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Critical Perspectives on Accounting 16 (2005) 905928

Making accounting accountable in thepublic sector

Garry D. Carnegie a,, Brian P. West b

a School of Enterprise, Melbourne University Private, Hawthorn, 3122, Australiab

School of Business, University of Ballarat, Ballarat, Australia

Received 20 October 2002; received in revised form 12 January 2004; accepted 15 January 2004

Abstract

Accounting is conventionally constituted and practised as a quantitative discipline which em-

phasises the use of money values. Where such values are unavailable or inappropriate, non-money

quantifications or qualitative forms of information take precedence. However, the boundaries of con-

ventional accounting remain imprecisely defined and this creates a jurisdictional tension between

monetary and non-monetary systems of accountability. This issue is examined within the context of

the Australian and New Zealand public sectors, where recent regulatory changes have mandated the

valuation for financial reporting purposes of a broad range of government controlled resources thatare of a non-financial character. Rationales for this expanded use of money values are re-evaluated

within the context of practical and theoretical issues associated with theirapplication, particularly with

regard to the accountability of public sector institutions. This accountability theme is then extended

in terms of the need to make accounting itself more accountable within the public sector.

2004 Elsevier Ltd. All rights reserved.

Keywords: Public sector accounting; Money values; Accountability

Bourgeois society is infected by monomania: the monomania of accounting. For it,

the only thing that has value is what can be counted in francs and centimes.

(Simone Weil,La Condition Ouvriere, 1951)

Corresponding author. Tel.: +61-3-9810 3102; fax: +61-3-9810 3149.

E-mail address:[email protected] (G.D. Carnegie).

1045-2354/$ see front matter 2004 Elsevier Ltd. All rights reserved.

doi:10.1016/j.cpa.2004.01.002


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906 G.D. Carnegie, B.P. West / Critical Perspectives on Accounting 16 (2005) 905928

1. Introduction

In his bookThe Measure of Reality (1997), Alfred Crosby charts the epochal shift inWestern society that was driven by the development of advanced methods of quantification

between the 13th and 16th centuries:

During the late Middle Ages and Renaissance a new model of reality emerged in

Europe. A quantitative model was just beginning to displace the ancient qualitative

model. Copernicus and Galileo, the artisans who taught themselves to make one good

cannon after another, the cartographers who mapped the coasts of newly contacted

lands, the bureaucrats and entrepreneurs who managed the new empires and East and

West India companies, the bankers who marshalled and controlled the streams of

new wealththese people were thinking of reality in quantitative terms with greater

consistency than any other members of their species.

(Crosby, 1997, p. xi)

As this paragraph suggests, bookkeeping and accounting were an integral part of this

new modelof reality.Indeed,Crosby makes thebold claim that Inthe past seven centuries

bookkeeping has done more to shape the perceptions of more bright minds than any single

innovation in philosophy or science (1997, p. 221).

While the development of advanced systems of quantification brought many benefits,

measurers in the late Middle Ages were sometimes confused and overzealous in applying

their newly discovered techniques: when in the fourteenth century the scholars of Oxfords

Merton College began to think about the benefits of measuring not only size, but also

quantities as slippery as motion, light, heat and colour, they forged right on, jumped the

fence, and talked about quantifying certitude, virtue and grace (Crosby, 1997,p. 14). Suchmisplaced endeavour may seem quaint today, but the basic problem of deciding what can

and should be quantified persists. The quantification revolution in Western society provided

an alternative to previous ways of understanding, but it would only be superior within certain

contexts:

Today we utilize numbers when we want narrow focus on a given subject and max-

imum precision in our deliberations. The old Europeans preferred broad focus and

settled for imprecision in the hope of including as much as possible of what might be

important.

(Crosby, 1997, p. 46)

While the language of number has achieved unrivalled prominence in science (McLeish,1991),in other domains numerical representations are sometimes impractical or inappro-

priate. Money values, for example, are ascribed routinely to items, such as motor vehicles,

plant and equipment, land and buildings, but can rarely be assigned on a reliable basis in

connection with more amorphous concepts, such as a happy family life, good health, or

a clean natural environment. Between such obvious extremes lies a territory in which the

choice between quantitative and qualitative means of expressionand the circumstances in

which both might be appliedis sometimes contested (see, e.g. Burritt et al., 1996; Carman,

1996; Carman et al., 1999; Churchman, 1971). This is a fundamental issue in accounting,


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G.D. Carnegie, B.P. West / Critical Perspectives on Accounting 16 (2005) 905928 907

which has been defined traditionally in terms of its primary emphasis on monetary quan-

tification: the specific subject matter dealt with in accounting is money-price (Littleton,

1953, p. 9). Although in recent years calls have been made for financial reports to embrace awider spectrum of informationsuch as social and environmental impacts (Deegan, 1998;

Gray, 2002; Gray et al., 1996; Lehman, 1999; Parker et al., 1989)money remains the

universal substance of accounting (Porter, 1996, p. 37).

The creation and navigation of this boundary between the monetary and non-monetary,

and between accounting and other disciplines, such as law (Bromwich, 1992), environmen-

tal science (Power, 1991, 1997a) and engineering (Miller, 1998), may have implications that

go far beyond accountings traditional technical issue of determining the form and content

of financial reports. As many accounting researchers have now recognised, there is much

more to accounting than is suggested by its traditional dour, neutral and functionalist image

(Burchell et al., 1980; Carnegie and Napier, 1996; Carruthers, 1995; Colwyn Jones and

Dugdale, 2001; McSweeney, 1997; Miller, 1994; Miller and OLeary, 1987; Morgan, 1988)

and this re-understanding has been extended to include accounting within the public sector

(Broadbent and Guthrie, 1992; Guthrie, 1998; Laughlin and Broadbent, 1993; Lawrence,

1999). Although portrayed as being essentially descriptive, financial reports are subjectively

constituted and interpreted (McSweeney, 1997; Morgan, 1988).The information they con-

tain is used both to influence and rationalise human actions and, in turn, reflects the results

of such actions (Hines, 1988).As a consequence, the imposition or selection of systems of

monetary valuation has the capacity to re-categorise particular domains as financial and

precipitate a re-understanding of what is being accounted for: To quantify qualities is to

abstract away much of their conventional meaning (Porter, 1996,p. 44). It may also lead

to a re-casting of the status of occupations operating within those domains.

The accountingprofession enjoys substantial authorityin identifying, valuingand record-

ing events and circumstances in money terms (Montagna, 1986; West, 1998, 2003,chapter3), and in legitimating such representations through the audit function ( Pentland, 2000;

Power, 1995, 1996, 1997b). Moreover, as an elite occupational group the accounting pro-

fession enjoys a privileged capacity to impose the very systems of monetary valuation that

command its expertise, extend its authority and enhance its status (Booth and Cocks, 1990).

