THE FINANCIAL ACCOUNTABILITY FRAMEWORK OF AUSTRALIAN PUBLIC ENTERPRISE

Abstract: This paper is concerned with the complexities of accountability for Australian public enterprise and analyses some of the conceptual issues which need to be addressed in developing a framework for reform. The analysis suggests that the matrix of financial accountability relationships is quite complex in terms of its objectives, its concern for both public interest and commercial viability issues and the number of participants. Furthermore, it operates in an intricate environment of political, administrative and control structures. Although the general financial reporting objectives for public and private enterprises may be similar from a conceptual viewpoint, the assumptions underlying the private sector agency model (a simple one-to-one shareholder-manager relationship based on profit maximisation and individual self-interest) may not allow a realistic or suitable modelling of the intricacies of this process at an operational level at least.
The analysis identifies some of the difficulties encountered when modelling the financial accountability processes for public enterprises. It then suggests a framework which takes into account the multi-layered nature of performance objectives and the unique operational environment of public enterprises. The model encompasses performance responsibilities at both the macro- and micro-economic levels, and operates through a linked chain of participants, each with distinct financial accountability obligations and information needs. It identifies several tiers of participants together with the appropriate accountability responsibilities at each level.