Mohammad

Al-Amin Rashid
ID-20018
Motivation to this paper
Objectives
• Providing a review
• Critical assessment of PSMA in EEs
• Drawing attention of the policy makers
Research regarding management
accounting in EEs
• Financial accounting research
• Management accounting research is still in its
infancy
• Extensive reviews of PSMA but lack in
focusing EEs
• PSMA on EEs has begun to develop quite
recently
Important Papers
• “Public sector accounting and financial management in
developing countries: a critical assessment of the
literature”. [ Abdul-Rahman et al.(1997)]
• “ Management accounting in less developed countries:
What is known and needs knowing”.[ Hoper et al.(2009)]
Focus Questions
• What do we know?
• What do we need to know?
Team objectives
• To present a background on PSMA research with an
introduction of this paper
• To present the papers
• Critically evaluate the paper
MD. MANJURUL HOQUE
Id 20012
 BOUNDARIES OF THE REVIEW AND REVIEW
APPROACH
1.Management Accounting has been defined in different shapes and
forms.
2.Management accounting must be understood in the context of
historical, political and economic factors.
3.Financial Accounting has been excluded to narrow the focus.
4.A broad range of economies has been covered in this paper.
5.This review examines research on countries in the World Bank’s lower
to upper middle bands.
 BOUNDARIES OF THE REVIEW AND
REVIEW APPROACH

 All countries except those with a very high UN HDI have been included.
 Ex-communist countries in transition have been excluded.
 Public sector has been defined in a broad sense .
 Public sector covers state-owned commercial and non-commercial enterprises
(SOEs), autonomous government agencies, core organizations at different
layers of government (i.e. central, intermediate and local ), and also
organizations that formally operate outside the government sector but are
regulated and partly funded by government.
 SELECTION OF JOURNALS AND REVIEW
DESIGN
 The complete tables of contents of relevant journals over 20 years have been
examined.
 Initial selection of journals includes all important international accounting
journals as well as one public administration journal with an exclusive focus
on emerging economies.
 The total number of papers in accounting journals amounts to 43 ;
Accounting, Auditing, and Accountability Journal (AAA) and the Journal of
Accounting & Organizational Change (JAOC) published the largest number of
papers.
 Journals such as Abacus and the Journal of Management Accounting Research
did not publish papers in the target domain.
 This review does not include papers published in non-English journals.
 SELECTION OF JOURNALS AND REVIEW
DESIGN
The approach in reviewing academic papers on Public Sector Management
Accounting was as follows:
 The papers selected for review were read and summarized.
 Each summary included categorizations according to continent, theories,
methods of data collection and management accounting themes, together
with the paper’s main findings.
 A database has been produced including all summaries and categorizations of
the papers, and then used this database to compile tables of the various
categorizations.
 References for the reviewed papers are given in the Reference list and their
categorizations in Appendix A.
CATEGORIZATION OF REVIEWED PAPERS

 Categorization of papers according to continent:

Continent Number of papers As a percentage of

total
Africa 20 29
Asia 30 43
Latin America 2 3
Australian Pacific 5 7
Two or three continents 3 4
EE in general 9 13
Total 69 100
CATEGORIZATION OF REVIEWED PAPERS

 Categorization of papers according to methods of data collection:

Methods of data Number of papers As a percentage of

collection total
Literature review 7 10
Case-field study 42.9 62
Survey 4.3 6
Documentary study 2.3 3
Policy study based on 7.5 11
official documents
Reflection (Essay) 5 7
Total 69 100
MD.SALAUDDIN
ID:20-047
Theories and Paradigm:
Categorization of papers according to theories and
paradigms
Theories No. of papers As a percentage paradigm
of total
Agency/Economic/Contingency 9 13 Mainstream
theory accounting/functionalist
Institutional/Stakeholder/Action/He 14 20 Interpretative
rmeneutics/structuration theory
Governmentality / Bourdiesian 5 7 Critical
framework
Labor process/Political economy 7 10 Critical
Descriptive papers without any 34 49 -
explicit theory

