On the legitimacy and apoliticality of public sector performance audit: exploratory evidence from Canada and Denmark

PurposeThe increasing uptake of performance auditing (PA), which entails both the facilitation and the control of government policies, has seriously challenged state auditors' claims that they are apolitical. This article aims to understand how supreme audit institutions (SAIs) operate to maintain and nurture the political neutrality and legitimacy of their PA.Design/methodology/approachThe authors draw on Suchman's typology on legitimacy (1995) to analyze the PA reports of two countries with a long history of both performance auditing and accusations of political interference, namely Canada and Denmark. Documentary analysis and interview methods are employed.FindingsThis study shows how the two SAIs have been pursuing pragmatic, moral and cognitive legitimacy through the professionalization and standardization of both the form and the content of their PA reports. Engaging and maintaining the dialogue with the audited administration, triangulating recognized social science methods, and emphasizing the “public interest” basis of PA reflect some of the tools adopted to navigate the “grey zone” between objective, relevant and politically sensitive audits.Research limitations/implicationsThe paper's explorative approach limits the possibility for robust testing of the causal forces impinging on SAIs' choices of legitimation strategies. Nevertheless, variations between the Canadian and Danish SAIs in the strategic use of some legitimacy tools such as the media suggest a difference in the role of Public Accounts Committee in the two countries that can be investigated in future research.Originality/valueMuch research exists questioning the political neutrality of PA, yet there has not been much discussion on how SAIs have been able to develop and preserve the prevalent legitimacy of their PA amid the criticism. More specifically, our research reveals the tendency of both the Canadian and Danish SAIs to strategically underline the “public interest” dimension of their performance audits in an attempt to increase both their legitimacy and political neutrality.

Hospital accreditation systems and salience of organisational tensions

PurposeThis study examines how an externally imposed management control system (MCS) – hospital accreditation – influences the salience of organisational tensions and consequently attitudes of management towards the system.Design/methodology/approachData are collected using a case study of a large public hospital in Spain. In-depth interviews were conducted with 27 senior and middle managers across different functions. Relying on the organisational dualities classification in the literature, tensions are unpacked and analysed.FindingsEvidence is presented of how hospital accreditation increases the salience of organisational tensions arising from exposition of the organisational dualities of learning, performing, organising and belonging. Salient tensions were evident in the ambivalent attitudes of management towards the hospital accreditation system.Practical implicationsThe role of mandatory external control systems in exposing ambivalence and tensions will be of interest to organisational managers.Originality/valueThe study extends the management control literature by identifying an active role for an external MCS (accreditation) in increasing the salience of organisational tensions and triggering ambivalence. Contrary to the prior literature, the embedding of both poles of an organisational duality into the MCS is not a necessary precondition for increased tension salience. The range of attitudes towards MCSs beyond those specified in the previous literature (positive/negative/neutral) is extended to include ambivalence.

Understanding reporting boundaries in annual reports: a conceptual framework

PurposeThe purpose of this paper is to enhance conceptual understanding of reporting boundaries in corporate annual reports by developing a conceptual framework of the rules and principles, referred to here as dimensions, underlying boundaries. A total of nine contemporary regulations/guidelines are compared in terms of the boundary dimensions identified to illustrate similarities and differences in boundary concepts.Design/methodology/approachTo develop a conceptual framework of reporting boundary dimensions, academic and industry literature were analysed to identify boundary dimensions. Thereafter, nine contemporary regulations/guidelines were compared in terms of these dimensions. A qualitative approach was taken including document analysis and content analysis.FindingsA total of 10 key boundary dimensions were identified through analysis of academic and industry literature. Each dimension represents a continuum along which regulations/guidelines can position themselves. Taken together, the 10 dimensions provide a comprehensive description of the chosen boundary concept.Originality/valueThe paper contributes to accounting theory by providing a holistic conceptual framework of dimensions relating to reporting boundaries, thus answering calls for more conceptual development of the boundary construct. The conceptual framework and comparison of contemporary regulations/guidelines adds to scarce literature considering financial and non-financial boundaries simultaneously, which is relevant for annual reports. From a practical perspective, the paper brings renewed visibility to boundaries with implications for preparers, users, standard setters and auditors of annual reports.

