Further reading

not only in the terms set by the system itself but also by the lived experience of
those who provide and those who receive government services. We must at least
allow that this could be very different from what the systems portray.

FURTHER READING
Atkinson, T. (2005) Measurement of Government Output and Productivity for the National
Accounts (Atkinson Review: Final Report), Palgrave Macmillan.
Bouckaert, G. and Halligan, J. (2008) Managing Performance: International Comparisons,
Routledge.
Boyne, G., Meier, K., O’Toole, L. and Walker, R. (eds) (2006) Public Service Performance:
Perspectives on Measurement and Management, Cambridge University Press.
Kurunmäki, L. and Miller, P. (2006) ‘Modernising government: the calculating self, hybrid-
isation and performance measurement’, Financial Accountability and Management,
22(1): 88–106.
Propper, C. and Wilson, D. (2003) ‘The use and usefulness of performance measures in the
public sector’, Oxford Review of Economic Policy, 19(2): 250–67.
Shah, A. (ed.) (2007) Performance Accountability and Combating Corruption, World Bank.
Warburton, R. (2005) ‘Preliminary outcomes and cost–benefit analysis of a community
hospital emergency department screening and referral program for patients aged 75 or
more’, International Journal of Health Care Quality Assurance, 18(6/7): 474–84.

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 Chapter 3

Fundamentals of accounting

The technical fundamentals of accounting are the same in all organisations, whether
governmental, for-profit or not-for-profit. The public sector context, however, shifts
the emphasis among these fundamentals. Public sector accounting techniques require
a return to accounting fundamentals to understand them. It is also important,
because of the context, to understand that there are two other forms of ‘accounting’
that complement and sometimes compete with public sector accounting, especially
in national governments. First, there is the set of macroeconomic accounts for
each country (known as national accounting) and, second, there is each national
government’s budget.

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 3.1 Elements of accounting

3.1 Elements of accounting

Records of transactions – of each organisation – are the fundamentals of account-

ing, just as this aspect of accounting is fundamental to internal control. It is still
common for governments to use forms of single-entry bookkeeping. In the
Anglo-American context, single-entry systems are seen as archaic, belonging to
the nineteenth century at the latest, but probably few double-entry systems are
wholly comprehensive, integrated recording systems and the use of subsidiary
systems (for accounts receivable, for example) is still common. The ever-increasing
use of a few generic software packages will produce greater uniformity.
There is polarisation of views as to whether these records should be expressed
in a uniform way across a set of organisations (the most basic elements of a ‘chart
of accounts’) or left to each organisation to determine. Even in the latter case, at
some level there is demand for some kind of uniform classification of the results
of these transactions. The difference of opinion hinges on belief in the extent to
which any accounting system can provide meaningfully uniform categories (of
cost, for example). In extremis, a ‘chart of accounts’ believes that uniform records
produce uniform categories; the polar view is that the economics of different
organisations are different and no amount of uniformity in record-keeping can
change that. In practice, there are very strong demands for some degree of
uniformity – especially from politicians and non-financial managers – that have
to be satisfied regardless of whether the underlying records are expressed in a
uniform way or not.
Comprehensive, integrated double-entry recording systems can apply to each
organisation taken as a whole, naturally producing one set of financial state-
ments for each one. It is common practice, however, to keep sets of transactions
(pools of resources) assigned to a particular purpose completely separate from
other pools. The clearest form of this practice is in US state and local government
accounting, in which these pools of resources are called ‘funds’ (so clear is it that
the phrase ‘fund accounting’ has sometimes been used as shorthand for ‘state and
local government accounting’). These funds raise the basic question of whose
transactions are being recorded by the organisation’s accounting system: are they
the records of the organisation or of a fund within it? The starkest example of
this question might be where each fund also has its own bank account.
Although the question can raise complicated issues, the idea of a fund is
simply a technical response to the instinct we all have to designate money to
specific purposes, for a variety of reasons, sometimes because of the source of the
money, sometimes because of our intended use. The idea is also common in
business accounting, but the financial reporting imperative in Anglo-American
accounting has long been seen to be the provision of one set of consolidated
financial statements providing measures of revenues, expenses, assets, liabilities
and cash flows for each organisation as a whole, which has tended to obscure
important questions about the role of funds.
The enduring focus of accounting in government has been on the proper
recording of these transactions. Closely associated with this has been control of
spending against the budget.

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