Accrual Accounting in The Public Sector - NSW Case

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Accounting History
DOI: 10.1177/103237320200700205
2002; 7; 93 Accounting History
Mark Christensen
Wales government
Accrual accounting in the public sector: the case of the New South
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Accrual accounting in the
public sector: the case of
the New South Wales
government
Mark Christensen
Southern Cross University
Abstract
Accounting technologies have dominated public sector management
reforms and accrual based financial reporting has been significant
amongst these technologies. This paper examines the process of change
in the New South Wales Governments early adoption of accrual based
financial reporting. The studys main objective is to present a history
that identifies the agents of change promoting and facilitating an early
adoption of public sector accrual accounting. The main primary data
source for this research was interviews with three categories of
participants who had some involvement in the decision that dates back
to the late 1980s. Historical research methods were used within an
analytical framework provided by a proposed variant of Luders (1994)
Contingency Model. The paper finds that a revised Contingency Model
is useful as a framework and that the major role played by management
consultants was a significant aspect of the case study.
Keywords: public sector; accrual accounting; accounting history; New
South Wales
93
Acknowledgements: The author gratefully acknowledges the participation and generous donation of time by each
of the interviewees. The paper has also benefited from the comments of two anonymous reviewers, Professors
Garry Carnegie and Don Scott and participants at the Third APIRA Conference held in Adelaide in July 2001
and the 9th World Congress of Accounting Historians held in Melbourne in July/August 2002.
This paper is dedicated to the memory of Dr Barry Moore, chronicler of NSW administrative history and
contributor to improvements and understanding of NSW public sector administration during the 1970s and
1980s. Dr Moore died in a self-administered euthanasia pact with his wife, Dr Erica Bates, in March 1989 after
both had been diagnosed with terminal illnesses. Dr Moore chronicled developments in NSW administrative
history and that history provides the context within which this paper needs to be understood.
Address for correspondence:
Mark Christensen
School of Commerce & Management
Southern Cross University
P.O. Box 157
Lismore NSW 2480
Australia
Telephone: +61 2 6620 3787
Facsimile: +61 2 6621 3428
E-mail: mchriste@scu.edu.au
94
Accounting History NS Vol 7, No 2 - 2002
Introduction
The dramatic emergence of public sector accounting from a prolonged period of
ossification represents a juncture in accounting history that demands some analysis.
Such analysis could be an apt instance of where research of public sector
accounting history has been identified as a fruitful area (Carnegie & Napier, 1996,
p.27) even though it remains still grossly under-researched. Whilst there has been
a rapidly growing literature on New Public Management (NPM), including
contributions from authors debating the worth of the term itself, there is not a
significant accounting history literature dealing with specific NPM accounting
reforms such as the adoption of accrual accounting. Instead the literature has noted
that accounting technologies have dominated NPM reforms (Guthrie et al., 1999;
Hood, 1995; Lapsley, 1999; Olson et al., 1998) whilst some researchers have
questioned whether the accounting changes have been a rhetorical support for other
changes with hidden objectives (Guthrie, 1998a; Lapsley, 1999; Pollitt, 1995).
Related to that literature is some evidence that the adoption of accrual accounting
has not produced the gains originally expected of it (Jones & Puglisi, 1997; Miley
& Read, 2000; Olson et al., 1998; Perrin, 1998; Potter, 1999; Robinson, 1998).
A definitive assessment of the cost-benefit of adopting accrual accounting is
an outstanding task. Although some argue that an assessment may not be possible
(Funnell & Cooper, 1998), before such an assessment can be attempted it is useful
to develop a literature on the history of public sector accrual accounting in
Australia. It is the history of one early adopter of accrual based financial reporting
that this study addresses. The New South Wales Government (NSWG) was the
second government in the world and the first government in Australia to adopt
accrual based financial reporting (ABFR). As such an early adopter, its story is
useful in particular to researchers interested in the widespread adoption of public
sector accrual accounting whilst also adding to the mosaic that is emerging on how
New Public Management financial technologies came to dominate recent public
administration. An additional motivation for this paper is that a history of the
development of ABFR in NSW can form a base from which evaluations of ABFR
may be developed.
Currently, accounting history stands as a vibrant discipline, characterised by
international interest, a breadth of scope that is near unique in academic
accountancy, and a passion among its adherents that has driven its successes
(Fleischman & Radcliffe, 2000, p.35). In the spirit of such vibrancy this paper uses
an oral history approach as prompted by Carnegie and Napier (1996), Hammond
and Sikka (1996), and Parker (1999) to derive some of its primary data. Individuals
who were prominent in the decision to adopt ABFR are interviewed to generate
much of the primary data. These individuals include the then NSW Premier and
Treasurer, the Director-General of the Premiers Department and the Under-
95
Christensen: Accrual accounting in the public sector
Secretary of the NSW Treasury as well as others who formed a decision elite and
an interested group of outsiders. Analysis of data is undertaken with the aid of an
interpretational model derived from a contingency view of public sector accounting
change (Luder, 1992, 1994).
This paper is structured as follows. Firstly a review of the relevant literature
is presented. Following this review a proposed model for interpretation of the
historical data is briefly presented. An interpretational history of NSW ABFR is
then presented in a manner that facilitates testing of five hypotheses developed
from a model of public sector accounting change. Conclusions together with
suggestions for further research are presented in the final section.
Relevant literature
With the exception of official-type advocacies on behalf of accrual accounting as
well as various seminars, such as those organised by the NSW Public Accounts
Committee in 1988 and 1994, the literature regarding public sector accrual
accounting is relatively limited. One part of the literature has debated whether parts
of the change have been worthwhile (Aiken, 1994; Brorstrom, 1998; Clark-Lewis,
1996; Conn, 1996; Guthrie, 1998; Jones & Puglisi, 1997; Lapsley, 1999; Monsen
& Nasi, 1999; Olson et al., 1998; Rhodes, 1998; Robinson, 1998; Shand, 1990).
Other elements of the literature have discussed technical aspects of public sector
accrual accounting (Jones, 1998; Micallef, 1997; Ng & Shead, 1999; Pallot, 1992;
Walker et al., 1999); whether public sector assets confound accrual accounting (see
especially various contributions in Australian Accounting Review issues in the
1990s); whether the change is more than rhetoric (Guthrie, 1998a); and, whether
the change will have unintended consequences (Potter, 1999; Robinson, 1999).
Whilst this body of literature is important, in the absence of a history of public
sector accrual accounting, it is built on an incomplete base. Only recently has
attention turned in part to presenting an historical view of why and how the change
to accrual accounting took place (Ryan, 1999; Ryan et al., 1999; Ryan, 1998).
