Stories ofAccounting Change During Financial Reform of ...psasir.upm.edu.my/3581/1/Stories_of_Accounting_Change_During_Financial_Reform_of...proses bagaimana dan mengapa perakaunan

Pertanika J. Soc. Sci. & Hum. 14(2): 111-119 (2006) 1SSN: 0128-7702© Universiti Putra Malaysia Press

Stories of Accounting Change During Financial Reform of Public Enterprises

OR AZIAH ABU KASIMDepartment of Accounting and Finance, Faculty of Economics and Management

Universiti Putra Malaysia, 43400 UPM, Serdang, Selangar, Malaysia

E-mail: [email protected]

Keywords: Public enterprises, case studies, accounting change, non-technical issues and ways ofthinking

ABSTRAK

Kertas ini membuat perbandingan secara analitikal mengenai lima enterpris awam yangberorientasikan komersil daripada pelbagai negara yang melalui proses perubahan perakaunandan organisasi. Kelima-lima kes dipilih kerana penekanan ke atas pentingnya konteks dan ke atasproses bagaimana dan mengapa perakaunan berubah, diinterpretasi dan digunakan dalamspesifik organisasi. Perbandingan penemuan daripada kajian kes membolehkan pengajarandiperoleh serta persamaan dibincangkan. Perbandingan menunjukkan bahawa proses perubahanorganisasi melalui perakaunan tidak akan sentiasa menjadi cara yang berpengaruh atau berkesanuntuk mengubah gelagat atau cara berfikir yang telah diterima. Satu pengajaran penting ialahimplementasi perubahan dalam perakaunan dikaitkan dengan pelbagai isu bukan teknikal sepertitekanan persekitaran, budaya atau cara pemikiran, kuasa dan kebolehpercayaan.

ABSTRACf

This paper analytically compares five commercially-oriented public enterprises from differentcountries which were subjected to the process of accounting and organisational changes in orderto become profitable. The five case studies were selected for their attention to the importanceof context, and to the process of how and why accounting evolved, interpreted and used withinspecific organisations. A comparison of the insights drawn from these case stories allows somepossible lessons to be learnt and parallels to be drawn. The comparison reveals that the processof organisational change through accounting is complex and may not always evolve as aninfluential and effective means of altering behaviour and accepted ways of thinking. One vitallesson is that accounting change is implicated with various other non-technical issues such asenvironmental pressures, culture or ways of thinking, power and trust.

INTRODUCTION

Many recent empirical studies have recognisedthe implications of accounting in financiallyreforming public sector organisations (Curd andThome 2003; Uddin and Hopper 2003; Nylandand Pettersen 2004). These studies raiseempirical questions about how accountingchange was implemented and used, and itsconsequences for organisational change. Theaim of this paper is to compare five case studiesthat investigate the process of change inaccounting so that possible lessons could belearnt and parallels drawn.

In reforming public sector organisations,the constitutive role of accounting in the creationof a new organisational reality and the languageof profitability has been acknowledged (Dent1991; Ogden 1995; Ogden and Anderson 1999;Hoque and Moll 2001). Hopwood (1990: 10)argued that accounting has the potential tocreate a new organisational reality that is relatedto economic understanding because 'they[accounting] enable economic knowledge andunderstandings to be operationalised and thereby

or Aziah Abu KasiIn

to more readily permeate and shapeorganisational agendas, concerns and choices'.

onetheless, accounting change may not alwaysevolve as an influential means of altering theexisting organisational routines and acceptedways of thinking in the public sector becauseorganisations are composed of different intra­organisational groups with different goals,interpretations and political powers to implementand manage how change develops (Chua 1986;Pfeffer 1992; Hardy 1996).

The five case studies for discussion wereselected for their attention to the importance ofcontext, and to the process of how and whyaccounting evolved, was interpreted and usedwithin specific organisations. The first case studyby Abu Kasim (2004) is an in-depth case study ofaccounting change in a Malaysian public utilityduring the process of corporatisation; the secondis a longitudinal study of cultural change in apublic railway organisation by Dent (1991); thethird is Ogden's (1995) paper on accountingchange in the privatisation of the water industryin United Kingdom; the fourth is by Alam (1997)on the process of budgeting in two ofBangladesh's public enterprises; and finally, thecase study by Vamosi (2000) on the transitionprocess of a Hungarian company being subjectedto new market pressures.

