Public Sector Accounting - Study Notes

Benefits of this course to students

  • Useful to understand the broader institutional mechanisms around us.
  • Enhance skills to generate insights about overall organisational dynamics.
  • Enable understanding different accounting practices and issues compared to the private sector.
  • Provide an opportunity to study interests underlying an organisational setting.
  • Provides a broader view useful especially for a policy level manager.

Session Content

  • Understanding the role of accounting in different organizational contexts
    • 1 Understanding the state and its control over society
    • 2 Understanding political interest over public sector
    • 3 Identifying major categories of public sector institutions on the basis of their role in serving political interest
    • 4

Role of accounting in organisational contexts

  • Providing information on organisational accountability to interested parties outside the organisational boundary.
  • Providing controlling information for managerial decisions of the organisation.

Stakeholders / Roles in the public sector (as listed)

  • Investors/Rulers
  • Senior Managers
  • Functional managers
  • Non-managerial employees

Private Sector vs Public Sector: Key characteristics

  • Private Sector
    • Dominant group – Investors
    • Interest – Economic
    • Aim of control – Shareholder value / stakeholder value creation
    • Emphasis on financial value creation – high
    • Accounting base - Accrual
    • Influence of rules and regulations - Less
  • Public Sector
    • Rulers
    • Political / Social
    • Rulers’ interest / Stakeholder value creation
    • Emphasis on financial value creation - less
    • Cash but attempting towards accrual
    • Influence of rules and regulations - high

What and Why public sector?

  • How is a society controlled?
  • Who and whom
  • Why
  • How
  • Institutional setting for the control
  • Political society institutions
  • Civil society institutions
  • Role of public sector institutions
  • Interest underlying in public sector organisations

Who, whom and why in control over society

  • Who: Dominant class of the society (wealth/ knowledge / inheritance etc.)
  • Whom: All others other than the dominant group
  • Why: For sustenance in power, for accumulating wealth, to secure the inheritance etc.

How?

  • State
  • Legislature
  • Executive
  • Judiciary
  • Through
  • Consensual and Coercive Apparatus

Separation of Powers

  • Legislative
    • Makes Laws
    • Can ratify or veto a bill
    • Can override president's veto by a vote of \frac{2}{3}
    • Can declare laws unconstitutional
    • Creates federal courts
    • Nominates judges to Supreme Court
  • Executive
    • Carry out laws
    • Chief Justice presides over impeachment trial of president
  • Judicial
    • Interpret Laws
    • Supreme Court & Federal Courts

Consensual and Coercive Apparatus

  • Consensual apparatus:
    • Means of obtaining will as the basis of control (Morale and intellectual leadership)
  • Coercive apparatus:
    • Means of causing fear or using force or threat as the basis of control

Institutional Setting

  • Civil society institutions
    • Institution to operate consensual apparatus
    • E.g. Educational Institutions, Religious institutions, media institutions and public service institutions etc.
  • Political society institutions
    • Institutions to operate coercive apparatus
    • E.g. Police, Defense forces, courts etc.