Ryans work (especially 1995) provides an indepth analysis of events
between 1976 and 1993 that led to reforms of Australian public sector financial
reporting. Ryans contribution is significant but it does not deal specifically with
NSW nor does it apply a set of lenses that lead to the analysis of the type provided
here. That there has been no substantive analysis of the NSW case is perhaps not
surprising since there is generally a dearth of research on either the origins or the
consequences of public sector accounting change (Guthrie, 1998a; Ryan, 1995).
Further, with the exception of the work of Guthrie (1994), Ryan (1995) and Walker
(1995a and 1995b), there remains a lack of detailed case studies of public sector
accounting practices in the context of the prevailing organisational elements
(Broadbent & Guthrie, 1992; Wildavsky, 1988, p.107). This study attempts to
96
partly redress that void. However, one element in the literature that has developed
some cases of public sector accounting change is in the international comparative
field where Luders work has been central.
In the last decade, the most significant contribution to understanding public
sector accounting change has been Luders Governmental Accounting Innovation
Model (hereafter, known as the Contingency Model) (Luder, 1992). The
Contingency Model was formulated to better understand factors affecting adoption
of public sector accounting innovations. It posits that change is explained by
interactions between four modules: stimuli, structural variables of information
users, structural variables of information producers, and implementation barriers
(Luder, 1992). The model has been widely applied (El-Batanoni and Jones, 1996;
Godfrey, et al., 1996; Godfrey, et al., 2001; Khumawala, 1997; Likierman, 1996;
Luder, 1992 and 1994; Monsen & Nasi, 1998; Montesinos & Bargues, 1996; Pallot,
1996; Yamamoto, 1999; ) such that it has proven to be robust and adaptable (Chan
et al., 1996, p.9). As such Luders model offers itself as a suitable candidate to use
in a theoretically informed history of the adoption of ABFR.
Notwithstanding criticisms of efforts to use theoretically informed histories to
determine causality (Oldroyd, 1999), this paper will use a variant of the
Contingency Model as a framework from which the historical data can be sieved
and analysed. The underlying goal is to present a coherent and probable picture
(Fleischman et al., 1996b, p.62) of why ABFR was adopted by the NSWG.
Additional methodology issues are discussed in the next section following an
outline of the revised Contingency Model.
A revised contingency model of public sector accounting change
The model proposed here is a variant of Luders Contingency Model developed
after the benefit of discussions with Professor Luder (2000). Whilst the
Contingency Model has been used without modification to inform a history of
public sector accounting (Khumawala, 1997), a number of factors prompt
modification of the model for this study. Firstly, empirical support cannot be found
for Luders inclusion of the general public as an influential force on public sector
accounting (Copley et al., 1997; Coy et al., 1997; Hay, 1994; Mayston, 1992;
Public Accounts and Estimates Committee, 1999; Rowe, 1991; Rutherford, 1992;
Ryan et al., 2000; Walker, 1995a). Secondly, it has been argued that the role of
individuals needs to be incorporated in explanations of public sector accounting
change (Godfrey et al., 2001, p.280) and so the Contingency Model could benefit
from a behavioural orientation. Thirdly, Luders model focuses on the likelihood of
change rather than the purpose of change. To better understand the latter it is
necessary to consider how the accounting change has been harmonised with the
management system (Yamamoto, 1999, p.296). As a result, there is worth in
97
considering the relationship between management accounting and financial
accounting when examining public sector accounting change.
1
Incorporating responses to these three difficulties of Luders model has
resulted in development of a variant model. The proposed model consists of three
groups of actors that respond in part to each other but also react to a stimuli for
change whilst taking into account barriers which impede the change. The model
thus has five parts:
1. External stimuli for change (an exogenous force): relatively wide discussion
centred on a perceived problem and offering a philosophically based solution
to that problem.
2. Promoters of change: people and organisations with a vested interest in
wanting change.
3. Producers of information: public servants in central agencies and government
agency managers (CEOs, accountants, line managers).
4. Users of information: politicians holding responsibility for individual
portfolios or whole-of-government as well as Opposition politicians and
Parliamentary adjuncts such as the Auditors-General, Public Accounts
Committees and Parliamentary Committees.
5. Implementation barriers (an endogenous force): characteristics of the public
sector and its accounting system that act to restrict the options available to
implement change.
The model is depicted in Figure 1 (see over) and each of the five parts of the model
is briefly described below. For each of the models parts a hypothesis is proposed
and subsequently considered in light of the data revealed in the history presented in
this paper.
98
Figure 1: Process Model of Public Sector Accounting Change
Legend: Determinant influence
Significant influence
Minor influence
99
Promotors of change:
Consultants
Commentators
Academics
Organisations
representing
professional
interests
Users of information:
Ministers
Political advisors
Opposition members
Parliamentary
adjuncts such as
Auditors-General,
Public Accountants
Committees &
Parliamentary
Committees
Producers of
information:
Central agencies
Managers of line
agencies
Public sector
accountants
Stimuli
Implementation
barriers
Implementation of a new public sector accounting system
Stimuli
External to the public sector is a context established by the prevailing political and
social environment. This context is manifested in the collective debate that is
observed in popular media (print and electronic) and tangential sources such as
academic discourse, and comments of international bodies and professional
representative organisations. The coherency of the debate is reflected in some level
of repetitiveness in commentaries demonstrating, firstly, that there is a problem
and, secondly, that there is a solution available to the problem.
With respect to the adoption of ABFR, it is hypothesised (H
1
) that the ideas
which have been characterised as New Public Management (Hood, 1995) and,
consistent with a neo-liberal view of government in society (Funnell, 2001), were
important stimuli. That is, hypothesis H
1
is that the stimuli leading to the
accounting change were arguments that public sector debt needed to be reduced
and private sector technologies needed to be adopted by public sector managers.
Promoters of Change (PoC)
PoCs are identifiable people and/or organisations that promote recognition of the
problem and promulgate a solution. Although these promoters are identifiable, they
may not be publicly active nor necessarily known to the general public. However,
they are known to the Users of Information (UoI) either through personal contact
or through the office held by the Promoter. The motivation of PoC to use their
access to a UoI is influenced by epistemic considerations (Laughlin & Pallot, 1998)
or self-interest, including financial gain.
2
) that global
accounting firms acting as management consultants were prominent PoCs. In
addition there was also a less important, but influential, reinforcing effect from the
activities of both the accounting profession and public commentators.
