Public Sector Financial Management – Theme

Budgeting and financial management have been the focal areas in several public sector reform programmes in many nations around the world. Since the eighties most of the developed countries started to review the management of their public sector,  under the influence of the New Public Management and, at a later stage, of  the New Public Financial Management (Olson et al., 1998; Lapsley and Wright, 2004; Guthrie et al., 2005). More recently, deep changes and transformations have interested governments and others public entities under the growing pressure of the financial crisis: in fact, restructuring financial management tools in the public domain has been considered as the principal instrument to face budgetary crisis and fiscal shocks both in developed and emerging economies (Van Dooren et al., 2010; Lodge and Hood, 2012; Ongaro et al., 2013).

Public Financial Management (PFM) is usually seen as the complex of activities related to budget preparation and execution, control, accounting, reporting, monitoring and evaluation (Allen et al. 2004). However, this umbrella term also includes activities related to taxing, spending and debt management of government, which influence resource allocation and income distribution (Rosen 2002). Witt and Müller (2006) also include oversight and control as well as intergovernmental fiscal relations in PFM. According to Manning (2001), reforms in PFM move towards the achievement of two main goals: allowing managers to manage and making managers accountable.

As a matter of fact, the need for innovation in PFM is attracting not only a growing body of literature ( Hodge et al., 2010; Graham, 2011; Wynen et al., 2013) but also the interest of international organizations (OECD, IMF, IPSASB, etc.). Innovation deals with the introduction of a new practice or process, or the creation of a new good/service, or the change in intra- or inter-organizational relationships (Green et al., 2002). Successful innovation has been defined as “the creation and implementation of new processes, products, services and methods of delivery which result in significant improvements in outcomes in terms of efficiency, effectiveness or quality” (Albury and Mulgan, 2003).

The demand for innovation in PFM is therefore related to the efficient use of resources, the enhancement of the transparency and accountability in government finances and the achievement of a long-term financial sustainability for all public entities.

Nevertheless, PFM reforms have been only partially successful (Olson et al., 2001; Christensen and Lægreid, 2007). This result could be partly explained by, firstly, the fact that budgeting is a political process, not just a technical one: consequently, informal behaviour and practices could override the formal ones. Secondly, to produce the intended results, reform programmes need a political and managerial commitment to achieve real sustainable changes, while a lack of professional skills, rather than managerial skills, has been highlighted by scholars as a limit in implementing PFM reforms (Pollitt, 2004). Thirdly, international harmonisation is essential to achieve accountability and transparency, to improve inter- and intra-governmental relationships and to enlarge stakeholders’ participation to the public life. Summarising, changes in public sector financial management are affected by social, political and organisational issues that in turn influence the direction and speed of reforms. For all these reasons, scholars have expressed their concern about the increasing complexity of the financial management systems, that may actually reduce rather than enhance the political accountability and control (Newberry and Pallot, 2005).

The Study Group intends to study innovations already put in action as well as unexplored solutions in PFM by different perspectives, looking for common lines of thinking in the realm of public administration, also through a combination of ideas from other social science disciplines (Bovaird, 2002; Vigoda-Gadot, 2002; Kickert, 2007). As a large set of reforms has been adopted in most of the countries in the last decades, there is a need to explore the consequences, both planned and unintended, of the reforms implemented at different governmental levels in accounting systems, budgeting and reporting. Empirical studies should investigate  whether the PFM reform programmes were all moving towards the same direction or they were contradictory. In addition, research on changes in public service delivery and on the new kind of relationships between public and private partners deserve more attention from scholars. In the same realm, cost accounting, management accounting and auditing innovations are issues that fall within the interests of our research agenda.

By embracing the abovementioned viewpoints, we intend to discuss theories, methodologies and methods related to innovation in PFM on which we could rely upon in order to achieve the highest possible level of efficiency and effectiveness in the public sector realm.

Read more on the 2014-2016 Programme of the Study Group

 

International Institute of Administrative Sciences
6th Floor C Block
Rue du Commerce 96
1040 Brussels (Belgium)
Phone : +32-(0)2-536.08.80
Fax : +32-(0)2-537.97.02
E-Mail: [email protected]