Social Accounting and Public Management

Accountability for the Public Good

Stephen P. Osborne, Amanda Ball

• Publisher: Routledge
• Year: 2010
• ISBN:
  9781136931734
• Edition: 1
• Topic: Business
• Subtopic: Managerial Accounting
• Index: Business

Social accounting as a discipline has challenged the methodology and focus of the larger field of accounting over the last 50 years. More recently it has taken on greater significance for other subjects as well, addressing issues for public policy and management more broadly. These include the issues of the nature of accountability in the contemporary plural state, environmental and societal sustainability, the ethical management and governance of public services and resources, and the creation and sustenance of social capital as an essential element of the modern plural state.

Social Accounting and Public Management brings together for the first time researchers from a range of disciplines including accounting, political science, management, sociology and policy studies to discuss and develop our knowledge and theory of the nature of 'accountability' in contemporary global society and the challenges it may pose for public policy and management. This book addresses this nexus of all of these issues and disciplines, and through this, makes a contribution to the development of the disciplines of both social accounting and public policy and management.

1
Introduction: Accounting—For the Common Good?

Amanda Ball and Stephen P. Osborne

Within the disciplines of public management in general, and accounting in particular, the study of social accounting is gaining significant momentum. This book aims to contribute to the momentum. It explores concepts of social accountability and innovations in the related practices of social accounting and social audit in the public services and third sector. It considers both what contribution this development can have to our understanding of accountability within the public sphere and how social accounting can impact accounting practice in the field.

WHAT IS “SOCIAL ACCOUNTING”?

“Social accounting” refers to organisational information disclosures (financial or non-financial) which significantly extend the scope of traditional financial accounting. It implies wide accountabilities to societal interest groups beyond the traditional model of financial reporting (via the profit and loss account and balance sheet). An often-cited explanation is that provided by Gray (2002, 687):

Social accounting is … a generic term … to cover all forms of “accounts which go beyond the economic” … —social responsibility accounting, social audits, corporate social reporting, employee and employment reporting as well as environmental accounting and reporting.

A considerable body of academic literature investigates the accounting practices and motives of businesses that report on their social, environmental, or sustainability impacts (Deegan and Soltys 2007; Gray 2002; Matthews 1997, 2004; Milne 2007; Parker 2005; Owen 2008). The more normative and philosophical writing (see, for example, Gray 1992, 2002) in support of such socially related disclosures argues that social accounting should have enabling potential and lead to action and change for the better—for instance, in the relationship between an organisation and its stakeholders and/or the natural environment. Indeed, a number of surveys amongst top international firms demonstrate a steady rise in such disclosure practices, if not their efficacy in changing society (Milne, Ball, and Gray 2008). Perhaps surprisingly, such developments have not had the impact upon the public sphere that one might have anticipated, especially given the current high profile of the climate change debate (Ball 2005). One recent review of the theoretical underpinnings of the public management discipline and the paradigmatic implications of public governance for this argued that the question of sustainability and social accounting was one of the core “new questions” that the discipline had to address if it was to meet the challenge of supporting responsive and effective public services in the new millennium (Osborne 2010b).

SOCIAL ACCOUNTING IN THE PUBLIC AND THIRD SECTORS

This book aims to contribute empirical and theoretical insights as to the state, utility, and potential of social accounting and accountability in the public and third sectors. Researchers specialising in social accounting have tended to largely overlook these fields in favour of issues impacting business and the accounting profession (Ball and Grubnic 2007; Matthews 1997; Milne 2007; Owen 2008)—although Marcuccio and Steccolini (2005) is one recent, and welcome, exception to this. Conversely, there are indications that the concepts, accounts, audits, and metrics of social accounting are becoming increasingly significant across a broader pallet, addressing issues of importance not just for for-profit, business organisations, but also for public policy and management more broadly. These include the issues of the nature of accountability in the contemporary plural state (Osborne 2006), environmental and societal sustainability (Ball 2005), the ethical management and governance of public services and resources (Lawton 1998), and the creation and sustenance of social capital as an essential element of the modern plural state (Lowndes and Pratchett 2008; Rossteutscher 2008). This book is intended to address this nexus of issues and disciplines and, through this, make a contribution to the development of both the disciplines of social accounting and public management. It draws together not only leading researchers from the field of accounting who are striving to address this issue, but also scholars from the broader field of public management and third sector studies who are also struggling to make sense of accountability in the contemporary fragmented state (Haveri 2006).

