(>X Public Sector Accounting and Financial Management Systems

Public Sector Accounting and Financial Management Systems

in the Context of Socioeconomic Development: An Empirical
Study of the Volta River Authority in Ghana

Abu Shiraz Abdul-Rahaman, Stewart Lawrence,

Sonja Gallhofer and Jim Haslam
D epartm ent o f A
ccounting University o f W
a ikato New Zealand

Abstract

The role of accounting in socioeconomic development has been

significantly documented in the international accounting literature.
However, a majority of these prior studies represent accounting as a
technical neutral craft which plays (or can play) an enabling role in
national socioeconomic development. This study contends that in some
situations conventional accounting with its emphasis on the entity concept
can play a constraining role in national socioeconomic development efforts.
This is illustrated by an empirical study of the Volta River Authority, a
major public sector organisation in Ghana. The paper is informed by the
Brundtland Commission's notion of sustainable development.

Introduction

This p ap e r seeks to provide an em pirical illustration o f how accounting fails to

function as a "social and institutional practice" within a third w orld organisational
context ( H opw ood and Miller. 1994). The p aper show s how accounting is severely
limited because o f its over- em phasis o f the conventional entity concept. By draw ing
upon the B rundtland C om m ission's notion o f " sustainable developm ent" the paper
illustrates how conventional accounting, w hich has its origins in the advanced W estern
capitalist countries, is unable to deal with social and environm ental aspects of
socioeconom ic developm ent in a third w orld country. G hana. W hile this limitation o
f conventional accounting might be perceived as universal, the p ap e r argues that it
is m ore critical in the case o f today 's developing countries w here tensions between
the entity concept and social and environm ental considerations in the drive for
national developm ent are m uch greater. T he objectives o f the p aper are achieved
through a case study o f the accounting and financial m anagem ent sy stems o f V olta
River Authority ( V R A 1). a m a jor pow er corporation w hich supplies electricity
to G h a n a and
neighbouring countries, from the largest hum an- m ade lake in the w orld

1 Also referred to in the paper as "the Authority"

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T he rest o f the p ap e r is organised as follows: T o provide a setting for the

'critical/interpretive' analysis in this paper, the first part profiles the V olta River
A uthority highlighting its historical backg round and the institutional fra m ew o rk within
w hich it functions. It also reviews the divergent p o s tw a r conceptual isat ions o f
socioeconom ic developm ent em phasizing the limitations o f the dom inant econom istic
\ iew ( of developm ent) w hich currently underscores conventional accounting. T he
B rundtland Com m ission's notion o f sustainable developm ent is also explicated as an
alternative conceptualisation o f developm ent draw n upon in this exposition. T he
second part o f the p ap e r then discusses how V R A 's accounting and financial
m anagem ent system s are unable to reflect the people- centred dim ension o f sustainable
developm ent through an illustration o f the rural/ national electrification p ro g ra m m e
currently pursued bv the G hana G overnm ent F urther ev idence o f how V R A is
unable to integrate the environm ental dimension o f sustainable developm ent into the
routine decision m aking m echanism is also provided. This is followed by a su m m a ry and
conclusions o f the paper

PART ONE

Background of the Volta River Authority

Volta River Authority is a public corporation established by the G h an a

Gov ernm ent in 1961 to generate electricity from the largest h u m a n - m ad e lake in the
world. Under the V olta River D evelopm ent Act. the establishing docum ent for the
V R A . the organisation is required to supply electricity in bulk to other G h an a ian
corporations ( including the Electricity C orporation o f G hana. ECG . w hich until
recently w as solelv responsible for pow er distribution in G h an a ) and p o w e r utilities in
neighbouring countries. In recent times however, the A uthority has also been charged
with the responsibility o f distributing electricity in the northern h a l f o f the c o u n t ry 2.

W hile the establishing docum ent o f the V R A requires it to run its " operations
on sound com m ercial lines’ . historical circum s tances o f the organisation hav e m ade
this objective difficult to achieve and have caused significant problem s. M ost
im portant in the history o f the V R A is the 1962 agreem ents with the W o r ld Bank
and V aleo' w hich requires the Authority to supply gua rante ed am ount o f pow er to V
aleo at a rate that has been a m ajor source o f contention since the mid 1970s. Such
an agreem ent w as necessary from the perspectiv e o f the G h a n a Gov ernm ent
because, to

“ Such a role is required because of the current Government's policy w hich seeks to
promote rural/national electrification.

' An aluminium smelter which was established as a major consumer of the

electricih to be generated from the Volta Project. This is further discussed shortly.

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secure f inancial assistance (in the form o f concessionary loans) from the W o r ld Bank
for the Volta River Project', the G h an a G overnm ent w as required to assu re the
Bank that not only w ould there be sufficient dem and for pow er generated from the
project but also enough revenue for debt servicing. Since the G h an a G overnm ent saw the
availability o f cheap electricity supply as an im portant ingredient in the country's
desire for rapid industrialisation, it com m issioned experts to adv ise on the possibility
o f establishing an alum inium smelter as the m a jor consum er o f electricity generated
from the V olta Project especially during the early years after the com pletion o f the
project. Follow ing the recom m endation o f the experts, the G h an a G overnm ent signed a
contract w ith K aiser A lum inium and C hem icals C orporation and Reynolds Metal
C o m p an y ( two giants A m erican com panies in the alum inum industry) to establish
a sm elter ( Valeo) with various concessions" granted by the G h a n a G overnm ent. In
addition, the V R A has relied on the W o r ld Bank G ro u p and other international
financial institutions for funding o f various projects. Each o f these financial
institutions has certain requirem ents in term s o f w hat it perceives as strong accounting
and f inancial m anagem ent procedures necessary to justify' loans to the A uthority (see
Tove. 19^1).

T hese agreem ents which preceded the establishm ent of the VRA
and su b s equent contracts have been m ajor sources o f contention in V R A 's operations
over the years. An im portant issue which has not only remained puzzling but unexplored
is how the A uthority's accounting and financial m anagem ent system s have been able to
satisfy these diverse constituencies or interest groups. How is the A uthority able to
p u r su e the objective o f prom oting socioeconom ic developm ent in G h a n a and also
satisfy the needs o f these international f inancial institutions, th rough the design o f
accounting and financial m anagem ent system s? T his p a p e r dem onstrates that in its
efforts to legitimise its operations to external constituencies and gain their support.
V R A has until fairly recently not seriously reflected the social and environm ental
aspects o f socioeconom ic developm ent in its f inancial m anagem ent sy stems and
practices. S uch has been the case partly because o f the institutional setting w ithin
w hich the Authority operates and the overw helm ing influence o f the entity1 concept o f
conventional accounting. Before delving into greater detail, the next section prov ides a
synopsis o f the m ethods em ployed to collect em pirical evidence for the paper.

4 The initial project for the construction of the Lake was known as the Volta River
Project and VRA evolved from this.

3 The concessions included a power rate of 2.625/kwh charged to the smelter with
no provision for escalation. This rate was later perceiv ed as one of the lowest power cost to a
smelter in the non-communist bloc (see Graham, 1982).