The findings from the five case studies wereanalysed for repeated and common issues, toexplain their underpinning reasons andunderstand them in the context in which thesefindings were raised. These international casestudies contribute to the insights ofunderstanding the ways in which accounting isused and its consequences within different butin some ways similar social contexts, i.e., thepublic sector.

An interesting research puzzle is that why,in spite of the enactment of innovativearrangements in the accounting system, the newsystem may become detached from everydaysocial interactions and practices. In other words,accounting in practice may function in theunintended and unexpected ways and suchdiversity of practices is explained through thecomparison of the insights from the differentcase stories.

This paper is structured into the followingsections: literature review, case study method,five stories of accounting change, comparison ofsome of their insights, implications andconclusion.

UTERATURE REVIEW

Public sector reform exercises, such ascommercialisation, corporatisation andprivatisation, are underpinned by the policy ofmany governments (e.g. Malaysia, New Zealandand Australia) that private sector ownership andstyle of management are relatively superior forremedying the poor economic performance ofpublic sector organisations (Muhd-8alleh andOsman-Rani 1991; Sulaiman 1993; Spicer et al.1996; Potter 2002). It can be inferred that theideology from the external environment shapesthe purpose and the way in which accounting isreformed in the public sector.

The economic rationale, that is, the fiscalproblems prevailing in the government sector,drives financial management reform (Humphreyet al. 1993; Sulaiman 1993). Financial stressprovokes accounting change, and at the sametime provides the opportunity for organisationsto change by emphasising managerialism andefficiency (Hood 1995). The 'best commercialpractices' for financial management reform inthe public sector imply those drawn from theprivate sector. The wider social environmentshapes the public sector's adoption of the newmanagement and accounting systems byresponding to the government mandate and theperception of 'best commercial practice'.

From the view of the governments,accounting change contributes positively to theeconomic welfare of public sector organisationsdue to its emphasis on efficiency, effectivenessand cost savings (Hopwood 1990; Hood 1995;Hoque and Moll 2001). The public sectormanagers are assumed to behave as rationalagents who substantially use accountinginformation for enhancing organisationalperformance through effective use of resources.This means that the use of accounting for makingdecisions is taken for granted, and by introducing'better' private sector techniques, the improvedeconomic efficiency will be realised in adeterministic way.

Accounting information is assumed to beuseful for allocating resources, motivating theperformance of certain activities, and exercisinginfluence and control; and through such use,enhancing financial accountability and theefficient allocation of resources. Accountingchange, albeit the private sector way, is widelyaccepted as the method of strengtheningfinancial accountability and controlling scarce

112 PertanikaJ. Soc. Sci. & Hum. Vol. 14 No.2 2006

Stories of Accounting Change During Financial Reform of Public Enterprises

resources within public sector organisations(Humphrey et al. 1993; Hood 1995; Olson et al.2001).

Such a narrow perspective has failed toacknowledge that uneven implementation of theaccounting technique can vary the effectivenessand consequences of accounting change betweenpublic sector organisations. The stories ofaccounting change, to be discussed later, attestto the uneven implementation of accounting inpractice. Contrary to the expectations ofreformers or the policy makers, the enactmentof the innovative techniques in some situationswill not necessarily lead to their desiredinstrumental use or positively impact onbehaviour and ways of thinking.

CASE STUDY APPROACH

The case study approach in the empirical studiesis an attempt to understand and explain thenature and organisational role of accounting asit is practised in a specific organisational context.This organisational context is crucial in providinga background for understanding how theaccounting system is interpreted (Hopper andPowell 1985; Carruthers 1995) and enacted asan organisational routine (Hopwood 1990;Scapens 1994).