In this way accounting needs to be understood not as a neutralif not benigntechnical

means of promoting accountability, but as a sociological and institutional practice which

itself needs to be made accountable through those who endorse and practise it (see, e.g.

Hopwood and Miller, 1994).

Recent developments in Australian and New Zealand public sector financial reporting

have precipitated a significant increase in the assignment of money values to commu-

nity and other resources which were previously accounted for by primarily non-financialmeans, both quantitative and qualitative.1 Miller (1998, p. 174) has noted that [a]ccounting

is most interesting at its margins, and these changes to public sector accounting pro-

vide an opportunity to examine the practice and consequences of the incremental applica-

1 This is not intended to imply the adequacy of such accountings. On the contrary, the need to review and, where

appropriate, reform accounting within the public sector has been widely acknowledged (see, e.g. Greenall et al.,

1988; Micallef et al., 1994; Sutcliffe et al., 1991).The matter in contention in this article concerns the directions

in which such reforms have proceeded.


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tion of conventional accounting technique. Illustrations of the expandedalthough often

problematicassignment of money values to public resources for financial reporting pur-

poses are provided in the following section. Two main themes are then developed fromthis exposition. First, consideration is given to the implications of these changes for the

accountability evaluations and other decision making processes of the users of public sec-

tor financial reports. Second, the accountability theme is enlarged in terms of assessing the

accountability of the accounting profession itself for the practices of monetary valuation

that it has designed, endorsed and applied in connection with public sector institutions.

Conclusions on these matters are provided in the final section.

2. Accounting and monetary valuation in the public sector

Since the mid 1980s, accounting and government policy-makers in a variety of jurisdic-

tions, includingthe UK and throughout continental Europe, have advocated and overseen the

adoption of accrual accounting systems for public sector financial reporting, with Australia

and New Zealand described as the leading proponents of such developments (Guthrie,

1998,p. 1; see alsoBoston et al., 1996; Guthrie et al., 1997; Pallot, 2003). It has been

contended within the pronouncements of standard setting bodies (see, e.g. the Public Sector

Accounting Standards Board (PSASB, 1996a, 1996b); the Australian Accounting Standards

Board (AASB, 2002) and PSASB and AASB (1999); PSASB and the Accounting Standards

Review Board (ASRB, 1990a))that such systems enable the accountability of public sec-

tor organisations and their managers to be enhanced. Commonly known as commercial

accounting, full accrual accounting systemswith their traditional emphasis on match-

ing costs and revenues in pursuit of accurate determinations of periodic profitevolved to

align with the profit-seeking orientation of business enterprises. As described byPaton andLittleton (1940, p. 16):

Accounting exists primarily as a means of calculating a residuum, a balance, the

difference between costs (as efforts) and revenues (as accomplishments) for individ-

ual enterprises. This difference reflects managerial effectiveness and is of particular

significance to those who furnish the capital and take the ultimate responsibility.

The statement of financial position (balance sheet) is rendered subordinate to the calcu-

lation of this residuum:

The factors acquired for production which have not yet reached the point in the busi-

ness process where they may be appropriately treated as cost of sales or expense

are called assets, and are presented as such in the balance sheet. It should not beoverlooked, however, that these assets are in fact revenue charges in suspense

awaiting some future matching with revenue as costs or expenses.

(Paton and Littleton, 1940,p. 25)

In spite of these origins and intents, full accrual accounting systems are now being

applied to a range of public sector institutions that have no profit making nor financial

wealth maximisation objective. Rather than subsisting in the generation of revenues, the

accomplishment of theseorganisationstypicallyabides in the provision of services thatare


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valued for their social and educative contributions.2 In many instances, such as for museums

where admission is free or by a token charge, no substantive attempt is made to generate

revenues from the services provided. Even more peculiarly, far from being revenue chargesin suspense, the social resources controlled by these organisationsincluding cultural,

heritage and scientific collections (hereafter collections)are very often to be held and

preserved indefinitely, in a custodial capacity, for current and future generations.3 With

particular reference to archaeology,Carman (1995, p. 23)explains the distinctive nature of

this responsibility:

the archaeological heritage can be seen to exist in the public domain, the realm of the

group rather than the individual, endowed with an otherworldly morality. The idea

of the otherworldly expresses the aura of the public domain quite nicely: it is not

of the everyday in which things are used up, discarded, bought, sold or just ignored.

The public domain is a special placeabove and beyond the reach of the individual

and yet something in which the individual has a legitimate interest and rights.

Collections of this genre are integral to the public programs operated by museums and

libraries, but the pecuniary and calculative training of accountants typically does not extend

to endowing an appreciation of these non-financial resources nor promoting accountability

for them. Accordingly, the rich cultural, heritage, scientific, educative and other values of

collections are at risk of being misunderstood and misrepresented when they are accounted

for by a profession that is inculcated to understand and prioritise objects and experiences

in primarily financial terms. To treat public collections as financial assets is a commercial

fictionand an intellectual vulgarism (Adam, 1937, p. 2;Carnegie and Wolnizer, 1995,

pp. 3842, 1999, pp. 1718; see alsoBarton, 2000; Burritt et al., 1996; Mautz, 1988; Pallot,

1990). Nevertheless, how they have been reassigned such an identity will now be outlined.

The quantification of social and other non-financial benefitssuch as those manifest

in public collectionsfor financial reporting purposes has created a nascent occupational

category which the accounting profession is claiming as its own. Behind this claim lies the

conventional accounting definition that assets are future economic benefits controlled by

the entity as a result of past transactions or other past events (PSASB and AASB, 1995,

paragraph 14). Assets are typically associated with expected future net cash inflows, as

typified and illustrated by the Financial Accounting Standards Boards (FASB) statement

2 The National Gallery of Australia (NGA) provides a compelling illustration of this commitment to the pursuit

of non-financial objectives. Under recently introduced legislation the NGA has been given authority to give

saleable art it no longer wants or needs to other galleries, and has proceeded to make arrangements to do so (Safe,

2003). While the organisation also has authority to sell works, it is reluctant to do so on the grounds that they

are often snapped up at auction by private collectors and disappear from the public eye (Safe, 2003).The giving

away of artworks to other public galleries was rationalised by the deputy director of the NGA on the grounds that

it means [t]he works can be better seen by the public, which is a better outcome for everyone (cited in Safe,

2003).In a similar vein, governing bodies of some Australian museums and similar institutions have sometimes

elected to return collections of indigenous artefacts and human remains to their traditional custodians (see, e.g.

Buckell, 2003a, 2003b).Needless to say, assigning money values to human remains that are held in collections

would represent a particularly problematic and morally dubious accounting practice.3 Excluded from consideration here are those items which may from time to time be de-accessioned from

collections and made available for sale or transfer on financial terms.