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Data Collection Procedures

M ultiple m ethods o f data collection w ere em ployed to g a th e r the necessary

evidence for this paper. Like m ost case studies, the m ost im portant issue in data
collection w as gaining access to the organisation (see Law rence. 1990: Yin. 1989). W e
had to em p lo \ a strategy w hich involved influential m em bers o f the G h an a ian public
and overseas academ ics to "open the gates" o f the V R A for this study. O nce access
w as gained, organisational m em bers w ere sufficiently open in their ap p ro a ch to the
study. T hree im portant methods including interviews, docum ent analysis, and non
participant observation were used to gather em pirical evidence. The interviews
lm o lv e d w hat has been described by Kvale ( 1983 ) as " qualitative research
interview". Q ualitatixe research interviews, according to k v a le . are those interview's w
hich seek to " gather descriptions o f the lifew orld o f the interviewee with respect to the
interpretation o f the m eaning o f the described phenom enon" (p. 174), Such interviews do
not seek to obtain quantifiable evidence but rather to gam an understanding o f the
research topic from the perspective o f the interviewee. One o f the researchers also stay
ed a t the V R A for tw o and a h a l f m onths as a non- participant observer. T he
experience in this role further enriched m uch o f the evidence collected since questions w ere
often asked for clarifications during this period. O ccasionally, organisational
participants substantiated their perspectives with evidence from docum ents including m em
oranda, reports and letters. All these form the basis o f the 'critical/ interpretive' analysis
in this paper.

The Concept of Development: Beyond Economic Reductionism

This section prov ides a framew ork for the analysis o f the em pirical evidence. It
reviews the various conceptualisations o f developm ent and explicates the concept o f
sustainable developm ent w hich guides the discussions in the paper. Such a clarifying
section is necessary because 'development' is an um brella concept w hose m eaning,
scope and understanding depend to a \ ery large extent on the lens through w hich it is
viewed. W i th the proliferation o f p o s tw a r theoretical paradigm s ' m developm ent
studies, diverging interpretations and conceptualisations o f developm ent currently exist
in the literature (see A uty. 1995; Hettne. 1990; k a y . 1989; Larrain. 1989). A uty
( 1995 . p. 3 ) observes that a broad distinction can be m ade betw een orthodox and
s t ructuralist perspectives o f development. A n im portant com monality betw een both
perspectives. Auty argues, is their em phasis (or reliance) on econom ic and quantifiable
indicators such as G ross D om estic Product, real per ca p i ta income, etc. as s tandards
for m easuring developm ent ( Auty. 1995. p 3; see also R ostow . 1990). T hese
conc eptuali sation s (i.e. s tructuralist and orthodox perspectives) o f developm ent w hich
becam e w ide spr ead in the early p o s tw a r period, project developm ent as "a rapid and
sustained rise in real output per head and attendant shift in the technological.

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econom ic , and dem ographic characteristics o f society" ( M abogunje. 1980. p. 36 )'\

W hile such a view has rem ained the dom inant p o s tw a r perspective o f developm ent
(see M abogunje. 1980; M unasinghe. 1993). recent w ritings indicate that it is also
possible to unde rs tand developm ent from '" sociological" (see C'emea. 1993) and ''e
cological" (see Rees. 1993) perspectives. This view is captured by B randt ( 1980 . p. 48 ) w
hen he observes that:

developm ent never will be and can n c \ e r be defined to universal

satisfaction. It refers to broadly speaking, social and econom ic
progress, and people will alw ays h a \ e different views ab o u t w h a t is
desirable. Certainly de\ e lo p m en t must mean im provem ent in living
conditions, for w hich econom ic grow th and industrialisation are
essential. But i f there is no attention to the quality o f grow th and to
social change one cannot speak o f development.

B randt ( 1980 ) not only goes on to argue th a t developm ent is a socially

constructed phenom enon but also suggests that historical factors in the imm ediate
p o s tw a r y ears have tended to grossly favour the econonnstic view (see also Cernea.
1993; Rees. 1993). H ow ever, in the last quarter o f this century, the dom inant
econom is t ic view has com e under serious attack from the M arxist. N eo- M arxist,
post st ructu ral ist and post- m odernist (i.e. radical) theorisations o f developm ent (see
Booth. 1985; Cernea. 1993; Corbridge. 1990; Hettne. 1990; M unasinghe. 1993; Rees.
1993; Serageldin. 1993) For instance, arguing from an ecological s tandpoint. Rees
( 1993 ) suggests that the once- held econom ic view o f natural resources as free goods is
partially responsible for such ecological problem s as the depletion o f the ozone laver
and the "green house effect" In a sim ilar fashion. C e rnea ( 1993 ) contends that, as a
socially constructed phenom enon, developm ent should be " people-centred" bv
reflecting on the w ay people conduct their lives (e.g. " enrichment" o f their culture) and
concludes that the dom inant econom istic perspective is inadequate in that regard.

W i th the proliferation o f diverse conceptualisations o f developm ent. Landell-

Mills ( 1993 ) argues that one o f the m ost im portant problem s facing co n tem p o rary
third

f> Steer and Lutz (1993. p. 21) argue that an important reason for "an excessive locus
on the economic aspects of development is becausc it is easier to measure w hat is transacted
in the market placc than what is not.... What to measure and where to measure it is intuitive,
and the numeraire (the common unit of account) enabling such aggregation is
straightforward - money". Steer and Lut/. concluded that such ' easy calculations arc not
available for many other aspects of development, especially social and environmental issues".

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w orld leaders is the choice o f ' a p p ro p r ia te ' developm ent perspectives . As though
responding to Landell- M ills ( 1993 ) in his review o f the m a jor issues constraining
socioeconom ic developm ent efforts in the third world, Serageldin ( 1993 ) propo ses that
for c o n tem p o rary developing countries to break the t rap o f unde rdevelop m ent,
they w ould need to unde rst and the concept in term s o f " sustainable developm ent", a
conceptual isat ion introduced by the B m n d t la n d C om m ission in 1987. The C om m ission
defined " sustainable development" as 'change' in socioeconom ic liv ing conditions w hich
" meets the need o f the present generation w i thout com prom is ing the needs o f future
generations" ( Serageldin. 1993. p. 7). V arious interpretations o f the C o m m i s s io n ' s
definition have given rise to different dim ensions o f the concept o f " sustainable
developm ent" (see W o r ld R esources. 1992 - 93 . p. 1-15). For instance, in his
presentation at the Fourth Pacific Islands C onference o f Leaders. Flalapua ( 1993 . p.
60 ) observed that " sustainable dev elopment":

is used w ith a range o f interpretations by policy m akers, planners, and

opinion m akers. But there a p p e a r to be tw o com m on interpretations o
f the concept. T he first one is a concernw i th environm entally
responsible developm ent, especially w ith the m anagem ent o f the
environm ental resources and their interactions w ith population and
econom ic activity’ in any given time. T h e other m a jor interpretation
is a concern w ith econom ic grow th that can be sustained ov er tune at a
given level o f population and environm ental quality.