Users of Information (UoI)
UoIs are political actors including Ministers, Opposition members and political
advisors but also include the Auditors-General, Public Accounts Committees and
Parliamentary Committees. In contrast to Luder (1992, 1994) but consistent with
the evidence cited above regarding low or no usage of public sector accounting
reports by citizens, the revised model does not attribute any significant role to the
general public or citizens. The advantage of excluding the general public is that it
avoids the uncertainty surrounding the usefulness of annual reports to the public
(Ryan et al., 2000). Additionally, operationalising the general public as a concept
and measuring the socio-structural variables suggested by Luder present difficulties
that outweigh the benefit of considering this variable which, at best, is thought to
be a background influence (Pollitt & Bouckaert, 2000, p.33). Exclusion of the
general public means the UoI category of actors consists of political and
administrative operatives. Such a categorisation is similar to Luders Reconsidered
100
Contingency Model in an application designed to suit Non-American Anglo-
Saxon countries (Luder, 1994, p.12). The rationale for this is that political actors
are motivated by the pressure to remain politically competitive to use public sector
accounting reports. Similarly, administrative actors with an accountability role
(Auditors-General and Public Accounts Committees) will also turn to accounting
information.
2
This depiction of UoIs is consistent with Pollitt and Bouckaerts
description of the role played by a political and administrative elite in public
management reform (2000, pp.24-38).
3
) that the UoIs
responded to the NPM stimuli and pressure from PoCs; in turn the UoIs exerted
pressure on the Producers of Information to implement ABFR.
Producers of Information (PoI)
PoIs are bureaucratic actors with some responsibility for accounting information.
This responsibility can be exerted by a central agency (typically Treasury or
Premiers Department) as well as by managers of line agencies where CEOs,
financial controllers and accountants hold responsibility for accounting outputs.
The PoIs are hypothesised (H
4
) as being largely responsive to the needs of
UoIs, although they may in some instances be proactive (Ryan, 1995).
Accordingly, there is a two-way relationship expected here since the PoIs are best
placed to advise UoIs regarding the impact of a proposed accounting change. Part
of the advice given by the PoIs will relate to barriers to implementation of the
accounting change.
Implementation Barriers
Implementation Barriers are features of the political or bureaucratic environments
that act to increase the cost or time required to implement accounting change.
Implementation Barriers are changed through the efforts of UoIs and PoIs but there
is also a two-way relationship with Promoters of Change since they must take
Implementation Barriers into account in their arguments. Also, the Implementation
Barriers may form part of the reason for subsequent actions by the Promoters as,
for example, when a consulting firm subsequently provides services with respect to
ways in which an Implementation Barrier may be overcome.
5
) that the
Implementation Barriers were inadequate public sector accounting expertise and
also flawed accounting records, especially asset records.
Case study of public sector accounting change
The above description of the modified contingency model and identification of five
hypotheses lays the foundation upon which a history of NSWs early adoption of
ABFR, as a particular accounting change, may be undertaken. This section consists
of three parts. It firstly describes the methodology used to develop that history. The
101
second part of this section presents a chronology and context of the events whilst
the third part analyses the history by using the framework of the modified
contingency model. The analysis reports findings with respect to each of the five
hypotheses posed above.
Methodology
The case study has been constructed using an historical analysis (Previts et al.,
1990a) of primary data gathered from interviews of elite decision-makers and
reviews of documentary sources. The documentary sources included working party
reports and minutes, annual reports, politicians and senior bureaucrats speeches,
policy statements, and reports of and submissions to various bodies of enquiry.
To develop a history, facts are necessarily selected and organised through a
judgemental process constrained by time and are provisional according to the
historians perception of the contextual variables of the period studied (Previts et
al., 1990b, p.147). The revised contingency model was used to order the data
gathering for development of the history. The use of a model in any history carries
a number of risks, not the least being that the researcher may be prompted to
interweave fact and opinion in a predisposition to find only confirming evidence
(Tyson, 1993, p.13). However, it must be recognised that it is impossible to
separate the past from our interpretations of it (Gaffikin, 1998, p.633) and the use
of a model, such as the one proposed in this study, is a justifiable technique aimed
at making the resulting interpretation coherent. This paper does not enter the debate
around the relation of historical research and explanation (Keenan, 1998; Miller &
Napier, 1993) but instead aims to clearly articulate its methodology as an aid to the
reader (Fleischman et al., 1996b; Fleischman & Radcliffe, 2000; Parker, 1997).
Further, it is hoped that calls for multi-paradigmatic histories (Fleischman et al.,
1996a; Fleischman et al., 1996b; Parker, 1999) may prompt other researchers to
consider the history of ABFR from another perspective and so demonstrate the
important point that there are many plausible histories of the same events
(Carnegie & Napier, 1996, p.17).
The interview-based primary data was gathered from face-to-face interviews
structured around a series of open-ended questions that were the same for each
interviewee within a cohort (but different between cohorts). In one case a telephone
interview was substituted where a face-to-face interview could not be arranged.
Interviewees were grouped into three cohorts of elites (Coleman & Skogstad, 1990)
on the basis of the revised contingency model:
1. Users of information: two interviewees Interviews Number 1 and 2.
2. Producers of information: three interviewees Interviews Number 3, 4 and 5.
3. Promoters of change: two interviewees Interviews Number 6 and 7.
Interviews were conducted between March and June 2000 and typically took one
hour but ranged in length from 50 minutes to 2.5 hours. All interviewees agreed to
102
the audiotaping of their interview and whilst note-taking did take place during the
interviews, this was kept to a minimum. Confidentiality of interviewees comments
was promised and so attribution of comments here is by way of reference to a
unique Interview Number linked to a cohort but not identifying the interviewee.
Names and relevant roles of interviewees within each cohort are given in Table 1.
