Public Sector to Public Services: 20 years of „Contextual‟
The University of Sydney
Paper for Accounting Auditing and Accountability Journal
thThe authors are grateful for comments received from attendees at the 5 Asia Pacific
Interdisciplinary Research on Accounting Conference, Auckland, July 2007. The paper
also benefited from constructive comments by the two referees, and also Professor Lee
Parker and Professor Richard Laughlin. Thanks for their research and editorial assistance
to Carlos Sterling and Fiona Crawford of The University of Sydney and Mike Johnson at
Roehampton University. We are grateful for research funding provided by the Faculty of
Economics and Business at The University of Sydney.
Public Sector to Public Services: 20 years of ‘Contextual’ Research.
This review forms part of this special issue, which celebrates two decades of AAAJ. The purpose of this paper is to review and critique the field of public sector accounting research since the Broadbent and Guthrie (1992) review. Many nation states deliver essential public services (e.g., health, education, defence, utilities, social security) directly. In recent times, many of these nations have been involved in programmes of „modernisation‟, which, in part, means that these public services now are significantly
managed, delivered and governed by private and third sector organisations.
The paper employs a literature-based analysis and critique of public sector accounting articles published in the selected journals from 1992 to 2006. The paper uses the 452 selected articles to address two questions: (1) What has been done? and (2) What could be done? From this, a descriptive meta-analysis of the characteristics of the research will be discussed. Finally, a conceptual analysis of the selected literature will be used to evaluate the field and address a possible future research agenda.
The paper seeks to demonstrate that the central focus of this field of public accounting research has moved from a public sector analysis to a public service focus reflecting that the source of supply of services is now more mixed. A substantial number of the analysed research papers recognise the changing nature of the field to that of „public services‟. The
descriptive analysis highlights that amongst the research papers reviewed there were several interesting patterns that emerged concerning public service research. Also, the dominance of Australasia and UK research was noted. The extent of research in different levels of government/jurisdiction indicated that the majority of research was organisationally based. Finally, when the various functional types of accounting are considered, management accounting remained the most researched area of interest. Whilst the analysis demonstrates the recent emergence of several new areas of interest (e.g., PPP/PFI; social and environmental matters; governance; and intellectual capital).
The paper only considered research within eight selected journals and over the period 1992 to 2006. Therefore, for instance, American mainstream public sector accounting research has not been reviewed These journals representing would be more „positivistic‟
in approach, as they consider large populations of data, rather than focussing on the use of accounting in particular organisational settings.
The main implications of the paper are that „contextual‟ public service accounting research has a strong tradition and, through the process of reflection and critique of the
body of work, several important insights are provided in order to highlight areas for
further research and policy development.
Keywords: public sector accounting, public services, modernisation, literature review
1 approaches to accounting research in the public In 1992, we reviewed „alternative‟
sector (Broadbent and Guthrie, 1992). We now return to this theme as part of a series of
reviews of aspects of accounting commissioned by Accounting Auditing and
2Accountability Journal (AAAJ) to mark 20 years of the Journal‟s publication. The aim
3of this paper is to contribute to the several thought pieces within this special issue of AAAJ, by focusing on the state of public sector accounting research and to provide a
discussion on its relevance to accounting and policy making and also explore avenues for
future research. Other authors have undertaken reviews of this nature over the past 25
years. For instance, Lapsley (1988) provided a seminal review of the overall field to
launch AAAJ and van Helden (2005) has reviewed management accounting
4contributions. However, this paper seeks to make a particular contribution; its objective
is to consider the state of what is more often now described as public services accounting
56research (PSAR), reviewing 20 years of published research from 1987 to 2006 and in doing so building upon the insights developed in Broadbent and Guthrie (1992). Simply
stated we wish to ask two questions: (1) what has been done; and (2) what could be done?
By addressing these questions, we will implicitly be considering what is „new‟ in relation
to the field of public services accounting research. This will inform an agenda suggesting
what should be done.