Total 69 100
Management Accounting Themes:
Categorization of papers according to management
accounting themes
Theme in key words No. of papers As percentage
of total

Changing nature of management accounting in SOEs 14 20

Western influences on management accounting 24 35
State-led centralized controls 7 10
Sequencing of financial management 8 12
The impact of EE-specific context on MA 13.5 20
Conflicting interests and values in management accounting 2.5 4
practice

Total 69 100
Management accounting theme continue

 First, studying the impact of Western influences on MA practices is the most

popular theme(35%).
 Second, researching in changing role of MA in SOEs is a frequently addressed
theme (20%).
 Third, the contextual influence on MA practice is also often discussed
(20%),mainly in combination with the above two themes.
 Forth, state-led centralized control features in seven papers(10%).
 Fifth, some papers have a strong practical relevance and discuss circumstances
under which a sequential approach to financial management might be appropriate
(12%)
 Finally, a small number of papers(4%) has pointed out conflicting interests and
values in the public sector.
Development discourses and political
economy of MA change
 The framework highlights two significant shifts, one from state-led development
to market-led development, and the other from market-led development to
localized development.
 Previous studies on NPM and MA changes have demonstrated a drastic change in
views on the role of state and MA models.
 Two of the most influential models of governance are traditional public
administration and NPM.
 Traditional public administration-led management control focus on compliance,
regularities, maintenance and control.
Development discourses and political
economy of MA change continue
 The main characteristics of this concept are a strong division between political and
bureaucratic responsibilities and rules-based controls, as well as steering of and
accountability for inputs.
 In contrast, NPM rests on ‘market-based controls’ to achieve efficiency,
effectiveness and cost savings and streamline the public sector.
 The central theme of NPM is to make managers accountable, by allowing
managers discretionary authority to reach their performance targets, and then
measuring, monitoring and reporting on performance indicators.
 EEs have their own idiosyncratic political and cultural conditions. Financial
dependence on donor agencies, the influence of international politics and their
political instability are critical in the examination of EEs public management.
Development discourses and ideal MA
model
Development discourses Ideal MA model
State-led Development Traditional Public Administration

Market-led Development NPM Model

Localization-led development NPM Model

Findings of the review
State-led development
• Sate as a center of development
• Sate was involved in all enterprises
• Focused on Traditional Public Administration (TPA)
Why
• Advocated by the World Bank
• Financed and supported by western countries and donor
agencies
TPA
• Ideal accounting model in that phase
• Focuses on centralized accounting model and centralized
budgeting
• Focuses on public sector auditing and accountability
through financial reporting to state bodies
Questions regarding this phase
• Lack of effectiveness in planning and control
• Over centralization
• Political control over budgeting and planning
• Collusion between managers and trade union leaders
• Focusing on satisfying external authorities
Why failed
• Unsuitable accounting framework as well as complex
socio- economic, cultural and political factors.
 Market-led
development
Background
• Shift in World Bank development discourse
• Free market perspective + Private
Why shifting
• Lack of anticipated progress in economic development
• Poor performance of the public sector
• Expect of reforms in the existing system
• Hoping to weed out political intervention and patronage
Concept of market led
development
• Saw the market as the center of development
• Attempted to bring private sector management style in
public sector
• Suggested various market oriented technologies like full
costing, market pricing, decentralized control etc.
NPM model
• Ideal accounting model
• Emphasis on result based budgeting and market based
resource allocations, pricing
• Private sector style performance management and
auditing
• External reporting to shareholders
First effect
• Many studies advocated this adoption as great
transformation
Questions regarding the
previous researches
• Investigation of adoption rather than applicability and
outcomes
• Lack of examination of basic structural conditions
• Ignorance of micro process of control, politics and culture
Questions regarding
this concept
1. Lack of structural
conditions
• lack of political commitment
• Overreliance
• Inability to tackle reforms
• lack of accounting infrastructure
• arising of confusion
2. Negative effect of culture and
politics
• Politicization controls
• Political constraints
• Unworkable and in effective reforms
3.Failure of basic first
approach
• Political stability and commitment
• Lack of technical/ professional capacities
• Under-developed institutions
Concept of Basic first
approach
• a first step to NPM reforms or market led development
• Assumes to reform in some basic ways before applying to
full reforms
• Focuses on sequential approach to financial management
• Focuses on integrated financial management system and
control
 Localization
• Arises on the process of reinventing the market led
development
• Free market+ Private+ localization of public services
+ empowerment of social capital developing
Implications
 Implications
• Localization of public services
• Increasing importance of NGO
• Evolution of micro-finance
 Normative View
• Constriction of more democratic, participative and
social form of accountability to facilitate
participatory mode of accountability
 NPM model
• Ideal accounting model
• Decentralization as well as participatory mode of
budgeting and resources allocation
• Emphasis on wider accountability
 Research Situation
• Very few researches have been done
• Only 5 studies have been found and 3 of them are
from Uganda
• Mixed results have been found
Scope
 Questions
• Institutions remain under-developed
• Clash with cultural orientation
MD MIRAZ
20003
 What do we need
What do we know?
to know ?

