Date: 2024-11-21 Page is: DBtxt003.php L0913-TVM-MMW-000021
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TrueValueMetrics ... Peter Burgess Manuscript
Making Management Work for Relief and Development |
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Chapter 21
Public Accountability |
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Accountability
What is it? Accountability is a commonly used word ... but exactly what does it mean. The US government's General Accounting Office has changed its name to the General Accountability Office ... but I am not really sure why. It was never an accounting office, but more an audit office, and now it describes itself as doing accountability, whatever that is. The public is not a priority stakeholder in the present structure of government and public sector accounting and reporting. Yet the public is the biggest stakeholder in terms of government performance and the use of public funds. And the public is not a stakeholder in the activities of the corporate private sector and the private NGO community. Though these organizations have control of most of the economic resources, and impact the public in all sorts of ways, they are not in any way expected to account to the public as a stakeholder. Even in cases where the community is very much a stakeholder in terms of socio-economic impact, the relationship is rarely raised to the level of stakeholder ... in other words, community does not really count. Accountability to whom? The idea of “public accounting” needs to be developed so that the public can be better informed about economic activities, both government and private, that influence society. There is a patchwork of reporting requirements, but most do not have a focus on the public, but on specific stakeholders. The reports are difficult to use for rigorous, logical analysis. They can be characterized as general accounting reports, rather than analytical accounting reports. They report facts, but nothing very useful. In too many cases reporting is not timely. By the time the public knows what is going on, the damage is done ... the funds that have been misappropriated have long gone. There needs to be a new form of accounting where the public is informed of what is being done with the funds in any governmental organization, or any organization where government funds are being used, or any activities that are going to have a material impact on a community. The system should require public reporting where any economic entity's economic activity has a material socio-economic impact on a community. This requirement would enable a community that is host to large scale FDI to be informed of what is going on, and to be able to respond if needed. Public accounting A transparency and accountability network for public accounting is needed to address the question “Accountable to whom?”. Any fund flow that has impact on a public or the society at large should be accounted for in the public space so that it can be seen to be doing public good, or at any rate, not doing public harm. There is very little technical challenge in putting together the sort of information that is needed. The accounting principles were developed several centuries ago, and the technology to manage data in huge volumes and in world wide organizations is now available. The challenge is much more to do with the human dimension, the organizational changes that are required and some very legitimate concerns about public access to private information, and potential abuse of this information in anti-social ways. The accountancy profession The accountancy profession does most of its work in the private sector being paid to “sign off” on the financial reports prepared by management for the owners. They are paid for this by management. While it has worked most of the time, it has not worked all of the time, and there have been periodic professional scandals. The integrity of financial reporting has been significantly weakened over the past 25 years by the growing importance of consulting done by professional accountancy firms, and the need to keep the client happy and the assignments safe. It is difficult to assess the damage done by conflict of interest before the accounting firms divested their consultancy practices. We will never know. Accounting in the relief and development sector is terrible. The accounting is usually cash based rather than being done on an accrual based, and there is very little of balance sheet analysis and the checks and balances that are integral to best practice corporate accounting. Accounting clerks in UN system offices and other relief and development organizations process vouchers and disburse cash, pay salaries, and that's about it. They do not usually do cost accounting related to projects, and certainly do not do project performance analysis as a priority part of their work. Because there are very few professionally qualified accountants in the employ of the relief and development sector, including big government agencies ... hardly anybody, almost nobody, understands the important difference between accounting using an accrual based system with balance sheet, operating statement and cash flow and the simple, and error prone, cash based system used by most of the public sector. In the corporate accountancy community it is often said: “Show me weak accounting, and I will show you a weak organization, and weak performance”. On this basis, the relief and development sector has tremendous weakness. A Public Accounting Utility The main elements The main elements of a public accounting utility are: (1) information; (2) a communication network; (3) an information storage capacity; (4) a data mining or data analysis capacity; and, (5) users. Information A database of information can be built relatively easily. The relational database that originated with Cobb in 1978 made organizing data a lot more efficient than it had been previously. The relational database is the foundation for almost all modern accounting systems, and any large body of organized data. The relational database can be deployed in: (1) a private computer center; (2) at the desktop; or, (3) in the Internet space. All variants have their place. The private computer center has the advantage of security, the desktop the advantage of being accessible in the community and the Internet of being accessible from anywhere. I have not yet embraced the idea of the database on a mobile I/O device, but it can also be envisioned. Database of Community Information Getting a database of community information built is something that is priority for the Transparency and Accountability Network (Tr-Ac-Net). A start has been made, but the work is far from complete, and it does not have any value unless there are also other initiatives working so that the information can be maintained and effective use made of the data. In a first phase, a lot of data was compiled using a Wiki ... it was a success in terms of demonstrating that information could be collected in a reasonably disciplined manner. But it was useless for analysis. In the next phase an Internet based relational database was used to pull together data about various aspects of relief and development, including community information. This showed a lot of potential. It was not very elegant, but it worked. In the next phases, the community information will be combined with various sets of organization information, project information, and fund flow information to provide a community view of the whole of the relief and development sector, and especially funds disbursed contrasted against the aggregate of community level activities and the value of these activities. It could get interesting. The meta data for information needed for public accounting is already well defined, but not presently conveniently presented. Rather, different bits are in a variety of different places. A communication network A communications network used to be a very expensive proposition, but that changed with the deployment of the Internet. Sadly the Internet is still difficult to access for most of the poor “south” and to the extent that it is available it is expensive. Access availability and expense are constraints, but the underlying Internet technology can be deployed at affordable costs. An information storage capacity Modern information storage technology is now making it possible for enormous quantities of electronic digital data to be stored economically. The technology is available. The challenge is to get it deployed in a useful manner. A data mining or data analysis capacity Again, modern technology is available. The challenge is to bring suitable technology together with the information and the storage so that useful results can be easily obtained. Users What is the point of anything, unless there are users. In the case of public accounting, the users are eventually the people and the representatives of the people, and those that advocate for the people, and the 4th estate, the media, that reports on anything and everything to inform the people. |
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