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that an asset embodies a probable future economic benefit that involves a capacity . . .to

contribute directly or indirectly to future netcash inflows (FASB, 1985,paragraph 26,

emphasis added).Collections, along with other non-financial resources, such as national parks, botani-

cal gardens, war memorials and plantations of trees along roadways, generally do not of

themselvesthrough day-to-day operations nor commercial exchangegenerate future net

cash inflows to the entities that have custody of them for present and future generations.

Even where some cash inflows can be attributed to such resources, unless these exceed the

cash outflows associated with holding and maintenance costs, then the case for recognis-

ing such resources as assets in financial terms would seem to be spurious. Nevertheless,

accounting policy-makers have asserted that collections and other like resources held by

not-for-profit organisations benefit the entities by enabling them to meet their objectives

of providing needed service to beneficiaries (PSASB and AASB, 1995, paragraph 21).

Public museums and libraries do indeed strive to provide social, cultural and educative

services to the community in accordance with the representations of their mission/objective

statements.4 But to contend that this necessitates that their collections be assigned money

values and reported in statements of financial position is a startling conceptual leap that

leaves behind the key notion that such statements are expressly and exclusively of afinan-

cialcharacter. However, such is the rationale that is used to transform the social and other

non-financial benefits of public collections into assets for financial reporting purposes in

non-commercial, social contexts.

The consequences of this weak definitional basis for the monetary valuation of collec-

tions are often compounded by difficulties, sometimes of a particularly perplexing nature,

in assigning money values to collection items and determining appropriate depreciation

policies.5 There are frequently no markets for these items as their unique character often

means that they do not belong to any generic category of commodities necessary for amarket to be constituted: like all museum artefacts, each one has an immensely personal

story (Heinrich, 2002, p. 1; see alsoCarman et al., 1999). Such stories contribute sub-

stantially to the uniqueness of particular artefacts and their non-financial values, and may

also precipitate legal measures designed to protect such items in a special domain beyond

the economics of the marketplace. In other instances, only thin and sporadic markets for col-

lection items exist. Money values assigned to collections and other non-financial resources

are therefore typically arbitrary and unreliable (Carnegie and Wolnizer, 1995, pp. 4344;

Jaenicke and Glazer, 1991, p. 9).

The following cases drawn from the Australian and New Zealand public sectors seek to

highlight this arbitrariness and lack of reliability. They are a small but illustrative sample

of the many dilemmas confronted by public sector managers in attempting to represent

4 As pointed out byJaenicke and Glazer (1991, p. 77), the primary function of repositories of collections is to

be and to hold.5 The Federal Government of Australia appears to have acknowledged implicitly this difficulty. While accepting

that the depreciation of buildings and equipment may provide a basis for budget allocations to public institutions,

the depreciation of collections is to be expressly excluded: the Government believes it is unrealistic for the

institutions to receive money for collections they are unlikely ever to attempt to sell, or for collections that are

more likely to appreciate in value (Crabb, 2003).


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non-financial resources in financial terms, and the unintended consequences which may

result from such practice.

2.1. Australian Museum and Museum Victoria

The collections of Museum Victoria (MV) based in Melbourne and the Australian Mu-

seum (AM) based in Sydney are broadly similar in composition and size, and the financial

reports of both institutions are subject to the same national accounting standard (AAS 29

Financial Reporting by Government Departments). The statements of financial position

of MV reported collections as non-current assets at $218 million and $227 million at 30

June 2001 and 2002, respectively (MV, 2001, 2002). In stark contrast, at the time of writing

the AM has yet to recognise its collections as an asset in its statement of financial position.

The organisations 2001 annual report disclosed in a note that it collection had been valued

at $4083 million, but added that the [collection] valuation exercise . . .

was not consideredto be reliable (AM, 2001).

In its 2002 annual report, the AM again declined to recognise its collection as an

asset, although noting that [e]fforts to refine the valuation to achieve a more reliable

value for collection assets continued during the year (AM, 2002). Unlike the previous

years report no collection value was mentioned, although it was revealed that [i]t is ex-

pected that . . .the value of the collection will be significantly less than values that were

mentioned in previous annual reports (AM, 2002).The AM has disclosed that its non-

recognition of its collections complies with a direction of the New South Wales Treasury

(AM, 2002).However, the Auditor-General of that state has issued qualified audit opin-

ions on the basis of a departure from AAS 29 (AM, 2001, 2002). In contrast, the audit

opinions issued by the Auditor-General of Victoria in connection with MV have been

unqualified.

This demonstrated inability of like institutions to apply consistently a common account-

ing standard highlights the perplexing nature of the standards prescriptions.6 Moreover,

while MV recognised its collection at $218 million for financial reporting purposes at

30 June 2001and had this ratified by the Auditor-General of Victoriathe director of

MV was reported in a Melbourne daily newspaper the previous year as stating that the

collection of 16 million artefacts was worth several billion dollars (Ketchell, 2000,

p. 9, emphasis added). These extraordinary variations in purported money values highlight

the reliable measurement dilemmas and arbitrary outcomes of valuing such collections in

money termsa situation that has been recognised by commentators from outside of the

accounting profession, where the process has been described as a bizarre campaign to put

a price on the incalculable, the irreplaceable and the unsellable (Byrne, 2002, p. 18; seealso,Griffin, 1995; Maslen, 1994, 1997).

6 Paradoxically, the conceptual framework that has been offered as providing the rationale for the recognition

of collections as assets (see, e.g. Micallef and Peirson, 1997) also nominates comparability as a key qualitative

characteristic of financial reports: The users of general purpose financial reports need to be able to compare

aspects of an entity at one time and over time, and between entities at one time and over time (PSASB and ASRB,

1990b, paragraph 31).


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2.2. Library Council of New South Wales

The Library Council of New South Wales (LCNSW) valued its collection for financialreporting purposes for the first time in 1999. The collection was valued at $2084 million,

even though some parts of the collection were not valued because the library is not able to

measure reliably the value of the assets (LCNSW, 1999). However, a note to the financial

statements acknowledged that the valuation was considered to be on the conservative side

as this was the first time that the Collection has been valued (LCNSW, 1999). This doubt,

while understandable in the circumstances, did not discourage the demonstration of apparent

pride that seems evident in the following claim recorded in the notes to the organisations

financial statements: This valuation confirms that the State Librarys Collection is the most

valuablein Australia (LCNSW, 1999, emphasis added).

The magnitude of thefinancialvaluation attributed to this collection was thus applied to

claim status as Australias most valuable library collection per se. It is a distorted and ill-

conceived claim given that the essential value of a library collection resides in its capacity

to meet the needs and interests of its users and serve as a repository for documents and

other artefacts of historical significance and cultural value.7 Furthermore, it is a compelling

instance of how a financial valuealbeit an incomplete and arbitrary onemay potentially

serve to displace notions of non-financial value having greater relevance within the specific

contexts of public sector organisations and the parties to which they are responsible.

