Public sector accounting and financial management in the context of a developing country: an empirical study of the Volta River Authority in Ghana

Using the Volta River Authority, a major Ghanaian corporation responsible for the generation and distribution of electricity in Ghana and neighbouring countries, as a case study, this thesis seeks to gain an empirical understanding of the nature and effectiveness of accounting and financial management systems in the context of a public sector organisation in a developing country. The principal rationale of the thesis is an attempt to substantiate and illuminate major issues and concerns about the nature of accounting and financial management systems in public sector organisations of developing countries today. The thesis problematises an overly simple view that developing countries have deficient accounting and financial management systems in their public sector organisations. The methodological, epistemological, and ontological orientations of the thesis are consistent with what Chua (1986) labels the “interpretive” paradigm. A recognition of multiple realities in the functioning of accounting enables an exploration of the claim that developing countries have deficient public sector accounting and financial management systems in a three-dimensional fashion. Firstly, the perceptions of organisational actors are drawn upon to aid evaluation of the basic deficiency claim. The research at this level emphasizes the technical-rational view of accounting as a tool for control over organisational financial resources. Thick descriptions of the systems for managing financial resources (including planning, budgeting, pricing, extent of computerisation, financial reporting and audit practices) of the VRA are gathered from organisational actors together with perceptions of the accounting and financial management systems by external constituencies such as the World Bank and the Authority’s multinational audit firms as a basis for evaluating the deficiency claim in the context of the VRA. Secondly, the thesis draws upon social theory (the view of organisations as negotiated orders) to further interpret the deficiency claim by bringing into the analysis the socio-historical circumstances of the organisation and how they help to provide insights into how the systems for financial resource management arise at the VRA. At this level of analysis, the thesis provides an interpretive construction of the technical procedures for financial resource management against the backdrop of the institutional setting within which the Authority conducts its operations. To this end, the influence of external constituencies such as the World Bank and the Volta Aluminium Company (VRA’s major customer) on the Authority’s accounting and financial management systems are explored. Thirdly, the thesis evaluates the effectiveness of the Authority’s accounting and financial management systems with reference to the extent to which they assist in the accomplishment of the principal rationale for establishing the organisation (i.e. socio-economic development of Ghana). At the third level of analysis, the Brundtland Commission’s notion of sustainable development is drawn upon as an alternative to the dominant economistic notion of development to provide a benchmark for the analysis. Employing the Commission’s perspective, the thesis attempts to understand the extent to which VRA’s systems of financial resource management reflect the notion of people-centredness and environmental awareness (i.e. the two major strands of the Commission’s notion of sustainable development). Multiple methods, including interviews, observation, document analysis and survey are employed to collect empirical evidence for this study. The major conclusions of the study are that from a technical-rational perspective, the claim that developing countries generally have deficient public sector accounting and financial management systems could not be established in the context of the VRA. This conclusion derived from the overwhelming positive perception of the Authority’s financial resource management systems by organisational actors, international funding agencies such as the World Bank, and the Authority’s multinational accounting/audit firms. Indeed, the claims about the lack of published annual accounts, inadequate information for managerial decision making, poor budgetary practices, and lack of independent auditors in developing country public sector contexts could not be supported in the case of the VRA. However, by going behind the technical procedures (façade) to uncover the forces which explain how the systems arise, the thesis argued that the deficiency claim might be supported in another sense; a sense which appreciates and problematises the socio-historical and institutional setting which are strongly responsible not only for the nature of the Authority’s current systems but how they have changed over time. In particular, the thesis argues that the systems of financial resource management are constructed partly to legitimise outcomes of prior negotiations between the Authority and its external constituencies. The constraints presented by these prior agreements and contracts render some of the Authority’s systems of financial resource management inconsistent with explanations grounded in conventional accounting and financial management logic. The thesis also finds, however, that some of the inadequacies observed with VRA’s systems of financial resource management reflected general limitations of conventional accounting with its over-emphasis on the entity concept rather than a peculiar organisational or even developing country problem. By employing an interpretive methodological approach to gain an understanding of the nature and effectiveness of accounting in a third world public sector organisational context, this thesis illuminates hitherto relatively unappreciated issues, including furthering an appreciation of accounting as a socio-political artefact in this context, and thus contributes to the critical and interpretive accounting literature