Table 1: Interviewees (note: order of mention does not equate to Interview
Number)
Cohort Name of Interviewee Prior relevant role of Interviewee
User of Nick Greiner Premier and Treasurer
Information Peter Collins Treasurer and Deputy Premier
(UoI)
Producer of Percy Allan Under-Secretary, Treasury
Information Richard Humphry Director-General, Premiers Department;
(PoI) Victorian Auditor-General; Chairman,
Public Sector Accounting Standards Board
Don Nicholls Deputy Secretary, Treasury; Executive Director,
NSW Commission of Audit;
Executive Member of Tasmanian and South Australian
Commissions of Audit; Secretary,
Victorian Treasury and author of An Independent
Review of Victorias Finances
Promoter of Bob Walker Professor of Accounting and author of weekly
Change (PoC) commentary on public sector administration
and finance
Michael Sharpe Senior Partner, Coopers & Lybrand consulting firm;
President of the Institute of Chartered Accountants
in Australia; member of the Treasurers Accounting
Advisory Panel
Since the interview data is a significant part of the primary data for this research
some comments on oral history techniques are warranted. Whilst oral evidence is
rare in accounting histories it does have a long lineage of usage by historians
(Douglas et al., 1988; Parker, 1999). The advantages of oral evidence are many
(Carnegie & Napier, 1996; Hammond & Sikka, 1996) but the outstanding reason
for its use in this history lies in the realisation that as a relatively recent event with
some degree of commercial confidentiality, the adoption of ABFR lacks
documentary evidence other than official pronouncements. Official documents
are typically written with a narrow perspective and a sanitised rendition of events
such that they are inadequate in highlighting problems, disagreements and the self-
interested manoeurvings of individuals and organisations. Therefore oral evidence
103
proves an invaluable resource to achieve a better understanding of the actions and
motivations of the decision-makers in this case (Parker, 1997, p.142). Nevertheless,
warnings about the dangers of oral evidence need to be heeded. It can be self-
serving in the interests of the interviewees, contaminated by nostalgia, at the mercy
of interviewees memories, censored by a reluctance to reveal potentially sensitive
and controversial information, influenced by the researchers behaviour and diluted
by the act of transcription (Hammond & Sikka, 1996; Parker, 1999). With these
warnings in mind, the remainder of this section relates to the history of the
NSWGs adoption of ABFR.
The events
Like all historical accounts, the history of the NSW Governments decision to
implement ABFR should be considered in the context of its time. Overwhelmingly,
that context was one of increasingly rapid change. Two major enquiries heralded
the period of change: the Royal Commission on Australian Government
Administration reporting in 1976 (for a useful summary of this Royal
Commissions accounting impacts refer to Parker and Guthrie, 1990, pp.116-7);
and, the Review of NSW Government Administration conducted by Professor
Wilenski and reporting in 1977 and 1978. Neither of these enquiries recommended
ABFR but both set in train a series of changes that were to make ABFR appear to
be consistent with the overall direction of change.
3
ABFR should not be seen as an
isolated event in an indeterminate sea of change. Instead it was consistent with, and
reinforcing of, the general tide of movement reflecting adoption of private sector
practices in the management of public sector organisations. Although the wave of
that tide was only beginning to crest in the late 1980s, Dr Barry Moore, as an
interested chronicler of public sector change, was able to identify the principles of
corporatisation as being the essence of the sea change to that date. These principles
are summarised as follows: (Moore, 1989, p.109-115):
Demands for clear objectives, including explicit financial objectives, for all
government bodies.
Downstream autonomy as a means of diminishing the control of central
agencies.
Increased emphasis on performance monitoring which had been a pervasive
feature of administrative life for at least 15 years (Moore, 1989, p.112).
Changed management incentives including performance related pay, external
advertising of vacancies, abolition of seniority-based promotions, and market-
based pay scales.
Ensuring competitive neutrality through mechanisms like transfer pricing and
competitive tendering.
104
The principles of corporatisation identified by Moore went beyond Government
Trading Enterprises and were implemented in inner budget organisations. Among
the consequences of these changes that have most relevance to the history of ABFR
in NSW were:
Expectations of increased accountability.
Moves towards a smaller public sector in both functions delivered and assets
controlled.
Emphasis on productivity and economy.
Moores analysis is confined to NSW but it is not contradicted by others with an
Australia-wide perspective at the same time (see, for example, Parker & Guthrie,
1990). Two milestones assisted Moore in his understanding of the sea of change he
was experiencing and chronicling. Firstly, the election of a government led by Mr
Nick Greiner and secondly production of the Curran Report (NSW Commission
of Audit, 1988) requested by Mr Greiner in the first months of his government. The
election of the Greiner Government was important because of its espoused vision
of NSW Incorporated and the attached importance of running the State like a
business. The Curran Report was an explicit statement arguing the benefits of
applying a corporate management framework which features many of the
management tools widely employed in the private sector ... in tune with the
approaches to public sector reform which are being quite widely proposed and
adopted (Groom, 1990, p.144). The Curran Report tied together most of the sea of
change in which the NSW public sector found itself in 1988. Further, the Curran
Reports recommendation that accrual accounting be adopted by the NSW public
sector has been described as its most innovative and radical (Groom, 1990,
p.153).
The above-mentioned context identifies the themes of change relevant to the
NSWG decision in 1988 to adopt ABFR and its initial implementation in 1992 for
the 1992/1993 financial statements. Appendix 1 provides a chronology of the
events surrounding the history. The chronology can be roughly split into three
phases:
the pre-1987 discussion/agitation phase, when the case for accrual accounting
was being put;
the 1988 decision phase, when government made a commitment to adopt accrual
accounting; and,
the post-1988 implementation phase, when actions were taken at a Departmental
level to enact the change.
Within the discussion phase, pre-1988, the role of the Auditors-General, both State
and Commonwealth, deserves special note. Ryan (1998, p.527) provides evidence
of the activities of the Auditors-General in arguing for accrual accounting but there
105
is also evidence that these arguments were largely unsuccessful. Perhaps the most
active Auditor-General, Mr Ken Robson of NSW, put it best when he stated:
Everybody and I mean everybody was against me (about the need for accrual
accounting). They thought I was an idiot or something. But I believed strongly that
unless accrual accounting was used, there wouldnt be proper decisions made
(Soh, 1992). Robson went on to explain that only when Greiner turned accrual
accounting into an election issue did it achieve acceptance. As a result it is argued
here that whilst the Auditors-General may have been active in their support for
change, they were not able to exert enough influence to make any difference in the
first phase of the history.
4
The second phase of the history is marked by Greiners
political commitment in early 1988 and the subsequent Curran Commission
report endorsing accrual accounting in NSW. In the final phase the main activity is
change of accounting systems and a series of reviews examining implementation
progress. A notable feature of this phase was the inability of the accounting
profession to match the speed of the NSW reforms and so accounting standards
lagged behind. In effect NSW was forced to push ahead with its accounting reforms
in the absence of agreed standards from the profession.
Given this broad chronology and its context, the remainder of this section
discusses the history as interpreted with the aid of the Revised Contingency Model.
Stimuli
All three cohorts of interviewees identified two information seminars on public
sector accrual accounting as being crucial milestones associated with a shift from
discussion to commitment. Whilst these seminars were not the stimuli for change,
they provide evidence as to the stimuli that were having an impact on the groups of
actors considered in this case. These seminars were organised firstly by the
Australian Society of Accountants (now CPA Australia) in conjunction with Arthur
Andersen & Co. (1987) and secondly the NSW Public Accounts Committee (1988).
