Jan Rommel

Accrual Accounting Reforms: Only for Businesslike (Parts of) Governments

Based on governmental accounting experiences and on the rising criticism of accrual accounting, this paper proposes that accrual accounting in governments will only succeed in businesslike (parts of) governments in the coming years. This proposition leans on the inappropriate transfer of the accrual accounting framework from the profit sector, the underestimation of difficulties considering accrual budgeting and the lack of attention to the political dimension. This paper points out that the advocates of accrual accounting have neglected some important considerations.

Sourcing strategy of Belgian SMEs: empirical evidence for the accounting services

The primary objective of this paper is to examine the sourcing strategy for one business function (accounting services), by looking at the degree of outsourcing for each task of this function. Three research questions are addressed: (1) What sourcing strategy do SMEs use for accounting services? (2) What are the reasons? (3) Is there a link between sourcing strategy and company characteristics? The research design consisted of a postal survey sent out to 1200 managers of SMEs in Belgium. The main results showed that 53% use selective outsourcing, i.e. combining both an inhouse accountant with an accounting service provider. The results also showed that 35% use total insourcing and 12% prefer total outsourcing. Surprisingly, cost reduction is not the main reason for outsourcing. External expertise is the main reason for selectively outsourcing. SMEs select a total insourcing strategy because they want the accounting information at hand. Finally, larger SMEs decide for a total insourcing strategy and prefer to keep the accounting services internal. The conclusions show that future research should focus on the degree of outsourcing. The practical implication of this study is that accounting service providers should highlight their expertise and overcome the disadvantage of remote data analysis to attract more SME-customers.

Theme: Whole of government accounting— international trends

Whole of government accounting (WGA) is an integral part of the accruals accounting and financial reporting changes accompanying public sector reforms internationally. The adoption of accruals accounting is generally rationalized for micro-economic purposes, such as economic efficiency. At this micro-economic level, WGA reflects the governance changes in the public sector involving the provision of public services through decentralized entities (public, private or public and private), and the increasing role of co-ordination and control performed by governments (Osborne and Gaebler, 1992; Christensen and Laegraid, 2007). According to the Organization for Economic Co-operation and Development (OECD, 2004, p. 4), these decentralized governance structures ‘created new challenges for governments to maintain central direction and control’. Consequently, WGA developments help governments to retain a whole of government approach towards the fulfilment of public interest, as well as to be accountable for the ‘whole basket’ of services provided (Grossi and Mussari, 2008). Macro-economic rationales support the use by governments of fiscal rules, such as commitments to balanced budgets and specified debt levels. With the introduction of such rules, rationales for WGA have been extended to include macro-economic purposes as well, and the reporting boundaries have been extended. HM Treasury in the UK has gone furthest with this, seeking to encompass the whole of the public sector, including all levels of government within one WGA. The idea of WGA is ambiguous, because it may refer to a government (central, regional or local) producing a single financial report that encompasses all government activity within its area of authority. Alternatively, it may refer to a central government’s efforts to produce a single financial report that encompasses public sector activities throughout the country. This would mean including the WGAs of all governments at lower levels, as well as the central government’s activities in its own right. Clearly WGA is a complex development that carries with it multiple tensions, both in relation to the stated aims, and in relation to the accounting rules adopted. In attempting to fulfil micro-level objectives, efforts to converge governmental accounting practices with business-style accounting—such as the International Federation of Accountants’ efforts to converge International Public Sector Accounting Standards (IPSAS) with the International Accounting Standards Board’s International Financial Reporting Standards (IFRS)—may be difficult, but they become even more complicated with efforts to fulfil macrolevel objectives at the same time by aligning the accounting requirements with macro-level statistical accounting requirements (see, for example, IPSAS 22). This themed edition of Public Money & Management contains articles based on papers initially presented last year at an international workshop in Italy on ‘Whole of government financial reporting: international trends’. The workshop, organized jointly by the University of Siena and the University of Sydney, was held at Santa Chiara College in Siena from 31 August to 2 September 2008 with the aim of creating an atmosphere in which scholars and practitioners could analyse and debate the similarities and differences among diverse WGA approaches adopted internationally. Attending the workshop were approximately 50 scholars and experts from 16 countries (Australia, Belgium, China, Estonia, Finland, Germany, Italy, The Netherlands, New Zealand, Norway, South Korea, Spain, Sweden, Switzerland, the UK and the USA), as well as representatives from extra-national organizations (the European Commission and the United Nations). The workshop commenced with guest speakers. The first, Professor Klaus Lüder of Speyer University, noted that, although the fragmentation of governmental structures as part of the public sector reforms had increased the perceived need for WGA, reform proponents, especially those from the AngloAmerican countries, had sought WGA from the beginning. Lüder observed a lack of clarity surrounding what is meant by WGA and a gradual extension of the concept of ‘whole of government’ for financial reporting purposes. While WGA may begin at the level he labelled Theme: Whole of government accounting— international trends

