Making Accounting Accountable in The Public Sector: Garry D. Carnegie, Brian P. West

Critical Perspectives on Accounting 16 (2005) 905–928
Making accounting accountable in the

public sector
Garry D. Carnegie a,∗ , Brian P. West b
a School of Enterprise, Melbourne University Private, Hawthorn, 3122, Australia
b School of Business, University of Ballarat, Ballarat, Australia
Received 20 October 2002; received in revised form 12 January 2004; accepted 15 January 2004
Abstract
Accounting is conventionally constituted and practised as a quantitative discipline which em-

phasises the use of money values. Where such values are unavailable or inappropriate, non-money
quantifications or qualitative forms of information take precedence. However, the boundaries of con-
ventional accounting remain imprecisely defined and this creates a jurisdictional tension between
monetary and non-monetary systems of accountability. This issue is examined within the context of
the Australian and New Zealand public sectors, where recent regulatory changes have mandated the
valuation for financial reporting purposes of a broad range of government controlled resources that
are of a non-financial character. Rationales for this expanded use of money values are re-evaluated
within the context of practical and theoretical issues associated with their application, particularly with
regard to the accountability of public sector institutions. This accountability theme is then extended
in terms of the need to make accounting itself more accountable within the public sector.
© 2004 Elsevier Ltd. All rights reserved.
Keywords: Public sector accounting; Money values; Accountability
Bourgeois society is infected by monomania: the monomania of accounting. For it,

the only thing that has value is what can be counted in francs and centimes.
–(Simone Weil, La Condition Ouvriere, 1951)
∗ Corresponding author. Tel.: +61-3-9810 3102; fax: +61-3-9810 3149.

E-mail address: g.carnegie@muprivate.edu.au (G.D. Carnegie).
1045-2354/$ – see front matter © 2004 Elsevier Ltd. All rights reserved.
doi:10.1016/j.cpa.2004.01.002
906 G.D. Carnegie, B.P. West / Critical Perspectives on Accounting 16 (2005) 905–928
1. Introduction
In his book The Measure of Reality (1997), Alfred Crosby charts the epochal shift in
Western society that was driven by the development of advanced methods of quantification
between the 13th and 16th centuries:
During the late Middle Ages and Renaissance a new model of reality emerged in
Europe. A quantitative model was just beginning to displace the ancient qualitative
model. Copernicus and Galileo, the artisans who taught themselves to make one good
cannon after another, the cartographers who mapped the coasts of newly contacted
lands, the bureaucrats and entrepreneurs who managed the new empires and East and
West India companies, the bankers who marshalled and controlled the streams of
new wealth—these people were thinking of reality in quantitative terms with greater
consistency than any other members of their species.
–(Crosby, 1997, p. xi)
As this paragraph suggests, bookkeeping and accounting were an integral part of this
“new model of reality”. Indeed, Crosby makes the bold claim that “In the past seven centuries
bookkeeping has done more to shape the perceptions of more bright minds than any single
innovation in philosophy or science” (1997, p. 221).
While the development of advanced systems of quantification brought many benefits,
measurers in the late Middle Ages were sometimes confused and overzealous in applying
their newly discovered techniques: “when in the fourteenth century the scholars of Oxford’s
Merton College began to think about the benefits of measuring not only size, but also
quantities as slippery as motion, light, heat and colour, they forged right on, jumped the
fence, and talked about quantifying certitude, virtue and grace” (Crosby, 1997, p. 14). Such
misplaced endeavour may seem quaint today, but the basic problem of deciding what can
and should be quantified persists. The quantification revolution in Western society provided
an alternative to previous ways of understanding, but it would only be superior within certain
contexts:
Today we utilize numbers when we want narrow focus on a given subject and max-
imum precision in our deliberations. The old Europeans preferred broad focus and
settled for imprecision in the hope of including as much as possible of what might be
important.
–(Crosby, 1997, p. 46)
While the language of number has achieved unrivalled prominence in science (McLeish,
1991), in other domains numerical representations are sometimes impractical or inappro-
priate. Money values, for example, are ascribed routinely to items, such as motor vehicles,
plant and equipment, land and buildings, but can rarely be assigned on a reliable basis in
connection with more amorphous concepts, such as a happy family life, good health, or
a clean natural environment. Between such obvious extremes lies a territory in which the
choice between quantitative and qualitative means of expression—and the circumstances in
which both might be applied—is sometimes contested (see, e.g. Burritt et al., 1996; Carman,
1996; Carman et al., 1999; Churchman, 1971). This is a fundamental issue in accounting,
G.D. Carnegie, B.P. West / Critical Perspectives on Accounting 16 (2005) 905–928 907
which has been defined traditionally in terms of its primary emphasis on monetary quan-
tification: “the specific subject matter dealt with in accounting is money-price” (Littleton,
1953, p. 9). Although in recent years calls have been made for financial reports to embrace a
wider spectrum of information—such as social and environmental impacts (Deegan, 1998;
Gray, 2002; Gray et al., 1996; Lehman, 1999; Parker et al., 1989)—money remains “the
universal substance of accounting” (Porter, 1996, p. 37).
The creation and navigation of this boundary between the monetary and non-monetary,
and between accounting and other disciplines, such as law (Bromwich, 1992), environmen-
tal science (Power, 1991, 1997a) and engineering (Miller, 1998), may have implications that
go far beyond accounting’s traditional technical issue of determining the form and content
of financial reports. As many accounting researchers have now recognised, there is much
more to accounting than is suggested by its traditional dour, neutral and functionalist image
(Burchell et al., 1980; Carnegie and Napier, 1996; Carruthers, 1995; Colwyn Jones and
Dugdale, 2001; McSweeney, 1997; Miller, 1994; Miller and O’Leary, 1987; Morgan, 1988)
and this re-understanding has been extended to include accounting within the public sector
(Broadbent and Guthrie, 1992; Guthrie, 1998; Laughlin and Broadbent, 1993; Lawrence,
1999). Although portrayed as being essentially descriptive, financial reports are subjectively
constituted and interpreted (McSweeney, 1997; Morgan, 1988). The information they con-
tain is used both to influence and rationalise human actions and, in turn, reflects the results
of such actions (Hines, 1988). As a consequence, the imposition or selection of systems of
monetary valuation has the capacity to re-categorise particular domains as “financial” and
precipitate a re-understanding of what is being accounted for: “To quantify qualities is to
abstract away much of their conventional meaning” (Porter, 1996, p. 44). It may also lead
to a re-casting of the status of occupations operating within those domains.
The accounting profession enjoys substantial authority in identifying, valuing and record-
ing events and circumstances in money terms (Montagna, 1986; West, 1998, 2003, chapter
3), and in legitimating such representations through the audit function (Pentland, 2000;
Power, 1995, 1996, 1997b). Moreover, as an elite occupational group the accounting pro-
fession enjoys a privileged capacity to impose the very systems of monetary valuation that
command its expertise, extend its authority and enhance its status (Booth and Cocks, 1990).
In this way accounting needs to be understood not as a neutral—if not benign—technical
means of promoting accountability, but as a sociological and institutional practice which
itself needs to be made accountable through those who endorse and practise it (see, e.g.
Hopwood and Miller, 1994).
Recent developments in Australian and New Zealand public sector financial reporting
have precipitated a significant increase in the assignment of money values to commu-
nity and other resources which were previously accounted for by primarily non-financial
means, both quantitative and qualitative.1 Miller (1998, p. 174) has noted that “[a]ccounting
is most interesting at its margins”, and these changes to public sector accounting pro-
vide an opportunity to examine the practice and consequences of the incremental applica-
1 This is not intended to imply the adequacy of such accountings. On the contrary, the need to review and, where
appropriate, reform accounting within the public sector has been widely acknowledged (see, e.g. Greenall et al.,
1988; Micallef et al., 1994; Sutcliffe et al., 1991). The matter in contention in this article concerns the directions
in which such reforms have proceeded.
tion of conventional accounting technique. Illustrations of the expanded—although often