Institutional isomorphism and the adoption of lASs in a developing country: another crisis of external dependence

This paper provides a critical evaluation of the recent decision of the Bangladeshi accounting profession to adopt all applicable International Accounting Standards. The paper argues that institutional legitimisation is a key factor that drives the adoption process. This argument is based on evidence of immense pressure that major international donor/lending institutions put on the Bangladeshi government and professional accounting bodies to adopt lASs not only to provide credibility to foreign investors but also ensure that accountability arrangements with lending/donor agencies are tight enough. Clearly, the government and other institutions in Bangladesh have very little option (if any at all) because of the country\u27s high dependence on aid. We argue that a wholesale adoption of lASs constitutes a quick-fix that may not necessarily be in the long-term interest of Bangladesh and its accounting institutions

Independent financial auditing and the crusade against government sector financial mismanagement in Ghana

Purpose – The purpose of this paper is to explore the increasing role of financial auditing in the fight against government sector fraud and financial mismanagement in Ghana, Africa. Using a Foucauldian-inspired theoretical framing, the paper explores the growing cases of fraud in the Ghanaian public sector and the technologies of government that have been enlisted to combat it. The paper also discusses the particular interests that are likely served by the push for financial audits as the preferred weapon for fighting government sector fraud in the country. Design/methodology/approach – The approach of the paper is qualitative involving the use of a variety of archival material and interviews with employees of the Ghana Audit Service, the Controller and Accountant-General's Department, and global agencies like the World Bank and United States Agency for International Development (USAID). Findings – The paper finds that contrary to the view of “auditing as an alien phenomenon in most parts of the Third World, certainly Africa,” financial auditing is the preferred approach to fighting government sector fraud in Ghana. The paper also shows that financial auditing is privileged over other technologies of government, in this context, largely because it reinforces the hegemony of international development agencies like the World Bank and the imperialism of the big four accounting firms. Originality/value – The paper adds insight into the increasing role of financial auditing in the fight against government sector fraud and financial mismanagement in Ghana.Auditing, Financial reporting, Fraud, Ghana, Governance, Public sector organizations

Accounting and public sector reforms: A study of a continuously evolving governmental agency in Australia

Purpose – The purpose of this research is to explore the role of accounting in the reform process of a continuously evolving governmental agency in the Australian state of New South Wales. Design/methodology/approach – Drawing on two complementary organizational change models, the paper investigates how the shifting objectives of the Department of Public Works and Services (DPWS) rendered its financial management and accountability systems inadequate and how “new” accounting technologies introduced to anchor the reform process clashed with bureaucratic procedures to create a very challenging context for the organization's management. The paper uses multiple research methods including interviews, archival material and observation to understand the reform process at the DPWS and its implications for public sector accounting and public sector management. Findings – The paper finds that the unique history and continuously evolving nature of the DPWS makes it an important context for re-examining the dynamics of change processes and the contribution of accounting technologies within that context. Since the late 1980s, the DPWS has transformed itself from a budget-dependent bureaucratic governmental agency to a business-oriented commercialized agency operating in a competitive environment. Research limitations/implications – Future research could be directed at understanding how cultural fragmentations are mended in this extremely challenging reform process. Further case studies employing the two organizational change models could provide additional insights in this area. Practical implications – The paper argues that the cultural fragmentation that is introduced by the reform of the Public Works Department and the diverse and often conflicting obligations of the sector have added to the complexities of managing the organization. Perhaps a transformational leadership-style might be appropriate for managing such a challenging context. Originality/value – This paper would be of value to researchers and practitioners with an interest in public sector reform and management.Accounting, Australia, Organizational change, Public sector reform