It could be argued that the C o m m issio n 's conceptualisation is predicated on

the notion that decisions regarding w elfare m axim isation o f the present generation m ust
not constrain the prospects for m aintaining or im proving the living s tandards o f future
generations. T his further "implies that our econom ic system s should be m anaged so
that w e live o f f the div idends o f our resources, while m a intaining and im proving the
asset b ase" ( Repetto. 1986. p. 15-16). T o ensure this, organisational and national
decision m aking m echanism s such as accounting m ust play a leading role. It is for this
reason that in seeking to gain an appreciation o f V R A ' s ac counting and f inancial
m anagem ent system s in this paper, a conceptual under standing o f developm ent
consistent with the B a in d t lan d Com m ission's notion o f " sustainable developm ent is
draw n upon. Such a fram ew ork provides an unchartered terrain for investigating the
extent to w hich the A u th o r i ty ' s social and environm ental obligations are dis/ served
by the existing accounting and financial m anagem ent systems. T he choice o f " su s ta in ab le
developm ent" as the conceptual base for the investigation in this p ap e r is also partly
inform ed bv K ennedy ( 1968 . in Steer and Lutz. 1993. p. 20 ) w hen he points out
the

7 See Ki 1lick (1978) for ;i detailed discussion of the divergent economic policies
(•ind notions of development) which Ghana attempted to pursue during the immediate post colonial
years.

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m a jor criticism o f the dom inant econom istic view in the following illuminating
passage:

T he gross dom estic national product does not allow for the health o f
our children, the quality o f their eduction, or the jov o f their pla\ It
does not include the beaut) o f our poetry or the strength o f our
m arriages; the intelligence o f o ur public debate or the integrity o f o ur
public officials. It m easures neither o ur w it nor our courage: neither
our w isdom nor our learning; neither our com passion nor o ur devotion
to o ur country; it m easures everything, in short, except that w hich
m akes life w orthw h ile ( em phasis added).

Kenned)' is arguing, in the above quote, that life is too com plex an entity to be
unde rs tood s o le h ’ in term s o f econom ic m easurem ents or numbers". Vital issues
concerning political, spiritual, and social aspects o f hum anity are not ca p tured by the
do m in an t econom is t ic perspective simply because the)' are apparently not quantifiable
(see W a r ing. 1989; 1995). H ow ever, there is evidence in the literature that
co n tem p o rary developing countries cannot get over the " h a rsh " conditions o
f ( socioeconom ic) underd evelopm ent w ithout strong politico- sociocultural advancem ent
(see H a la p u a . 1992; Leftwich. 1994; Serageldin. 1993). For instance. " A genda 21".
the " m ajor policy docum ent o f the June 1992 Rio Earth S um m i t called for expansion o f
existing system s o f national accounts in order to integrate environm ental and social
dim ensions in the accounting f ra m e w o rk . ..." ( Steer and Lutz. 1993. p 22). T he
Rio E arth S um m i t w as prom oting the concept o f " sustainable developm ent" on
grounds that it has a prom ising potential o f integrating the social and environm ental aspects o
f developm ent into the existing system s o f organisational and national accounting. T
hus by d raw ing upon the notion o f " sustainable development" as a f ram ew ork for
the critical/ interpretive analysis o f the A uthority's accounting and financial m anagem ent
system s, this p ap e r provides a 'broader' understanding o f the effectiveness o f these
system s. By so doing, the p ap e r avoids the danger o f naively draw ing 'firm' conclusions
based solely on the sim plistic technical procedures and descriptions as obtains in the
ex tan t literature (see Lowe. Puxty. and Laughlin. 1983).

T ak in g the above discussion as the platform , the next section exam ines the
A uthority's accounting and financial m anagem ent system s in the context o f the rural
and national electrification program m es w hich are currently m a jor priorities o f the
G h a n a G overnm ent delegated to the V R A and E C G . T he section provides a
discussion

x While this paper agrees with Kennedy's argument, it nonetheless maintains that
the mechanisms which are responsible for producing the "numbers" (including accounting
systems) are human artifacts and can therefore be (re)designed to reflect these important
issues about humanity, albeit in an inexhaustive sense.

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o f the justifications (i.e. social and econom ic) for m ra l electrification in G h a n a

and a t tem pts to find the extent to w hich the A uthority's current ac counting and
financial
m anagem ent system s have changed to accom m odate these new developm ents in its
operations

PART TWO

Rural/National Electrification and Socioeconomic Development

R ural electrification is a m ajor issue w hich m ost countries have faced (and
others are still facing") at som e stage in their drive for advance m ent in socioeconom ic
developm ent. In the United States for exam ple, although the quest for electrification in
rural A m erica began at the turn o f the century, it w as not until the creation o f the Rural
Electrification A dm inistration ( R E A ) in 1935 that rural electrification w as accepted
as a public responsibility ( Brown. 19X0. p ix). But the establishm ent o f the R E A did
not im m ediately lead to electrification for the rural folk in A m erica until after the
second w orld w ar. In m ost developing countries, rural electrification becam e a m a t
te r o f public concern in the early 1970's. In fact the W o r ld Bank estim ated that bv
1971. the cum u la t ive investment in rural electrification by developing countries in
the Bank's
operations are a am ounted to US$ 10 .000 million ( W orld Bank. 1975. p. 5)'°. T he Bank
further projected that oxer the next ten years (i.e. from 1975 through to 19X5). US$
10 .000 million to US$ 15 .000 million w as to be invested in rural electrification and
this w ould be sufficient to provide up to a total o f 300 million rural folks in third w orld
countries with electricity.

V arious national governm ents have different reasons for em barking on rural
electrification program m es. N otw i thstanding the diversity o f objectives. S aunders.
Davis. M oses and Ross ( 197X. p. 3-4) m ake an attem pt to sum m arise the m a jor
expectations o f national governm ents for prom oting m ral electrification in the
follow ing passage:

1. Increasing agricultural productivity resulting from the use o f labor- saxing

electrical equipm ent

9 . .

Indeed, a majority of those countries which are still facing the quest for rural
electrification arc the so-called developing countries (see World Bank. 1975).

The World Bank also estimated that this investment provided 23 % of the village-
rural population in Latin America. 15% in Asia, and 4 % in Africa south of the Sahara or
about 23 % of the total mral population in poor countries with electricity by the early 1970s
(see Cecelski. et al. 1979. p. 73).

