Financial accountability for public sector bodies : an information system approach and empirical study of Commonwealth statutory authorities

Abstract

In Australia, grave doubts have been raised about the ability of the annual fmancial reports of Commonwealth statutory authorities to provide adequate financial accountability to Parliament and other interested parties. The issue is particularly important since these authorities and similar bodies are often used as instruments of government's welfare and economic policies, and have a significant impact upon the economy in distributive as well as allocative terms. This thesis examines issues surrounding the setting of minimum accounting and financial reporting standards as a contribution to solving these problems. A conceptual approach to standard setting is offered which stresses that the information systems which are the subject of these standards have a positive role to play in accountability for management performance as well as the establishment of legal and fiscal compliance. It is suggested that an objective of such regulation is information control as well as absolute prescription. The accountant's information choice problem is addressed through the vehicle of choice from among available capital maintenance and cost measurement concepts. The analysis suggests appropriate measurement and reporting objectives, explores public sector financial accountability structures and develops an accountability spectrum as a means of associating measurement models with categories of economic purpose given to statutory authorities. An empirical study provides a data bank of operating and enivronmental characteristics relevant to such standard setting, and explores the feasibility of a categorisation that is specific to this purpose and less subjective than those so far offered. In conclusion, several recommendations for the process of developing such standards are derived from the analysis.