Noel Hyndman

The Actual Implementation of Accruals Accounting: Caveats from a case within the UK Public Sector

Purpose – To ascertain the principal benefits and drawbacks that have been experienced in implementing accruals-based resource accounting in the UK public sector. Design/methodology/approach – In a unique study, which presents case research of the Northern Ireland experience within the wider UK context, semi-structured interviews were held with key actors involved in the implementation, maintenance or oversight of resource accounting in Northern Ireland. This paper looks at the operation of a newly introduced system through the eyes of those who are in a position to understand and evaluate the impacts (accountants). Findings – It finds that the actual implementation of accruals accounting is very different, in effect, in cost and in terms of timing, to that presented in pre-implementation government publications. The result is a complex, expensive system that has provided few benefits to date. What is found is a story of overoptimistic claims and obfuscation of costs. The very best that could be suggested from this research is that a lengthy continuum of accounting change is underway. Research limitations/implications – This research is a case study within the wider UK public sector and therefore any generalizing of the conclusions beyond the Northern Ireland context should be undertaken with care. However, although Northern Ireland departments are relatively small compared with Westminster departments, there are significant similarities between the modes of operation of all departments within the UK (whether in Westminster, Scotland or Wales). Furthermore, both the implementation of resource accounting and the challenges that it presents are common to all public sector bodies in the UK. Originality/value – Gives some thought-provoking arguments into the benefits and drawbacks of implementing accruals-based resource accounting in the UK public sector which will provide interest to those in the field.

Governance and Charities: An Exploration of Key Themes and the Development of a Research Agenda

The concept of governance has been widely discussed in both the business and non-business sectors. The debate has also been entered into within the charity sector, which comprises over 169,000 organizations in the UK. The UK-based Charity Commission, which describes itself as existing to promote sound governance and accountability, has taken a lead in this debate by promoting greater regulation and producing numerous recommendations with regard to the proper governance of charitable organizations. However, the concept of what is meant by governance is unclear and a myriad of ideas are placed under the umbrella of good governance. This paper explores the major themes that form the basis of much of this discussion, examining both the theoretical underpinnings and empirical investigations relating to this area (looking from the perspective of the key stakeholders in the charity sector). Based on an analysis of the extant literature, this paper presents a broad definition of governance with respect to charities and outlines a future research agenda for those interested in adding to knowledge in this area

The Achievement of Scale Efficiency in UK Universities: A Multiple-input Multiple-output Analysis

This study is an empirical investigation of the cost efficiency of UK universities based on a flexible multi-product cost function model. Emphasis in the study is on the identification of optimal overall scale in UK universities and scale efficiency with respect to the individual outputs of teaching and research. The study directly employs the research ratings generated by the 1992 research assessment exercise to take explicit account of research quality. In addition, emphasis is placed on comparing the results obtained to those obtained by Glass et al (1995). This latter study was based on earlier UK university data and utilized the research ratings generated by the 1989 research assessment exercise. The key findings are: that UK universities are on average characterized by increasing returns to scale; that returns to scale in research are decreasing for the top and middle university groups and constant for the bottom group; and that on average increasing returns hold for undergraduate teaching provision.

Rational Management, Performance Targets and Executive Agencies: Views from Agency Chief Executives in Northern Ireland

The way in which central government services are delivered in both Britain and Northern Ireland has changed significantly since 1988. Executive Agencies have been created with the aim of improving the efficiency and effectiveness of service delivery, with changes being supported by an increasing focus on the rational management model as a basis for improving management in the public sector. This paper is a case study of nine agencies within the Northern Ireland ‘family of agencies’ and is the first study of its type in the UK. It presents the results of a series of interviews with agency Chief Executives that attempted to identify perceptions with respect to the development, use and impact of mission statements, objectives, targets and performance measures (components of a rational management approach). The main findings of the research include: Northern Ireland Chief Executives perceive an increased focus on quantification since agencification; this focus is viewed as helpful in providing a basis for improving management; systems in practice are considered to be much more flexible than a rigid management model would normally suggest; and, it is thought that the potential adverse consequences of such an approach can be managed.