problematic—assignment of money values to public resources for financial reporting pur-
poses are provided in the following section. Two main themes are then developed from
this exposition. First, consideration is given to the implications of these changes for the
accountability evaluations and other decision making processes of the users of public sec-
tor financial reports. Second, the accountability theme is enlarged in terms of assessing the
accountability of the accounting profession itself for the practices of monetary valuation
that it has designed, endorsed and applied in connection with public sector institutions.
Conclusions on these matters are provided in the final section.
2. Accounting and monetary valuation in the public sector
Since the mid 1980s, accounting and government policy-makers in a variety of jurisdic-
tions, including the UK and throughout continental Europe, have advocated and overseen the
adoption of accrual accounting systems for public sector financial reporting, with Australia
and New Zealand described as the “leading proponents” of such developments (Guthrie,
1998, p. 1; see also Boston et al., 1996; Guthrie et al., 1997; Pallot, 2003). It has been
contended within the pronouncements of standard setting bodies (see, e.g. the Public Sector
Accounting Standards Board (PSASB, 1996a, 1996b); the Australian Accounting Standards
Board (AASB, 2002) and PSASB and AASB (1999); PSASB and the Accounting Standards
Review Board (ASRB, 1990a)) that such systems enable the accountability of public sec-
tor organisations and their managers to be enhanced. Commonly known as “commercial
accounting”, full accrual accounting systems—with their traditional emphasis on match-
ing costs and revenues in pursuit of accurate determinations of periodic profit—evolved to
align with the profit-seeking orientation of business enterprises. As described by Paton and
Littleton (1940, p. 16):
Accounting exists primarily as a means of calculating a residuum, a balance, the
difference between costs (as efforts) and revenues (as accomplishments) for individ-
ual enterprises. This difference reflects managerial effectiveness and is of particular
significance to those who furnish the capital and take the ultimate responsibility.
The statement of financial position (balance sheet) is rendered subordinate to the calcu-
lation of this “residuum”:
The factors acquired for production which have not yet reached the point in the busi-
ness process where they may be appropriately treated as “cost of sales” or “expense”
are called “assets”, and are presented as such in the balance sheet. It should not be
overlooked, however, that these “assets” are in fact “revenue charges in suspense”
awaiting some future matching with revenue as costs or expenses.
–(Paton and Littleton, 1940, p. 25)
In spite of these origins and intents, full accrual accounting systems are now being
applied to a range of public sector institutions that have no profit making nor financial
wealth maximisation objective. Rather than subsisting in the generation of revenues, the
“accomplishment” of these organisations typically abides in the provision of services that are
valued for their social and educative contributions.2 In many instances, such as for museums
where admission is free or by a token charge, no substantive attempt is made to generate
revenues from the services provided. Even more peculiarly, far from being “revenue charges
in suspense”, the social resources controlled by these organisations—including cultural,
heritage and scientific collections (hereafter collections)—are very often to be held and
preserved indefinitely, in a custodial capacity, for current and future generations.3 With
particular reference to archaeology, Carman (1995, p. 23) explains the distinctive nature of
this responsibility:
the archaeological heritage can be seen to exist in the public domain, the realm of the
group rather than the individual, endowed with an “otherworldly morality”. The idea
of the “otherworldly” expresses the aura of the public domain quite nicely: it is not
of the everyday in which things are used up, discarded, bought, sold or just ignored.
The public domain is a special place—above and beyond the reach of the individual
and yet something in which the individual has a legitimate interest and rights.
Collections of this genre are integral to the public programs operated by museums and
libraries, but the pecuniary and calculative training of accountants typically does not extend
to endowing an appreciation of these non-financial resources nor promoting accountability
for them. Accordingly, the rich cultural, heritage, scientific, educative and other values of
collections are at risk of being misunderstood and misrepresented when they are accounted
for by a profession that is inculcated to understand and prioritise objects and experiences
in primarily financial terms. To treat public collections as financial assets is a commercial
fiction—and an “intellectual vulgarism” (Adam, 1937, p. 2; Carnegie and Wolnizer, 1995,
pp. 38–42, 1999, pp. 17–18; see also Barton, 2000; Burritt et al., 1996; Mautz, 1988; Pallot,
1990). Nevertheless, how they have been reassigned such an identity will now be outlined.
The quantification of social and other non-financial benefits—such as those manifest
in public collections—for financial reporting purposes has created a nascent occupational
category which the accounting profession is claiming as its own. Behind this claim lies the
conventional accounting definition that assets are “future economic benefits controlled by
the entity as a result of past transactions or other past events” (PSASB and AASB, 1995,
paragraph 14). Assets are typically associated with expected future net cash inflows, as
typified and illustrated by the Financial Accounting Standards Board’s (FASB) statement
2 The National Gallery of Australia (NGA) provides a compelling illustration of this commitment to the pursuit
of non-financial objectives. Under recently introduced legislation the NGA has been given authority to “give
saleable art it no longer wants or needs to other galleries”, and has proceeded to make arrangements to do so (Safe,
2003). While the organisation also has authority to sell works, it is reluctant to do so on the grounds that “they
are often snapped up at auction by private collectors and disappear from the public eye” (Safe, 2003). The giving
away of artworks to other public galleries was rationalised by the deputy director of the NGA on the grounds that
it means “[t]he works can be better seen by the public, which is a better outcome for everyone” (cited in Safe,
2003). In a similar vein, governing bodies of some Australian museums and similar institutions have sometimes
elected to return collections of indigenous artefacts and human remains to their traditional custodians (see, e.g.
Buckell, 2003a, 2003b). Needless to say, assigning money values to human remains that are held in collections
would represent a particularly problematic and morally dubious accounting practice.
3 Excluded from consideration here are those items which may from time to time be “de-accessioned” from
collections and made available for sale or transfer on financial terms.