We believe that this book is opportune in the aftermath of a global financial and economic crisis and as governments worldwide contemplate deep spending cuts in the public and third sectors. We anticipate an intensification of the use of (conventional) financial management and accounting technologies as part of a discourse of savings, value, and profit and loss in both sectors. Although a considerable body of “alternative” public sector accounting research contests such developments, accounting requirements, often modelled on private sector practice, continue to proliferate under modern managerial styles of governance and strategy increasingly adopted in both sectors (Broadbent and Guthrie 1992). Yet, as Anderson-Gough and Brown argue:

we know accounting is not the perfect measuring device; we know it has assumptions and power effects; we know it shapes and even distorts behaviour. (2009, 97; emphasis added)

We contend that, although the NPM discourse is predicated at the policy and managerial levels on the “three E’s”, this does not necessarily mean that the mainline staff of public service organisations and other stakeholders necessarily identify with this discourse. We argue here for public management and social accounting researchers to take up some of the concerns of an “alternative” public sector accountability and accounting agenda through critical engagement with the dominant discourse of economic rationality—and the managerial and accounting practice that it engenders. We also contend the need to explore social accounting in the context of new bases for public management in the twenty-first century—predicated on such values as the common good, social justice, social and ecological sustainability, and ethical public management—even as the social legitimacy of public and third sector organisations’ claims on government resources is severely tested (Osborne 2010a).

Certainly, public bodies and third sector organisations can be observed to produce socially oriented qualitative and quantitative disclosures. Organisations in these sectors have not only had to meet corporate, for-profit standards of accountability (that is, demonstrating proper financial stewardship), but also have long had “an additional dimension of accountability in respect of their not-for-profit objectives” (Perrin 1985, 22). A key question, however, is whether and how existing commitments and obligations for social disclosure provide any basis for advancing our understanding and the practice of social accounting and accountability. By this we mean accountings which are socially significant—that is, they are planned to render visible, challenge, or confront changing patterns of social, political. and economic control and “those factors that are shaping the social roles which information is serving” (Hopwood 1978, 63).

This alternative narrative of accounting and accountability also has significance beyond the confines of the accounting field alone. As we have suggested, the accounting discourse that has long dominated accountability within the public sphere has been one rooted firmly in the traditional financial model of profit and loss, with a focus for public services on their economy and efficiency—often to the exclusion of their effectiveness and equity (Broadbent and Guthrie 2008). However, the increasingly fragmented public sphere, together with the shock waves for public finances and public services produced by the recent global recession, present a challenge to this hegemony. Whilst politicians have competed to take the (immoral) high ground of public spending cuts and “efficiency savings” as a response to the latter crisis, we would argue that such an approach is profoundly short-sighted and likely, in the longer term, to exacerbate the fragility of the public sphere. Many of the traditional financial accounting models simply cannot cope with the sophistication of the public governance of the fragmented state, whilst enduring global economic recovery will require a more sustainable approach to accountability than “simple” profit and loss accounts (Osborne 2010a). This book will explore this complexity and suggest new directions in the theory and practice of accountability that can take this debate forward.

CROSS-DISCIPLINARY PERSPECTIVES

In order to advance both the concept and the practice of social accounting, and its contribution to public management, this book for the first time brings researchers from a range of disciplines together (including accounting, political science, management, third sector studies, sociology, and policy studies) to discuss and develop our knowledge and theory of social accounting and accountability in the public and third sectors.¹ Indeed, authoritative reviews of the extant social accounting literature are candid in their admissions that the field has been dominated by a coterie of senior academics, whose work, unfortunately, is most frequently cited by each other (Parker 2005; Deegan and Soltys 2007; Ball and Milne 2007). These same reviews also bemoan a dearth of academic work on the building of models and tools to foster social accounting disclosures (Matthews 1997; Gray 2002). As we argue here, social accounting and accountability exist at the nexus of a number of disciplines—accounting, political studies, and management, for example—all of which have important perspectives on the topic but which are usually dealt with in isolation. The attempts by some economists to provide cost-benefit analyses of public policy proposals, for example, can be construed as a form of social accounting (Matthews 1997), yet it is rarely discussed in this context or the combinatory potential acknowledged across these disciplines. The cross-disciplinary focus of this volume is, we believe, a unique contribution to the body of knowledge across the disciplines embraced by it.

OVERVIEW OF THE BOOK AND HOW TO READ IT

The contribution of this book to the fields of social accounting and public management lies in exploring five core questions. These five questions, in turn, motivate the five substantive parts of the book:

Part I presents a number of critical discourses on social accounting and audit in order to address our first core question: What social accounting concepts and practices have evolved over the recent past in order to meet the challenges facing contemporary public and third sector organisations?

Part II presents an interdisciplinary examination of the nature of accountability and approaches to its evaluation in different public and third sector contexts. Here our core concern is in understanding: What is the nature of “accountability” in contemporary (global) society and what challenges does this pose for public policy and management?

Part III considers the development of social accounting for social and ecological sustainability in public and third sector bodies. Here we ask: Can social audit and accounting contribute to sustainable development in our contemporary (global) society, and what might this contribution be?

Part IV reviews emerging models to account for social capital in this society. O...

Table of contents

• Routledge Critical Studies in Public Management
• Contents
• Figures
• Tables
• Acknowledgements
• 1 Introduction: Accounting—For the Common Good?
• Part I Social Audit and Social Accounting
• Part II Accountabilities
• Part III Social Accounting and Sustainability
• Part IV Social Accounting, Social Capital, and the Social Economy
• Part V Social Accounting, Accountability, and Ethics
• Contributors
• Index