Secondary sources written close to the events (Moore, 1988; Soh, 1992) and those
with more time to introspect (Ryan, 1995 and 1998) also confirm this attribution.
This finding is a crucial one since it begins the identification of the effective
promoters
5
behind the idea of adopting ABFR and it identifies the stimuli for
change. Whilst this is consistent with Ryan (1995) an influential UoI also identified
an earlier seminar that influenced his thinking: a Harvard Business School finance
Professor (M Colyer Crum) argued for public sector accrual accounting whilst
visiting Sydney perhaps as early as 1974 (UoI, Interview 1).
The seminars concentrated on the need for government to constrain debt (the
problem) and argued the benefits of applying private sector discipline on
government (the solution). The arguments presented bore a strong consistency
with a number of doctrines that Hood (1995) identifies as underlying NPM and the
speakers propositions are firmly embedded in a neo-liberal concept of government
in society. For example, one speaker cites public choice theory as the grounding for
106
public sector accrual accounting (Regan, 1987, pp.7-8). Following the seminars and
the election of the Greiner Government in 1988, the issue of being seen to have
robust and professional debt management was confirmed as being a goal sought by
the government (UoI, Interviews 1 and 2) although there was confusion between
debt and liabilities (PoC, Interview 6). Some PoIs recognised the opportunities for
change presented by the stimuli: reform was in the air you know the Roger
Douglas thing in a different era we wouldnt have been able to do it (introduce
accrual accounting) (PoI, Interview 4).
The evidence regarding stimuli for change supports Hypothesis H
1
. A number
of stimuli for change are identified. The single most important one was the desire
to bring the public sector and private sector closer together in their management
because of the philosophy of the Greiner government. However, this was either
initiated or legitimated by an espoused concern regarding better economic
management and improved public sector debt control (Greiner, 1993). The stimuli
for change were strong in motivating the PoCs and UoIs but of small influence on
the PoIs as evidenced by the clear statement of priorities by the Treasury Secretary
placing accrual accounting below other reforms (Allan, 1988, p.41).
Promoters of Change
Whilst the 1987 ASA and 1988 Public Accounts Committee seminars identify the
stimuli, they also identity management consulting firms as being the important
PoCs. Management consulting firm partners dominated both seminars and argued
that ABFR was necessary for asset management and debt control (Egol, 1987;
McGinniss, 1988; Plater, 1988; Regan, 1987). Amongst the arguments presented
was the assertion that public sector accrual accounting had been implemented
overseas (although this point was subsequently refuted by the NSW Treasury after
a quickly arranged study tour of the USA in 1988; PoI, Interview 5; PoI, Interview
3; PoC, Interview 7). Indicative of their influence at this early stage was the
consultants organising of overseas contacts for a bureaucrats study tour and one
firm, Arthur Andersen, writing select parts of the Greiner Governments Audit
Commission discussion of the desirability of implementing accrual accounting
(NSW Commission of Audit, 1988, Appendix F). Further, at the urging of a major
firm (PoC; Interview 7) a Treasurers Accounting Advisory Panel (the Panel)
comprising senior partners from all the major accounting firms was instigated by
the Premier and Treasurer.
The Panel provided an independent source of advice to the Treasurer and
Treasury on emerging accounting issues affecting the public sector (NSW
Government, 1991, p.30). The Panel institutionalised the influence of consultants
on accrual accounting issues and it followed an $83,250 consultancy competitively
won by Coopers & Lybrand to advise on development of a Financial Reporting
Code for Budget Sector agencies converting to accrual accounting (NSW
Government, 1991, p.101). Recognition of the Panels importance has been
107
explicit: the Panel was very important and was very successful (PoI, Interview 4)
and it was a group of experts saying this is the right thing to do (UoI, Interview
1). Further evidence of the importance of consultants is strong: I dont know how
many consultants we employed but they were right through the place (PoI,
Interview 4). I would like to acknowledge the contribution from the big six
accounting firms (Mellor, 1995, p.18) and, a number of consultants approached
Treasury promoting accrual accounting (prior to 1988) (PoI, Interview 3).
The actions of the consulting firms during implementation of the change were
particularly influential. The Premier arranged a meeting with the Managing
Partners of KPMG Peat Marwick, Price Waterhouse, Coopers & Lybrand, Arthur
Andersens, Deloittes and Ernst & Young (and that meeting resulted in) the
secondment of a manager from each firm into a department for approximately six
months to act as project manager (Scullion, 1991, p.30-1) for the implementation
of accrual accounting in select departments. The importance of consultants is
confirmed in interviews with all three cohorts of interviewees. For example, they
were supportive of it and it was helpful to them it would be too cynical a view to
say that public sector work was previously a whole area that their firms did not
have available to them and that they were only looking for work but they were
certainly supportive of a convergence of public and private accounting standards
because it was in the interests of the good management of the State (UoI,
Interview 1). Further, it was expected, and I think it is now realised, that such skill
transfer and such exchange (with consultants) is beneficial to NSW agencies as
much as it is to the firms themselves (Mellor, 1995, p.18).
It is hypothesised in the Revised Contingency Model that there are PoCs in
addition to the consulting firms. However, the data from this case does not support
an argument that the other PoCs were influential in the adoption of ABFR.
Although a number of other academic and commentator PoCs were urging caution
(Groom, 1990; Moore, 1989; Painter, 1990; Walker, 1989; Walker, 1988) they do
not appear to have had an influence (UoI, Interview 1; PoI, Interview 3).
In consideration of Hypothesis H
2
, it is concluded that the most important
PoCs were the management consulting firms since they initiated discussion of
accrual accounting and then provided the necessary wherewithal to achieve its
implementation. The ability of the firms to provide the wherewithal in terms of
computing systems and technical accounting advice meant that the consultants
were not simply used to legitimate philosophical change: they were at the core of
implementing real accounting change. There was a sense of epistemic strength
(Laughlin & Pallot, 1998) behind this since it was initially consistent with
professional body support and there was a sense that it was right (PoC, Interview
7). However, it would be naive to believe that participation in the reform process,
including representation on the important Treasurers Accounting Advisory Panel,
would not lead to economic gain as the public sector opened up for advisory work
108
(PoC, Interview 6; PoC, Interview 7). Whatever their motives, the consultants
dominated the process of change and controlled the discourse and were
institutionalised at the centre of the executive machinery (Saint-Martin, 1998,
p.346). However, this domination of the changes encouraged little critical
reflection or a full appreciation of several practical difficulties associated with their
implementation (Potter, 1999, p.46). In this regard, two PoIs commented on the
resultant frustration with the accounting profession in not resolving technical
accounting issues related, in most part, to asset measurement quandaries (PoI,
Interview 4; PoI Interview 3).