The consequences of accounting changeare difficult to predict without understandingthe process of change within the context inwhich it unfolds, and from the perspective ofthose directly involved with the process.Therefore, its actual role during organisationalreform is difficult to determine in advancebecause the role of accounting might be shapedby the context, and this role in turn might shapethat context.

Since accounting is implicated in social andorganisational practices (Burchell et al. 1980),the traditional and technical approach, whichignores the context in which accounting operates,is not able to fully explain the actual role ofaccounting in a specific organisational setting.The case study method provides an appreciationof the social context in which accountinginformation is used and the natural setting inwhich the accounting practices emerge (Scapens1990).

The broad and common concern of the fiveselected case studies was to empirically explainhow the organisational members in publicenterprise settings enacted, and used accounting.The way organisational members interpret andsocially construct their day-to-day accountingpractices explain why accounting is or is notused instrumentally for changing behaviour orways of thinking.

It was an interesting puzzle that accountingbecame detached in certain settings and not inothers; even though profitability is important forsurvival in all five cases. The findings from thefive case studies were analysed for repeated andcommon issues, to explain their underpinningreasons and understand them in the context inwhich these findings were raised.

THE FIVE STORIES OF

ACCOUNTING CHANGE

The first story by Abu Kasim (2004) is an in­depth case study of PSP, a disguised name for aMalaysian public utility company being subjectedto the pressures of corporatisation. PSP wasexpected by the government to transform itselfinto a self-financing, efficient and profitableorganisation to facilitate its future divestiture.Consequently, the need to transform PSP into abusinesslike entity was not created by marketforces, nor PSP's internal needs (as it wasprofitable), but rather by government policy. Asprofitability became increasingly importantduring corporatisation, attempts to enhanceprofitability were made through imposing newbudgeting system and recruiting new accountinggraduates. A new budgeting system wasintroduced in a deliberate attempt to emphasisecost control and accountability on the operationsfloor. In spite of these attempts, the findingreveals that accounting changes were enacted,but over time detached from operationalconcerns.

The preoccupation of the State accountant!in promoting cost-savings through mechanicalcompliance with accounting rules from theheadquarters, and in attempting to improvefinancial visibility through a hierarchical form ofaccountability (Roberts 1991) overlooked theimportance of making accounting information

State Accountant refers to the position of the accountants at the state offices. State offices are the regional officeslocated in almost every state in the country.

PertanikaJ. Soc. Sci. & Hum. Vol. 14 No.2 2006 113

Nor Aziah Abu Kasim

accessible, understandable and relevant for theoperations managers. As it was, the centralisedbudgeting system did not allow sufficientflexibility and empowerment of local decision­making. This constraint imposed by accountingfailed to secure the trust of the operationsmanagers to use accounting as a mechanism forenabling change. In short, the lack of changeshaped by accounting practice could beattributed to the enactment and perception ofaccounting as a centre of calculation rather thandiscretion (Quattrone and Hopper 2001). Overtime, the budgets evolved to become a source ofconflict, implicated with issues of trust and power,and were not widely drawn upon or accepted bythe operations managers.

The analysis showed that resistance, whichled to the ritualistic use of the budgets by theoperations managers, was due to the powerfulembedded ways of thinking, the strategicdeployment of power to maintain the existingpower relations, the imperatives of the continuityof public service provision, and the lack ofsufficient trust to cooperate in securing mutualbenefits. Resistance enables the flexibility andautonomy of the operations managers tocontinue to concentrate on the provision ofservices. In this way, within PSP, the stability ofthe dominant public service 'ways of thinking'or 'institution' occurred simultaneously with thechanges in the accounting system.

The second story of accounting change inEuro Rail, a disguised rail company, by Dent(1991) demonstrates a successful transformationfrom the public railway culture that stressessocial service to a business culture that pursuesprofitability. The term 'culture' is comparable tothe terms 'way of thinking' and 'institution'which were used in the case study of PSP. Dentconceptualises the reconstruction of theorganisational culture as a process of 'uncouplingof activities from the railway culture and theirrecoupling to the business culture' (ibid: 724).Both Euro Rail and PSP faced changingenvironments, especially from the government'schallenge that they have to become modern andbusinesslike through incorporating private sectormanagement practices. The recruitment ofaccountants in PSP and the Business managersin Euro Rail symbolised an image of modernitythat was important for securing legitimacy fromthe government.

