financial years from 2004-2005 to 2011-2012. Findings - Findings indicate some variation in the measurement bases adopted and a number of departures from the measurement bases prescribed in the reporting frameworks, including AASB 1049. Findings also reveal that none of the nine governments have headlined a full accrual based budget balance number since the implementation of AASB 1049 in 2008. Research limitations/implications - While the study focuses on the Australian general government sector environment, it has significant implications in highlighting the ambiguity in the government budget balance numbers presented and the monitoring and information asymmetry problems that can arise. Research findings have wider relevance internationally in highlighting issues arising with the public sector adoption of accrual accounting. Practical implications - The paper highlights the manner in which governments have been selective in the manner in which they present important budget aggregates. This has important practical and social implications, as the budget balance number is one of the most important measures used to evaluate a government's fiscal management and responsibility. Originality/value - The paper represents the first detailed examination of aspects of the effect of the transition to AASB 1049.

An institutional perspective on management accounting change in the public sector : a case study from Canada

This thesis reports on a four-year field study conducted at the Saskatchewan regional office of the Department of Indian Affairs and Northern Development, a large department of the Government of Canada. Over the course of the study, a sweeping government-wide accounting reform took place entitled the Financial Information Strategy. An ethnographic study was conducted that documented the management accounting processes in place at the regional office prior to the Financial Information Strategy reform, the organization’s adoption of the new accounting system associated with this initiative, and the state of the organization’s management accounting system once the implementation was complete. This research, therefore, captures in detail a management accounting change process in a public sector organization. This study employs an interpretive perspective and draws on institution theory as a theoretical framework. The concept of loose coupling and insights from the literature on professions were also employed in the explanation-building process for the case. This research contributes to institution theory and the study of management accounting change by recognizing conflicting institutional forces at the organizational level. An existing Old Institutional Economics-based conceptual framework for management accounting change is advanced and improved upon through the development of a new conceptual framework that incorporates the influence of wider institutional forces, the concepts of open and closed organizational systems and loose coupling, and the recognition of varying rates of change and institutionalization of organizational activity sets. Our understanding of loose coupling is enhanced by the interpretation of institutional influences developed in this study as is the role of professionalization as a normative influence in public sector organizations.

A summary view of government cost recovery policies in Australia and New Zealand relating to the supply of public sector information

Researching administrative history is problematical. A trail of authoritative documents is often hard to find; and useful summaries can be difficult to organise, especially if source material is in paper formats in geographically dispersed locations. In the absence of documents, the reasons for particular decisions and the rationale underpinning particular policies can be confounded as key personnel advance in their professions and retire. The rationale for past decisions may be lost for practical purposes; and if an organisation’s memory of events is diminished, its learning through experience is also diminished. Publishing this document tries to avoid unnecessary duplication of effort by other researchers that need to venture into how policies of charging for public sector information have been justified. The author compiled this work within a somewhat limited time period and the work does not pretend to be a complete or comprehensive analysis of the issues.----- A significant part of the role of government is to provide a framework of legally-enforceable rights and obligations that can support individuals and non-government organisations in their lawful activities. Accordingly, claims that governments should be more ‘business-like’ need careful scrutiny. A significant supply of goods and services occurs as non-market activity where neither benefits nor costs are quantified within conventional accounting systems or in terms of money. Where a government decides to provide information as a service; and information from land registries is archetypical, the transactions occur as a political decision made under a direct or a clearly delegated authority of a parliament with the requisite constitutional powers. This is not a market transaction and the language of the market confuses attempts to describe a number of aspects of how governments allocate resources.----- Cost recovery can be construed as an aspect of taxation that is a sole prerogative of a parliament. The issues are fundamental to political constitutions; but they become more complicated where states cede some taxing powers to a central government as part of a federal system. Nor should the absence of markets be construed necessarily as ‘market failure’ or even ‘government failure’. The absence is often attributable to particular technical, economic and political constraints that preclude the operation of markets. Arguably, greater care is needed in distinguishing between the polity and markets in raising revenues and allocating resources; and that needs to start by removing unhelpful references to ‘business’ in the context of government decision-making.

Optimising COBIT 5 for IT governance : examples from the public sector

Control Objectives for Information and related Technology (COBIT) has grown to be one of the most significant IT Governance (ITG) frameworks available and also the best suited for audit, as it provides comprehensive guidance around IT processes and related business goals. However, given the constraints of both time and resources within which the Australian public sector is forced to operate, implementing an audit framework the size of COBIT in its entirety is often considered too large a task. As an alternative to full implementation it is not uncommon for the public sector to “cherry pick” controls from the framework in an effort to reduce its size. This paper reports on research undertaken to evaluate the potential to use an optimised sub-set of COBIT 5 for ITG audit in Australian public sector organisations. A survey methodology was employed to determine the control-objectives considered to be the most important to a selection of public sector organisations. Twelve control-objectives were identified as being most important to Queensland public sector organisations. As ten of these were also identified by previous studies, it appears possible to derive an optimised sub-set from COBIT 5 that would be both enduring and relevant across geographical and organisational contexts.

IT governance stability in a political changing environment : exploring potential impacts in the public sector

Public sector organisations (PSOs) operate in information-intensive environments often within operational contexts where efficiency is a goal. What's more, the rapid adoption of IT is expected to facilitate good governance within public sector organisations but it often clashes with the bureaucratic culture of these organisations. Accordingly, models such as IT Governance (ITG) and government reform -in particular the new public management (NPM)- were introduced in PSOs in an effort to address the inefficiencies of bureaucracy and under performance. This work explores the potential effect of change in political direction and policy on the stability of IT governance in Australian public sector organisations. The aim of this paper is to examine implications of a change of government and the resulting political environment on the effectiveness of the audit function of ITG. The empirical data discussed here indicate that a number of aspects of audit functionality were negatively affected by change in political direction and resultant policy changes. The results indicate a perceived decline in capacity and capability which in turn disrupts the stability of IT governance systems in public sector organisations.