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2. C hanging crop patterns resulting from the use o f seasonal labor- saving
equipm ent and/ or the use o f electric p u m p s to provide irrigation water.
3 D evelopm ent o f rural industries; especially those related to the processing o f
agricultural com m odities in rural areas
4. Increasing per capita income resulting from increased agricultural
productivity and the developm ent o f industrial opportunities.
5. Reduction in household labor through the use o f electrical appliances.
6. Reduction in rural- urban m igration o f families and young people as rural
living conditions im prove and em ploym ent opportunities are created through
industrial developm ent and expansion.
7. Im provem ent in the household sanitary conditions and family health
resulting from the use o f electricity for w a te r system s, refrigeration,
ventilation and lighting
8. Relating to rural electric cooperatives; im proved sense o f com m unity
p articipation and involvement resulting from w ork on self-help project:
developm ent o f com m unity leadership training.
9. R eduction in household energy expenditures w ith the substitution o f
electricity for candles, kerosene, gas and wood.
10. Increased satisfaction w ith life resulting from am enities available following
electrification.

In G hana, various G overnm ents have, over the years, show n significant
concern a b o u t the need for electrification o f the entire country bv the year 2020 .
Indeed, national/ rural electrification w as one o f the m a jor issues on the current
GovernmeVit's cam paign trail during the 1992 and 1996 presidential and parliam entary
elections (see Public A genda. M arch 3-9. 1997). T he im portance o f national/ rural
electrification to the people o f G h an a is evidenced by the follow ing quote from a report
issued by the M inistry o f Fuel and P ow e r in S eptem ber 1988:

current estim ates suggest that only ab o u t 15 % o f the country's

population, largely concentrated in the southern urb an centres o f the
country, is provided with electricity. Even this relatively fortunate
few have not been able to rely on reliable and "clean" supply o f this
vital energy resource because o f frequent disruptions o f pow er
outages and f luctuating voltages; a t tr ibutable mainly to the neglect
and su b - s ta n d a rd m aintenance o f existing generation and distribution
equipment.

T h e above quote illustrates the im portance o f electrification in any part o f the

country not only the so- called rural areas. Indeed, it could be argued th a t electrification
o f any' p a r t o f the country-7 except for the few urban areas in southern G h a n a could be
term ed rural electrification. N otw i thstanding the 'convincing' nature o f such an
argum ent, in G hana, a distinction is often m ade between N a tio n a l E le c tr ific a
tio n

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P ro ject (NKP) and R u r a l L ow er Volta a n d the Self- H e lp E le c tr ific a tio n P ro jects.

The form er specifically relates to the electrification o f D istrict capitals in the N o r
th including Brong A hafo. N orthern. U pper E astern, and U pper W estern regions. T
h is w as first initiated in 1994 " under w hich electricity w as to be extended to 3 6 ? 4
localities nation- w ide by |the vear| 2020 '' ( V oltascope, Jan.- Feb. 1996. p. 4). U nder
the Rural. Self- H elp Pro]ect. com m unities within a distance o f 20 km from the grid
could be connected by the \ e a r 2020 W hilst the V R A has the responsibility for
electrifying the N orthern sector (i e the four regions indicated above). E C G is charged
with a sim ilar responsibilit\ tor the southern sector (i.e. the rem a ining six regions).
Funding for the A uthority's com ponent o f the National Electrification Project is
provided bv a consortium o f international and local bodies including. International
D evelopm ent A gency. D A N ID A . M inistry o f Mines and Energy, and V R A itself.
Since the G overnm ent has consistent!) provided the sam e justifications for rural and national
electrification (see the next sub- section), the m te rp re t i \ e construction o f the
accounting sy stem s against the backdrop ot these projects does not find the distinction im
portant, especially in the N orth w here there is hardly any difference in socioeconom ic living
conditions between the D istrict capitals and other rem ote villages.

Justification for National/Rural Electrification and VRA's Accounting and

Financial Management Systems

In its S eptem ber 1988 report on the energy sector, the Ministry o f Fuel and
Pow er stated that the principal rationale for the national/ rural electrification project in
G h a n a w as "to accelerate the pace o f industrial and econom ic developm ent o f the
targeted areas". From such a 'broad' rationale, the investm ent in national/ rural
electrification can. be justified on tw o main grounds: viz socio-political and economic.
W hile som e com m entators (e.g. Saunders et al . 1978) imply that these ground s to r
justifying rural electricity can only be mutually exclusive, w e take a view that there is
the possibility for a " nuddle- range" ju s t i f ica t io n 11. For instance, the G o v e rn m e n t m
ight justify the large investm ents in rural electrification by perceiving it as a social good or
service w hich rural people are entitled to. along w ith education and health services (see
S aunders et al.. 1978. p. 170). How ever, as in the case o f education and health
(especially with the global restructuring o f the traditional public sector), the
G overnm ent might design a system ( o f accounting and finance) w hich aim s at
recouping either part or the w hole o f the investment in the project over a long period o f
t im e ' :.

1 A justification that incorporates both the socio-political and economic aspects.

12 Perhaps, a period which might not be economically acceptable to the private

profit-driven entrepreneur.

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F ollow ing the contention in interpretive accounting research that accounting is

not a neutral craft because o f its ability to render particular patterns m ore visible than
others (see Burchell. et. a L 1980). it could be argued th a t the organisation w hich is
delegated the responsibility for executing the rural/ national electrification project will
h ave to ( re)design its accounting system s to conform w ith (or meet) the ( new)
requirem ents em anating from the justifying rationales o f the project( s).

Social Versus Economic Justifications and Accounting Systems.

U nder the social benefits app roach for justifying rural electrification, the
project is considered to be entirely in the social realm (see Saunders et al.. 1978). From
such a perspective, rural electrification could be likened to other traditional social
services such as education, health, adequate pure water, roads and com m unication
facilities, and w aste disposal projects. Since the G h a n a G overnm ent holds itself out as
not seeking any econom ic g am s from the national/ rural electrification project, there
will be no need for com puting rates o f returns and other accounting / econom ic ratios to
justify the need for the project. The posture adopted by the G h a n a G overnm ent is
evidenced by the following quote:

The national electrification project is regarded as a priority to prov ide

cheap and reliable electricity bv extending the national grid to the
northern h a l f o f the country (Ministry o f Fuel and Power. 1988).

The above quote further buttresses the contention that econom ic justification
for the rural/ national electrification project is unnecessary from the perspective o f the
G h a n a G overnm ent. H ow ever, since the project is not wholly funded by
the G overnm ent, other financiers o f the project m ight seek som e form o f econom ic
justifications, at least, assu ra n ce o f future cash flows w hich will be sufficient for debt
servicing. T his is evidenced by the IDA's (the m a jor lender for the national/ rural
electrification program m e ) conditionality that for the G h a n a G overnm ent to justify its
national/ rural electrification program m e , an 'investment' plan should be draw n and
•clearly establish:

uniform standards, identity priority program s for the extension o f the

grid to unelectrified areas o f G h an a m ac cord ance with satisfactory
econom ic/ f inancial criteria ( W orld Bank Report. No. 8207 . 1990. p .
7).