that an asset “embodies a probable future economic benefit that involves a capacity . . . to
contribute directly or indirectly to future net cash inflows” (FASB, 1985, paragraph 26,
emphasis added).
Collections, along with other non-financial resources, such as national parks, botani-
cal gardens, war memorials and plantations of trees along roadways, generally do not of
themselves—through day-to-day operations nor commercial exchange—generate future net
cash inflows to the entities that have custody of them for present and future generations.
Even where some cash inflows can be attributed to such resources, unless these exceed the
cash outflows associated with holding and maintenance costs, then the case for recognis-
ing such resources as assets in financial terms would seem to be spurious. Nevertheless,
accounting policy-makers have asserted that collections and other like resources held by
not-for-profit organisations “benefit the entities by enabling them to meet their objectives
of providing needed service to beneficiaries” (PSASB and AASB, 1995, paragraph 21).
Public museums and libraries do indeed strive to provide social, cultural and educative
services to the community in accordance with the representations of their mission/objective
statements.4 But to contend that this necessitates that their collections be assigned money
values and reported in statements of financial position is a startling conceptual leap that
leaves behind the key notion that such statements are expressly and exclusively of a ﬁnan-
cial character. However, such is the rationale that is used to transform the social and other
non-financial benefits of public collections into assets for financial reporting purposes in
non-commercial, social contexts.
The consequences of this weak definitional basis for the monetary valuation of collec-
tions are often compounded by difficulties, sometimes of a particularly perplexing nature,
in assigning money values to collection items and determining appropriate depreciation
policies.5 There are frequently no markets for these items as their unique character often
means that they do not belong to any generic category of commodities necessary for a
market to be constituted: “like all museum artefacts, each one has an immensely personal
story” (Heinrich, 2002, p. 1; see also Carman et al., 1999). Such “stories” contribute sub-
stantially to the uniqueness of particular artefacts and their non-financial values, and may
also precipitate legal measures designed to protect such items in a special domain beyond
the economics of the marketplace. In other instances, only thin and sporadic markets for col-
lection items exist. Money values assigned to collections and other non-financial resources
are therefore typically arbitrary and unreliable (Carnegie and Wolnizer, 1995, pp. 43–44;
Jaenicke and Glazer, 1991, p. 9).
The following cases drawn from the Australian and New Zealand public sectors seek to
highlight this arbitrariness and lack of reliability. They are a small but illustrative sample
of the many dilemmas confronted by public sector managers in attempting to represent
4 As pointed out by Jaenicke and Glazer (1991, p. 77), the primary function of repositories of collections is “to
be” and “to hold”.

5 The Federal Government of Australia appears to have acknowledged implicitly this difficulty. While accepting
that the depreciation of buildings and equipment may provide a basis for budget allocations to public institutions,
the depreciation of collections is to be expressly excluded: “the Government believes it is unrealistic for the
institutions to receive money for collections they are unlikely ever to attempt to sell, or for collections that are
more likely to appreciate in value” (Crabb, 2003).
non-financial resources in financial terms, and the unintended consequences which may
result from such practice.
2.1. Australian Museum and Museum Victoria
The collections of Museum Victoria (MV) based in Melbourne and the Australian Mu-
seum (AM) based in Sydney are broadly similar in composition and size, and the financial
reports of both institutions are subject to the same national accounting standard (AAS 29
“Financial Reporting by Government Departments”). The statements of financial position
of MV reported collections as non-current assets at $218 million and $227 million at 30
June 2001 and 2002, respectively (MV, 2001, 2002). In stark contrast, at the time of writing
the AM has yet to recognise its collections as an asset in its statement of financial position.
The organisation’s 2001 annual report disclosed in a note that it collection had been valued
at $4083 million, but added that “the [collection] valuation exercise . . . was not considered
to be reliable” (AM, 2001).
In its 2002 annual report, the AM again declined to recognise its collection as an
asset, although noting that “[e]fforts to refine the valuation to achieve a more reliable
value for collection assets continued during the year” (AM, 2002). Unlike the previous
year’s report no collection value was mentioned, although it was revealed that “[i]t is ex-
pected that . . . the value of the collection will be significantly less than values that were
mentioned in previous annual reports” (AM, 2002). The AM has disclosed that its non-
recognition of its collections complies with a direction of the New South Wales Treasury
(AM, 2002). However, the Auditor-General of that state has issued qualified audit opin-
ions on the basis of a departure from AAS 29 (AM, 2001, 2002). In contrast, the audit
opinions issued by the Auditor-General of Victoria in connection with MV have been
unqualified.
This demonstrated inability of like institutions to apply consistently a common account-
ing standard highlights the perplexing nature of the standard’s prescriptions.6 Moreover,
while MV recognised its collection at $218 million for financial reporting purposes at
30 June 2001—and had this ratified by the Auditor-General of Victoria—the director of
MV was reported in a Melbourne daily newspaper the previous year as stating that “the
collection of 16 million artefacts was worth ‘several billion dollars’ ” (Ketchell, 2000,
p. 9, emphasis added). These extraordinary variations in purported money values highlight
the reliable measurement dilemmas and arbitrary outcomes of valuing such collections in
money terms—a situation that has been recognised by commentators from outside of the
accounting profession, where the process has been described as a “bizarre campaign to put
a price on the incalculable, the irreplaceable and the unsellable” (Byrne, 2002, p. 18; see
also, Griffin, 1995; Maslen, 1994, 1997).
6 Paradoxically, the conceptual framework that has been offered as providing the rationale for the recognition
of collections as assets (see, e.g. Micallef and Peirson, 1997) also nominates “comparability” as a key qualitative
characteristic of financial reports: “The users of general purpose financial reports need to be able to compare
aspects of an entity at one time and over time, and between entities at one time and over time” (PSASB and ASRB,
1990b, paragraph 31).
2.2. Library Council of New South Wales
The Library Council of New South Wales (LCNSW) valued its collection for financial
reporting purposes for the first time in 1999. The collection was valued at $2084 million,
even though some parts of the collection were not valued because “the library is not able to
measure reliably the value of the assets” (LCNSW, 1999). However, a note to the financial
statements acknowledged that the valuation was “considered to be on the conservative side
as this was the first time that the Collection has been valued” (LCNSW, 1999). This doubt,
while understandable in the circumstances, did not discourage the demonstration of apparent
pride that seems evident in the following claim recorded in the notes to the organisation’s
financial statements: “This valuation confirms that the State Library’s Collection is the most
valuable in Australia” (LCNSW, 1999, emphasis added).
The magnitude of the ﬁnancial valuation attributed to this collection was thus applied to
claim status as Australia’s “most valuable” library collection per se. It is a distorted and ill-
conceived claim given that the essential “value” of a library collection resides in its capacity
to meet the needs and interests of its users and serve as a repository for documents and
other artefacts of historical significance and cultural value.7 Furthermore, it is a compelling
instance of how a financial value—albeit an incomplete and arbitrary one—may potentially
serve to displace notions of non-financial value having greater relevance within the specific
contexts of public sector organisations and the parties to which they are responsible.
2.3. National Library of New Zealand
In compliance with comprehensive accrual accounting being mandated throughout the