Steering From Ministers and Departments

Abstract This article aims at contributing to the study of autonomous agencies by focusing on how they cope with steering from ministers and departments. Drawing from the trust literature, we look at how agencies co-operate with ministers and departments, in order to increase autonomy. A model is built to cluster several trust-building mechanisms and to link these to autonomy. We then apply this to a limited set of Flemish agencies. We conclude that agencies develop strategies to increase trust with the trustor. These strategies may be targeted either at the minister as a trustor or at the department as a competing trustee.

Exploring effects of coordination on the autonomy of regulators: energy regulators in Belgium

Regulatory administrations are increasingly fragmented. Regulation is produced by multi-actor multi-level constellations. Researchers have described how actors in such constellations coordinate with each other. This article explores how coordination affects the decision-making autonomy of agencies, using a case study of energy regulation in Belgium. It describes the extent of autonomy from the parent minister and explores how the regulator coordinates with other actors at multiple levels of government. The findings indicate that de facto discretion of regulators can be increased or reduced by other governmental actors besides the parent minister. This calls for the development of a ‘relational perspective’ on (regulatory) agency autonomy, which looks at relations with multiple actors, even when these actors have no direct principal–agent relationship with the agency. Points for practitioners In recent decades, many Western governments have created independent regulatory agencies. The accumulation of these agencies across policy sectors and across levels of government has been associated with the creation of new coordination mechanisms. However, these trends may have certain unintended consequences. When authority is fragmented, the capacity for single actors to intervene may be reduced. Coordination may affect the de facto decision-making capacity of regulators. When agencies use inter-organizational relations to build up expertise, the autonomy vis-à-vis the parent minister may increase. However, when coordination mechanisms are based only on informal, voluntary agreements, these mechanisms may fail to compensate for all resource dependencies.

Should all capital goods of governments be recognised as assets in financial accounting

Although accrual accounting has become increasingly more popular in many governments over recent years, some issues remain unresolved. Previous literature questioned whether non-business-like governmental assets can be adequately capitalized. Whereas these studies mostly focussed on specific types of assets, such as infrastructure, military assets or heritage assets, this paper expands these views by taking a holistic approach to their treatment. Because such specific types of assets share fundamental characteristics, they could be called “specific governmental assets”. The analysis distinguishes between business-like government assets used in provision of public services and “specific governmental assets” which provide their services directly to the public, such as public art galleries, museums and parklands. It is argued that GAAP definitions of assets cannot be applied to the public sector for business-like assets without modification to allow for the replacement of cash generation for the owning entity by service provision to the public and not to the government as owner. However this amended definition of assets does not embrace “specific governmental assets” because these assets provide their services directly to public users of them, and the assets cannot normally be valued in financial terms because they have been removed from business-like markets by government decision. The paper highlights the problems caused by the misapplication of business accounting techniques to the public sector.