Certainly, private investors will not be attracted by such an econom ically

m arginal p ro jec t 1' and therefore the m ost suitable accounting method in such a
scenario

The project would be perceived as economically marginal largely because of Us

social dimension. Consistent with the Government's stance and the absence of private

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might be a com b ination o f "social accounting" in its n a r ro w sense ( see A gyei. 1977;
Enthoven. 1979; M obley, 1970; S arpong. and G ray, 1989) w ith aspects o f " private
enterprise accounting" (see Enthoven. 1979). Since the V R A is an organisation w hich
is expected to conduct its " operations on sound com m ercial lines", by delegating the
responsibility o f national/ rural electrification in the N orth to the V R A . the G overnm ent
has left the A u thority in a situation w here its operational objectives are increasingly
becom ing blurred (i.e. w hether econom ic or social pursuits should be em phasized).
Indeed, the situation w hich the A uthority is currently faced with could be likened to
w h a t Bromilley and E uske ( 1986 . p. 311 ) described in the m anagerial
ac counting l iterature as the ' use o f rational system s in a bounded rationality’
organisation". T his argum ent derives from the contention in scores o f studies that, as
a hu m a n a r te fa c t " , w hen society's dem and changes, accounting system s m ust also
change i f they are to continue to be in the ( dis) service o f society (see Briston. 1978;
Littleton. 1968; Perera. 1989). By adding the responsibility o f national/ rural
electrification ( which is perceived as a social service by the people o f G h a n a 1 ) to its
objectives, it could be arg u e d that
the V R A is currently experiencing significant changes in dem and from society. As a
consequence, the A uthority's accounting and financial m anagem ent system s w ould also
be expected to change to continue in the ( dis) scrvice o f society.

W hile a wide array o f possibilities o f change( s) in ac counting system s is

available to the A uthority, tw o main m odes o f change are suggested in this p ap e r
and w ere discussed w ith organisational actors. First, the A uthority m ight
decide to m aintain its existing accounting system s intact on the ground s that they
accord with " operations on sound com m ercial lines". But in addition, it will design
another set o f ac counting system s w hich incorporates both the social desirability
and econom ic requirem ents o f rural/ national electrification, to ju x ta p o se the existing
ac counting and financial m anagem ent systems. In this case, the accounting
system s for the rural/ national electrification are designed as though they w ere for a
separate entity (see Dean. 1989. for project accounting procedures). Such an option
m ight how ever, im o lv e a drain on organisational scarce resources, especially in third
w orld countries w here the expected contributions o f hum an and financial resources
are m uch higher than in their advanced W estern counterparts (see C raner and
Jones. 1990). The second possibility will involve an attem pt to incorporate or
integrate the requirem ents

capitalist investors m such a project. therefore, one would not cxpcct profit maximisation to
dominate the accounting practices of an organisation charged with executing such a projcct.

14
And indeed, a servant ol society (see Littleton. 1968)

1 Partis because of the Government's promises in political fora.

16 Because of relative scarcities.

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o f the socially desirable rural/ national electrification projects into the existing
ac counting and f inancial m anagem ent systems. A lthough such an alternative might
have the advantage o f not over- stretching organisational scarce resources, it
nevertheless, will involve a com plete overhaul o f the existing accounting systems.

W hile the changes in societv's dem ands o f V R A might have im plications for a
wide range o f accounting and f inancial m anagem ent issues such as planning, budgeting
and control, and f inancial reporting, for illustrative purposes, the paper identified the
pow er rate s t ructure as the most important and \ isible 1 element o f the existing
ac counting and financial m anagem ent system s w hich w ould be significantly affected by
the rural/ national electrification project. T his w as therefore discussed with
organisational m em bers. W e initiated the discussion with an arg u m en t that if the
rural/ national electrification project could be viewed in the sam e perspective as health,
educational s e n ices, and roads and com m unications (see S aunders et al.. 1978. p.
171). then 'full' cost recovering should not becom e a central consideration in the project
and for that m a t te r should not be reflected in the A uthority's accounting system. For
such a project to be beneficial to a m ajority o f rural G h a n a ia n s 1*, tw o options
regarding the pricing s tructure w ere raised by the researcher. As a first option, it w as
argued that the m ost obvious and perhaps com m on mode o f prom oting rural/ national
electrification w ould be through G overnm ent subsidy o f rural electrification. Indeed, this s
trategy has historically proved effective in m ost o f today's a d \ a n c e d countries including
the United States. United K ingdom , and A u s t ra l i a 1 The second option in v o k e s
designing the rate s t ructure in such a w av that urban electricitx consum ers cross
subsidise electricity in rural areas. T he motive for such cross- subsidisation is equity.
As Reed ( 1906 ) observes:

Equitv is the fundam ental concern o f sustainability's social dimension.

T h e S tandard used in assessing social sustainability is w hether society
is providing all citizens the opportunity to have access to m inim um

17 Most important and visible to all parties concenied including: the Ghana
Government and VRA management, other financiers, and the rural (potential) electricity
consumer, because of its direct impact on revenues, returns on investments, and net personal
incomes respectively.

IS Who arc also relatively low income earners compared to their urban counterparts.

1; It should be noted, however, that the successful implementation of this strategy in

the advanced Western countries is no guarantee that this would work equally for today's
developing countries. This is the basis of cultural imperialism (or cthnoccntricism) w hich has
been significantly criticised in the literature (sec Said. 1993: Pcrcra. 1989)

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s tandards o f security. hum an rights, and social benefits, including

food, health, and education... (p 434 ).

In the case o f the Authority, the pow er rate charged to both the rural and urb an
dw ellers is the sa m e 20 (i.e. uniform non- subsidised p o w er rates), and does leave
a g reater nu m b e r o f rural G h anaians w ho hav e already connected electricitv under the
national/ rural electrification project with huge unpaid bills, especially in the N E D 21
operating area. In an interview with s ta f f m em bers at N . E . D it w as echoed that the
Authority had little influence in designing its pricing structure. T his is evidenced bv the
follow ing quote:

I agree with you that the accounting procedures should change to

reflect these G overnm ent policies, especially the rate s tructure, but the
fact is. whatev er we propose to charge to the ordinary co n su m er o f
electricity m ust be determ ined together with E C G w hich is responsible
for pow er distribution in the south... T his in turn is subject to app roval
by parliam ent...Y es. currently our rate s t ructure is such that there is
cross subsidisation between residential, non- residential and industrial
consum ers... On the average, a household in T am a le incurs a pow
er bill o f C 5 . 0 0 0 - C l 0 . 000 per month. But residential consum ers
still think the p o w er cost is high ... T o show its com m i tm ents to
the national electrification project. I agree w ith y ou that the G overnm ent
should have subsidised rural electricity.

In that case how our pricing sy stem is designed w ouldn't have been a
problem as you and I can see. U nfortunately this is not so.

T h u s , the G overnm ent's rural/ national electrification project becom es a m a t

te r o f concern because with the current pricing structure, m ost rural folks are not going
to be able to connect to the national grid despite the fact that transm ission lines m ight
run

2 ()
As at first January 1995 the Authority charged N.E.D and ECG a wholesale rate
of C23 per kvvli. Organisational actors were, however unwilling to discuss the actual rate
charged to the individual households per unit of electricity since this was perceived as very
confidential proposals made to the government and strongly guarded at the time of empirical
evidence collection. Some organisational actors speculated that an ostensible reason for the
Government's silence on the rates proposed was the impending political elections. There
might be some substance in such speculations because barely three months after the
Gov ernment was ushered in (i.e. re-elected), an announcement of a proposed 300 % increase
in domestic power rates was made.