New Zealand public sector, the collection of the National Library of New Zealand (NLNZ)
was valued for financial reporting purposes. An apparently unforeseen economic conse-
quence of this action became apparent when the New Zealand government levied a capital
charge on the reported assets of government departments. This would have had profound im-
plications for the NLNZ, precipitating a redirection of resources away from the institution’s
primary function of fostering the educational and intellectual well-being of its community
and acting as a repository for historical manuscripts and other artefacts.
Amid protests over the capital charge imposition and its likely effects, the “Heritage
Collections” of the NLNZ, valued at $522 million as at 30 June 1994, “were transferred to
the Crown on 1 July 1994 at book value” (NLNZ, 1995). This transfer ensured that the library
did not pay a capital charge based on the $522 million valuation. A contrived and convenient
solution was thereby reached by an accounting book entry. However, this carried with it an
implicit admission that the conceptual basis for the valuation was fundamentally flawed;
that the library collection was not a financial asset of the institution that had custody of it
and which was accountable for its maintenance and use. The transfer of heritage collections
from the books of the NLNZ to the books of the Crown thereby highlights the problematic
nature of control over such resources. While definitions of assets require “control” by
7 Difficulties associated with assigning money values to library collections, and in formulating appropriate de-
preciation policies, are made evident by the extraordinarily diverse accounting policies adopted for these resources
by Australian public universities (Carnegie and West, 2003).
the reporting entity (e.g. PSASB and AASB, 1995, paragraph 14), the circumstances of
the NLNZ highlight a tendency within the public sector for such control to subsist only
with government generally rather than with particular public sector institutions (see also
Carnegie and Wolnizer, 1999, p. 18). This, again, draws attention to the custodianship
function—rather than unrestricted control of resources—which characterises many public
sector institutions and the responsibilities of their managers.
Also, evident in the case of the NLNZ is a contradiction of the subsequently issued
Valuation Guidance for Cultural and Heritage Assets prepared by the New Zealand Treasury
(2002). This document asserts that the “[f]inancial reporting of cultural and heritage assets
is useful” in promoting the accountability of public sector managers, contending that the
financial reporting of such assets will serve “to provide information by which the Chief
Executive Officer and governing body can be held responsible for their stewardship of
public assets and to measure changes in the net worth of public sector entities over time”
(New Zealand Treasury, 2002, p. 5). This presumed nexus between the “net worth” of public
sector entities and the accountability of their managers is not subject to further explication.
It is a presumption not accepted within institutions having custody of public collections,
and shown to be wholly spurious in the case of the NLNZ given the apparent divergence
between “custodianship” for management purposes and “control” for financial reporting
purposes of this organisation’s library holdings.
2.4. Museum of New Zealand and the City of Ballarat
Specific artefacts within collections are often unique and irreplaceable, particularly when
their significance derives from historical events and cultural settings. The Museum of New
Zealand (MNZ) was faced with the prospect of valuing explorer Captain James Cook’s
Hawaiian cloak and the skeleton of Phar Lap, the famous race horse of the early 1930s. These
unique and irreplaceable artefacts were valued at $3 million and $1 million, respectively
(Watt, 1995, pp. 40 and 44). Captain Cook’s cloak was valued at what was claimed to be an
“international market value”, while the valuation of Phar Lap’s skeleton was based on a long
dated offer from an Australian museum, which holds the thoroughbred’s hide, to purchase
the skeleton in order “to see the racer ‘completed’ ” (Watt, 1995, p. ii). Such reference
points for assigning money values are often spurious or at least questionable, on account of
the unique character of the artefacts involved and the absence of recent and relevant actual
transaction values.
A related example concerns the City of Ballarat, which valued the “Eureka Flag”—the
symbol of an 1850s uprising by gold-miners that has acquired iconic status within
Australia—at $10 million. It was claimed that this valuation gained credibility because
“another great Australian icon”, the mounted hide of Phar Lap, had also been valued at $10
million (Danaher, 2000). The Mayor of the City of Ballarat, however, acknowledged that
“the true value of the flag could never be recorded in dollars” and that it was “priceless”
(Danaher, 2000). In spite of the $10 million valuation the Eureka Flag was not recognised
as an asset in the statement of financial position of the City as at 30 June 2000. This was
justified in the notes to the financial statements on the grounds that “uncertainty exists to
the appropriateness of its carrying value” on account of “the unique nature of this asset and
the absence of a market value” (City of Ballarat, 2000).
2.5. City of Warrnambool
In its 1993–1994 annual report, the City of Warrnambool valued the 1000 Norfolk Island
trees which line the roadways of this Australian coastal city at $6 million, or $6000 each.
This arbitrary financial valuation of “Norfolk Pines” was not recorded as an asset in the city’s
statement of financial position but was shown in the “asset value summary” of the annual
report (Connelly, 1995, p. 3; Thomson, 1995, p. 1). A formula to assess the money value of
the trees had been devised by horticulturists. When a fire subsequently destroyed four of the
trees, it was claimed in local newspaper reports that this had resulted in $24,000 damage.
However, the loss was not of a money kind as the trees are non-financial resources providing
lifestyle, sentimental and emotional benefits to Warrnambool residents and visitors (Black,
2002). As Hines (1991) has argued, attempts to value “nature” in money terms are not only
unreliable but may also have the effect of misrepresenting and devaluing natural resources.
According to its proponents, expanding the domain of conventional accounting to em-
brace the monetary valuation of non-financial resources of the genre illustrated will aid in
assessing the financial position and performance of public sector organisations and enhance
the accountability of their managers (Hone, 1997; Micallef and Peirson, 1997; Rowles,
2002). As is the case in other domains, managers of public sector institutions should reason-
ably be held accountable for operations within their jurisdiction. They should, for example,
be held accountable for conserving and protecting the non-financial resources held in the
collections of not-for-profit institutions (Carnegie and Wolnizer, 1995, p. 44, 1996, p. 90).
But being preoccupied with the financial value of non-financial resources is a distracting
and paradoxical pursuit. The managers of not-for-profit organisations, such as museums
and libraries, “have neither the responsibility to maximise the financial value of collections
or return on investment, nor the liberty to trade freely or commercially under the statues
which govern the operations of their organisations as would be required to discharge such
responsibilities” (Carnegie and Wolnizer, 1999, p. 18). Rather, the non-financial resources
of such organisations, often having been removed by legal means from the economics of the
marketplace (Carman, 1996), are most typically to be conserved and preserved for current
and future generations in accordance with mission statements that emphasise their social,
cultural and educative roles. Put bluntly, the financial valuation of non-financial resources
constitutes an “accounting fiction” (Carnegie and Wolnizer, 1995) as well as an account-
ability mirage.
3. Accountability in the public sector
The case illustrations provided in the previous section highlight the expansion of the
process of assigning money values to collections and other non-financial public sector
resources, and the often arbitrary and futile nature of such endeavour. Attention is now
directed to evaluating the implications of these extended regimens of monetary valua-
tion for promoting accountability within the public sector. More specifically, the possi-
ble impacts of the coerced and contrived metamorphosis of the “non-financial” into the
“financial” is considered in terms of its impact on various and diverse accountability
discourses.
Characterisations and evaluations of accounting as a language constitute a well-

