KeywordsPublic Administration Public Accountability Public Entity Accounting Principle Political Accountability
The term “accountability” implies the duty to act in a responsible way and to be accountable to others for one’s actions, in order to maintain effective and logical links between planning, deciding, action, and verification.
The term – particularly familiar in Western societies – comes, in a theoretical sense, from political science studies and should be considered a fundamental cornerstone of democratic systems (Shah 2010; Borowiak 2011).
In any case, it represents the need to convey how financial and nonfinancial resources are used, the correctness of those who operate in a management capacity, the adequacy and conformity of actions taken compared to preexisting objectives, and the results reached over time. This is achieved by highlighting organization policies, laws, and political, social, cultural, and environmental requirements in which the entity – whether public or private – operates, in order to contextualize any evaluation of results and objectives, plans and behavior.
According to the above-mentioned perspective, accountability mostly refers to the ability of putting third parties in a position to evaluate the action taken, so as to adequately make the organization actors responsible for their actions. Financial and nonfinancial communication and all related documents represent costs-reporting instruments laid out by those who manage the organization for those who, even when not directly involved in management tasks, have some interest in it.
It is evident that the type of interest and involvement of a person in the life of a public entity determines the character and modalities of cost-reporting. It is clear that to each different category of recipient should correspond different documents and tailored contents. This helps us understand how, from an accountability perspective, in recent years there has been a significant vertical and horizontal increase in organization information. Social, environmental, gender, and sustainability reports have become widespread in all Western economies.
The information contained in annual reports and other economic documents has been debated in academia for quite some time now: In particular, whether the information is destined to viewers outside of the organization, whether the internal information capacity is always higher than the external, whether different kinds of information – economic, environmental, and social – are alone sufficient to satisfy all expectations and cognitive needs, and whether all interest groups have the same capability of drawing conclusions from the documents, without any distinction between those that are internal or external to the public entity, involved in the work of the organization or merely potentially interested.
Governments and public monitoring bodies
Consumers and their representative groups
Governments and all remaining parts of the public administration are strongly interested in the communication of financial and nonfinancial data, for fiscal and economic policy reasons and – in some cases – for reasons related to public order and/or to administrative, financial, or hierarchical relationships.
Citizens play a very important role. They can be considered as the main target of organization behavior and therefore the main target of entity information. Citizens can represent, at the same time, at least three categories of subjects: voters, taxpayers, and consumers. As a voter, every citizen has the right to be informed in order to decide by himself in a responsible manner his own behavior, especially during the vote (Brennan 2011; Flinders 2012; Mair 2013). He has the right to receive adequate information but also a duty to actively participate in the life of the community using all his skills, for himself and for others. As a taxpayer, each citizen contributes directly or indirectly, through taxes and fees, to the financing of public sector entities. A complete and transparent financial and nonfinancial information is able to make him understand how his money is used and what services or benefits have been produced with it. In this way, the citizen is enabled to know about the public value created (Moore 1995; Esposito and Ricci 2015). As to the citizen as a consumer or user, please see below.
Those who fund the organization, who depend on annual reports to evaluate how much trust to place in the organization, cannot ignore the elements contained in each accounting document. Banks and other financial institutions can thus get a better idea of the creditworthiness of the public entity involved.
Suppliers could be interested for commercial reasons and for reasons related to market relations. In this case, the economic difficulties of an organization can significantly affect its supply prospects.
In the same way, consumers appear to be more and more involved in the life and decision-making process of an organization. The coproduction of value and the frequent participation of consumers, especially in public service companies, have also led to the establishment of more active communication processes. The value that an informed consumer can bring to the life of a public entity (Ostrom and Ostrom 1977; Voorberg et al. 2015) is undeniable.
Employees and unions are interested in reports and business results because their working lives are linked to the health of their organization and to its plans. Public employees’ attention towards organization strategies and reports has grown considerably, while organization solidity and employees’ expectations regarding professional and salary growth are greatly linked. Such individuals also display a particularly strong interest in accounting documents, although it is important to say that their interest is proportional to the size of the entity.
Competing organizations are also interested in the economic and financial reports and communication of the entity. Releasing such documents to the public facilitates the access to them and the possibility to examine them closely.
Finally public management figures, who know about the information contained in the reports and the main events affecting the life of the organization in question, have always been interested in communication tools, both as drafters and as recipients. They represent the top decisional level of the organization and are in the best position to read and perfectly understand such reports. They are aware of the complex reasons – either explicit or implicit – for which they were drafted and of the criteria inspiring them. Therefore, the management forms its decisions on the basis of the information produced by the entity communication system and of the results it releases.
The accounting principles and rules regulating the economic information should guarantee a true and transparent representation of the organization situation and facilitate the evaluation by stakeholders of the work done by administrators, in a framework of responsibility (Roberts 2009).
The Role of Accountability
The legal and regulatory evolution which has accompanied the public sector reforms in many countries in the past few years, affirming the theories of New Public Management (Pollitt 1993; Hood 1995; Pollitt and Bouckeart 2000) and New Public Financial Management (Olson et al. 2001), has also increased the culture of accountability in public organizations.
We can say that such evolution has allowed us to go from a culture of execution to a culture of results, from accounting to accountability (Bovens 2009). There is in fact a strong connection between accountability and external information. In this sense, it is possible to talk about public accountability, which can be applied to any organization that has a responsibility towards the public. In public administration, the term accountability implies at least three fundamental concepts: (1) the duty on behalf of the public entity to report on the use of public funds and the relative production of results to the citizen, showing correctness and coherence in its administration especially in economic terms, in a thorough and transparent way; (2) the need to introduce mechanisms for taking responsibilities showing that the decisions made are coherent with the tasks taken on and the commitments made; (3) the need to highlight the actual public value being created, showing that the organization operates responsibly to achieve an adequate level of legitimacy and deserved consensus.