2.3. National Library of New Zealand

In compliance with comprehensive accrual accounting being mandated throughout the

New Zealand public sector, the collection of the National Library of New Zealand (NLNZ)

was valued for financial reporting purposes. An apparently unforeseen economic conse-quence of this action became apparent when the New Zealand government levied a capital

charge on the reported assets of government departments. This would have had profound im-

plications for the NLNZ, precipitating a redirection of resources away from the institutions

primary function of fostering the educational and intellectual well-being of its community

and acting as a repository for historical manuscripts and other artefacts.

Amid protests over the capital charge imposition and its likely effects, the Heritage

Collections of the NLNZ, valued at $522 million as at 30 June 1994, were transferred to

theCrownon1July1994atbookvalue(NLNZ, 1995). This transfer ensured that the library

did not pay a capital charge based on the $522 million valuation. A contrived and convenient

solution was thereby reached by an accounting book entry. However, this carried with it an

implicit admission that the conceptual basis for the valuation was fundamentally flawed;that the library collection was not a financial asset of the institution that had custody of it

and which was accountable for its maintenance and use. The transfer of heritage collections

from the books of the NLNZ to the books of the Crown thereby highlights the problematic

nature of control over such resources. While definitions of assets require control by

7 Difficulties associated with assigning money values to library collections, and in formulating appropriate de-

preciation policies, are made evident by the extraordinarily diverse accounting policies adopted for these resources

by Australian public universities (Carnegie and West, 2003).


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the reporting entity (e.g.PSASB and AASB, 1995, paragraph 14), the circumstances of

the NLNZ highlight a tendency within the public sector for such control to subsist only

with government generally rather than with particular public sector institutions (see alsoCarnegie and Wolnizer, 1999, p. 18). This, again, draws attention to the custodianship

functionrather than unrestricted control of resourceswhich characterises many public

sector institutions and the responsibilities of their managers.

Also, evident in the case of the NLNZ is a contradiction of the subsequently issued

Valuation Guidance for Cultural and Heritage Assets prepared by the NewZealand Treasury

(2002). This document asserts that the [f]inancial reporting of cultural and heritage assets

is useful in promoting the accountability of public sector managers, contending that the

financial reporting of such assets will serve to provide information by which the Chief

Executive Officer and governing body can be held responsible for their stewardship of

public assets and to measure changes in the net worth of public sector entities over time

(New Zealand Treasury, 2002, p. 5). This presumed nexus between the net worth of public

sector entities and the accountability of their managers is not subject to further explication.

It is a presumption not accepted within institutions having custody of public collections,

and shown to be wholly spurious in the case of the NLNZ given the apparent divergence

between custodianship for management purposes and control for financial reporting

purposes of this organisations library holdings.

2.4. Museum of New Zealand and the City of Ballarat

Specific artefacts within collections are often unique and irreplaceable, particularly when

their significance derives from historical events and cultural settings. The Museum of New

Zealand (MNZ) was faced with the prospect of valuing explorer Captain James Cooks

Hawaiian cloak andthe skeletonof Phar Lap, the famous race horse of the early 1930s. Theseunique and irreplaceable artefacts were valued at $3 million and $1 million, respectively

(Watt, 1995, pp. 40 and 44). Captain Cooks cloak was valued at what was claimed to be an

international market value, while the valuation of Phar Laps skeleton was based on a long

dated offer from an Australian museum, which holds the thoroughbreds hide, to purchase

the skeleton in order to see the racer completed (Watt, 1995, p. ii). Such reference

points for assigning money values are often spurious or at least questionable, on account of

the unique character of the artefacts involved and the absence of recent and relevant actual

transaction values.

A related example concerns the City of Ballarat, which valued the Eureka Flagthe

symbol of an 1850s uprising by gold-miners that has acquired iconic status within

Australiaat $10 million. It was claimed that this valuation gained credibility becauseanother great Australian icon, the mounted hide of Phar Lap, had also been valued at $10

million (Danaher, 2000).The Mayor of the City of Ballarat, however, acknowledged that

the true value of the flag could never be recorded in dollars and that it was priceless

(Danaher, 2000).In spite of the $10 million valuation the Eureka Flag was not recognised

as an asset in the statement of financial position of the City as at 30 June 2000. This was

justified in the notes to the financial statements on the grounds that uncertainty exists to

the appropriateness of its carrying value on account of the unique nature of this asset and

the absence of a market value (City of Ballarat, 2000).


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2.5. City of Warrnambool

In its 19931994 annual report, the City of Warrnambool valued the 1000 Norfolk Islandtrees which line the roadways of this Australian coastal city at $6 million, or $6000 each.

This arbitrary financial valuation of Norfolk Pines wasnotrecorded as an asset in the citys

statement of financial position but was shown in the asset value summary of the annual

report (Connelly, 1995, p. 3;Thomson, 1995, p. 1). A formula to assess the money value of

the trees had been devised by horticulturists. When a fire subsequently destroyed four of the

trees, it was claimed in local newspaper reports that this had resulted in $24,000 damage.

However, the loss was not of a money kind as the trees are non-financial resources providing

lifestyle, sentimental and emotional benefits to Warrnambool residents and visitors (Black,

2002). AsHines (1991)has argued, attempts to value nature in money terms are not only

unreliable but may also have the effect of misrepresenting and devaluing natural resources.

According to its proponents, expanding the domain of conventional accounting to em-

brace the monetary valuation of non-financial resources of the genre illustrated will aid in

assessing the financial position and performance of public sector organisations and enhance

the accountability of their managers (Hone, 1997; Micallef and Peirson, 1997; Rowles,

2002). As is the case in other domains, managers of public sector institutions should reason-

ably be held accountable for operations within their jurisdiction. They should, for example,

be held accountable for conserving and protecting the non-financial resources held in the

collections of not-for-profit institutions (Carnegie and Wolnizer, 1995, p. 44, 1996, p. 90).

But being preoccupied with the financial value of non-financial resources is a distracting

and paradoxical pursuit. The managers of not-for-profit organisations, such as museums

and libraries, have neither the responsibility to maximise the financial value of collections

or return on investment, nor the liberty to trade freely or commercially under the statues

which govern the operations of their organisations as would be required to discharge suchresponsibilities (Carnegie and Wolnizer, 1999, p. 18). Rather, the non-financial resources

of such organisations, often having been removed by legal means from the economics of the

marketplace (Carman, 1996), are most typically to be conserved and preserved for current

and future generations in accordance with mission statements that emphasise their social,

cultural and educative roles. Put bluntly, the financial valuation of non-financial resources

constitutes an accounting fiction (Carnegie and Wolnizer, 1995) as well as an account-

ability mirage.

3. Accountability in the public sector

The case illustrations provided in the previous section highlight the expansion of the

process of assigning money values to collections and other non-financial public sector

resources, and the often arbitrary and futile nature of such endeavour. Attention is now

directed to evaluating the implications of these extended regimens of monetary valua-

tion for promoting accountability within the public sector. More specifically, the possi-

ble impacts of the coerced and contrived metamorphosis of the non-financial into the

financial is considered in terms of its impact on various and diverse accountability

discourses.