How change was enacted and accomplishedin both organisations was concerned with powerand influence. A new culture can be a majorsource of power, particularly if it gains ascendancyto become dominant' (ibid: 708). In contrast toEuro Rail, the internal power struggles in PSPbetween the accountants and the operationsmanagers did not lead to the dominance ofaccounting for influencing meanings. In EuroRail, as well as in PSP, the incompatibility betweenthe public service culture and the business culturecreated tensions between the pursuit of socialservices and profitability. However, such tensionswere necessary in order to challenge theprevailing institutions, and subsequently toreplace them with the new business ways ofthinking. But in PSP, the challenge led tounintended consequences, namely the lack oftrust and the ritualistic use of the budgets thatundermined the role of the State accountants.The puzzle is why, given the same challengefacing both organisations, the meanings andsignificance attached to accounting changediffered so fundamentally.

In Euro Rail, the competent Businessmanagers, imported from outside, were the socialagents who brought and instilled a new profit­oriented culture. They had broad business skillsand experience and successfully introducedchange through persuasion: 'It was all aboutrelationships. We (Business managers) had topersuade everyone around us' (ibid: 717). Tominimise resistance, change was introducedincrementally, and not in a threatening ordifficult way. In PSP, the accountants were a newbreed, just like the Business managers in EuroRail, but being new graduates in accounting theylacked business experience and skills and tendedto adopt the imposed rule rather mechanically.

In PSP, there were limited interactions,persuasion and relationship building over time.In contrast, the Business managers in Euro Railbuilt relations and secured support from the topmanagement in their endeavour to gain influenceand power. Furthermore, in PSP accountingtended to serve the hierarchical and statutoryreporting requirements, rather than the needsof the operations managers. In PSP, theoperations managers are powerful due to theirsenior positions and expertise in operations,and they have strong support from their superior,

114 PertanikaJ. Soc. Sci. & Hum. Vol. 14 No.2 2006

Stories of Accounting Change During Financial Reform of Public Enterprises

i.e. the State manager2, in the pursuit ofoperational goals. They can easily mobilise theirpower to hinder the direct involvement of theState accountant in their affairs. In PSP's broadercontext, corporatisation had no intention to de­emphasise PSP's social obligations, since thepublic service obligations were actuallystrengthened through regulation. The strongenforcement of the regulatory body did notpromote the 'uncoupling of activities' from themandated social service concerns.

The study conducted by Ogden (1995) ofthe privatised water industry shares with thestudies of PSP and Euro Rail the need foraccounting change as a means of culturaltransformation. In Ogden's work, privatisationexerted pressures on the Water Authorities totransform themselves into profit-making entities.In the transformation process, the role ofaccounting as an economic discourse was evidentin the use of the language of efficiency and costeffectiveness to construct a new organisationalreality. As a whole, the findings across the waterindustry show that accounting played aconstitutive role in 'redefining organizationalobjectives, changing the meanings ascribed toorganizational activities, and reshapingperceptions of what are critical issues' (ibid:214). Internal resistance due to theincompatibility between the engineeringdemands and business priorities was only brieflynoted, but initiatives such as delegated budgets,cost centres, new management informationsystems and reward systems successfully promotedfinancial accountability.

An interesting contrast between PSP andthe United Kingdom Water Authorities is thegreater emphasis placed on the economicrationale by the regulatory body for the UnitedKingdom water industry. The regulator set theprice based on a standard formula, but theintention was not simply to stabilise the price,but also to promote "yardstick" competition(Ogden 1995: 197). Yardstick competition wasintended to enable the regulator to promotecost competition between the different watercompanies through price control. The costs ofthe most efficient companies in the industrywere incorporated into the pricing formula in

computing and enforcing new prices. Accountinginformation was therefore drawn and acted uponby both the regulator and the companies toachieve cost savings. In the case of PSP, thegovernment imposed a price freeze for the pastten-year period; and the regulator had to enforcethose prices. This long duration and the lack ofa systematic procedure for price revision reflectthe government's predisposition to socio-politicalrather than cost and profitability issues. In spiteof the corporatisation exercise, PSP was stilltreated as a public utility by the Malaysiangovernment. The detachment of the budgetingsystem in PSP could be attributed, at least inpart, to these socio-political demands of theregulator and the government.