More explicitly, our paper signals a recognition of changes in context in the perceived
significance of the ownership of public services by nation states and suggests that the
1 „Alternative‟ accounting research was defined in detail in Broadbent and Guthrie (1992, pp. 3-31). As indicated in the body of this paper, there have been a substantial number of articles since 1992 and
„contextual‟ accounting research is well established. 2 See, various other papers in this special issue that review „contextual‟ accounting research, AAAJ, Vol. 21, No. 2, 2008. 3 The request was to review and critique the subject area allocated, in this case public sector accounting.
Each review and critique was to engage a range of literature, not just AAAJ. We chose to include a range of
„contextual‟ accounting journals. Commissioned papers were asked to outline the state of the sub-discipline, a discussion of its relevance to accounting and policy making and exploration of avenues for future
research. 4 Particular topics have been explored, for example in Financial Accountability and Management’s special edition on the Modernisation of the Public Sector in November 2001. 5 Public service accounting research (PSAR) is the term used in our review to describe this area. 6 In undertaking this analysis we were strongly influenced by Parker‟s (2005) approach to a literature
review and are grateful for his support in adopting this approach.
delivery of public services is increasingly accepted as a focus by a range of regulatory
and government agencies. Equally, public services are progressively seen by policy
makers to be as significant as the commercial sector in the context of wider economic and
social development. This increasing recognition has arguably consolidated the impetus,
already in existence at the start of this period, that demanded changes to ensure that the
nation state „delivers‟. A pertinent example is provided by the World Bank (2007), in
which it notes:
A well functioning public sector that delivers quality public services consistent with
citizen preferences and fosters private market-led growth while managing fiscal resources
prudently, is considered critical to the World Bank‟s mission of poverty alleviation and
7the achievement of millennium development goals. This quotation indicates the importance that is placed upon public services by significant
regulatory and policy bodies such as the World Bank, but raises in it many other issues.
For example, what constitutes „delivery‟? This is a concept that is bound in both context and ideological preference. ‟Delivery‟ as a concept is something we take for granted and
because it is not self evident; this review will explore it further. Another issue we will
examine is the nature of the relationship with the private sector. The quotation hints at
the assumptions of those who wish to develop a transformational agenda, showing their
belief in the importance of managing fiscal resources. Accounting is an important
technology in this respect - although what it can do, and what it is perceived to do, are not
necessarily the same thing.
Overall, the main objective of the paper is to consider what has been achieved in the past
two decades and what remains to be achieved by public sector accounting researchers in
stthe early 21 Century. We wish to move beyond understanding and towards making a
difference by engaging in critical public policy debates about public services.
7See, for more details
http://web.worldbank.org/WBSITE/EXTERNAL/WBI/WBIPROGRAMS/PSGLP/0,,menuPK:461646~pagthePK:64156143~piPK:64154155~theSitePK:461606,00.html (Accessed 10 May 2007).
The paper has three corresponding aims. The first aim is to take the arguments of
Broadbent and Guthrie (1992) as a foundation from which to build. The second aim, in
light of an analysis of the published work that has been undertaken in the period (1987-
8, is to establish the relevance of the analysis in our earlier paper. This paper will 2006)
focus particularly on the nature of the research agenda rather than emphasising the nature
of the approaches to research that have been adopted, as was the case in the previous
paper. The third aim is to identify the diverse aspects that have been studied,
highlighting those areas we see as significant as well those areas that have been
overlooked or silenced.