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Characterisations and evaluations of accounting as a language constitute a well-

established theme in the accounting literature. Routinely described as the language of

business, accounting is represented functionally to be an essentially communicative dis-cipline (American Accounting Association, 1966; Bedford and Baladouni, 1962; Lavoie,

1987; Riahi-Belkoui, 1995). Additionally, one of the primary functions of communicating

accounting information is to enable appropriate accountability evaluations. For example, an

Australian Statement of Accounting Concepts (SAC2) prescribes that [m]anagements and

governing bodies shall present general purpose financial reports in a manner which assists

in discharging their accountability (PSASB and ASRB, 1990a, paragraph 44). The same

statement defines accountability as the responsibility to provide information to enable

users to make informed judgements about the performance, financial position, financing and

investing, and compliance of the reporting entity (PSASB and ASRB, 1990a, paragraph 5).

Conventional accounting, as practised for private sector organisations that have a private

profit making intent, understandably and necessarily focuses on quantitative and monetary

representationsfinancial dataas the means of promoting accountability. This is so

because the purpose and success of such organisations are inextricably bound to financial

outcomes. The shareholders of public companies, for example, are generally assumed to be

motivated by wealth maximising strategies which cause them to focus on expressly financial

variables, such as reported profits, dividend paying capacity and solvency. Consistent with

this circumstance, it is common for private sector business organisations to express their

organisational objective in terms of maximising shareholder wealth. Financial data are

necessarily the primary medium for revealing the extent of progress in achieving such an

objective.

This conventional model of accountability for profit-seeking business organisations has

drawn criticism for being too narrowly focussed (Deegan, 1998; Gray, 2002; Gray et al.,

1996; Lehman, 1999; Parker et al., 1989).It is contended that investors and other financialstatement users are now increasingly concerned with a broader range of (non-financial)

information. Accordingly, there have been calls for a move to triple bottom line reporting

which encompasses social and environmental indicators in addition to traditional financial

disclosures (Elkington, 1997; Gray et al., 1996; Mathews, 1993).

If the traditional emphasis on financial information is being found wanting in discharg-

ing accountability obligations within the business sector, such an emphasis is even more

problematic within the public sector domain of institutions, such as museums, libraries and

other not-for-profit entities, whose objectives and reasons for being are not solely, nor even

principally, of a financial character. Public libraries and museums, for example, are typically

charged with responsibility for accumulating and holding resources in the public interest

for current and future generations. Paradoxically, while there are calls for accountabilitywithin the private sector to be expanded to embrace non-financial factors, accountability

within public sector not-for-profit entities is being coerced by accounting standards into a

narrower financial focus.

Clearly, there is a financial aspect to achieving appropriate mechanisms of accountability

within public sector institutions. This relates, for example, to ensuring that public moneys

are expended appropriately and properly accounted for. However, most public sector

institutionsincluding museums, libraries, universities, hospitals and art galleriesare

established to provide services to the public. The effective financial management of such


12/24


entities within their prevailing organisational contexts is not for the purpose of delivering

purely financial returns and outcomes, but to enable them to pursue their social objectives

with greater effectiveness and efficiency. A hospital that is well managed in financial termscannot be presumed to be meeting a communitys needs for health care. Likewise, the

standing of a university will derive from the quality of its education and research programs

rather than be gleaned from results or trends revealed by its statements of financial position

and performance.

Changes in public sector accounting have been claimed to be motivated by a need to

promote enhanced accountability within the sector. In pursuit of this goal regulators have

been drawn to adopt the financially based model that has evolved in connection with pri-

vate sector business organisations. In Australia, for example, three accounting standards

designed expressly for application in the public sector have been promulgated: AAS 27

Financial Reporting by Local Governments,AAS 29Financial Reporting by Govern-

ment Departments andAAS 31Financial Reporting by Governments. These standards

prescribe the preparation of general purpose financial reports on a full-accrual accounting

basis in the same style as those prepared for private sector business organisations. Yet, there

is no requirement for the disclosure of other accountability measures, such as performance

indicators. The reporting of such indicators is simply encouraged under each of AAS 27

(paragraph 99), AAS 29 (paragraph 12.10.1) and AAS 31 (paragraph 16.1.1).

As Walker (2002, p. 43) has observed with regard to theAustralian public sector, [u]nless

financial information is related to some measure of the quantum or quality of services

actually delivered by governments, financial data are largely irrelevant. It is this condition

of irrelevance that is now evident in Australian public sector reportingnot just in spite of

the promulgation of public sector accounting standards butbecauseof those standards. The

almost exclusively financial focus of the standards has promoted an incongruous notion

of accountability for the entities to which they are applied, under which taxpayers andother interested parties have access to detailed financial information regarding public sector

entities but only fragmented and voluntary disclosures regarding the services demanded of,

and provided by, these entities.Parker (1996, p. 5)notes:

We have witnessed an ongoing rush to incorporate the supposedly more sophisticated

and developed private-sector accounting methodologies into public-sector accounting

practice with hardly a pause to consider the significant differences in structures,

objectives and social requirements of public-sector organisations.

This one size fits all approach has failed to recognise that financial data are often not

the primary medium for facilitating accountability evaluations within the complex setting

of the public sector (Robinson, 2003; Sinclair, 1995). The consequences of this neglectare evident in Walkers (2002) survey which reveals that the disclosure of performance

indicators within the Australian public sector is characterised by opportunism (favouring

good news indicators), inconsistencies between entities and within single entities over

time, and a general adhockery. As a consequence the discourse of accountability within the

public sector remains unfortunately lopsided and incomplete:

The accounting profession has overstated its claims that sets of financial statements

unaccompaniedby performance indicators will meetthe information needs of external


13/24


stakeholders. They will not without accompanying information about what those

agencies have actually delivered in the way of services to the community.

(Walker, 2002,p. 53)

While this criticism has general relevance, it is with regard to collections and other like

items that it has most direct application. Here, the accounting profession has shown itself to

be blinkered by a traditional, even if well intended, monetary fixation that obscures its own

accountability. As discussed above and elsewhere, collections are not financial resources but

social resources. Attempts to place money values on them are prone to error and subjectivity.

Even more importantly, such valuations will usually make no meaningful contribution to

revealing the accountability of their custodians, nor any other aspect of organisational or

managerial performance.

The key issues with regard to providing evidence of appropriate stewardship over non-

financial resources, including museum and library collections, war memorials, and parks

and gardens, pertain to factors, such as their physical condition, security, arrangements for

public access and use, and indictors of their usage and the quality of the visitor experience.

