Accounting and accountability in local government: An introduction

This special issue on Accounting and Accountability in Local Government originates from the observation that, regardless of the vast archives of surviving records of public organizations around the globe, accounting history research has tended to be concentrated on investigations in the private sector. Local government organizations, largely neglected in historical research, were selected for particular attention since these institutions provided and continue to provide structure and order to collective lives. Independently of the geographical location around the globe and their structure, these institutions represent the action of the government at the micro level, thus impacting upon the lives of the governed and the connections between these institutions and other local entities. Accounting and accountability play an important role in the administration and governance of such organizations and, consequently, in the process of ordering activities within local communities.

Our call for papers for this special issue sought to stimulate robust and rigorous work on this theme, making use of diverse theoretical and methodological perspectives and encouraging studies from within or across specific countries or regions. The topics advanced in the call for papers included:

Preparing the call for papers stimulated us to analyse published historical research on the theme, aiming at identifying the main themes and trends in this historical research, the extent of adoption of particular theoretical perspectives, the nature of sources examined, the periods of time investigated, and the main contributions of published research on accounting’s past within local government settings (Sargiacomo and Gomes, 2011). Based on 33 articles that we identified on the theme, dating from 1965 to 2009, it was possible to confirm that accounting history research on local government remained under-investigated and, although strongly based on the archive, the traditional approach prevailed, with only a few articles adopting a theoretical framework to interpret the findings.

The analysis identified a prevalence of studies concerned with investigating the adoption, use and institutionalization of accounting and financial practices in local government and accounting for municipal corporations, while the other two research areas identified (accounting and the interplay between local government and central government; and accounting and accountability in community organizations operated within local government organizations) received considerably less attention from researchers. Although the analysis showed a predominance of nineteenth- and twentieth-century Anglophone settings, some relevant exceptions emerged from Germany, Italy, Russia, Spain and Sweden. Very little was published prior to the 1980s and only after the 1990s did publications increase. However, and notwithstanding some diversification in topic areas, the number of publications slightly diminished in the 2000s.

Possible avenues of research were identified within accounting and accountability in local government, additional to those emphasized in the call for papers. Therefore, in addition to the potentialities of applying different theoretical perspectives, other possibilities include: bringing to light social and cultural differences from the most diverse locations of the globe; studies covering different periods of time, since local government institutions have often existed for centuries and may play important roles for local communities over extended periods of time; and studies regarding relevant bodies operated by local authorities, such as transport and public utilities, education, water and consortia services, prisons, theatres, as well as charitable institutions. Additionally, potentialities emerge from biographical and prosopographical studies, which can bring to light the work of important individual figures and their influences in the administration of local government entities. Finally, a possibility to be explored is the “Comparative International Accounting History” research, given the lack of studies which have simultaneously analysed the accounting systems of local government authorities in different countries.

While the previous results included publications until 2009, a review of recent publications from 2010 to 2013 (issues available to the middle of September of the previously selected journals) demonstrates that accounting history research concerning accounting and accountability in local government is attracting increasing attention from researchers (see Appendix 1). This includes a particular emphasis from Italian historical accounting researchers and the more extensive use of theoretical frameworks to interpret findings.

Adding to these recent publications, the five articles in this issue of Accounting History embrace different themes within accounting and accountability in local governments, guided by a variety of theoretical perspectives. The papers are focused on the nineteenth and twentieth centuries and provide insights from four countries: New Zealand, with two studies, Spain, the USA, and Japan. Published historical accounting research has often reflected what is called the “traditional approach”, under which accounting tends to be perceived as a technical practice alone and the State as a non-problematic, regulatory body. However, the five articles in this special issue, reflecting the changes occurring within accounting history research in general, adopt a different approach by recognizing that accounting, besides being perceived as a technical practice, is also a social practice, with implications for organizational and social functioning.

Situated in New Zealand, during the twentieth century, the article by Miley and Read covers the interplay of local government and central government and the role played by accounting in three moments in time when earthquakes occurred. The three earthquakes analysed, the Murchison earthquake of 1929, the Napier/Hawke’s Bay earthquake of 1931, and the 2010–11 Christchurch earthquakes, were selected due to their magnitude and damage caused and the fact that all happened during periods of economic hardship. Natural disasters, such as earthquakes, are events that affect people’s lives, and local government entities are often best positioned to evaluate and provide immediate relief to the population. The authors show that in the three events analysed, accounting information, as a consequence of the radical change introduced by government reforms, which included the introduction of accrual accounting, was able to play a more prominent role in the management of Christchurch’s earthquake recovery, when compared with the previous situations. However, change does not always imply improvement, and, as indicated by the authors “by the Christchurch earthquake, the relationship between local and national government, and the financial record-keeping that supported it, had become more complex and multi-layered” (p. 463). This study highlights the role of accounting as a social practice, since accounting information was used to manage and make decisions regarding the recovery from a situation that had profoundly affected a society. Interestingly, by studying three events at different moments in time, the authors were able to highlight the “shifting dynamic between national and local government and … weaknesses of contemporary government accounting that might otherwise remain hidden” (p. 449).