Alam (1997) investigated the role of budgetsby contrasting the budgetary process in two ofBangladesh's, commercially-oriented publicenterprises involved in the processing of juteand sugar respectively. Although the studyexcluded internal organisational processes, theintertwined institutional and technicalenvironments and the process of preparingbudgets are comparable with the context of PSP.It was interesting to note that despite beingsubjected to similar institutional pressures, thesugar firm was able to deploy a more attachedbudget called the 'working budget' (ibid: 158).This budget was instrumentally involved withorganisational activities because the 'budgetestimates are always formulated at the lowestlevel where the activities are actually performed'(ibid: 158). In contrast,jute's budgeting processinvolved the imposition of often unrealisticproduction targets by the government for socio­economic purposes such as maintainingemployment and avoiding labour unrest.

In Alam's case studies, the detachment ofaccounting in jute was due to the irrelevance ofthe government's imposed budget targets forthe daily organisational activities. The imposedbudget targets, either by the accountants in PSPor the institutional environment in jute, wereprepared in isolation from the needs of theoperations. However, imposition is an incompleteexplanation for the detachment as was attestedby PSP's intra-organisational budgeting process.For PSP, detachment also served the operations

State manager heads the state or regional offices. He reports directly to the Chief Executive Officer at theheadquarters.

PertanikaJ. Soc. Sci. & Hum. Vol. 14 No.2 2006 115

or Aziah Abu Kasim

managers' intentions of deliberately. a:oidin.gfollowing rules that threatened to lImIt theIrflexibility and erode their power in local decision­making. It was also risky for them to tru~t andcooperate with the accountants by adhenng tothe budgeting rules.

In the final case study by Vamosi (2000),the story of BCW, which is a privatised Hungariancompany, involved a deliberate attempt to useaccounting for the transition from a governmentto a privately-owned company. BCW, with anestablished history of 125 years, became aprivatised entity which was subjected to ~e new'market disciplines', and was reqUIred toconstruct a new organisational identity. It nowhad to be 'in charge of securing its own survival'(ibid: 45) because the government relinquish~dits responsibilities concerning both ownershIpand management. Survival in the new marketenvironment created the need for BCW'saccounting system to be redefined andreconceptualised. In Vamosi's words, 'accountingpractice is a target for change and an ins~m~nt

in the process of generating a new constl~tl~n

and institutionalization' (ibid: 28, emphasIS mthe origirIal). There are parallels between BCWand PSP in terms of accommodating the neweconomic demands from the environment, andthe pursuit of financial survival throughaccounting change. .

As organisational change is a process that ISongoing, both PSP and BCW had to co~ront

the 'cargoes-of-thoughts' (ibid: 27) or preVIouslyembedded ways of thinking carried over fromthe government era. The process of adapting tochange was shaped and constrained by theinstitutions inherited from the past. An equallyimportant observation in both PSP and. BCWwas the lack of the technically and profeSSIonallyqualified organisational actors for understand~ngthe rules and meanings of the new accountmgsystem. Hence, the cognitive constrain~ in. termsof the institutions and the low finanCIal lIteracylimited the acceptance and the mobilisation ofaccounting for constructing the new reality. Thelack of use of accounting led to continuity of theold reality. However, while BCW was unabl~ torecruit qualified graduates, PSP recr.t.lltedaccountants from outside, but, as mentIOnedearlier, they lacked the wider essential businessskills and experience to manage change.