Qualitative information (such as a report on storage conditions within a museum) and

quantitativedata (such as theextent of public usage)can enableassessmentsof such variables

(for discussions of the distinctive nature of accountability and management issues arising

within public museums, arts institutions and other similar entities see Abraham et al.,

1999; Carnegie and Wolnizer, 1996; Zan, 1998, 2000a, 2000b, 2002; Zan et al., 2000).The

assigning of dollar values to non-financial resources, however, is a misplaced endeavour as

it invokes an irrelevant and inappropriate language of accountability. A periodic increase

or decrease in the arbitrary reported dollar value of a museum collection, for example,

will typically reveal nothing of relevance to the purposes for which it is heldbeing, in

summary, to maximise a communitys social and intellectual capital. On the contrary, aninadequatelystored andcuratedcollection maywell be reported at an increasing dollar value,

particularly where that value is imputed or otherwise calculated based on assumptions, such

as the application of a price index. Given the lack of reliable evidence pertaining to such

calculations, and the complexity and vastness of many collections, the ability of auditors

either to authenticate or challenge assigned money values in such circumstances may be

limited.

Attempts to express the non-financial in financial terms represent a misplaced and

overzealous endeavour to translate the benefits that processes of monetary quantification

have yielded in connection with private sector business organisationswhich hold financial

resources and have financial objectivesinto another, quite distinct, domain. Above all, it

fails to recognise that the usefulness of monetary quantification is not universal but confinedto certain contexts. The determination of those contexts must derive from the demonstrable

relevance, availability and fitness for purpose of money values; notfrom a mere presumption

of transferability from other settings (Barton, 1999b, 2002).

The dysfunctional consequences of failing to delineate in purposive terms the bound-

aries of monetary quantification involve more than the often very significant effort and costs

expended in attempting to value and audit non-financial resources in financial terms. First,

there is distraction from the need to promote a more diverse discourse of accountability

within the public sector; one which encompasses qualitative information and non-monetary


14/24


data (Carnegie and Wolnizer, 1996).Second, it may foster a misunderstanding of the pur-

pose and nature of certain public sector resources. Valuing a war shrine or memorial in

dollar terms, as required under Australian and New Zealand accounting standards, not onlyfails to promote the accountability of its custodians but threatens to misrepresentif not po-

tentially desecratethe purpose for which such monuments are established and maintained

(seeInglis, 1998). Third, the usefulness of the financial reports of public sector institutions

in general may be diminished as they are distorted by the inclusion of non-financial re-

sources expressed in a financial form, particularly within non-commercial contexts. Fourth,

the accounting profession risks exposing itself as an occupational group which evidently

fails to appreciate, respect or understand the functions and purposes of public organisa-

tions concerned with enhancing social and intellectual capital. Fifth, as argued below, such

behaviour leads to concerns about the accountability of the profession itself.

These issues present a challenge to those who have presumed that the suitable model

for promoting accountability within the public sector is simply a replication of that which

is used within the private sector. Indeed, they indicate a need to investigate and evaluate

the accountability of accounting itself. This is especially so given the apparent reluctance

of the accounting profession in various parts of the world to evaluate the impacts of the

reforms based on full accrual accounting systems that it has promoted within the public

sector.

4. The accountability of accounting

As mentioned previously, the accounting standards that drove the implementation of

accrual accounting within the Australian public sector are AAS 27, AAS 29 and AAS 31. 8

AAS 27 and AAS 29 were both prepared by the PSASB which was established within theprofession-sponsored Australian Accounting Research Foundation (AARF).9 In the case of

AAS 31 the only variation from these arrangements was that the AASB also contributed to

the preparation of the standard.

AsCorbett (1996, p. 138)observes, the self-interest of the accounting profession was an

important influence on the standard setting agenda:

there is a large measure of self-serving self-interest in whatthe accounting professions

senior bodies are trying to do. If they can impose a common set of standards on the

public sector, their members, whose experience is mainly in the private sector, will

suddenly become experts in what public sector accounts should contain and will thus

become eligible to serve as consultant experts and contract auditors.These private interests were masked by the familiar claim of a due process operating

under which constituents are provided with the opportunity to comment on an exposure

8 These standards apply respectively to local governments, government departments, and governments and

thereby constitute a substantial platform of accounting regulation within the Australian public sector.9 These standards were then issued by the AARF on behalf of the Australian Society of Certified Practising

Accountants (now re-named CPA Australia) and The Institute of Chartered Accountants in Australia.


15/24


draft before the final version of an accounting standard is issued. However, asRyan et al.

(1999, p. 174)note:

While the due process adopted for developing accounting standards in the Aus-

tralian public sector is ostensibly the same as that utilised for private sector accounting

standards, differing institutional arrangements and political environments are likely

to drive differences in constituent involvement.

Such differences are evident in the findings of studies by Carnegie and West (1997) and

Ryan et al. (1999)with regard to the development of the accounting practices now required

under AAS 27 and AAS 29, respectively. In both these studies it was ascertained that the

preparer constituent grouplocal governments in the case of AAS 27 and government

departments in the case of AAS29exerted only a marginal influence over thefinal versions

of these standards. A number of possible explanations for this lack of influence have been

advanced, including:

Thelack of experience of preparer groupswithin thepublic sectorin lobbying on proposed

accounting standards. That the debate was conducted in terms that were unfamiliar to many respondents from

the public sector. In particular, from the outset the debate was couched in conventional

accrual accounting terminology and Statements of Accounting Concepts. There was an implicit presumption that the model of accounting practised in the private

for-profit sector would also be the appropriate one for the public sector, with responses

that challenged this basic presumption unlikely to exert influence.

Adding to these concerns regarding the efficacy of the due process applying to the

development of the public sector standards is the problematic background and operation of

the now defunct body which oversaw the preparation of the standards: the PSASB. This has

been studied in detail byChua and Sinclair (1994), who conclude:

The conditions of possibility for the emergence of the PSASB included a business

sector hurting in a recessionary environment, a government bureaucracy suddenly

self-critical and eager to adopt the managerial strategies of a business-oriented pri-

vate sector, State governments who became prepared to set up a national corporate

regulatory agency, a more educated and sceptical citizenry, a divided accounting pro-

fession which included a proactive subgroup of government accountants with access

to government sponsors and an embryonic accounting standard-setting programme

constrained by a lack of resources.(Chua and Sinclair, 1994, p. 701)

The influence of these circumstances is evident in the subsequent activity of the PSASB,

which was [d]ominated by the standard-setting agenda of the private sector ( Chua and

Sinclair, 1994, p. 702) and under pressure to produce something on account of its extremely

small output (p. 699). Given this settingand an environment buoyant about private sector

accomplishment and practices and cynical towards those of the public sectorit is perhaps

not surprising that the imposition of the private sector model of financial reporting emerged


16/24


as the favoured and expedient resolution for regulating the accounting of all types of entities

within the public sector.10

The evidence now suggests that the transportation of full accrual accounting to thepublic sector is yet to provide any comprehensive means for enabling improved account-

ability assessments within that sector. AAS 27, AAS 29 and AAS 31 have an almost ex-

clusive financial focus and thereby fail to promote the broader accountability discourse

that is required within public sector settings where social objectives often necessarily

take priority over financial outcomes. Even with regard to financial accountability, fi-

nancial outcomessuch as a particular profit level or financial structure, as revealed by

conventional financial reportsare often not the main matter in contention, given the

non-financial nature of the objectives which govern many public sector organisations and

the behaviour of their organisational participants. Rather, financial accountability in these

settings typically pertains to the propriety of the transactions entered into and how they

have contributed to facilitating outcomes of a social character, such as a better educated

community.