Users of Information
The most dominant player in the entire case study was Mr Nick Greiner, Premier
and Treasurer, as a UoI. Each interviewee acknowledged this and some even argued
that he may have been the only politician who understood the difference between
cash and accrual accounting. His demand for different information was insistent
and determinant. As a result, Treasury priorities were changed (PoI, Interview 3),
resources were devoted to the task (PoI, Interview 4), private sector advisors were
used (PoC, Interview 7), and impediments such as inadequate skills or prior
accounting records were not allowed to divert the change (UoI, Interview 2).
Indeed, Greiners role in this historical account provides a strong example of
Oldroyds (1999) accident and personality as being at the core of why causal
theories of history are undermined. Other UoIs such as the Public Accounts
Committees and Auditors-General had a minor influence limited only to early
stages in the history.
The arguments presented by the PoCs captured the attention of political actors
(Ryan, 1995) since they were based around depictions of the stimuli for change.
These arguments were in accord with the philosophical bases of an incoming new
government even though they were not vote winners. Even in 12 years retrospect
it would be kidding to suggest that it (accrual accounting) was a basic part of the
election plank the basic plank was NSW Inc and it was consistent with that
(UoI, Interview 1).
Some non-political UoIs also argued for ABFR. The most important of these
were external to the responsible central agencies of Treasury, Public Service Board
or Premiers Department: the Auditors-General (Harris, 1995; Robson, 1987).
However, as noted above, the Auditors-General activism was limited to the early
part of the history and it was not successful. Indeed, the most active Auditor-
General, Mr Ken Robson, retired early before the first accrual based reports were
prepared. Additional evidence of the lack of influence Auditors-General was the
exclusion of Audit Office representation on the Premiers Accounting Advisory
Panel until its influence had declined under the next Premier, Mr Fahey (PoC,
Interview 7).
109
Some individuals wore a number of hats such that they were influential over
the full process of change. A notable instance of this was the role of Mr Richard
Humphry in three pivotal positions: Chairman and Member of the Public Sector
Accounting Standards Board (1983 to 1993), Victorian Auditor-General (1986 to
1988) and Director-General, NSW Premiers Department (1988 to 1994). His
progression through these positions meant that ultimately he was at the centre of
the implementation of ABFR in NSW (Ryan, 1998, p.527).
A synergy developed between the UoIs and the PoIs as soon as the UoIs had
signaled their support for change. For example, If the politician shows an interest
in something the public servants will become enthused about it and there was a
sense in Treasury of a desire to be at the forefront (UoI, Interview 1). The sense
that Treasury was at the cutting edge of public financial reform was publicly
expressed with pride in the form of gratitude for the Treasurers encouragement
and support in changing the States financial management, accounting and
reporting systems to amongst the most advanced in the world (NSW Government,
1991, p.i).
There is strong evidence to support Hypothesis H
3
since the UoIs noted that
they were following an agenda set by NPM ideas (the stimuli for change) and that
they demanded change from the PoIs to implement ABFR (UoI, Interviews 1 and
2).
Producers of Information
Although the PoIs were content to implement government policy on accrual
accounting, they were initially unenthusiastic: for the moment (other reforms)
have a higher administrative priority than accrual accounting (Allan, 1988, p.41).
Their later enthusiasm for accrual accounting has been described as turning
adversity into triumph (PoC, Interview 6).
One reason advanced as to why adoption of ABFR was later favoured by the
PoIs was to avoid problems associated with updating accounting systems and
recruiting staff. It was considered that accrual accounting would mean standard
accounting software could be used and accounting graduates recruited with greater
success (PoI, Interview 5). However, more importantly, the PoIs enthusiasm
seems to emanate from a desire to meet the needs of the forceful UoIs. It is also
worth noting that the PoIs outside of the central agencies were not of any
significant positive or negative influence in the change. These PoIs were reluctant
to use accrual based reports and did not demonstrate a complete acceptance and
internal use of accrual information (Public Accounts Committee, 1996, p.80).
Nevertheless, this reluctance did not impede implementation of ABFR which has
since been characterised as having taken on a crash-through approach (Funnell &
Cooper, 1998, p.202).
Accounting staff in Treasury and the Premiers Department were happy to
respond to the demands of the UoIs and to use this influence to bring themselves to
110
the forefront of their profession. In the case of the head of Premiers Department
this response was consistent with his earlier work as a UoI in the Commonwealth
Department of Finance and the Victorian Auditor-General Office whereas in the
case of Treasury it involved realigned priorities.
There is data to support Hypothesis H
4
by demonstrating responsiveness from
some PoIs to pressure from the UoIs. But there is not sufficient data to argue that a
truly two-way relationship existed. That is, the PoIs were not successful in
modifying the manner of implementing ABFR so as to minimise the impact of the
implementation barriers as discussed next.
Implementation barriers
There were varying levels of concern with impediments to a smooth
implementation of accrual accounting. The PoIs noted the lack of accounting skills
in the public sector as an impediment; for example, many of the accountants in
government were not accountants as you would think of them in the private sector
for many of them it was a nightmare for them to move across to an accrual
system (PoI, Interview 4). This was confirmed in 1994 by the Public Accounts
Committee arguing that there was still a need to improve the skills and training for
accounting and finance officers (Public Accounts Committee, 1995, p.i).
However, the UoIs paid less attention to the impact of this impediment. For
example, I dont think that the cost of conversion from cash accounting to accrual
would have been any reason to delay its implementation whether it was fairly
costly or not costly it would not have made any difference (UoI, Interview 2).
Another impediment that worried PoIs was the inadequate state of asset records:
We had things (assets) we didnt even know about! (PoI, Interview 4). However,
the UoIs were only interested in this problem as a reason to push accrual accounting
faster rather than to become more cautious: how could we manage if we didnt
know what assets we owned? (so) our general approach to government was to
push on all fronts if you take a very careful, measured approach all it means is
that nothing ever happens (UoI, Interview 1). Again, consistent with NPM, the
government was explicit in trying to use accrual accounting to force departments to
recognise and value assets in their control (Greiner, 1993, p.54).
Two PoIs noted that the absence of public sector accounting standards was a
problem. However, given that this was not an issue to other actors, it is not
examined here as a barrier to implementation. The apparently resigned acceptance
of this problem probably results from another accident of history: the Head of
Premiers Department had been a Chairman of the PSASB and so was not prepared
to allow technical accounting debates to interfere with the pace of reform.