established theme in the accounting literature. Routinely described as “the language of
business”, accounting is represented functionally to be an essentially communicative dis-
cipline (American Accounting Association, 1966; Bedford and Baladouni, 1962; Lavoie,
1987; Riahi-Belkoui, 1995). Additionally, one of the primary functions of communicating
accounting information is to enable appropriate accountability evaluations. For example, an
Australian Statement of Accounting Concepts (SAC2) prescribes that “[m]anagements and
governing bodies shall present general purpose financial reports in a manner which assists
in discharging their accountability” (PSASB and ASRB, 1990a, paragraph 44). The same
statement defines “accountability” as “the responsibility to provide information to enable
users to make informed judgements about the performance, financial position, financing and
investing, and compliance of the reporting entity” (PSASB and ASRB, 1990a, paragraph 5).
Conventional accounting, as practised for private sector organisations that have a private
profit making intent, understandably and necessarily focuses on quantitative and monetary
representations—financial data—as the means of promoting accountability. This is so
because the purpose and success of such organisations are inextricably bound to financial
outcomes. The shareholders of public companies, for example, are generally assumed to be
motivated by wealth maximising strategies which cause them to focus on expressly financial
variables, such as reported profits, dividend paying capacity and solvency. Consistent with
this circumstance, it is common for private sector business organisations to express their
organisational objective in terms of maximising shareholder wealth. Financial data are
necessarily the primary medium for revealing the extent of progress in achieving such an
objective.
This conventional model of accountability for profit-seeking business organisations has
drawn criticism for being too narrowly focussed (Deegan, 1998; Gray, 2002; Gray et al.,
1996; Lehman, 1999; Parker et al., 1989). It is contended that investors and other financial
statement users are now increasingly concerned with a broader range of (non-financial)
information. Accordingly, there have been calls for a move to “triple bottom line reporting”
which encompasses social and environmental indicators in addition to traditional financial
disclosures (Elkington, 1997; Gray et al., 1996; Mathews, 1993).
If the traditional emphasis on financial information is being found wanting in discharg-
ing accountability obligations within the business sector, such an emphasis is even more
problematic within the public sector domain of institutions, such as museums, libraries and
other not-for-profit entities, whose objectives and reasons for being are not solely, nor even
principally, of a financial character. Public libraries and museums, for example, are typically
charged with responsibility for accumulating and holding resources in the public interest
for current and future generations. Paradoxically, while there are calls for accountability
within the private sector to be expanded to embrace non-financial factors, accountability
within public sector not-for-profit entities is being coerced by accounting standards into a
narrower financial focus.
Clearly, there is a financial aspect to achieving appropriate mechanisms of accountability
within public sector institutions. This relates, for example, to ensuring that public moneys
are expended appropriately and properly accounted for. However, most public sector
institutions—including museums, libraries, universities, hospitals and art galleries—are
established to provide services to the public. The effective financial management of such
entities within their prevailing organisational contexts is not for the purpose of delivering
purely financial returns and outcomes, but to enable them to pursue their social objectives
with greater effectiveness and efficiency. A hospital that is well managed in financial terms
cannot be presumed to be meeting a community’s needs for health care. Likewise, the
standing of a university will derive from the quality of its education and research programs
rather than be gleaned from results or trends revealed by its statements of financial position
and performance.
Changes in public sector accounting have been claimed to be motivated by a need to
promote enhanced accountability within the sector. In pursuit of this goal regulators have
been drawn to adopt the financially based model that has evolved in connection with pri-
vate sector business organisations. In Australia, for example, three accounting standards
designed expressly for application in the public sector have been promulgated: AAS 27
“Financial Reporting by Local Governments”, AAS 29 “Financial Reporting by Govern-
ment Departments” and AAS 31 “Financial Reporting by Governments”. These standards
prescribe the preparation of general purpose financial reports on a full-accrual accounting
basis in the same style as those prepared for private sector business organisations. Yet, there
is no requirement for the disclosure of other accountability measures, such as performance
indicators. The reporting of such indicators is simply “encouraged” under each of AAS 27
(paragraph 99), AAS 29 (paragraph 12.10.1) and AAS 31 (paragraph 16.1.1).
As Walker (2002, p. 43) has observed with regard to the Australian public sector, “[u]nless
financial information is related to some measure of the quantum or quality of services
actually delivered by governments, financial data are largely irrelevant”. It is this condition
of irrelevance that is now evident in Australian public sector reporting—not just in spite of
the promulgation of public sector accounting standards but because of those standards. The
almost exclusively financial focus of the standards has promoted an incongruous notion
of accountability for the entities to which they are applied, under which taxpayers and
other interested parties have access to detailed financial information regarding public sector
entities but only fragmented and voluntary disclosures regarding the services demanded of,
and provided by, these entities. Parker (1996, p. 5) notes:
We have witnessed an ongoing rush to incorporate the supposedly more sophisticated