As well as failing to address this issue of relevancethe need for information that

aligns with the nature of the entities concernedreforms of public sector accounting have

sometimes imposed very impractical requirements. While some sense of this failing may

be gleaned from the illustrations provided earlier, a further compelling example concerns

the fiasco of accounting for land under roads. Australia has a vast road network, most of

which is under government control. It was the intent of AAS 27, AAS 29 and AAS 31 that

land under roads be brought to account as an asset in the statements of financial position of

government authorities that control such land.

This was an extraordinary requirement given that, except in the rarest of circumstances, it

would be inconceivable that such land would continue to be used for anything else other than

its existing purpose. Also, trying to ascribe a reliable dollar value to such land is fraught withdifficulty. The price of adjoining landprone to fluctuation in rural areas due to changing

commodity prices and climatic conditionswould often be a very doubtful indicator of

the market value of the narrow, fenced off, and often tree-lined strips of land under roads,

which are typically unusable for other purposes. Even if such a process was used, the vast

distances of the Australian road network would make valuation an immensely expensive and

time consuming task. Having failed to recognise these problems at the outset, the standard

setters were forcedin the face of widespread protest from local governmentsto extend

transitional provisions applying to the recognition of this asset. Supplements to each of

the standards were issued in 1999 and contained the following admission:

The transitional provisions . . .permitting a local government [government depart-

ment] [government] to elect not to recognise land under roads as assets are extended

10 The problematic issues associated with the financial reporting of infrastructure and heritage resources were

apparently subordinated by the PSASBin favour of expediency in generating regulatory output. AAS 27 Financial

Reporting by Local Governments, requiring that such resources be assigned money values and reported in

statements of financial position (subject to transitional provisions), was first issued in 1990. In contrast to the

usualand expectedsequence of events, the AARF then issued a discussion paper on this topic ( Rowles,

1992)two yearsafterAAS 27 was promulgated (seeCarnegie and West, 1997, p. 37).


17/24


because the Boards project on land under roads is progressing more slowly than orig-

inally scheduled, and consequently, a reliable method of measuring land under roads

is unlikely to be identified and accepted before those traditional provisions expire.(Development of the Standard, AAS 27A, AAS 29A and AAS 31A)

These extended transitional provisions deferred, until 31 December 2002, the require-

ment for government entities to recognise land under roads in their statements of financial

position. However, in light of continued failure to determine how the requirement could be

implemented, the transitional period has againbeen extended. AASB 1045 Land Under

Roads: Amendments to AAS 27A, AAS 29A and AAS 31 was issued in October 2002 and

now extends until 31 December 2006 the transitional provisions for the recognition of land

under roads as assets.11 The first of the standards applying specifically to the Australian

public sector (AAS 27) was originally issued in 1990. The restated transitional provisions

mean that at least 16 years will elapse in attempting to implement one of the basic require-

ments of this standard. However, resolution of the issue even within that time frame stillseems unlikely, with the AASB acknowledging only that requirements for the recogni-

tion of land under roads will be reviewed once again when there is greater international

convergenceon the issue (Development of the Standard, AASB 1045, emphasis added).

This procrastination marks perhaps the biggest technical debacle in Australian standard

setting. AsCarnegie and West (1997)point out, the proposal that local governments recog-

nise land under roads as an asset for financial reporting purposes was criticised on both

practical and theoretical groundsand often contested as being simply unworkableby

many of the respondents to the exposure draft that preceded AAS 27 (see also Barton,

1999a). At that time, however, the standard setters were unmoved by widespread criticism

of this proposal to assign dollar values to a non-financial resource. With regard to local

government infrastructure more generally,Walker et al. (1999)draw attention to how themoney values mandated by AAS27 for financial reporting purposes are likely to rank behind

other kinds of disclosures (such as the physical condition of infrastructure) in facilitating the

decision making processes and accountability evaluations of local government constituents

and other decision makers.

This raises important issues not just about accounting in terms of its traditional role

as a mechanism for promoting accountability, but in terms of making accounting itself

accountable. Major accounting change in the public sector has been driven by a colonising

(Laughlin, 1991) strategy of the accounting profession founded on claims that its traditional

productcomprehensive accrual-based financial reportscan serve as the primary medium

for enhancing accountability within the sector. The successful pursuit of this strategy has

manifested in a significant expansion of the range of public sector resources that are assigned

money values. However, there has been no demonstration of how this practice accords with

the primarily socialas against financialobjectives of most public sector entities.

Lacking broad-based expertise in connection with accountability issues within the

public sectorwhich often depart from the accounting professions more familiar territory

of private sector for-profit entitiesthe accounting profession has proceeded to behave

11 This further extension of the transition period was justified on the bases of input received from constituents

and a lack of international convergence on the issue (Development of the Standard, AASB 1045).


18/24


in the manner predicted by Larson (1977) for occupational groups which have only a

problematic technical and intellectual foundation for their practices. That is, to create

and emphasise pure mannerisms (including cognitive ones, such as unnecessary jargon orunjustifiably esoteric techniques or pseudo-paradigmatic changes) (Larson, 1977, p. 45).

The success of this strategy has been facilitated by a comparative lack of occupation-based

opposition. While Abbott (1988) characterises professional groups as competing to

establish jurisdiction over particular domains, the public sector represented relatively

vacant territory in terms of organised occupational control. In connection with assigning

money values to collections and related resources within public institutions the accounting

profession has had to contend only with smaller and less well-resourced occupational

groups, such as librarians and museum curators, in mobilising its colonising strategy. The

means for implementing the strategy comprised a financial accountability regime backed

by accounting standards requiring the preparation of comprehensive accrual-based general

purpose financial reports. This, in turn, precipitated a significant expansion in the number

and range of public sector resources that would need to be assigned money values, with

the implicit assumption being that resources not accounted for by conventional accounting

practices would be unaccounted for per se.