The language of profit warnings: a case of denial, defiance, desperation and defeat

PurposeTaking a communication perspective, the paper explores management's rhetoric in profit warnings, whose sole purpose is to disclose unexpected bad news.Design/methodology/approachAdopting a close-reading approach to text analysis, the authors analyse three profit warnings of the now-collapsed Carillion, contrasting the rhetoric with contemporaneous investor conference calls to discuss the profit warnings and board minutes recording boardroom discussions of the case company's precarious financial circumstances. The analysis applies an Aristotelian framework, focussing on logos (appealing to logic and reason), ethos (appealing to authority) and pathos (appealing to emotion) to examine how Carillion's board and management used language to persuade shareholders concerning the company's adverse circumstances.FindingsAs non-routine communications, the language in profit warnings displays and mimics characteristics of routine communications by appealing primarily to logos (logic and reason). The rhetorical profiles of investor conference calls and board meeting minutes differ from profit warnings, suggesting a different version of the story behind the scenes. The authors frame the three profit warnings as representing three stages of communication as follows: denial, defiance and desperation and, for our case company, ultimately, culminating in defeat.Research limitations/implicationsThe research is limited to the study of profit warnings in one case company.Originality/valueThe paper views profit warnings as a communication artefact and examines the rhetoric in these corporate documents to elucidate their key features. The paper provides novel insights into the role of profit warnings as a corporate communication vehicle/genre delivering bad news.

Space for accounting and accountability: realising potential management accounting research contributions to the space sector

PurposeThe contribution of accounting research to the space sector has arguably been less discernible, less visible and less appreciated than that made by STEM disciplines. This paper aims to ascertain the nature and extent to which management accounting can contribute to interdisciplinary advancements of the space sector. This is accomplished by investigating possible contributions realised by management accounting research to the space sector and identifying the opportunities and challenges facing interdisciplinary accounting researchers in making a contribution.Design/methodology/approachThis qualitative empirical study draws on interviews with 25 academic researchers and practitioners from Australia, the USA, the UK, Canada, Europe, India and China, with research or practitioner experience on accounting issues germane to the space sector. The purpose is to seek their perceptions of how interdisciplinary management accounting research can solve contemporaneous problems in the space sector.FindingsThe potential contribution that management accounting research can make in the space sector is grounded in the inherent interdisciplinary of the discipline. The propensity to draw on other disciplines, theories, methodologies and methods is a strength of management accounting, as it is arguably by such interdisciplinarity that “wicked problems’ such as those presented by space exploration, policy and research can be solved.Originality/valueThis is one of the first papers to explore the role and contribution management accounting research can offer to what has traditionally been a STEM-dominated field. In so doing, it underscores the central importance and value-added by an interdisciplinary approach to management accounting research.

Accounting, performance and accountability challenges in hybrid organisations: a value creation perspective

PurposeDrawing upon theoretical insights on value creation perspectives, the authors aim to advance the understanding of performance and accountability in different hybrid organisations.Design/methodology/approachThe authors conceptualise common theoretical origins of hybrid organisations and how they create and enact value, by reflecting on the Accounting, Auditing and Accountability Journal (AAAJ) special issue articles. Furthermore, the authors propose an agenda for future research into accounting, performance and accountability for hybrid organisations.FindingsHybrid organisations can be conceptualised through their approaches to value creation (mixing, compromising and legitimising). This article provides a more detailed understanding of accounting, performance and accountability changes in hybrid organisations.Practical implicationsThis contribution also has relevant practical implications for actors, such as politicians, managers, professionals, auditors, controllers and accountants, encased in various hybrid organisations, policy contexts and multi-faceted interfaces between public, private and civil society.Originality/valueHybridity lenses reveal novel connections between different types of hybrid organisations and how they create and enact multiple values.

Calculative practices, social movements and the rise of collective identity: how #istayathome mobilised a nation

PurposeThe Italian government addressed the first wave of its COVID-19 outbreak with a series of social restrictions and calculative practices, all branded with the slogan #istayathome. The hashtag quickly went viral, becoming both a mandate and a mantra and, as the crisis played out, we witnessed the rise of the Italian social movement #istayathome. This study examines how the government's calculative practices led to #istayathome and the constituents that shaped this social movement.Design/methodology/approachThe authors embrace social movement theory and the collective identity perspective to examine #istayathome as a collective action and social movement. Using passive netnography, text mining and interpretative text analysis enhanced by machine learning, the authors analysed just over 350,000 tweets made during the period March to May 2020, each brandishing the hashtag #istayathome.FindingsThe #istayathome movement gained traction as a response to the Italian government's call for collective action. Thus, people became an active part of mobilising collective responsibility, enhancing the government's plans. A collective identity on the part of the Italian people sustained the mass mobilisation, driven by cohesion, solidarity and a deep cultural trauma from COVID-19's dramatic effects. Popular culture and Italy's long traditions also helped to form the collective identity of #istayathome. This study found that calculative practices acted as a persuasive technology in forming this collective identity and mobilising people's collective action. Numbers stimulated the cognitive, moral and emotional connections of the social ties shaping collective identity and responsibility. Thus, through collective identity, calculative practices indirectly influenced mass social behaviors and the social movement.Originality/valueThis study offers a novel theoretical perspective and empirical knowledge to explain how government power affects people's culture and everyday life. It unveils the sociological drivers that mobilise collective behaviors and enriches the accounting literature on the effects of calculative practices in managing emergencies. The study contributes to theory by providing an understanding of how calculative practices can influence collective behaviors and can be used to construct informal networks that go beyond the government's traditional formalities.