A Comparative Study on the Impact of Revised SORP 2 on British and Irish Charities

Charities constitute an important sector in the economies of Britain and Ireland. However, despite their economic importance, charity external financial reporting has been characterised by a diversity of accounting practice and a lack of standardisation. Over the last 20 years an attempt has been made to improve this situation by the publication of a Statement of Recommended Practice (SORP) for charities in 1988 and its revision in 1995. It is argued that inconsistencies in the financial statements of charities and the adoption of dubious accounting practices make it difficult for users of charity accounts to understand (and therefore use) the information provided. Previous studies have mainly looked at the impact of the original SORP (1988) on large charities in Britain. Little is known with respect to the impact on Irish charities. This paper presents the results of a comparative analysis of over 200 financial statements of Irish and British charities with respect to the recommendations contained in the revised SORP (1995). The results provide evidence that the accounts of Irish charities are considerably less compliant with the recommendations made in the revised SORP than their British counterparts. Possible reasons for this are discussed.

Performance Information, Accountability and Executive Agencies

The growth of executive agencies in the UK has been rapid. The first agency was established in 1988 and, by October 1997, over 75% of civil servants were working in such organizations. They were created to improve the efficiency and effectiveness of the delivery of central government services. Accountability was widened, and an emphasis was placed on the need to develop performance measurement and performance reporting systems. This article discusses the importance of performance information for accountability by agencies, and, through a time-series study of annual reports, examines changes over time. While highlighting the increasing use of performance information in external reporting, the article identifies significant weaknesses.

Executive Agencies, Performance Targets and External Reporting

Since 1988, the role of Next Steps executive agencies has been crucial in delivering central government services. Agencies were established to improve service delivery, with changes being supported by an increasing focus on quantification. The Government argued that performance measures and targets are vital in supporting management in planning and controlling the operation of an agency, and that they are also important in providing a basis for reporting to those outside its immediate management—an aspect of discharging accountability. This article discusses the connections between targeting and reporting performance in agencies and, through an empirical study of business plans, corporate plans and annual reports, shows the extent of such linkages. The article provides evidence that key targets in planning documents of agencies provide a useful platform for external reporting, although improvements can still be made.

The hand of government in shaping accounting and reporting in the UK charity sector

Accounting in the UK charity sector has changed massively over the past 25 years, with various stakeholders influencing what has occurred. Using insights from stakeholder theory, and interviews with a number of key actors, this article focuses on the influence of one definitive stakeholder—government—in developing a regime of quality accounting and reporting in the sector. In particular, the evolution of the Statement of Recommended Practice (SORP) for charities is explored. It is argued that a much tighter and more meaningful regime of accounting and reporting has been encouraged by government, among other stakeholders, and this has led to a more accountable and healthier charitable sector.

Conversion ratios in charities in England and Wales: An investigation of economies of scale

This study examines ways in which the scale economies of charities can be measured and investigates the use of conversion ratios as indicators of scale efficiency. Problems and difficulties inherent in the use of these ratios are detailed. The analysis then employs nonparametric tests (Mann-Whitney and Kruskal-Wallis tests), based on the identified conversion ratios, to examine for the existence of scale economies in the operation of the 500 largest fundraising charities in England and Wales. The statistical analysis provides evidence of scale economies and suggests that scale efficiency gains have not as yet been exhausted. The charity sector therefore appears to be characterised by increasing returns to scale with further growth necessary before optimal size, as indicated by constant returns to scale, is achieved.

Has Devolution Increased Democratic Accountability

This article examines the impact of devolution, the New Public Management and public management culture on accounting for democratic accountability in the first term of the devolved national assemblies and parliament in the UK. Although there is more openness, transparency, consultation and scrutiny with regard to budgets, accounts and performance as a result of devolution, there is extensive information overload. Thus, many politicians are highly dependent on the parliamentary division of labour and are reliant on experts and advisors functioning as buffers and filters of accounting information.