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  • Management Accounting, Devolution andDemocratic Accountability

    Research Report

    Mahmoud EzzamelCardiff Business School

    Noel HyndmanQueens University, Belfast

    ge JohnsenOslo University College

    Irvine LapsleyUniversity of Edinburgh Management School

    June PallotCanterbury University, New Zealand

    Simona ScarparoWarwick University Business School

  • Copyright CIMA 2005First published in 2005 by:The Chartered Instituteof Management Accountants26 Chapter Street London SW1P 4NP

    Printed in Great Britain

    The publishers of this document consider that it is aworthwhile contribution to discussion, without necessarilysharing the views expressed.

    No responsibility for loss occasioned to any person acting orrefraining from action as a result of any material in thispublication can be accepted by the authorsor the publishers.

    All rights reserved. No part of this publication may bereproduced, stored in a retrieval system, or transmitted, in anyform or by any means method or device, electronic (whethernow or hereafter known or developed), mechanical,photocopying, recorded or otherwise, without the priorpermission of the publishers.

    Translation requests should be submitted to CIMA.

  • Management Accounting, Devolution and Democratic Accountability 1

    Contents

    Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2About the authors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Executive Summary and recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Glossary of abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

    1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61.2 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61.3 Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81.4 Research Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91.5 Outline of the Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

    2. The Process of Devolution in the UK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102.2 Devolution in Northern Ireland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102.3 Devolution in Scotland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112.4 Devolution in Wales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .122.5 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

    3. International Comparisons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .143.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .143.2 Political Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .143.3 National Audit Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .173.4 New Public Management (NPM) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .183.5 Public Management Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .183.6 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

    4. Research Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .204.1 Research Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .204.2 Data Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .204.3 Way of Working . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

    5. Accountability in the UK Devolved Parliaments and Assemblies . . . . . . . . .225.1 Introduction: The Accountability Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .225.2 Accountability Arrangements in the UK Devolved Institutions . . . . . . . . . .235.3 What Accountability Means for the Participants to the Study . . . . . . . . . .245.4 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

    6. Management Accounting Information in the UK Devolved Institutions . . .266.1 Northern Ireland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .266.2 Scotland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .286.3 Wales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .296.4 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30

    7. Issues of Performance Measurement and Auditingin the UK Devolved Parliament and Assemblies . . . . . . . . . . . . . . . . . . . . . . . .317.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .317.2 Availability and Use of Performance Information . . . . . . . . . . . . . . . . . . . . .327.3 Sources and Accessibility of Performance and Audit Information . . . . . . . .337.4 The Impact of Reforms on Performance and Audit Information . . . . . . . . .347.5 The Impact of Devolution on Performance and Audit Information . . . . . .347.6 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35

    8. International Comparison: Issues on Accounting and Accountabilityin New Zealand and Norway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .368.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .368.2 Empirical Issues on Accounting and Accountability in New Zealand . . . . .368.3 Empirical Issues on Accounting and Accountability in Norway . . . . . . . . . .388.4 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39

    9. Discussion and Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40

    References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43

  • Management Accounting, Devolution and Democratic Accountability2

    The work on this project started in Edinburgh in 2000 as anidea for a CIMA-sponsored project on managementaccounting in central government. The project was funded bya grant from the Research Foundation of The CharteredInstitute of Management Accountants (CIMA) in 2001. In2002, the project also received a grant from the Devolution,Parliamentarism and Democratic Accountability: aComparative Study project (grant award numberL219252132) in the Economic and Social Research Council(ESRC) research programme on devolution and constitutionalchange.

    The aim in writing this report is to contribute to the debateon the role of finance, accounting and management as facetsof the modernising agenda in evaluating the democraticaccountability that is taking place in accounting, publicmanagement, political science, sociology and economics,within the governance and the constitution theme. Thisreport aims to be useful to practitioners (public sectoraccountants, managers and policy-makers). Research oncurrent political and administrative practices can be useful forpoliticians, policy-makers, journalists and citizens, at large. Inparticular, the project is relevant for informing the debates ondevolution, decentralisation, regionalisation and federalism,for instance with regard to establishing regional assemblies inEngland, and in assessing the diverse roles of accounting ondemocratic accountability in public sector reforms.

    Acknowledgements

    It is of great sadness to the research team that weacknowledge the death of June Pallot, a member of thisresearch team who passed away on 5th November 2004following a long battle with illness. This publication isdedicated to her memory.

    A number of steps have been taken to facilitate interactionwith and dissemination of findings to different usergroups of this research (such as academics, politicians andpolicy-makers). Firstly, the main findings have been presentedboth to academic and to professional conferences, includingseminars in Northern Ireland, Scotland and Wales, whereplans and preliminary results have been presented anddiscussed with politicians and policy-makers. Secondly, theauthors have also participated in CIMA and ESRC workshopsand conferences. Thirdly, results have been circulated andpublished, with more publications in prospect to enhancedissemination.

    There are many institutions and individuals to acknowledge.Thanks to ESRC and CIMA for financial support. Thanks toRebecca Edser, Sarah Hunt, Gary Martin and Elisa Wright forassistance in data collection for the project. Thanks also tothe many colleagues an