Will 'austerity' be a critical juncture in European public sector financial reporting?

Heald, D. A. and Hodges, R. (2015) Will 'austerity' be a critical juncture in European public sector financial reporting? Accounting, Auditing and Accountability Journal, 28(6), pp. 993-1015. (doi: 10.1108/AAAJ-04-2014-1661)

Abstract

Purpose – The purpose of this paper is to analyse how austerity has impacted to date upon European Union (EU) financial reporting developments and how this might influence future reforms. It considers how a critical juncture in EU financial reporting might be recognized and factors which might prevent or delay such a juncture being realized. Design/methodology/approach – The paper uses the theoretical conceptualization of the territorializing, mediating, adjudicating and subjectivizing roles of accounting (Miller and Power, 2013), linked to document analysis and interviews with members of the relevant policy communities. In technical terms, austerity makes accounting subject to greater demands for consistency and uniformity. In political terms, accounting is implicated in increasing external fiscal surveillance of sovereign states. Findings – The authors have shown how the Miller-Power framework illuminates these developments. The territorializing role of accounting in sovereign states creates an environment which facilitates the mediating, adjudicating and subjectivizing roles. Austerity promotes re-territorializing, yet also creates incentives for governments to hide risks and guarantees: the comparability of financial reports and national accounts may be achieved only at a rhetorical level. Evidence for a critical juncture would be termination of national traditions of financial reporting, greater harmonization of accounting across tiers of government, weakening of the linkages to private sector accounting, and stronger alignment of government financial reporting with statistical accounting. Originality/value – The paper provides a theoretically based analysis of how austerity influences government financial reporting and statistical accounting and brings them into closer contact. This analysis is located within broader tensions between technocracy and democracy that are institutionalized in EU fiscal surveillance.

• Item Type: Articles
• Additional Information: David Heald acknowledges financial support from the Leverhulme Trust (EM-2012-078).
• Keywords: Austerity, public sector financial reporting , EPSAS , critical juncture, fiscal transparency, statistical accounting, HJ Public Finance, Business, Management and Accounting(all)
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Heald, Professor David
• Authors: Heald, D. A., and Hodges, R.
• College/School: College of Social Sciences > Adam Smith Business School > Accounting and Finance
• Journal Name: Accounting, Auditing and Accountability Journal
• Publisher: Emerald Group Publishing
• ISSN: 1368-0668
• ISSN (Online): 1758-4205