Article2024

Financial accountability discharged from local government financial statements: an institutional theory approach to accounting change

Ellen Haustein · Peter C. Lorson · Lasse Olavi Oulasvirta · Lotta‐Maria Sinervo

8 citations0/0 files storedJournal of Accounting & Organizational Change

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Accounting and Organizational Management Auditing, Earnings Management, Governance Accounting Theory and Financial Reporting

Abstract

Purpose By focusing on the perspective of politicians, this paper aims to question the change brought about by local government financial statements for accountability. It applies the Burns and Scapens’ (2000) framework of accounting change to explore politicians’ routines when using the accrual accounting information and which type of change was induced by financial statements on financial accountability to politicians and citizens. Design/methodology/approach Considering that accounting reforms take time to unfold their effects, this paper studies two countries that have 11 years of difference in the reform implementation and thus a different accounting maturity. A qualitative research approach was used based on 55 semistructured interviews in five Finnish and six German municipalities with 25 councilors from Finland and 30 from Germany. Findings Councilors with a longer period of time to adjust to the accounting reforms seem to have developed more routines in using financial statements to assess the financial situation and performance. The change induced in accountability to politicians is partly formal and more evolutionary than revolutionary. The complexity of financial statements can lead to regressive change, especially in financially distressed local governments. As for accountability to citizens, a real change is not observed, reflecting a regressive type of change. Originality/value The study contributes to the empirical studies on financial accountability in the public sector context by analyzing the use of financial statements in two-way accountability relations from the perspective of politicians. Thereby, the paper adopts a transnational comparative approach and draws on old institutional economics.

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References

1991A PUBLIC MANAGEMENT FOR ALL SEASONS?1996Understanding Radical Organizational Change: Bringing Together the Old and the New Institutionalism 2007Analysing and Assessing Accountability: A Conceptual Framework 1 2014Qualitative content analysis: theoretical foundation, basic procedures and software solution 2000Conceptualizing management accounting change: an institutional framework 1995The chameleon of accountability: Forms and discourses 1994Organizational Routines as Grammars of Action 2000Delegation and accountability in parliamentary democracies

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