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The reason for sidelining accountancy is quite simple ... most of the leadership of our global society favors a regime of minimal accountability that allows greed to flourish. The weaker the accounting, the easier this is to do.
The elite decision makers are more responsive to power and ideology than critical data based analysis and judgement:
“My mind's made up ... don't confuse me with facts”
This is a common mindset in corporate management and but it is also evident in politics and in society at large. This gets to be dangerous when there is also this:
“I know what I am doing ... and God forbid that anyone would try to hold me accountable!”
This is the environment that accounting and organized data about facts must operate in and be reliable. How it is done is very much a secondary issue. The data are neutral ... and they are about
facts. Measuring facts may be difficult ... but accounting aims to have data about facts on the record. When you have data ... there can be analysis ... and reports ... and conclusions. And if
there is organizational structure there can also be decisions and improved performance.
Fund flow analysis shows multiple problems.
The value dynamics in the relief and development industry are all wrong. This has been a chronic
problem for a long time with the institutional leadership having little understanding or interest in the
issues.
- Fund flow misappropriation
- Corruption
- Value destruction
- Negative multiplier
- Big projects with high risk and low return
- Planning and performance disconnect
- Waste
- A minimum of beneficiary impact
Fund flow misappropriation
There are end to end problems with fund flow accountability ... some of the fund flows are severely compromised, while others are managed excellently. However, because of weakness in metrics it is not easy to know which ones are excellent and which are not. Weak financial control has been endemic and as a result all sorts of resources have gone missing ... stolen money ... stolen inventory ... over invoicing ... under delivering. Embezzlement of all sorts ... petty corruption and grand corruption.
Part of the problem is that all of the participants have a very narrow interpretation of their responsibilities for transparency and accountability ... essentially every organization thinking of itself in a bilateral relationship with the donor or source of funding ... and the public having no stake in anything. In this arrangement it is relatively easy for a bilateral relationship to provide fertile ground for weak performance and worse.
Little has been done over very many years to end this comfortable arrangement, and all the incentives in place encourage its continuation.
The amount of money being raised for international relief and development assistance is huge. Fund
raising in the aftermath of natural disaster is especially impressive, and shows how supportive many
people are of development initiatives. But sadly the relief and development industry is less than candid
about how the resources are used and what is being accomplished.
Phantom Aid
In 2003 a well know NGO based in the UK called this Phantom Aid. Others before had called the phenomenon “Black Hole Development” implying that no matter how much fund flow there was, the
results would still be the inconsequential.
This is a better model for development with the money getting used on the ground for real work that can deliver meaningful results.
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