21
N.E.D. is a branch of VRA responsible for electricity distribution in the North.

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directly above the roofs o f their hom es 22. I f such becom es the case, then the pu rp o se o f
the rural/ national electrification w ould have been defeated. T here are scores of
em pirical studies on rural electrification projects w hose ptirpose(s) have been defeated
because they w ere perceived as not econom ically accessible to the poor m a jority 2^ (see
Cecelski. D unkerlev, and R am say. 1979). F or instance, there is evidence that, a I97X
survey in Com illa, B angladesh, w here rural electrification began in 1963. show ed that
even 15 years after the introduction o f electricity, less than 5 % o f the rural population
used electricity because o f high pow er rates vis a m s m ral income lev els.

T h u s as far as the Authority's accounting system s are concerned, there have

not been any changes to reflect the social desirability o f national/ rural electrification.
Indeed, the A uthority is currently experiencing a situation w here the governm ent on its
political p la tform s assures the people o f " cheap pow er for all by the year 2020 " but the
system s o f pricing electricity do not only contradict such prom ises but are also closely
m onitored and controlled by the governm ent. For instance, the proposed 3 0 0 % increase
in p o w er rates charged to the G hanaian electricity consum er is perceived bv the
G o v ern m en t as part of a strategy w hich seeks to m ove the A uthority tow
ards " com m ercial com petitiveness" 21. Such a strategy, however, is quite inconsistent
with the social desirability o f " electricity for all by the year 2020 " w hich is em
phasized in the G overnm ent's political fora (indeed, a replica o f the situation reported by
Bromillev and Euske. 19X6). W i th such inconsistent dem ands from the G
overnm ent, the m a n ag e m en t o f the A uthority does not have any m otivation to reflect
"social considerations" in its existing accounting and financial m anagem ent system s
2', especially the rate structure.

22
This view was also shared by organisational actors. They maintained that the
large number of customers whose accounts are due for disconnection under the Authority's
policies (i.e. for long overdue bills) supports this view.

2 '
The emphasis in this argument is on 'poverty' in relative terms since there is a
tendency to overlook income disparities in third world countries especially by ethnocentric
researchers as evidenced in Rostow's (1960) stages model.

24
It should be noted that there is currently a lack of consensus among
organisational actors on what constitutes "commercial competitiveness". On its part, the
Government's interpretation is centred on the need to earn "reasonable" returns on its
investment. An interpretation which is very much in conflict with its social desirability
justification of rural/national electrification.

23 We found this defence which was put up by the Authority's management

convincing and indeed, it supported the substantial institutional theorisations of accounting
systems design and change process in the extant managerial accounting literature (sec, Alam

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By insisting that the A uthority should m aintain the existing pricing s t ructure
(i.e. a system w hich does not provide subsidies for rural electricity consum ers), the
G h a n a G o v ern m e n t is failing to recognise that m a x im u m utilisation and
therefore m a x im u m benefits o f the rural/ national electrification will only be realised if
actual electricity use equals potential use (see S aunder s et al., 1978). T o reach such
a goal, the governm ent will have to institute policies w hich will seek to o
perationalise the social desirability o f the rural/ national electrification p ro g ram m e . C o
n s is te n t with such a change will be the need for the A uthority's accounting system s ,
with p a r t icu la r reference to the pricing structure, to incorporate these social
justifications of rural/ national electrification projects. Until then, the A uthority's ac
co u n t in g and financial m anagem ent system s will continue not to reflect the "
people- centred" d im ension of sustainable developm ent.

Accounting Systems and Environmental Obligations of the VRA

O ne o f the m ost pervasive and topical issues in academ ic and professional

research is consideration o f integrating the environm ent into 'traditional' research
agendas. T h e overw helm ing concern for environm ental aw a re n ess is evidenced by
the e m e rg en c e o f such sub- disciplines as environm ental ac counting (see G ra y , 1992; G
ray, K ouly, and L avers, 1995) and environm ental or ecological econom ics (see M
ikesell,
1992) am o n g others. As indicated earlier, environm ental issues are also an im portant
dim ension o f the notion o f " sustainable developm ent". In this section w e seek to
exam ine the extent to w hich the environm ental obligations o f the V R A have been
integrated into its accounting and f inancial m anagem ent system s o v e r the years. T he
discussion in this section is based principally on the interview s with various s ta ff
m e m b e r s o f the Authority.

L ike m ost electric supply utilities, the V R A has its environm ental
obligations w hich m a nagem ent has a lw ays sought to carry out ( S enior officer, R eal
E s ta te and E nvironm ent D epartm ent). O ne o f the m a jor environm ental conce rns o f V
R A is the resettlem ent o f the people w ho w ere displaced for the construction o f the A
k o so m b o and A k u se d a m s 26. A lthough the responsibility for the m aintenance o f the
resettlem ent tow nships built for persons displaced by the form ation o f the V o l ta L ak e
has been, at the request o f the G overnm ent, t ransferred to ap propriate d ep a r tm en t s
and agencies of G o v e rn m e n t since 1971, residual problem s affecting the settlers are
still referred to the

and Lawrence, 1994; Ansari and Euske, 1987; Hoque and Hopper, 1994; Scapens; 1994;
Covaleski, et al, 1996).

’’6
" Those communities which were displaced as a result of the construction of the
two dams include Torgome, Natriku, West Kpong, South Senchi, Fadzoku, and Old Akrade.

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A u thority for advice and necessary action ( V R A A nnual Report. 1991. p. 5) W hile
the A u thority has m ade this one o f its m ajor priorities since its establishm ent, there
is am p le evidence that it still continues to dom inate the A uthority's environm ental
concerns ( Senior officer. Real Estate and Environm ent D epartm ent).

D espite the fact that V R A has over the last thirty years " taken m easures to
control the environm ental problem s arising from the construction o f the A k osom bo
and A kuse dam s and has tried to help d e \ e lo p com m unities along the lake area",
recent trends show that, the A uthority's operations have com e under serious scrutiny for
environm ental friendliness ( V i ttor- Q uao. 1996 . p X). Such pressures are partly
induced by international trends, health related problem s ( particularly Bilharzia)
resulting from the construction o f the dam. and other environm ental problem s caused
by the people resettled along the lake area. For instance, extensive 'crude' fishing and
farm ing are undertaken by the lake side settlers w ho also depend on fuel w ood for
dom estic and com m ercial purposes. Such 'unfriendly' and uncontrolled activities along
the lake side not only m a r the natural beauty o f the valley but also threaten the lire
span o f the V olta Lake, the main source o f electrical pow er generation for G h a n
a ( V i t tor- Q uao. 1996).