and developed private-sector accounting methodologies into public-sector accounting
practice with hardly a pause to consider the significant differences in structures,
objectives and social requirements of public-sector organisations.
This “one size fits all” approach has failed to recognise that financial data are often not
the primary medium for facilitating accountability evaluations within the complex setting
of the public sector (Robinson, 2003; Sinclair, 1995). The consequences of this neglect
are evident in Walker’s (2002) survey which reveals that the disclosure of performance
indicators within the Australian public sector is characterised by opportunism (favouring
“good news” indicators), inconsistencies between entities and within single entities over
time, and a general adhockery. As a consequence the discourse of accountability within the
public sector remains unfortunately lopsided and incomplete:
The accounting profession has overstated its claims that sets of financial statements
unaccompanied by performance indicators will meet the information needs of external
stakeholders. They will not without accompanying information about what those
agencies have actually delivered in the way of services to the community.
–(Walker, 2002, p. 53)
While this criticism has general relevance, it is with regard to collections and other like
items that it has most direct application. Here, the accounting profession has shown itself to
be blinkered by a traditional, even if well intended, monetary fixation that obscures its own
accountability. As discussed above and elsewhere, collections are not financial resources but
social resources. Attempts to place money values on them are prone to error and subjectivity.
Even more importantly, such valuations will usually make no meaningful contribution to
revealing the accountability of their custodians, nor any other aspect of organisational or
managerial performance.
The key issues with regard to providing evidence of appropriate stewardship over non-
financial resources, including museum and library collections, war memorials, and parks
and gardens, pertain to factors, such as their physical condition, security, arrangements for
public access and use, and indictors of their usage and the quality of the visitor experience.
Qualitative information (such as a report on storage conditions within a museum) and
quantitative data (such as the extent of public usage) can enable assessments of such variables
(for discussions of the distinctive nature of accountability and management issues arising
within public museums, arts institutions and other similar entities see Abraham et al.,
1999; Carnegie and Wolnizer, 1996; Zan, 1998, 2000a, 2000b, 2002; Zan et al., 2000). The
assigning of dollar values to non-financial resources, however, is a misplaced endeavour as
it invokes an irrelevant and inappropriate language of accountability. A periodic increase
or decrease in the arbitrary reported dollar value of a museum collection, for example,
will typically reveal nothing of relevance to the purposes for which it is held—being, in
summary, to maximise a community’s social and intellectual capital. On the contrary, an
inadequately stored and curated collection may well be reported at an increasing dollar value,
particularly where that value is imputed or otherwise calculated based on assumptions, such
as the application of a price index. Given the lack of reliable evidence pertaining to such
calculations, and the complexity and vastness of many collections, the ability of auditors
either to authenticate or challenge assigned money values in such circumstances may be
limited.
Attempts to express the non-financial in financial terms represent a misplaced and
overzealous endeavour to translate the benefits that processes of monetary quantification
have yielded in connection with private sector business organisations—which hold financial
resources and have financial objectives—into another, quite distinct, domain. Above all, it
fails to recognise that the usefulness of monetary quantification is not universal but confined
to certain contexts. The determination of those contexts must derive from the demonstrable
relevance, availability and fitness for purpose of money values; not from a mere presumption
of transferability from other settings (Barton, 1999b, 2002).
The dysfunctional consequences of failing to delineate in purposive terms the bound-
aries of monetary quantification involve more than the often very significant effort and costs
expended in attempting to value and audit non-financial resources in financial terms. First,
there is distraction from the need to promote a more diverse discourse of accountability
within the public sector; one which encompasses qualitative information and non-monetary
data (Carnegie and Wolnizer, 1996). Second, it may foster a misunderstanding of the pur-
pose and nature of certain public sector resources. Valuing a war shrine or memorial in
dollar terms, as required under Australian and New Zealand accounting standards, not only
fails to promote the accountability of its custodians but threatens to misrepresent—if not po-
tentially desecrate—the purpose for which such monuments are established and maintained
(see Inglis, 1998). Third, the usefulness of the financial reports of public sector institutions
in general may be diminished as they are distorted by the inclusion of non-financial re-
sources expressed in a financial form, particularly within non-commercial contexts. Fourth,
the accounting profession risks exposing itself as an occupational group which evidently
fails to appreciate, respect or understand the functions and purposes of public organisa-
tions concerned with enhancing social and intellectual capital. Fifth, as argued below, such
behaviour leads to concerns about the accountability of the profession itself.
These issues present a challenge to those who have presumed that the suitable model
for promoting accountability within the public sector is simply a replication of that which
is used within the private sector. Indeed, they indicate a need to investigate and evaluate
the accountability of accounting itself. This is especially so given the apparent reluctance
of the accounting profession in various parts of the world to evaluate the impacts of the
reforms based on full accrual accounting systems that it has promoted within the public
sector.
4. The accountability of accounting
As mentioned previously, the accounting standards that drove the implementation of

accrual accounting within the Australian public sector are AAS 27, AAS 29 and AAS 31.8
AAS 27 and AAS 29 were both prepared by the PSASB which was established within the
profession-sponsored Australian Accounting Research Foundation (AARF).9 In the case of
AAS 31 the only variation from these arrangements was that the AASB also contributed to
the preparation of the standard.
As Corbett (1996, p. 138) observes, the self-interest of the accounting profession was an
important influence on the standard setting agenda:
there is a large measure of self-serving self-interest in what the accounting profession’s
senior bodies are trying to do. If they can impose a common set of standards on the
public sector, their members, whose experience is mainly in the private sector, will
suddenly become experts in what public sector accounts should contain and will thus
become eligible to serve as consultant experts and contract auditors.
These private interests were masked by the familiar claim of a “due process” operating
under which constituents are provided with the opportunity to comment on an exposure
8 These standards apply respectively to local governments, government departments, and governments and
thereby constitute a substantial platform of accounting regulation within the Australian public sector.
9 These standards were then issued by the AARF on behalf of the Australian Society of Certified Practising
Accountants (now re-named CPA Australia) and The Institute of Chartered Accountants in Australia.
draft before the final version of an accounting standard is issued. However, as Ryan et al.
(1999, p. 174) note:
While the “due process” adopted for developing accounting standards in the Aus-
tralian public sector is ostensibly the same as that utilised for private sector accounting
standards, differing institutional arrangements and political environments are likely
to drive differences in constituent involvement.
Such “differences” are evident in the findings of studies by Carnegie and West (1997) and
Ryan et al. (1999) with regard to the development of the accounting practices now required
under AAS 27 and AAS 29, respectively. In both these studies it was ascertained that the
“preparer” constituent group—local governments in the case of AAS 27 and government
departments in the case of AAS 29—exerted only a marginal influence over the final versions
of these standards. A number of possible explanations for this lack of influence have been
advanced, including:
• The lack of experience of preparer groups within the public sector in lobbying on proposed
accounting standards.
• That the debate was conducted in terms that were unfamiliar to many respondents from
the public sector. In particular, from the outset the debate was couched in conventional
accrual accounting terminology and Statements of Accounting Concepts.
• There was an implicit presumption that the model of accounting practised in the private
for-profit sector would also be the appropriate one for the public sector, with responses
that challenged this basic presumption unlikely to exert influence.
Adding to these concerns regarding the efficacy of the “due process” applying to the
development of the public sector standards is the problematic background and operation of
the now defunct body which oversaw the preparation of the standards: the PSASB. This has
been studied in detail by Chua and Sinclair (1994), who conclude:
The conditions of possibility for the emergence of the PSASB included a business
sector “hurting” in a recessionary environment, a government bureaucracy suddenly
self-critical and eager to adopt the managerial strategies of a “business-oriented” pri-
vate sector, State governments who became prepared to set up a national corporate
regulatory agency, a more educated and sceptical citizenry, a divided accounting pro-
fession which included a proactive subgroup of government accountants with access
to government sponsors and an embryonic accounting standard-setting programme
constrained by a lack of resources.
–(Chua and Sinclair, 1994, p. 701)
The influence of these circumstances is evident in the subsequent activity of the PSASB,
which was “[d]ominated by the standard-setting agenda of the private sector” (Chua and
Sinclair, 1994, p. 702) and under pressure to produce something on account of its “extremely
small output” (p. 699). Given this setting—and an environment buoyant about private sector
accomplishment and practices and cynical towards those of the public sector—it is perhaps
not surprising that the imposition of the private sector model of financial reporting emerged
as the favoured and expedient resolution for regulating the accounting of all types of entities
within the public sector.10
The evidence now suggests that the transportation of full accrual accounting to the
public sector is yet to provide any comprehensive means for enabling improved account-
ability assessments within that sector. AAS 27, AAS 29 and AAS 31 have an almost ex-
clusive financial focus and thereby fail to promote the broader accountability discourse
that is required within public sector settings where social objectives often necessarily
take priority over financial outcomes. Even with regard to financial accountability, fi-
nancial outcomes—such as a particular profit level or financial structure, as revealed by
conventional financial reports—are often not the main matter in contention, given the
non-financial nature of the objectives which govern many public sector organisations and
the behaviour of their organisational participants. Rather, financial accountability in these
settings typically pertains to the propriety of the transactions entered into and how they
have contributed to facilitating outcomes of a social character, such as a better educated
community.
As well as failing to address this issue of relevance—the need for information that
aligns with the nature of the entities concerned—reforms of public sector accounting have
sometimes imposed very impractical requirements. While some sense of this failing may
be gleaned from the illustrations provided earlier, a further compelling example concerns
the fiasco of accounting for land under roads. Australia has a vast road network, most of
which is under government control. It was the intent of AAS 27, AAS 29 and AAS 31 that
land under roads be brought to account as an asset in the statements of financial position of
government authorities that control such land.
This was an extraordinary requirement given that, except in the rarest of circumstances, it
would be inconceivable that such land would continue to be used for anything else other than
its existing purpose. Also, trying to ascribe a reliable dollar value to such land is fraught with
difficulty. The price of adjoining land—prone to fluctuation in rural areas due to changing
commodity prices and climatic conditions—would often be a very doubtful indicator of
the market value of the narrow, fenced off, and often tree-lined strips of land under roads,
which are typically unusable for other purposes. Even if such a process was used, the vast
distances of the Australian road network would make valuation an immensely expensive and
time consuming task. Having failed to recognise these problems at the outset, the standard
setters were forced—in the face of widespread protest from local governments—to extend
transitional provisions applying to the recognition of this “asset”. Supplements to each of
the standards were issued in 1999 and contained the following admission:
The transitional provisions . . . permitting a local government [government depart-