COMPARING INSIGHTS OF

THE CASE STUDIES

In summary, although all the organisations faceda strong influence from the environment, theircomparison indicates some variety in the use ofaccounting information and its effects andeffectiveness as a mechanism for infusing newmeanings and values. Detachment of accounting,in terms of its lack of use and effect, was observedin some cases but not in others; the powerfulrole of accounting for attaining economicefficiency, assumed by the governments couldnot be generalised across all contexts.

The successful 'recoupling to the businessculture' (Dent 1991: 724) resulted in promotingthe use of accounting as the new organisationalknowledge. Such use was possible through thestrategy of persuasion and influence developedby the Business managers. The implementationof changes had the support of the topmanagement, but was not perceived as animposition that was drastically done, and directlycame from the Business managers. Relative tothe mechanistic and imposition method ofexerting change in PSP, the way change wasintroduced and later enforced in Euro Rail ledto the acceptance of the Business managers aseffective and powerful change agents.

Privatisation of the United Kingdom waterindustry and corporatisation of PSP did notresult in increased market competition. Insteadthese utilities are maintained as monopolies, butsubjected to similar interference by thegovernment through regulation. However, onone hand, in the United Kingdom water industry,the institutional environment enabled costcompetitiveness through price regulation; PSP'senvironment exerted regulative and normativeconstraints through a price freeze on the other.Clearly, the objective of regulation differs in thatthe emphasis in PSP was more on the socialaspect, while in the United Kingdom waterindustry, it was more on the economic aspect.

As mentioned above, the differing emphasisin regulation partially explains the detachmentof accounting in PSP. The existence of bothprice stability and limited competition, results inless incentive for PSP to improve its cost-savingsperformance through the use of accountinginformation. Although both governments engagein regulation to curb the monopoly powers of

116 PertanikaJ. Soc. Sci. & Hum. Vol. 14 No.2 2006

Stories of Accounting Change During Financial Reform of Public Enterprises

the utility entities, the impact of the regulationin Malaysia appears to reinforce the intra­organisational conflict between public serviceand profitability goals. The Malaysian governmentinterferes through the government regulatorybody primarily to protect public interests thanto maintain incentives for higher economicefficiency.

Similar to Alam's work, the government ofBangladesh through the Ministry interferes inthe operations of jute through price fixing andenforcement, rather than economic purposes.The budgets became rituals because they weremade to follow the requirements of thegovernment rather than the daily operations. InPSP and jute, the non-economic aspects ofinterference by the governments contribute toexplain the marginal use of the budgets foreconomic decision-making. The strong influencesby the Bangladesh and Malaysian governmentsensure that public enterprises continue to pursuemultiple social and economic objectives.Ineffectiveness of accounting, in terms of itsmarginal role in operations, is due to the stronginfluence and role of institutional pressures. InBCW and PSP, financial survival drove accountingchanges but the internal institutions - theestablished ways of thinking from the previousgovernment entities - continued to exertinfluence and shaped the way in whichaccounting change became detached and notdrawn upon for internal activities. Whileeconomic imperatives in the environmentstimulate commercial and financial changes,organisations such as PSP, jute firm and BCWwere still constrained by social responsibility,government interference, and old workforce.Consequently, these studies show that ceremonialenactment of accounting change can result incontinuity or stability of the old ways of thinking.

In summary being entities in the publicdomain, new economic demands from thegovernment are accommodated within all thecase organisations. These public enterprisespursued financial survival through accountingand organisational changes. The results fromaccommodating the environmental pressures tochange through accounting had an unevenimpact, depending on how it was drawn upon byorganisational members.

IMPLICATIONS

All the above stories share the need foraccounting to change as a means of transformingthemselves into profitable organisations. In somestories, accounting plays a marginal role inoperations due to several reasons such asinterference from the government, theestablished ways of thinking from previousgovernment entities, social interactions whichinclude trust and power issues. These issuesquestion the potential of the new accountingsystem to create a new organisational reality(Hopwood 1990) with profitability as animportant agenda. The findings imply that theprocess of accounting change and its effects andconsequences cannot be rationalised on purelytechnical grounds, and in isolation from thecontext in which the information is producedand used.