The work that we review is from a significant set of accounting journals in the area, and
does not cover the public management and administration journals. Although we
recognise that the latter journals do not ignore the accounting literature entirely – Public
Money and Management for example deals with accounting and management issues – the
recognisable boundary provided by the purely accounting focused journals is adopted
9despite the limitation this produces. The reason for this is simply to consolidate a concern with public services accounting, auditing and accountability issues. Hence we
review the content of the following journals: Accounting, Auditing and Accountability Journal (AAAJ); Accounting Forum (AF); Accounting, Organizations and Society (AOS);
British Accounting Review (BAR); Critical Perspectives on Accounting (CPA); European
Accounting Review (EAR); Financial Accountability and Management (FAM); and
Management Accounting Research (MAR). In making this choice we are not considering
10the content of the „American Mainstream‟ and those similar journals that concern
8 This study reviews papers up to December 2006, which when considered with those reviewed in
Broadbent and Guthrie (1992), means that at least 20 years of accounting research has been reviewed. 9 Other journals, such as Australian Accounting Review (AAR), were excluded because they are not
available in public electronic form and therefore would have been very difficult to analyse. 10 American Mainstream is that research which has become mainstream in the US, but which we would see
as providing a very narrow view of accounting. Hence the label here of „American Mainstream‟ to signify the American-centricity of the approach. In 1992, we used the label „alternative‟ to indicate the contextual
and critical emphasis of the work we reviewed at that time and we retain that label. Now in using the
labels „mainstream‟ and „contextual‟, we recognise the extent to which this might signify relative rankings
and do not wish to concede a primacy to the notion of mainstream. Instead we simply wish to note the
themselves with more positivistic approaches in which populations of data rather than the
use of accounting in particular organisational settings is considered. In this respect, the
following analysis respects the contextual and qualitative approaches explored in 1992 as
“Alternative” forms of understanding. So, as in 1992, the review is not exhaustive but aims to give a „flavour‟ of the work in the field (Broadbent and Guthrie, 1992). One of
11 used is extensive, in the limitations of such an analysis is that, although the database
one paper such as this only a general view of the landscape is able to be provided.
In order to achieve this task the substantive arguments of the paper will be structured in
the following fashion. Section Two addresses the question of whether our previously
provided framework of the nature of the public sector is relevant in light of the
contemporary context. The relevance of the categorisation of the approaches to research
adopted in the literature will also be revisited. In Section Three, the research methods
adopted will be described and the descriptive meta-analysis that falls out of this will be
discussed in Section Four. Section Five will undertake a conceptual analysis of the
literature and provide insights into significant trends and address a future research agenda.
Section Six will provide our conclusions.
2. Defining boundaries: What constitutes the Public Services and ‘Alternative’
(i) The Domain of the Public Sector
In Broadbent and Guthrie (1992), we defined the public sector and its domain with a
focus on ownership and control. In this paper we argue that the changing nature of the
field has led to its re-naming to public services. Our guiding assumptions now follow
strength of this approach in the US whilst highlighting the strength of the „contextual‟ approach in other
parts of the scholarly world. 11 The database was constructed from a review of the selected journals and is populated with nearly 500
journal articles. The full list of journal articles reviewed and the coding criteria and worksheets are
available from the authors. The reference list to this paper includes illustrations from the literature review
used in the paper.
12. Based on this those outlined by Hutton (2006) on the role of public managers
definition, public services are those activities which are enshrined within the notion of
public good or service based on universality of access for the citizenry rather than the
private provision through a market. It is assumed these „public services‟ should be
available for all members of the given society, supplied in an equitable fashion. This is a
substantial shift in the definition and boundary of the nature of the subject of our research.
The paper will explore this issue in some detail as the analysis also gives the opportunity
to consider some recent literature.
[Take in Figure 1]
The changes in the public sector that required a corresponding modification to our
definition - from public sector to public services - was already in existence in 1992. It is
illustrated by the difficulties that accompanied the task of constructing the domain of the
public sector in the earlier paper. Figure 1 illustrates the different sub-elements seen as
the domain of the public sector. In 1992 there was arguably an assumption that the
public sector comprised the organisations providing services to the public that were
publicly funded, owned and operated. Ownership and operation were crucial to the
concept of the public sector. However, the domain was already in flux in the wake of
privatisations and corporatisation (Guthrie, 1993) and these changes meant that some
assumptions about state ownership and operation were no longer valid, although not
affecting the assumption of some need for state funding, either directly or through
subsidy. There was in this respect some separation of purchaser and provider roles (i.e.,
„steering‟ and „rowing‟ see, Gaebler (1992) as well as some reconsideration of what were essential universal services. State control of some public services was seen as important
to retain, particularly in the case of utilities, and this was made possible through
regulation of prices.