ment] [government] to elect not to recognise land under roads as assets are extended
10 The problematic issues associated with the financial reporting of infrastructure and heritage resources were
apparently subordinated by the PSASB in favour of expediency in generating regulatory output. AAS 27 “Financial
Reporting by Local Governments”, requiring that such resources be assigned money values and reported in
statements of financial position (subject to transitional provisions), was first issued in 1990. In contrast to the
usual—and expected—sequence of events, the AARF then issued a “discussion paper” on this topic (Rowles,
1992) two years after AAS 27 was promulgated (see Carnegie and West, 1997, p. 37).
because the Board’s project on land under roads is progressing more slowly than orig-
inally scheduled, and consequently, a reliable method of measuring land under roads
is unlikely to be identified and accepted before those traditional provisions expire.
–(“Development of the Standard”, AAS 27A, AAS 29A and AAS 31A)
These extended transitional provisions deferred, until 31 December 2002, the require-
ment for government entities to recognise land under roads in their statements of financial
position. However, in light of continued failure to determine how the requirement could be
implemented, the transitional period has again been extended. AASB 1045 “Land Under
Roads: Amendments to AAS 27A, AAS 29A and AAS 31” was issued in October 2002 and
now extends until 31 December 2006 the transitional provisions for the recognition of land
under roads as assets.11 The first of the standards applying specifically to the Australian
public sector (AAS 27) was originally issued in 1990. The restated transitional provisions
mean that at least 16 years will elapse in attempting to implement one of the basic require-
ments of this standard. However, resolution of the issue even within that time frame still
seems unlikely, with the AASB acknowledging only “that requirements for the recogni-
tion of land under roads will be reviewed once again when there is greater international
convergence on the issue” (“Development of the Standard”, AASB 1045, emphasis added).
This procrastination marks perhaps the biggest technical debacle in Australian standard
setting. As Carnegie and West (1997) point out, the proposal that local governments recog-
nise land under roads as an asset for financial reporting purposes was criticised on both
practical and theoretical grounds—and often contested as being simply unworkable—by
many of the respondents to the exposure draft that preceded AAS 27 (see also Barton,
1999a). At that time, however, the standard setters were unmoved by widespread criticism
of this proposal to assign dollar values to a non-financial resource. With regard to local
government infrastructure more generally, Walker et al. (1999) draw attention to how the
money values mandated by AAS 27 for financial reporting purposes are likely to rank behind
other kinds of disclosures (such as the physical condition of infrastructure) in facilitating the
decision making processes and accountability evaluations of local government constituents
and other decision makers.
This raises important issues not just about accounting in terms of its traditional role
as a mechanism for promoting accountability, but in terms of making accounting itself
accountable. Major accounting change in the public sector has been driven by a “colonising”
(Laughlin, 1991) strategy of the accounting profession founded on claims that its traditional
product—comprehensive accrual-based financial reports—can serve as the primary medium
for enhancing accountability within the sector. The successful pursuit of this strategy has
manifested in a significant expansion of the range of public sector resources that are assigned
money values. However, there has been no demonstration of how this practice accords with
the primarily social—as against financial—objectives of most public sector entities.
Lacking broad-based expertise in connection with accountability issues within the
public sector—which often depart from the accounting profession’s more familiar territory
of private sector for-profit entities—the accounting profession has proceeded to behave
11 This further extension of the transition period was justified on the bases of “input received from constituents”
and a “lack of international convergence” on the issue (“Development of the Standard”, AASB 1045).
in the manner predicted by Larson (1977) for occupational groups which have only a
problematic technical and intellectual foundation for their practices. That is, “to create
and emphasise pure mannerisms (including cognitive ones, such as unnecessary jargon or
unjustifiably esoteric techniques or ‘pseudo-paradigmatic’ changes)” (Larson, 1977, p. 45).
The success of this strategy has been facilitated by a comparative lack of occupation-based
opposition. While Abbott (1988) characterises professional groups as competing to
establish “jurisdiction” over particular domains, the public sector represented relatively
vacant territory in terms of organised occupational control. In connection with assigning
money values to collections and related resources within public institutions the accounting
profession has had to contend only with smaller and less well-resourced occupational
groups, such as librarians and museum curators, in mobilising its colonising strategy. The
means for implementing the strategy comprised a financial accountability regime backed
by accounting standards requiring the preparation of comprehensive accrual-based general
purpose financial reports. This, in turn, precipitated a significant expansion in the number
and range of public sector resources that would need to be assigned money values, with
the implicit assumption being that resources not accounted for by conventional accounting
practices would be unaccounted for per se.
In these circumstances, little opposition has emerged to the presumption that the
reporting of information expressed in money terms is the fundamental and only necessary
means of promoting accountability. Yet, it is a presumption of questionable validity in
connection with commercial organisations and one that becomes spurious and stultifying
when applied to the more complex setting of the public sector, especially in connection
with non-financial resources. Attempts to propose alternative notions of accountability,
such as “Enabling Accountability in Museums” (EAM) (Carnegie and Wolnizer, 1996),
are yet to motivate the accounting profession to take the lead in refining and promoting
such models for improved accountability and more apt performance measurement within
prevailing organisational contexts.
Consistent with this perspective, Potter (2002) describes financial accounting reforms
within the Australian public sector as having been driven by a process of “institutional think-
ing” under which decision making processes and forums remain beset by a dominant and
conventional way of understanding. Thus, in the development of the Australian accounting
standards for public sector entities “traditional accounting tasks of measurement and dis-
closure were continually emphasised, the rationale for commercial accounting disclosures
remained beyond question and alternative, non-financial accountability and performance
measurement systems were never considered” (Potter, 2002, p. 84). When the development
of accounting practice is constrained in this way, accounting itself is accountable only to
convention and not to the criterion of practical serviceability—of providing information of
demonstrable fitness for use for and about diverse organisations—that the discipline claims
as its primary purpose.
Briloff (1972, 1993) coined the term “unaccountable accounting” in connection with his
expose of problematic financial reporting practices by private sector corporations, and it
is now apposite to make analogous inquiries into the accountability of accounting within
the public sector. Being accountable as a profession extends to addressing adequately those
criticisms or challenges that may be levelled at specific accounting reforms and, if necessary,
promptly amending or withdrawing accounting rules which prove to be dysfunctional or
unworkable. Those arguing the case for the financial valuation of collections have avoided
responding specifically to a number of key questions posed by Carnegie and Wolnizer
(1995, p. 44, 1999, pp. 16–18) on this topic. As Potter (2002, p. 83) indicates, it is apposite
to ask: “Is this an acceptable response from accounting rule-making agencies that claim to
be concerned with issues of accountability?” Newberry (2002, p. 48), noting that “Carnegie
and Wolnizer asked reasonable questions”, has also inquired: “will those questions ever be
answered?” Accordingly, the questions are posed, yet again, for those advocates, wherever
they may be located, for a full and satisfactory response. They pertain particularly to the issue
of assigning money values to collections, but have general relevance to other non-financial
resources within the public sector:
• What is the financial meaning of any such quantum?