Belgium and Its Regions

For a long time, Belgium was a consensual and pillarized society with a history of coalition governments. It has a strong administrative law and Rechtstaat tradition, and the basic traits of its administrative system refer to the Napoleonic tradition. The senior level of public managers in its administration is heavily politicized. Since the 1970s, the Belgian unitary state became increasingly subjected to a federalization process, resulting in a federal state with a complicated internal structure. Basically, there are two main member regions—Flanders and Wallonia— with the Brussels region and the German community having a specific position. In particular, most domestic service-delivery functions at the federal level have been moved to the regional governments. In this text, we not only discuss agencification at the federal level, but also consider the diverging practices at the Flemish and Walloon levels.

Beyond the Paradigm Clashes in Public Administration

One of the must-read books for any research student is Thomas Kuhns The Structure of Scientific Revolutions (1970). Although this book was not specifically written for public administration, it is compul sory material for those who want to get a grip on the discipline. When reading the other part of the must-read list, namely those exemplars that are specific to public administration, it quickly becomes clear that Kuhns paradigms pop up very frequently. The traditional literature seems to be punctuated with authors and themes that have engaged in paradigmatic debates. However, the more we look at Kuhns book next to these other authors, the less likely it appears that Kuhn would have liked their use of his concept. Naturally, science has a lot to do with discourse, and we have to make articles controversial enough to get them published. It is tempting to label ones findings as a paradigm but what price do we pay for the random use of this concept? In our essay, we want to illustrate that traditional scholars, which we consider conveniently here as the old generation, use the paradigm concept too loosely, thereby only leading to heated scholarly discus sions and paradigm wars but not resulting in practical or useful an swers. We will look at one recent paradigm war, the one between public management and public administration and show how the traditional scholars misuse the concept. We will argue that younger students, who are not yet established academicians, are well suited to end these para digm wars because they are not yet fully socialized by the older genera tion. If we can avoid the paradigm trap in the future, then perhaps we, as students, can actually impart something to our supervisors.

Specialization and Fragmentation in Regulatory Regimes

In recent years, the regulation literature has reported a marked increase in the complexity of regulation. New regulatory organizations have emerged as a result of the hiving off of tasks from existing organizations (Jordana and Levi-Faur 2004). First, specialized regulators have been created in multiple sectors (Christensen and Laegreid 2006). Secondly, authority has been dispersed from central states towards multiple levels of government. National states delegated authority to subnational (e.g. regions) and supranational levels. These new organizations have not entirely replaced the old ones, which led to an accumulation of institutions.

Authors' Reply?Paradigm Clashes in Public Administration: A Further Discussion

If the original essays were indeed a rather incoherent set (Mark R. Rutgers) of approaches, then the replies by the more established schol ars certainly were very similar. After reading the replies, two general arguments seem to emerge from their discussion. First, a critical glance is cast at the extent to which the essays presented new perspectives. The essays do not seem to differ all that much from those of the older generation, in that many of our argu ments have already been put forth in the past. There are much more deviations from the mainstream literature than the new authors have acknowledged. Put strongly, we do not know our history (Ralph Hummel) and therefore present a simplified picture of the old gener ation (Mark R. Rutgers). The senior authors had seemingly expected a more revolutionary approach in which the new generation would give short shrift to the enormous amount of work that has been undertaken by past generations. However, if the new generation would rise and claim that the old have done it all wrong, and that they are the ones who have seen the light, then the generations would be talking past each other and there would not be a true dialogue. We do not believe that any of the new authors really intended to wipe out the past. The issues that were raised were indeed not so new. However, even though our voices may sound familiar, they do not sound loud. The fact that we bring up issues that had already been raised indicates that they have not yet been sufficiently addressed by the mainstream of the current litera ture and it was probably the desire of the authors that the themes achieve a mainstream status. The second argument is directly related to the first point. The senior authors suggest that we consider more our own ideas, thoughts and feelings. We do not differ much from the mainstream because we seem preoccupied with wanting to fit in (O. C. McSwite). We might be able to distance ourselves more from the old generation through close intro