Since the detachment of accounting systemis a contingent and contextual phenomenon,the case study approach will continue to beuseful for explaining the phenomenon in futureand further studies. According to Keating (1995:66), 'case study research is certainly one meansfor accounting researchers to develop anintimate, contextually sensitive knowledge ofactual management accounting practices'.

For policy makers in the area of publicsector reform, in particular in the Malaysianeconomy, the story of PSP should raise questionsabout the appropriateness of commercialaccounting5 for enhancing the economicefficiency of all public enterprises. Littleconsideration has been given to the'unpredictable' impact of economic reform,contextual differences between organisations,and whether these differences matter whenreforming each unique organisation. Policymakers can no longer take for granted thatprivate sector accounting is an instrumental andsufficiently powerful means to achieve profit­oriented ways of thinking and behaving.

As shown in Dent's case study, managingchange is about managing relationships andeffective persuasion to reduce resistance fromother organisational members. For accountantsto manage change, they need to interact andsecure the trust and confidence of other

Commercial accounting is the term used in the corporatisation policy to indicate the private sector accounting.

PertanikaJ. Soc. Sci. & Hum. Vol. 14 0.22006 117

or Aziah Abu Kasim

members in the organisation. Technical skillswithout interpersonal skills will not be sufficientto secure other members' cooperation andcommitment to use accounting information inthe intended manner. Thus, an importantimplication is that learning outcomes in theteaching and learning of accounting shouldinclude both the technical and interpersonal skills.

CONCLUSION

The stories of accounting change provide someinsights into the complexity due to the non­technical issues involved in implementingaccounting change during financial reform. Thelack of uniform effects from accounting practicessupports the claim that accounting is not simplya technique but a social and organisationalpractice that can have a variety of possible butunpredictable effects on organisations. Itsimplementation was not narrowly and simplyconcerned with accounting techniques and rulesthat would inevitably be followed in the spirit offinancial management reform.

As case study findings are context-specific,the idiosyncrasies of the findings hinder theirpossible generalisation to other contexts but areincorporated here in order to enhanceunderstanding of the role of accounting duringfinancial reform. Lack of generalisation in casestudies is however compensated by the holisticand in-depth study of each specific organisation.Since financial management reform in the publicsector is an international agenda, further researchin terms of collaboration in various naturalsettings can further improve the comparisonsand the search for explanations of the differentor similar consequences from implementingaccounting. These explanations are invaluablefor improving and enhancing the effectivenessof the financial transformation of publicenterprises.

REFERENCES

ABU-KAsIM, N. A. 2004. Corporatisation, loosecoupling and stability: accounting change in aMalaysian public utility. Ph.D thesis, TheUniversity of Manchester, Manchester.

A1.AM, M. 1997. Budgetary process in uncertaincontexts: a study of state-owned enterprises inBangladesh. Management Accounting Research8:147-167.

BURCHELL, S., C. CLUBB, AG. HOPWOOD, J. HUGHESand J.C. NAPAHIET. 1980. The roles ofaccounting in organizations and society.Accounting, Organizations and Society 5(1): 5-27.

CARRUTHERS, B.G. 1995. Accounting, ambiguity andthe new institutionalism. Accounting,Organizations and Society 20(4): 313-328.

CHUA, W.F. 1986. Interpretive sociology andmanagement accounting research - a criticalreview. Accounting, Auditing and AccountabilityJournal 1(2): 59-79.

COVALESKl, M. A., M. W. DIRSMITH and S. SAMUEL.1996. Managerial accounting research: thecontributions of organizational and sociologicaltheories. Journal of Management AccountingResearch 8: 1-35.

DENT, J. F. 1991. Accounting and organizationalcultures: a field study of the emergence of anew organizational reality. Accounting,Organizations and Society 6(8): 705-732.

GURD, B. and H. THORNE. 2003. The transformationof an accounting system during organisationalchange: a longitudinal study. FinancialAccountability and Management 19(1): 21-43.

HARDy, C. 1996. Understanding power: bringingabout strategic change. British Journal ofManagement 7 Special Issue: 83-516.