With respect to Hypothesis H
5
, barriers to implementation were of less
importance than expected. Explicit statements from both UoIs noted that cost of
implementation was not important (and not even estimated). Since higher
implementation barriers impose higher implementation costs it is apparent that they
111
were not important in the decision to proceed or not. However, both barriers
mentioned by almost all interviewees (low level of accounting skill in the public
sector and poor asset records) provided the promoters of change with the
opportunity to sell their wares. That is, significant expense was incurred on
consultancies to advise on accrual accounting, train staff and review asset records.
As an aside, it is interesting that information on the cost of implementing a new
accounting system designed to provide improved information is unlikely ever to
be reached as agency records in this respect are unreliable (Public Accounts
Committee, 1996, p.59).
Conclusion
Implementation of ABFR has been a reform that has been promulgated widely at a
significant cost (Public Accounts Committee, 1996). The fact that NSW was
amongst the first implementing jurisdictions in the world makes the case study
worthwhile since it can throw light on the process of change. So as to order the data
gathered in this case study a Revised Contingency Model was proposed and from
this five hypotheses were developed. These hypotheses were examined in light of
oral evidence gathered from individuals who were central in the events surrounding
the decision to adopt ABFR.
The history identifies stimuli that made certain pro-active political Users of
Information receptive to the arguments presented by consulting firms in the role of
Promoters of Change. These arguments were solidly based within the management
doctrines described by Hood (1995) as characterising NPM. The Users
subsequently exerted significant force on central agencies in their role as Producers
of Information. This force was designed to achieve the adoption of ABFR with
little concern for any associated problems. As a consequence the central agencies
of Treasury and Premiers Department responded with enthusiasm to implement
ABFR. The subsequent implementation of ABFR was heavily dependent on the
services of management consultants of whom some had been very vocal in the
arguments advanced for the change to accrual accounting. Thus, the prime actors
in the NSWG decision to adopt ABFR were the Premier and private sector
consultants. To this team were added central agency PoIs at the implementation of
the decision.
A significant aspect of the history presented in this study is the explicit
acknowledgment that implementation cost was not considered as a barrier to
change. Indeed, increased cost in the form of significant usage of external
consultants was seen as a necessary strategy to overcome the acknowledged
implementation barriers of inadequate accounting skills and poor asset records.
Whilst this strategy resulted in more speedy change it probably was the genesis of
subsequent criticisms. Two main criticisms of the (probable) high cost and rushed
approach stand out. Firstly that the cost of implementation is not known (Public
112
Accounts Committee, 1996). Secondly, that insufficient planning and
development work was done initially in linking accrual accounting back to the
budgeting process, in exploring and defining the likely problems and in developing
options and solutions (Hickling Corporation, 1997, pp.iv-v). These criticisms and
the finding that implementation cost was not important in the decision to undertake
the change point increasingly to the usefulness of researching whether ABFR has
been worthwhile.
Two other significant aspects of the history relate to the promoters of ABFR:
the Auditors-General, whilst being active, were not effective in their advocacy but
the Big Six accounting firms were successful in their calls for ABFR. This contrast
raises questions now of whether the accountability rationale for ABFR, as
advanced by the Auditors-General, has been delivered in the private sector version
of public sector ABFR, as implemented by a large number of consultants. The
Auditors-General and Public Accounts Committees are now in a position to
investigate this outstanding question. The longstanding and continuing debate
about the appropriate degree of fit of commercial accounting and reporting
practices for public sector organisations increasingly calls for further research of
these issues (Barton, 1999; Carnegie & Wolnizer, 1999; Guthrie, 1998a; Potter,
2002; Walker, 1989).
The data of the case study confirms Hypotheses H
1
, H
2
and H
3
whilst offering
mixed support for H
4
and rejecting H
5
. Collectively these results demonstrate the
usefulness of the Revised Contingency Model. However, the Implementation
Barrier module deserves modification to incorporate the possibility, as in this case,
that implementation problems, such as high implementation costs, may not be
perceived as impedients to change, especially where such implementation costs are
not readily ascertainable and/or are perceived to not outweigh the anticipated
benefits of the change.
It is acknowledged that in its approach and in its evidence this historical
account presents foci of potential conflict, just as Carnegie and Napier (1996,
pp.14-5) aptly warn are features of most accounting histories. Whilst these conflicts
may stand as legitimate limitations to the research they are also pointers to areas
where additional research should be fruitful.
This research has a number of limitations. These limitations result from the
case study being an interpretational history and as such it cannot promise to present
a definitive view of events (Previts et al., 1990a). The interpretation of this history
provided by way of applying the revised contingency model may be criticised as
being a doctrinaire approach (Tyson, 1993). However, it is not argued that it
precludes alternative interpretations. Were the facts or the personalities to be
different there is no guarantee that the cases outcome would substantially differ.
Although an interesting dinner party conversation amusement, the second guessing
of history is the unattainable test of the analysis presented in interpretational
113
histories (for example, would accrual accounting have been implemented if Nick
Greiner was not elected in 1988?). Such second guessing is especially fraught in
cases such as this where the history is relatively recent and is shrouded in
commercially confidential practices. It is appropriate to note that it should not
surprise us in the least that histories will be written and rewritten as layers of
narrative, interpretation and explanation are developed with the lapse of time and
the revisiting of archives by successive generations of scholars (Parker, 1999,
p.24).
Other limitations to the research emerge from the model that has been used to
inform the history. For example, more finely detailed differentiation of the models
groups of actors could have been developed. This is perhaps most important with
respect to the Users of Information where there are substantive differences between
government and opposition political users as well as lobbyists. Further, the model
only allows an individual to be in one category of actors at a particular point of time
and this proves to be a limitation in understanding this history since some
significant individuals moved between roles as the history progressed. For
example, Mr Richard Humphry held three pivotal positions; Mr Don Nicholls
moved from being at the centre of NSWs adoption of accrual accounting to being
the author of four States audit commissions for incoming governments.
Further research justified by the issues considered here probably needs to
address the outstanding question of costs and benefits from accrual accounting; that
is, whether ABFR and accrual budgeting, have delivered the benefits as promised
by its vocal advocates in the 1980s. Such research would do well to work from the
most important conclusion of this history: the role of management consultants in
the promotion, design and execution of public sector accrual accounting has been
one of the most significant exercises of epistemic influence over the internal
workings of government in the last two decades.