Blockchain technology design in accounting: Game changer to tackle fraud or technological fairy tale?

PurposeThis paper aims to design, build and evaluate a blockchain platform in the accounting domain, taking an ecosystem perspective. To achieve this aim, the research provides evidence for developing a decentralised architecture rooted on blockchain technology, designing a proof of concept and modelling an accounting blockchain-based system.Design/methodology/approachMoving from the analysis of previous literature and leveraging on the design science approach, this paper provides a framework grounded on the main pillars of blockchain and accounting functions, identifying technical and non-technical issues that must be addressed embrace blockchain technology's full potential.FindingsWe propose and discuss a conceptual framework for a blockchain-based accounting context, moving from the identification of a typical accounting scenario. The framework is organised around three scalable levels: the first level is a technological infrastructure based on a distributed database with peer-to-peer storage; second, in the intermediate level, increasing control levels are assured through permissions and validation and third, in the higher level, the system provides the integration of business and security applications. The deployment of this system relies on a private network of nodes that validates transactions.Practical implicationsThe proposed conceptual framework about blockchain development in accounting allows closing the knowledge gap between blockchain developers and accounting experts by suggesting technological and strategic issues for practitioners.Originality/valueWe provide practical guidelines to design and adopt blockchain in the accounting domain.

Call to service: The Register of Australian Accountants for National Service 1940–1944

PurposeThe paper explores the creation in Australia of the Register of Accountants for National Service. Established at the outset of the Second World War, the Register operated for four years from June 1940 providing voluntary, non-remunerated, part-time and after-hours services to a highly stressed and seriously stretched federal government bureaucracy by members of the main Australian professional accounting bodies. Departments of the Navy, Army, Air Force, Supply and Development and Munitions were the largest consumers of the services offered.Design/methodology/approachThe study of the Register relies mainly on an extensive archive of war-time documentation from the Federal Government and various accounting professional institutes which has survived, predominantly in the National Archives of Australia. The resource is particularly rich in material covering the complex negotiation processes that brought the Register into operation together with documentation recording and reporting the work of the Register. The themes of professionalization, institutional legitimacy, volunteerism and patriotism are all invoked to explain the presence of the Register in the machinery of government that was assembled to deliver the ultimately successful war effort. Created by the principal professional accounting institutes, the Register attests to the commitment of their members to the war effort and, thereby, the importance of the profession to Australian society.FindingsThe perilous situation of Australia at a time of war provided a compelling incentive for the accounting profession to organise itself in an efficient and highly effective manner to assist with the war effort. The disparate and somewhat fractured accounting profession at the time was able to work together in a structured, cohesive and disciplined manner to provide voluntary services when called upon. To deliver the voluntary services promised, a purpose-built set of institutional arrangements was put in place. An extensive inventory of the potential services that could be provided by members of the main professional accounting bodies was conducted to facilitate the smooth matching of government needs with services available.Research limitations/implicationsDiscussion focusses only on Australia where the Register was unique. No other examples have been discovered where a profession has self-mobilised to serve a nation in a time of war. A further limitation is that the activities reported are restricted to self-reporting by the Register and a small loose collection of documents prepared by the Department of the Navy.Originality/valueThe uniqueness of the Register is the core of the originality and value of this study. How and why it came into being and the method by which it completed the “task” assigned to it stand as testament to a profession strategically placed to contribute in a substantive manner to the war effort at minimal cost to the nation.

Combining accountability forms: transparency and “intelligent” accountability in a public service organization

PurposeThe paper's purpose is to consider the challenges, a public sector organization faces combining both transparency and “intelligent” forms of accountability (cf. Roberts, 2009).Design/methodology/approachThe authors conducted a case study of StatePol, a police service in an Australian state.FindingsThe data analysis revealed three themes. First, prior to 2013, transparency forms of accountability dominated, emphasizing crime statistics with the effect of reinforcing internal partitions and inhibiting collective action. Second, post-2013, a greater emphasis was placed on “intelligent” accountability with conversations around process and collective accountability at the operational level. Crime statistics were used less for operational-level accountability and more for attention-directing. Third, changing the emphasis from transparency to its combined use with “intelligent” accountability required strong leadership, clearly communicated strategy and middle-level managers with appropriate skills.Originality/valueThe authors identify a number of important factors in combining transparency and “intelligent” forms of accountability. The authors note the difficulties that fragmentation between forms of accountability and the somewhat amorphous nature of the accountability concept itself can cause. In doing so, the authors provide empirical evidence of the challenges changing from an emphasis on transparency, to combined use with an “intelligent” form of accountability.