HOOD, C. 1995. The" ew public management" inthe 1980s: variations on a theme. Accounting,Organizations and Society 20(2/3): 93-109.

HOPPER, T. and A. POWELL. 1985. Making sense ofresearch into the organizational and socialaspects of management accounting: a reviewof its underlying assumptions. Journal ofManagement Studies September: 429-465.

HOPWOOD, A.G. 1990. Accounting and organisationchange. Accounting, Auditing and AccountabilityJournal 3(1): 7-17.

HOQUE, Z. and]. MOLL. 2001. Public sector reform:Implications for accounting, accountability andperformance of state-owned entities - anAustralian perspective. The InternationalJournalof Public Secta'/< Management 14(4): 304-326.

HUMPHREY, C., P. MILLER and R.W. ScAPENS. 1993.Accountability and accountable managementin the UK public sector. Accounting, Auditingand Accountability Journal 6(3): 7-29.

118 PertanikaJ. Soc. Sci. & Hum. Vol. 14 0.22006

Stories of Accounting Change During Financial Refonn of Public Enterprises

KEATING, PJ. 1995. A framework for classifying andevaluating the theoretical contributions of caseresearch in management accounting. Journalof Management Accounting Research 7: 66-86.

MUHD-SALLEH, 1. and H. OSMAN-RANI. 1991. The Gr(JUJthof the Public Sector in Malaysia. Institute ofStrategic and International Studies (ISIS)Malaysia.

NYLAND, K. and I. J. PETTERSEN. 2004. The controlgap: the role of budgets, accountinginformation and (non-) decisions in hospitalsettings. Financial Accountability and Management20(1): 77-102.

OGDEN, S. G. 1995. Transforming frameworks ofaccountability: the case of water privatization.Accounting, Organizations and Society 20(2/3):193-218.

OGDEN, S. G. and F. ANDERSON. 1999. The role ofaccounting in organisational change:promoting performance improvements in theprivatised UK water industry. Critical Perspectiveson Accounting 10: 91-124.

OLSON, 0., C. HUMPHREY and J. GUTHRIE. 2001.Caught in an evaluatory trap: a dilemma forpublic services under NPFM. The EuropeanAccounting Review 10(3): 505-522.

PFEFFER, J. 1992. Managing with P(JUJer: Politics andInfluences in Organizations. Boston,Massachusetts: Harvard Business School Press.

POTTER, B. 2002. Financial accounting reforms inthe Australian public sector: An episode ininstitutional thinking. Accounting, Auditing andAccountability JoumalI5(1): 69-93.

QUATTRONE, P. and T. HOPPER. 2001. What doesorganizational change mean? Speculations ona taken for granted category. ManagementAccounting Research 12: 403-435.

ROBERTS, J. 1991. The possibilities of accountability.Accounting, Organizations and Society 16(4): 355­368.

SCAPENS, R.W. 1990. Researching managementaccounting practice: the role of case ctudymethods. British Accounting Review 22: 259-281.

SCAPENS, R. W. 1994. Never mind the gap: towardsan institutional perspective of managementaccounting practices. Management AccountingResearch 5: 301-321.

SPICER, B., D. EMANUEL and M. POWELL. 1996.Transforming Government Enterprise: ManagingRadical Organisational Change in DeregulatedEnvironments. Australia: The Centre forIndependent Studies Limited.

SULAIMAN, A. A. H. 1993. The role of the governmentin a privatisation exercise: pre- and post­privatisation. In the National Conference onPrivatisation: The Challenges Ahead, 7 October,Kuala Lumpur.

UDDIN, S. and T. HOPPER. 2003. Accounting forprivatisation in Bangladesh: testing World Bankclaims. Critical Perspectives on Accounting 14:739-774.

VAMOSI, T.S. 2000. Continuity and change;management accounting during processes oftransition. Management Accounting Research11(1): 27-63.

(Received: 21 September 2005)

PertanikaJ. Soc. Sci. & Hum. Vol. 14 No.2 2006 119