In response to these recent pressures, the A uthority, in 1994. redesignated its

Real Estate D epartm ent as Real Estate and E nvironm ent D epartm ent charged with the
responsibility o f effectively tackling and resolving the environm ental issues arising out
o f the A uthority's operations ( V R A A nnual Report. 1994. p. 1()): . T he new role o f the
departm ent also includes focusing on developing and im plem enting m easures to
m itigate effects o f the A uthority's operations on the environm ent. T h e A uthority's
com m i tm ent to these policies are dem onstrated by the creation o f a T ru s t Fund o f
US$ 5 0 0 . 0 0 0 ( or approxim a te ly C 525 . 5 million) a year to assist settlements affected by
its activities. In 1994. the A uthority also started:
m easures to check the adverse effects o f land degradation along the
V o l ta Lake by reafforesting ab o u t 430 hectares o f degraded areas on
the slopes o f the A djena Gorge.. W e plan to extend this p ro g ra m m
e to sim ilar areas along the lake in the com ing years. .. w e are |a l so |
educating and involving the people living in the tow ns and villages
along the shores o f the Lake in the fight against environm ental
degradation ( V R A A nnual Report. 1994. p. 10).

27
The Authority also runs a well equipped Hospital which provides proximity and
excellent serv ices for staff members and the people living in these areas. The general,
attitude of the Authority towards this Hospital is summarised in the words of the Surgical
Specialists and Superintendent of the Akosombo Hospital in the following words: "There is
no limit on medical expenditure [for employees].... No matter how much it costs we'll always
ensure that our patients are given the best treatment" (cf. Own, 1996. p. 5).

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V i t to r - Q u a o ( 1996 . p. 17) observes that every G h an a ian has a duty to protect the
life span o f the tw o darns as evidenced bv the following quote:

it is im perative that as the A uthority in fairness reconsiders the

responsibility to bear the costs o f those problem s associated with the
construction o f the two dam s, we all join hands to help app reci ate and
contribute to s a \ e and prolong the life span o f the lake.

W hile the A uthority has dem onstrated significant com m i tm ents to alleviating
the environm ental effects o f its operations, the activities o f the relatively new
D epartm ent o f Real Estate and Environment have not vet been integrated into other
D epartm ents o f the Authoritv For instance, there is am ple evidence that traditional
accounting methods do not often provide adequate inform ation on environm ental costs,
and thus result in ill-informed and costly m anagem ent decisions (see Quellette. 1996).
Recent research also show s that there are signs that " m anagem ent control systems" can
prov ide a fram ew ork for an integrated environm entally friendly organisation, especially
in the hydroelectric industry (see Evans. 1996; C av an a u g h . 1996). At the V R A not
only are environm ental issues unintegrated into m a instream cost determ ination, but
organisational participants do not envisage this as happening in the next few years.

A lthough recent events show that V R A is significantly com m i t ted to

environm ental friendliness, the organisation is currently faced with a shortage o f
technical expertise in the areas o f assessm ent, recognition, and costing o f
environm ental im pacts o f its operations. T hese difficulties are not peculiar to the
Authoritv as evidenced by the situations in the United States (see All. 1994; C arson.
1994; Quellette. 1996; W i lliam s and Phillips. 1996). New Z ealand ( Hooks. 1996; Orr.
1994). United Kingdom (Baker. 1996; Evans. 1996). C a n a d a (Glenn. 1995; Plackett.
1995; Selg. 1994). A ustralia (Frost and W i lm shurst. 1996; Keys. 1995) and A s
ia ( J a n e t . 1996). For instance, it w as found that organisational participants did not have
know ledge o f such relatively new environm ental costing techniques as "Life Cvcle
Costing" (see Epstein. 1996) and "env ironmental m anagem ent accounting" (see Baker.
1996) w hich is currently experim ented in some W'estern nations, notably C a n a d a w
hich is perceiv ed as being at the leading edge in environm ental accounting (see A nonvm
ous. 1994) " Perhaps the lack o f technical expertise is resulting from the fact
that

It is important to mention, though, that the tcchniquc of "full costing” might not
be known to most organisations in the so-callcd advanced countries. Therefore, the lack of
know ledge of this technique should not significanth influcncc judgements of the competence
of the Authority's accounting staff By mentioning Tull costing" to organisational
participants, the researcher's secondary- objective was to bring this to their notice as a
contribution towards the efforts to design costing procedures for environmental impacts of
the Authority's operations

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assessm ents, recognition and costing o f env ironm ental im pact requires a com
bination o f highly skilled engineers, legal and accounting personnel. This lack o f
technical
expertise in quantifying the Authority 's environm ental issues is noted by V i t tor- Q
uao ( 1996 . p. 8) as follows;

to enable the section [Real Estate and E nvironm ent D epartm ent] to
fulfill its responsibility effectively, m a nagem ent is still considering
p roposa ls presented on the effective m a n p o w e r an d equipm ent
needs o f the sectio n .... It is very im portant th a t such a section has
som e m inim al nu m b e r o f experts to look at specific areas especially
supervision and assessm ent o f strategies being initiated...

A l though the A uthority consistently m aintains that it prides it se l f with the

com petent a rm y o f staff, senior m anagem ent pointed out that the requirem ents o f
environm ental accounting call for further training o f existing s ta f f or recruitm ent o f
"new" s t a f f w ith expertise in this a re a 29. M a n ag e m en t saw this as an urgent
requirem ent i f the "new" departm ent is to thrive and get integrated w ith other
departm ents particularly Costing and M a nagem ent A ccounting Division and the
F inance D ep a r tm en t as a whole. At the tim e o f em pirical evidence collection, there w
as an im pending sem inar under the them e The P resent E n v iro n m en ta l T h in k ing a n
d its E ffe c t on VRA. to be organised for certain categories o f V R A staff. T he m ain
objectiv e o f this sem inar w as to encour age s t a f f m em bers o f other departm ents (
particularly accounting and f inance 30) to understand the integrative role o f the new
Real Estate and E nvironm ent D epartm ent within the b roade r organisational spectrum . It
w as the expectation o f m a n ag e m en t that with a clear understanding o f how their roles
interact w ith the functions o f the "new" D epartm ent, organisational actors will be able to w
ork together tow ards overcom ing its initial difficulties, including devising techniques for
quantifying, costing, and ev aluating the im pact o f the A uthority's operations on the
environm ent. T he D irector o f Real Estate and Environm ent w as quite optim istic that i
f o rganisational m em bers w orked together, solutions for the V R A 's environm
ental
problem s will not be hard to find. As the D irector noted in an interview w ith Vittor-
Q u a o ( 1996 . p. 17); "the environm ental problem s do not dem and |only | new solutions
but rather very tactical ap p ro a ch to prom ote hum an health and econom ic benefits to all
parties involved".

2 ‘)

The Authority intends to pursue both options because of the paucity of Ghanaians
who can effectively design, implement, and monitor environmental costing systems to a
considerable standard.