About management accounting (MA) in the

public sector in emerging economies (EE )
 PSMA has been receiving increasing attention from
researchers, consultants and policy makers

Important role played in Transformation over

economic development last two decade

EE Development State Led Market Led

Each of these development modes has given rise

to distinctive types of MA practices
 Closely linked with
State
national plans
Led Public Sector
Period
Rational accounting
Framework

Serious governance and implementation

problems

Main Concern is to maintain compliance with

budget limits and financial regulations,
 Accounting Doctrine

Efficiency Decentralization Transparency

Underlying Theme of New Management Tools

Donor Adopt public-

Agency
EE sector reforms
Changes private-sector accounting technologies often failed to
achieve the desired outcomes

Market-based doctrines pay little attention to underlying

contextual differences between developed countries and EEs

EEs lack the institutional mechanisms and structural conditions

necessary for private management styles to operate effectively

Mismatch between structural realities and imported MA

knowledge has produced controls that are often symbolic
• Major outcome of review is that local context
matters
• The main reason is that EEs are confronted
with public-sector reforms as they are
sponsored by donor agencies
• Socio-economic conditions such as poverty
and corruption have been identified as
important issues to consider in bringing about
desired changes in MA in the public sector
Future Research Area

How political processes intertwine with

management and accounting controls in the
public sector ?

How management accounting tools are

implemented and used in practice ?

Dialectics between institutional changes at the

field level and MA changes at the micro level
embedded in local contextual circumstances

participatory budgeting in the public sector as a

response to new dialogues, especially on issues
such as localization/social empowerment
• Donor agencies should take a closer look at the local context
before investing in a particular policy framework
• To play a more supportive role in stimulating development by
making room for diversity based on differences in historical
and political contexts
• Localized and indigenous accounting technologies should
perhaps be encouraged rather than discarded
Public-sector MA research in EEs is emerging, it
is still in its infancy

Should be open to considering

specific EE contexts, and
refrain from the idea that
Western-centric MA practices
might easily be copied in EEEs
Critical Evaluation
 Positive sides
• Supported by different theories
• Extensive review of different journals and research
papers
• Review papers are taken focusing on different
continents
• Findings are based on theories and research papers
 Negative sides
• 72% review papers are based on Asia and Africa
continents
• Lack of single effect
• Most of the Asian studies are based on China
• Lack of direct work or observations
• 50% papers are based on explicit theories
• No explanation about the application of theories
 Scope limitation
• Such types of review papers are scarce
• There are a few but cannot be accessed at free of
cost
• Time constraints
 At a glance
• Provided a background of researches on this sector
• Mentioning of objectives
• Provided a description about the paper
• Showed the findings with respect to theories
• Critical evaluation of the paper
 How theories are used to support
findings
Example:
• Studies by Alam and Lawrance (1994) and Alam
(1997) found that in Bangladesh public sector
corporations saw the budgeting as a process of
complying with external authorities requirements