12 See, Hutton (2006), executive summary report of The Work Foundation‟s public value consortium
November 2006. „Deliberative democracy and the role of public managers.‟ The full report is to be found at
http://www.theworkfoundtion.com/publicvalue/research/index.aspx (accessed 20 April 2007).
When framing our research in 1992, it was necessary to make decisions about what organisations to include in the domain of the public sector. Because it was considered that ownership and operation were no longer strictly essential to the concept of the public sector, the domain went beyond local and central government departments. However, Central and Local Government (or those similar units such as Federal and State Government) were (and remain) key elements of the domain. This is because of the
13 of the service, bureaucratic relationship that links government to the universal provisionand as such these elements can be relatively easily identified even though their nature
14may be different in diverse jurisdictions. Examples include the direct Government
Departments such as Defence or the provision of the audit services offered by National Audit Offices, as well as environmental services or social services provided by local (state) government or municipalities. Some of these elements have since been floated.
In Broadbent and Guthrie (1992) two other elements were also identified as important elements of the domain of the public sector. Public Institutional Systems (PIS) and Public Business Enterprises (PBE) were also considered to be part of the domain of the public sector because they provided public services albeit in different ways. For instance, PIS were seen as part of the public sector because they provided central public services such as healthcare and education. They were nevertheless separated from central and local government, despite being funded through taxation, because of their size and significant bureaucratic structures. The largest of these in the UK was the National Health Service (NHS). Since 1992, it has separated further from central government and operates with greater freedom from direct detailed government control. In other jurisdictions, such as Australia, the involvement of charities in the provision of health care services has also differentiated the health service from the government sector.
PBEs are mainly comprised of utilities, such as water electricity gas and telecoms. Although in 1992 these utilities had been privatised they were still associated with the
13 Because the authors have focused their own research interests in the UK (Broadbent) and Australia (Guthrie), these are the two countries from which illustrations are drawn, however many other nation states could equally be used as examples. 14 In retrospect different structures of administration in different nations make this bounding more complex (see, for instance, Olson et al., 1998, Guthrie et al., 2005, Jones et al., 2002).
public sector and the services they provided remained central to public life. In 1992, there remained a strong rhetoric that there was public involvement in PBE, through share ownership. Shares in PBE were marketed heavily to private investors with the view that this retained public control whilst freeing them from public bureaucracy. In all these cases there was a residual regulatory element ensuring some government control remained. Thus, they were included in the domain of the public sector.
(ii) Domain of the Public Services
While changes have made in a variety of aspects of service provision over the past twenty years, we argue that the elements identified as the domain of the public sector in 1992 are still relevant in 2007. However, the justifications for their inclusion have been reviewed and replaced by several different assumptions as Figure 2 illustrates. The notion of a public sector that requires public funding, ownership and operation of services is no longer appropriate. Instead the provision of public services may be organised in a variety
of ways and control is achieved through different organisational and regulative mechanisms. Public services might have some element of government funding, ownership, public direction or regulation, in different combinations but there is no longer a need for direct government ownership for the involvement in provision of these public
[Take in Figure 2]
Whilst the functions have not changed, there has been considerable change in funding, governance and accountability for control and operation of these public services, as well as the accounting and auditing of them. There have also been some structural changes and more private sector involvement, as well as the introduction of private sector approaches to service provision. We noted the existence of hybrid organisations in 1992 (e.g., Mackintosh, Jarvis et al., 1994), in which private sector approaches were used by the public sector and public service organisations (for example, universities) were urged to be „more commercial‟. This is still the case but even more so, for instance, many