114
Appendix 1: Chronology of events
Date Event
1983 March: Nick Greiner becomes Leader of Opposition
1985 Public Sector Accounting Standards Board publishes Research Monograph (no.5)
raising, amongst other matters, whether accrual or cash accounting is best for the
public sector
1986 Victorian A-G (Richard Humphry) argues for AA
SA PAC recommends AA for agencies with operating expenses greater than $5m.
Tony Harris (later to become NSW A-G) supports AA for all government in his
commentary on ASA Annual Research in Government Accounting Lecture
1987 The NSW and Victorian As-G present papers to the PACs Biennial Conference
Government A Big Business advocating AA
SA PAC repeats recommendation of AA for major asset holding agencies
November: ASA convenes Sydney seminar on AA with New York Comptroller
(Edward Regan) and Arthur Andersen US Partner & Director of Government Services
Industry Program (Morton Egol) as keynote speakers
1988 February: NSW PAC convenes Accrual Accounting Seminar (200 attendees)
A few days after the PAC Seminar (Moore 1988, p.166), Opposition Leader Greiner
outlines his management strategy including AA and a week later Labor Treasurer
Booth indicates he is thinking about AA
March: Greiner Government elected
July: Curran Report published. One term of reference was to advise on the impact
of, and procedures involved in, applying full AA (NSW Commission of Audit 1988).
Arthur Andersen commissioned to prepare an appendix on AA for the final report.
1989 SA PAC recommends AA for all government agencies in its 1988 Annual Report
PSASB issues Exposure Draft ED50 Financial Reporting by Local Government
1990 May: Premiers Conference: NSWG requests a Working party on financial
information harmonisation; Premiers establish the Working Party on Government
Financial Information (WPonGFI)
December: PSASB issues AAS27 Financial Reporting by Local Government
1991 February: Treasury Heads set up the Working Party on AA
May: Premiers Conference: receives WponGFI report recommending a Working
Party on Accrual Accounting
July: Special Premiers Conference: sets up Steering Committee for National
Performance Monitoring of GTEs and asks it to refine national accounting standards
including asset valuation
1991/92 NSW Budget Paper No. 2 notes 3 year strategy to adopt AA
AARF, PSASB issues Discussion Paper No.16, Financial Reporting by Government
Departments
Special Premiers Conference agrees that the States will move towards uniformity in
budget presentation and show a reconciliation of budget results and data on a
Government Finance Statistics (GFS) basis (Walker 1995a, p.4)
October: Victorian Government commits to implementing AA
... continued
115
1992 January: All Treasuries decide to fund the PSASB to produce a standard on
Departments (Ryan, 1999, p.176)
May: Heads of Treasuries Working Party on Accrual Accounting produce
unpublished Commonwealth report Accounting and Financial Reporting in the
Public Sector; recommendations appear lukewarm and allow adoption or not; Percy
Allan later says its recommendations were not as averse to AA as most of its
members were at the outset of the exercise (Ryan, 1995, p.208)
June: AARF issues Exposure Draft ED55 Financial Reporting by Government
Departments
1992/93 NSW Budget Papers present 1st whole of government financial report on
an accrual basis called comprehensive accounting
November: Commonwealth Government commits to implementing AA
1993 Public Finance & Audit (Budget) Amendment Act empowers NSWG Treasurer to
depart from ABS standards on reporting by changing definition of GFS
Report of the Victorian Commission of Audit Vol 1 argues that the Victorian
Government should introduce a system of full accrual accounting (p.iv)
June: Independent Commission to Review State Finances in Western Australia
reports on the benefits of comprehensive financial reporting on an accrual basis but
notes that NSW has had to move ahead of the accounting profession and with a lack
of consensus on conceptual issues (Walker, 1995b, p.10)
December: AARF issues AAS29 Financial Reporting by Government Departments (to
have effect 31.12.96)
1994 First NSW Public Accounts (1993-94) prepared on an accrual basis for the budget
sector (Walker, 1995b, p.5)
April: Treasurer requests PAC enquiry into accrual accounting implementation in
NSW
Commonwealth Government presents trial basis whole of government financial report
on an accrual basis
December: PAC holds seminar on AA implementation progress
1995 March: ED62 Financial Reporting by Governments
1996 June: PAC concludes NSW can be proud of its achievement as the 1st jurisdiction to
implement AA; estimates minimum implementation cost at $52m. (Public Accounts
Committee, 1996)
November: PSASB issues AAS31 Financial Reporting by Governments (to have effect
30.6.99)
Abbreviations:
AA: Accrual Accounting
AARF: Australian Accounting Research Foundation
ABS: Australian Bureau of Statistics
A-G: Auditor-General
ASA: Australian Society of Accountants (later Australian Society of Certified Practising
Accountants and later CPA Australia)
GFS: Government Finance Statistics
GTE: Government Trading Enterprise
PAC: Public Accounts Committee
PASAB: Public Sector Accounting Standards Board
SA: South Australia
WPonGFI: Working Party on Government Financial Information
116
Notes
1. This is notwithstanding Balls point that in the public sector the predominance of
the accounting imperative suggests that management accounting never has been
distinct from financial accounting (2001, p.297).
2. There may be some scepticism that users as defined in this study would necessarily
rely on ABFR as their primary data source. Such scepticism points to an unfulfilled
research area which is outside the ambit of this paper and has been highlighted by
others as an important future research question (Guthrie, 1998a; Potter, 2002).
3. I am grateful to Professor Allan Barton for the insight that draws a lineage from
Wilenskis work to NSW ABFR. Wilenskis two reports now stand as a forceful
argument for breaking the inertia of NSW public administration in many fields.
4. One contributor to the Victorian Congress of the Australian Society of Accountants
noted in November 1987 I am well aware that the majority of the accounting
profession is disinterested in the topic (of public sector accrual accounting) and
many government accountants are hostile at any suggestion of accrual accounting
(Walker, 1987, p.1). He went on however to acknowledge the efforts of the then
Victorian Auditor-General in attempting to overcome this negative attitude to public
sector accrual accounting.
5. These seminars were dominated by management consultants from the Big Six
accounting firms and their activity signposts the failure of prior promoters such as
the Auditors-General in contrast to the Big Six promoters. Support for the
assessment that the Auditors-General and some interested public servants had failed
to achieve change to this point (1988) is provided by Ryan (1995, p.195) in which
she cites a PSASB Chairperson: Humphry and Shand who were both high profile
did not make any progress (Richard Humphry then being the Victorian Auditor-
General and David Shand then being a senior Commonwealth public servant). In
additional support of this observation it can be noted that David Shand had been
advocating public sector accrual accounting, without any success, from as early as
1983 when employed in the Victorian public sector.
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