• By recourse to what reliable commercial evidence may an auditor authenticate that fi-
nancial sum?
• In what demonstrable way or ways is such a financial quantum useful for enhancing and
judging the accountability of those who manage not-for-profit public arts institutions
having non-commercial objectives?
• In what demonstrable way or ways is that financial quantum used for gauging
the financial efficiency with which a public (grant-dependent) arts institution is
managed?
• If collections are not things that necessarily have financial attributes, then on what demon-
strable grounds—logical or empirical—can they be assigned a financial value in the
general purpose financial reports of public arts institutions?
• For what present financial decision concerning collections would an incomplete list
or aggregation of outdated and differently dated acquisition prices be useful or
relevant?
–(Carnegie and Wolnizer, 1995, p. 44, 1999, pp. 16–18)
5. Conclusion
The purpose of this paper has been to explore two interrelated facets of accountability.
The first concerns the changes to accounting practice within the Australian public sector
which have had as their main distinguishing feature the full implementation of the
conventional private sector system of accrual accounting and an extensive expansion
of the range of public sector resources, including those of a non-financial character,
which are subject to monetary valuation. It has been argued, especially in cases where
key non-financial resources are to be valued for financial reporting purposes, that these
reforms have failed to achieve their stated purpose of promoting enhanced mechanisms of
accountability within the public sector because their almost exclusive financial focus fails
to embrace the need for a much broader discourse of accountability within public sector
settings. As Chua (1996, p. 151) has noted, calculative languages “take away context
whether it is cultural, temporal, historical”. Yet, it is precisely such contexts that need to
be to the fore in appreciating, managing and being made properly accountable for many
public sector resources, such as library and museum collections. Reassigning the way in
which particular resources are accounted for risks reassigning the way they are viewed and
understood:
Rarely, if ever, are preexisting qualities simply made more precise by being quantified.
At issue, rather, is the creation of new entities, made impersonal and (in this sense)
objective when widely scattered people are induced to count, measure, and calculate
in the same way.
–(Porter, 1996, p. 36)
The second accountability theme concerns the accountability of accounting itself, espe-
cially in the post-Enron era. In particular, it has been contended that accounting regulators
and professionals have a responsibility to ensure that they are accountable for the techni-
cal practices they impose. This includes assessing the implications for organisational and
social functioning of applying such practices and responding on an adequate and timely
basis when they are criticised. Ignoring alternative approaches to enhancing accountability
within the public sector—that are proposed on the basis of their aptness within particular
organisational contexts—is also not indicative of a responsive or flexible professional group.
Common to both these themes is the notion that effective discourses of accountability
must often embrace more than just financial data and that the value of many public sec-
tor resources—being not of a financial kind—should not be attempted to be expressed in
money terms. Identifying and evaluating the impacts of such practices will assist in broad-
ening debate on proposed accounting reforms and contribute to making accounting more
accountable.
Accounting, with its conventional emphasis on monetary valuation, plays a key role in
enabling systems of accountability within a broad range of contexts. However, enhanc-
ing the usefulness of accounting information requires an awareness and acknowledgement
of its limitations. The issue of what can and needs to be assigned money values is es-
sential in delineating the boundaries of conventional accounting. In resolving this issue
it needs to be recognised that “[a]ccounting systems should not drive policy: it should
be the other way around” (Corbett, 1996, p. 139). Rather than proceed from such recog-
nition, recent changes in public sector accounting—and in particular the process of as-
signing financial values to non-financial resources—appear to have been driven by an
obsessive and narrow pecuniary focus: “the culture of . . . accounting does not seem to
know half measures” (Zan et al., 2000, p. 337). Under this interpretation of the public
sector, what has not been assigned a money value is presumed to be unaccounted for, un-
acknowledged, unappreciated, and even not yet called into being. It is an interpretation
that needs to be critically analysed and then modified in order to enable broader, more apt
and cost-efficient systems of accountability—emphasising the safekeeping of non-financial
resources—to be adopted within the public sector, and to make accounting itself more ac-
countable. As Nelson (1993, p. 226) notes, “When it cannot hear the distinctive voices of
others, accounting ends up trying to see what others are doing, through the single-minded
medium of money”. Misplaced systems of monetary valuation resulting from this single-
mindedness threaten to devalue the resources to which they are applied and presage of
the need for greater scrutiny of the occupational group that oversees and prescribes such
practice.
Acknowledgement
The authors are grateful for the helpful comments of the anonymous referees; participants
in research seminars at Deakin and Monash Universities and the Universities of Melbourne,
Sydney and Tasmania; and Delfina Gomes, Keith McGavin, Robert H. Parker, Alan Smith
and Graeme Wines.
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Making Accounting Accountable in The Public Sector: Garry D. Carnegie, Brian P. West

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Critical Perspectives on Accounting 16 (2005) 905–928

Making accounting accountable in the

Accounting is conventionally constituted and practised as a quantitative discipline which em-

Keywords: Public sector accounting; Money values; Accountability

Bourgeois society is infected by monomania: the monomania of accounting. For it,

∗ Corresponding author. Tel.: +61-3-9810 3102; fax: +61-3-9810 3149.

tion of conventional accounting technique. Illustrations of the expanded—although often

2. Accounting and monetary valuation in the public sector

collections and made available for sale or transfer on financial terms.

be” and “to hold”.

2.1. Australian Museum and Museum Victoria

2.2. Library Council of New South Wales

2.3. National Library of New Zealand

In compliance with comprehensive accrual accounting being mandated throughout the

2.4. Museum of New Zealand and the City of Ballarat

2.5. City of Warrnambool

3. Accountability in the public sector

Characterisations and evaluations of accounting as a language constitute a well-

We have witnessed an ongoing rush to incorporate the supposedly more sophisticated

4. The accountability of accounting

As mentioned previously, the accounting standards that drove the implementation of

The transitional provisions . . . permitting a local government [government depart-

• What is the financial meaning of any such quantum?

Power M. Making things auditable. Acc Organ Society 1996;21(2/3):289–315.

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