In these circumstances, little opposition has emerged to the presumption that the

reporting of information expressed in money terms is the fundamental and only necessary

means of promoting accountability. Yet, it is a presumption of questionable validity in

connection with commercial organisations and one that becomes spurious and stultifying

when applied to the more complex setting of the public sector, especially in connection

with non-financial resources. Attempts to propose alternative notions of accountability,

such as Enabling Accountability in Museums (EAM) (Carnegie and Wolnizer, 1996),

are yet to motivate the accounting profession to take the lead in refining and promoting

such models for improved accountability and more apt performance measurement withinprevailing organisational contexts.

Consistent with this perspective,Potter (2002)describes financial accounting reforms

within the Australian public sector as having been driven by a process of institutional think-

ing under which decision making processes and forums remain beset by a dominant and

conventional way of understanding. Thus, in the development of the Australian accounting

standards for public sector entities traditional accounting tasks of measurement and dis-

closure were continually emphasised, the rationale for commercial accounting disclosures

remained beyond question and alternative, non-financial accountability and performance

measurement systems were never considered (Potter, 2002, p. 84). When the development

of accounting practice is constrained in this way, accounting itself is accountable only to

convention and not to the criterion of practical serviceabilityof providing information ofdemonstrable fitness for use for and about diverse organisationsthat the discipline claims

as its primary purpose.

Briloff (1972, 1993)coined the term unaccountable accounting in connection with his

expose of problematic financial reporting practices by private sector corporations, and it

is now apposite to make analogous inquiries into the accountability of accounting within

the public sector. Being accountable as a profession extends to addressing adequately those

criticisms or challenges that may be levelled at specific accounting reforms and, if necessary,

promptly amending or withdrawing accounting rules which prove to be dysfunctional or


19/24


unworkable. Those arguing the case for the financial valuation of collections have avoided

responding specifically to a number of key questions posed by Carnegie and Wolnizer

(1995, p. 44, 1999, pp. 1618)on this topic. AsPotter (2002, p. 83)indicates, it is appositeto ask: Is this an acceptable response from accounting rule-making agencies that claim to

be concerned with issues of accountability?Newberry (2002, p. 48), noting that Carnegie

and Wolnizer asked reasonable questions, has also inquired: will those questions ever be

answered? Accordingly, the questions are posed, yet again, for those advocates, wherever

they maybe located, fora full andsatisfactoryresponse. They pertain particularly to the issue

of assigning money values to collections, but have general relevance to other non-financial

resources within the public sector:

What is the financial meaning of any such quantum?

By recourse to what reliable commercial evidence may an auditor authenticate that fi-

nancial sum?

In what demonstrable way or ways is such a financial quantum useful for enhancing and

judging the accountability of those who manage not-for-profit public arts institutions

having non-commercial objectives? In what demonstrable way or ways is that financial quantum used for gauging

the financial efficiency with which a public (grant-dependent) arts institution is

managed?

If collections are notthings that necessarily have financial attributes, then on what demon-

strable groundslogical or empiricalcan they be assigned a financial value in the

general purpose financial reports of public arts institutions?

For what present financial decision concerning collections would an incomplete list

or aggregation of outdated and differently dated acquisition prices be useful or

relevant?(Carnegie and Wolnizer, 1995, p. 44, 1999, pp. 1618)

5. Conclusion

The purpose of this paper has been to explore two interrelated facets of accountability.

The first concerns the changes to accounting practice within the Australian public sector

which have had as their main distinguishing feature the full implementation of the

conventional private sector system of accrual accounting and an extensive expansion

of the range of public sector resources, including those of a non-financial character,

which are subject to monetary valuation. It has been argued, especially in cases wherekey non-financial resources are to be valued for financial reporting purposes, that these

reforms have failed to achieve their stated purpose of promoting enhanced mechanisms of

accountability within the public sector because their almost exclusive financial focus fails

to embrace the need for a much broader discourse of accountability within public sector

settings. As Chua (1996, p. 151) has noted, calculative languages take away context

whether it is cultural, temporal, historical. Yet, it is precisely such contexts that need to

be to the fore in appreciating, managing and being made properly accountable for many

public sector resources, such as library and museum collections. Reassigning the way in


20/24


which particular resources are accounted for risks reassigning the way they are viewed and

understood:

Rarely, if ever, are preexisting qualities simply made more precise by being quantified.

At issue, rather, is the creation of new entities, made impersonal and (in this sense)

objective when widely scattered people are induced to count, measure, and calculate

in the same way.

(Porter, 1996, p. 36)

The second accountability theme concerns the accountability of accounting itself, espe-

cially in the post-Enron era. In particular, it has been contended that accounting regulators

and professionals have a responsibility to ensure that they are accountable for the techni-

cal practices they impose. This includes assessing the implications for organisational and

social functioning of applying such practices and responding on an adequate and timely

basis when they are criticised. Ignoring alternative approaches to enhancing accountability

within the public sectorthat are proposed on the basis of their aptness within particular

organisational contextsis also not indicative of a responsive or flexible professional group.

Common to both these themes is the notion that effective discourses of accountability

must often embrace more than just financial data and that the value of many public sec-

tor resourcesbeing not of a financial kindshould not be attempted to be expressed in

money terms. Identifying and evaluating the impacts of such practices will assist in broad-

ening debate on proposed accounting reforms and contribute to making accounting more

accountable.

Accounting, with its conventional emphasis on monetary valuation, plays a key role in

enabling systems of accountability within a broad range of contexts. However, enhanc-

ing the usefulness of accounting information requires an awareness and acknowledgementof its limitations. The issue of what can and needs to be assigned money values is es-

sential in delineating the boundaries of conventional accounting. In resolving this issue

it needs to be recognised that [a]ccounting systems should not drive policy: it should

be the other way around (Corbett, 1996, p. 139). Rather than proceed from such recog-

nition, recent changes in public sector accountingand in particular the process of as-

signing financial values to non-financial resourcesappear to have been driven by an

obsessive and narrow pecuniary focus: the culture of . . . accounting does not seem to

know half measures (Zan et al., 2000, p. 337). Under this interpretation of the public

sector, what has not been assigned a money value is presumed to be unaccounted for, un-

acknowledged, unappreciated, and even not yet called into being. It is an interpretation

that needs to be critically analysed and then modified in order to enable broader, more aptand cost-efficient systems of accountabilityemphasising the safekeeping of non-financial

resourcesto be adopted within the public sector, and to make accounting itself more ac-

countable. AsNelson (1993, p. 226)notes, When it cannot hear the distinctive voices of

others, accounting ends up trying to see what others are doing, through the single-minded

medium of money. Misplaced systems of monetary valuation resulting from this single-

mindedness threaten to devalue the resources to which they are applied and presage of

the need for greater scrutiny of the occupational group that oversees and prescribes such

practice.


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Acknowledgement

Theauthors are grateful forthe helpful comments of the anonymous referees; participantsin research seminars at Deakin and Monash Universities and the Universities of Melbourne,

Sydney and Tasmania; and Delfina Gomes, Keith McGavin, Robert H. Parker, Alan Smith

and Graeme Wines.

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