Also within the setting of New Zealand, but in the ninetenth century, the article by Colquhoun analyses the introduction of new audit arrangements in local government through the study of two cases. Set in the archive and making use of Power’s (2003) explanatory schema for addressing the acceptance and/or rejection of proposed auditing practices and arrangements, and adopting the dual lenses of political legitimacy and organizational legitimacy, the article illustrates how legitimacy was sought in two opposing situations. The first regards a successful proposal for the Audit Office, at the time a central government department, to become the sole auditor of New Zealand municipalities in 1886. The second concerns an unsuccessful proposal for an increase in the scope of the Audit Office oversight of local government finance six years later. The author highlights that both organizational and political contexts are influential in the development of new technologies and in delivering legitimacy to public sector accounting and auditing. In fact, it was at the political level that in both cases the controversy was created. Both organizational and political legitimacy were important in the successful case reported in the article.

Positioned within twentieth-century Spain, the article by Sánchez-Matamoros, López-Manjón, Carrasco-Fenech and Funnell focuses on discourses of domination and repression, by analysing how accounting provided the means to enhance the position of powerful groups of individuals, in this case known as caciques or chiefs, who dominated rural village life in Spain. Utilizing archival sources and adopting an interpretative paradigm and Bourdieu’s framework, the authors studied the relationship between caciques and a charitable organization (the charity of Mr Rafael Tenorio) in a province in the southwest of Spain. The management of a charity institution founded in 1909 was the object of analysis to demonstrate the power of the caciques and the way in which accounting was used in the exercise of power. Embedded within the group of local caciques were the village mayor, the village priest and the three largest landowners. The authors demonstrate “that the power exercised by caciques relied, in part, upon accounting to enable them to exploit for their own benefit other people’s resources and enhance their cultural and symbolic capital” (p. 492). The study demonstrates that rather than simply being a technical practice, accounting is a social and cultural phenomenon – more “an instrument of power and domination than … a value-free body of ideas and techniques for putting into effect and monitoring contracts freely entered into between equals” (Carnegie and Napier, 1996: 8). In fact, the authors highlight the “symbolic violence exerted by accounting for the purpose of domination” (p. 493), however it was exerted in “a silent manner” and accounting techniques were possibly “invisible to all players” (p. 493).

Twentieth-century USA is the focus of the article by Pridgen and Flesher, who concentrate on the pioneering Tennessee Taxpayers Association organization. Using primary archival sources and group theory constructs from the political science field, the authors aim to document how the Tennessee Taxpayers Association, through performance audits, “was able to use its power and influence to shape the development of accounting systems and accountability in the local governments of Tennessee as early as 1932” (p. 507). Demonstrative of the impact and importance that local government entities have in people’s lives, this non-business and non-governmental association was the result of citizens’ efforts to evaluate and improve state and local government operations. Furthermore, it preceded by some 13 years the earliest effort by the United States to measure government performance. The article calls for, and highlights the importance of, future studies that investigate the influence of other non-governmental entities on accountability on local governments.

Yamamoto and Noguchi examine, through the lens of New Institutional Sociology, the transformation from cash-based to accrual-based accounting systems among Japanese local governments since the 1990s. Given the time period of the study, data was mainly constituted by formal documents and informal interviews with senior officials in local and national governments. The authors’ analysis of the interplay between central government and local governments in the light of New Institutional Sociology demonstrates that while coercive isomorphism provides explanations for the adoption of a modified model recommended by the central government, the reality was that decoupling explained “well the lower perceived utility of accrual accounting information in managing finances of local governments” (p. 529). As discussed by the authors, while “it is evident that reforms in local government accounting since the 1990s were coerced by Japan’s national government” (p. 540), these “did not originate in proactive local efforts to improve accountability or financial management” (p. 540).

The challenges and avenues for future research identified in 2011 continue at the time of writing this editorial. Based on articles published during 2010–13, including the studies published in this special issue, an augmented map of research clusters versus possible trends across the 1960–2013 observation period may be presented as shown in Figure 1.

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Figure 1.

Research clusters vs. possible trends across the 1960–2013 observation period (frequency of publications).

Figure 1 confirms that “The adoption, use and institutionalization of accounting and financial practices in LGs” is a strand which has generated renewed interest. In contrast, “Accounting for municipal corporations” has mostly disappeared, perhaps as a consequence of having been driven in the past – in the main – by the publications of two distinguished UK professors. “Accounting and the interplay between LG and central government” seems to be proceeding slowly, at the previous steady pace. The strand comprising “Accounting and accountability in community organizations that were operated within LG organizations” is instead clearly growing. This is mainly due to the growth of papers on accounting in charitable institutions, which appears to be a promising research agenda. At a more general level, the results portrayed reinforce the already identified lines of research, and call for further research. Relatedly, there is still an emerging need for rigorous and robust accounting history research that makes use of diverse theoretical and methodological perspectives and is set within or across specific countries or regions.

Finally, we take this opportunity to thank the reviewers for their thorough refereeing and the editors of the journal for their advice and support in developing and assembling this special issue. We also want to thank all the authors who expressed their interest in this special issue and congratulate the authors whose papers are now published for all their effort in developing their research for this special issue.