In public sector, the role of accountability has a deeper meaning than in private companies. This is because the funds used come from direct and indirect taxes on citizens, and the capital invested is destined to carrying out public functions.
In this sense, accountability means answering to the use of public resources, particularly when the satisfaction of collective needs and social and environmental results are concerned.
Concretely, this requires a multilevel and multitype understanding of accountability (Romzek and Dubnick 1987; Sinclair 1995): political accountability, public accountability, managerial accountability, professional accountability, personal accountability, and more. Political accountability depends on the functioning of democracies and it is developed mainly in the relations between politicians and citizens, elected representatives, and voters. The mandate given by voters and the political acts of those elected, such as laws and regulations, are the basis of this type of accountability. Public accountability is, in some ways, the natural expansion or the most extensive form of political accountability, as it directly involves the individual public entities and citizens. The reporting tools are numerous and very different from each other. When we talk about managerial accountability, the main focus is on the results achieved by an individual manager within the organization for which he works. The elements that characterize its responsibilities are mainly the performance achieved and resources used. Professional accountability concerns, in particular, values and skills that qualify the responsibility of a particular person within the entity. Professional experience, attachment to official duties and especially a sense of belonging are the basis of the expectations that are created in relation to the role that is played. Personal accountability relates exclusively to a person and his or her value system, regardless of the role or experience in previous positions. In this type of accountability, responsibility is taken for who you are and not for what you do.
Of particular interest are those levels of accountability which are used in public entities to communicate between management and political bodies and between public administration and political parties, movements, and the representative organizations supporting them. Thus, social control over administrative work must find adequate forms of insurance capable of guaranteeing a permanent balance between discretionary power and responsibility.
Accountability is an emancipatory concept through which it is possible to properly develop social relations (Gray and Jenkins 1993), relations which can never depart from the duties arising from the respect of citizens’ fundamental rights. In this perspective, accountability is tightly linked to the main ethical and moral choices taken by public managers and politicians. Of course, accountability can be observed from an ethical point of view or, perhaps, a moral one. Despite the risks and the limits that this observation involves (Messner 2009; Cho et al. 2015), there is no denying that accountability can help increase awareness of administrative action, both of those who administer and of citizens. Accountability serves as accelerator of virtuous processes. Increased awareness does not necessarily mean more responsible behavior, but more awareness is essential for the proper development of social relations and, therefore, for social capital (Putnam 2002). It is evident that the following questions remain: what to report, how to report, and when to report, questions around which lurk the elements most critical in public accountability. Due to these moral limitations, accountability cannot be considered as the maximum, or worse, the only expression of the responsibility of a public organization. On the other hand, improving human relations and instilling more conscious behavior can promote the general interests above individual interests. It is important to note that behind every entity, there are specific goals that, in the case of the public sector, have their origins and roots in the constitutional norms, laws, and the legal systems for the protection of both the fundamental rights and freedoms of individuals and of the interests of the entire community.
Correct and true information requires elaboration of accounting principles by the public sector, as well as the definition of rules that are capable of having an impact on the organizational models and governing structures within entities. Transparency of information and the correct representation of results can have a positive effect in public actions, with beneficial effects for all stakeholders. From this perspective, the legal asseveration or auditing of all documents, financial and nonfinancial communication, plays a decisive role, by which accountability is substantiated and is shaped by a qualified and independent professional subject, even more so in the voluntary accounting statements and nonmandatory reports. In fact, trust in the relationship between an administrator and citizens should never be a substitute for proper checks and inspections.
The essential prerequisites of accountability are a clear and unmistakable strategy of the political organs, the identification of accurate and prompt planning guidelines, the clear formulation of the objectives to be achieved, the construction of adequate mechanisms to measure and evaluate events, and finally the creation of effective communication channels, through which it is possible to transfer information and to give concrete personal and collective feedback. In recent years, there has been a wider acceptance of the idea that the legitimation of the public administration in the eyes of the public is less tied to its institutional nature and more and more to its ability to create goods and services in the quantity and with the quality expected by citizens, families, and the market in general (Saves 2000).
This new legitimacy undoubtedly strengthens the role and the function of public accountability, and at the same time the model of governance being adopted, confirming that it cannot be indifferent when achieving an effective management and a transparent relationship between governance and accountability.
Improving the relationship between generations
Reduction of conflicts of interest
Fighting corruption and cronyism
Improvement of employee motivation
Respect for human rights and the environment
Greater participation and awareness of citizens
Increase in the quality of the competition
In light of what has been said so far, it is necessary to go back to some of the considerations made in relation to the definition of accountability or rather to its practical and not only literal definition of its meaning.
The term implies distinctive aspects of the relationship between public administration and stakeholders, or between those who have the responsibility to manage and those who have directly or indirectly helped define the plans and who want to know about the choices made and in some cases criticize the results. In this context, justification plays a decisive role for the public – it is considered a reasonable explanation of the main decisions made, while punishment or reward becomes the immediate and direct consequences of the evaluations formulated by the receivers of information. They should be adequately and sufficiently connected to the results achieved and the expectations developed.
A clear and articulated planning process
A transparent definition of the internal and external responsibilities
An adequate accounting system
An effective internal system of monitoring and evaluation
Periodic communication of the activities carried out
A significant benchmarking activity
A significant use of technology in the communication process
A strong presence of these factors improves the quality of the evaluation process, which in turn leads to more transparent, understandable, and effective forms of cost-reporting.
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