' (l Because of the urgent need to design techniques or procedures for costing
environmental impacts of the Authority's operations.

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In discussing the problem s of the new Real E s ta te and E nvironm

ent D epartm ent, a senior officer indicated th a t one o f the m a jor problem s it has with
the F inance D epartm ent is the strict b udgeta ry control procedures. H e observed that.

a m th in g that is not provided for in the annual budget requires special

approv al f rom the D irector o f Finance and ap p ro p r ia te D eputy C h ie f
Executive. But this process is so rigid. Som etim es, the Finance
D epartm ent does not have a good know ledge o f w h a t is requested and
therefore they rely on the D eputy C h i e f Executive responsible for the
particu la r a r e a for advice ... It is true th a t this is necessary for
financial control purposes, but the delays are som etim es unacceptable.

In addition, while the A uthority has established a T ru s t F und specifically for

environm ental issues, the m ost im portant concern is how to quantify the environm ental
im pact o f its operations For instance, to w ithdraw an y m oney f rom this T ru s t
Fund, w hich is " admin istered by a body including P arliam entarians o f all the
affected settlem ents", a p p ro p r ia te costing proc edur es are required ( V R A A n n u a l R
eport, 1994.
p. 10). T hese procedures are currently arbitrary, though subject to reasonable
justification and the scrutiny o f the D irector o f Finance and ap p ro p r ia te D eputy C h ie f
Executive. T here is a need to s tandardise p rocedu re s for accessing this fund because
the delays are currently perceived as unacceptable. H ow ever, s tandar dis ation can only
be possible i f the A u thority is able to design -ways o f costing the environm ental im
pact o f its operations and integrate these into m a instream m anagerial accounting.

T o gain an understanding o f the forces driving the A uthority to p u rsu e these

environmental, policies with such renewed vigour, organisational p articipants w ere
asked w hether the A uthority w as under pressure from som e 'external' p o w er such
as the governm ent or f inanciers to pursue such policies. It w as realised ( by the
researcher) that both the G h a n a G overnm ent and the A uthority's financiers insist
on the environm ental friendliness o f its operations. T h u s disclosure o f environm ental
issues in its annual reports is required to assure the G h a n a G overnm ent, w hich has
delegated som e aspects o f the responsibility for resettlement o f the people displaced as a
result o f the construction o f the A k osom bo and A kuse dam s to the V R A . that these
people and indeed the dam s are properly looked after. In the case o f the f inanciers, the A
uthority is required to state the environm ental im pact o f any project for w hich it is
seeking funding f rom these institutions, particularly the W o r ld Bank G ro u p w hich
rem ains the A uthority's m a jor external source o f funding for its projects. F or
instance, organisational actors indicated that while a recent decision to justify capital
investm ent did not directly include the environm ental im pact o f such a project in the
costing or econom ic evaluations, it nonetheless, em phasized environm ental issues as
significant 'qualitative' factors. Similarly, in its 1991 proposal for funding (for p o w er
extension to W a in the U pper W estern region) from the International D evelopm ent A
ssociation, a

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88 Public Sector Accounting and Financial Management

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Vol. 6. No. 1 August I 9 l)X

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 The International Journal o f Accounting and B usiness Society

m e m b e r o f the W o r ld Bank G roup, the V R A disclosed environm ental im pacts as

follows:

T he propo sed project is not expected to have any m a jor adverse

environm ental effects. A n im portant com ponent o f the project ( 1 7 % o
f the project costs) is to supp K W a m the U pper W e s t Region. T he
shortest route to supply W a is the extension o f 161 k V system s from
D a b o y a to W a ( approxim a tely 15() km) H owever, the line w ould
need to go through the Mole N ational G am e Reserve. C ognizant o f the
environm ental needs o f the proiect and o f the A frican C o m e n t io n
for C onse rvation o f N ature and N atural Resources A greem ent, signed
bv G h a n a in 1969. V R A has decided to build the transm ission line to
W'a by c i rcum venting the M ole gam e reserve and thereby protecting
it. This has increased the distance to be covered by ab o u t 280 km
and has therefore, substantially added to the cost o f this com ponent.
The t ransm ission line in the north will provide grid supply to an area
presently supplied by diesel generators and w ould, therefore, eliminate
air pollution caused by diesel generation... ( W orld Bank. R eport No.
8 2 0 7 - G H . p. 23).

T he discussion in this section show s that the A uthority is currently pursuing

environm ental policies w hich are quite im portant to the people o f G hana. How ever,
these efforts are still at initial stages and explain the lack o f integration o f
environm ental policies in m ainstream accounting and financial m anagem ent
procedures. It is w orth em phasizing that in term s o f disclosing env ironmental policies
and im pacts in annual reports, significant efforts have been m ade by the A u thority in
the past especially w hen com pared to results o f surveys in such adv anced W estern
countries as A ustralia. New Zealand, and the United Kingdom , although the G hanaian
public still rem ains skeptical. This partly explains one senior officer's ( o f Real Estate
and E nvironm ent D epartm ent) com m ent that "as far as environm ental aw areness and
disclosures are concerned. V R A is doing better than any other G hanaian corporation.
... that is w hy I mentioned earlier on that our system s can not be described as deficient
i f they becom e know n to w hoever is m aking that assertion".

Conclusions

This p ap e r has sought to illustrate em pirically how the view o f accounting as a

neutral technical practice has failed to address significant national socioeconom ic
developm ent policies in a developing country organisational context T h e paper
dem onstrates how the failure to perceive accounting as a social and institutional
practice has resulted in the neglect o f vital issues in socioeconom ic developm ent o f
G hana. T he specific case study o f the V olta River A uthority, an organisation that w as
established as a m a jor v ehicle for rapid socioeconom ic developm ent in G hana, provides

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 The International Journal o f Accounting and Business Society

evidence o f how social and environm ental considerations ( two im portant aspects o f the
notion o f sustainable developm ent) h a \ e either been sidetracked or given very little
em phasis in the organisational routine decision m aking m echanism .

By draw ing upon the notion o f " sustainable development" as a terrain for
investigating the effectiveness o f the A uthority's accounting and f inancial m anagem ent
system s, it w as observed that the people- centred dimension o f the concept w as not
reflected in the A uthority's present accounting and financial m anagem ent systems. It
w as how ever, realised that m anagem ent o f the A uthority had very little control over the
design o f the system, especially w ith regards to the pricing structure. In fact, a m a jor
contradiction w as observed between the pricing s t ructure and the G overnm ent's current
policy o f prom oting rural/ national electrification. O n the environm ental dim ension o f
sustainable development, it w as found that V R A is currently m aking significant efforts
to incorporate environm ental impacts o f its operations into the traditional accounting
systems. In term s o f disclosure in annual reports, significant progress, in recent years,
w as observed. It w as however, found that these environm ental policies w ere pursued
with renewed vigour because o f external pressures from the G h a n a G overnm ent and
international financial institutions, such as the W o r ld Bank G roup.

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 90 Public Sector Accounting and Financial Management

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