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Accountability in local government: a principal‐agent perspective

Accountability in local government: a principal‐agent perspective Purpose – In Sweden there is an ongoing debate on ways to enhance accountability and transparency in order to avoid future scandals both in private companies and local government. Until now the debate has had clear political overtones, and there are no generally accepted methods for analysis of this issue. The purpose of the article is to survey and analyze the chain of accountability to be reviewed by the auditors and through the use of principal‐agent (PA) theory to identify the problems that may arise in holding persons accountable. Design/methodology/approach – The paper shows how PA theory can be used to structure and analyse the intricate situation in Swedish local government. The model is particularly suitable in complex systems of accountability. Therefore, the paper explores two cases where the outcomes were discharge from liability. Based on the two case studies, the paper extends the empirical investigation to a list of 63 qualified audit reports in local government for 2002 and 2003. Findings – PA theory facilitated the understanding and structuring of the complex accountability situation and helped to identify important weaknesses in the system. The analysis underscored that neither better accounting nor better auditing systems alone will resolve the dilemma in improving accountability. The link between auditors and elected officials and civil servants needs to be investigated and clarified. Among other things, this means that the focus of today's debate should shift toward the lack of clear responsibilities within local governments. Research limitations/implications – This paper explores an area of research where few studies have previously been conducted – therefore, the paper is to some extent exploratory. In the future the number of empirical examples could be increased, and the different problems in the system of accountability in local government could be discussed in more detail. Practical implications – This research paper is based on an empirical investigation – as far as we know no such study has previously been performed in Sweden The principle of public access to information in Sweden provides unique opportunities for openly studying the work of auditors in the system. Originality/value – The research shows that PA theory may be used to structure complex issues of accountability. In addition, the study recommends a new focus for the debate on accountability. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Human Resource Costing & Accounting Emerald Publishing

Accountability in local government: a principal‐agent perspective

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Publisher
Emerald Publishing
Copyright
Copyright © 2005 Emerald Group Publishing Limited. All rights reserved.
ISSN
1401-338X
DOI
10.1108/14013380510645397
Publisher site
See Article on Publisher Site

Abstract

Purpose – In Sweden there is an ongoing debate on ways to enhance accountability and transparency in order to avoid future scandals both in private companies and local government. Until now the debate has had clear political overtones, and there are no generally accepted methods for analysis of this issue. The purpose of the article is to survey and analyze the chain of accountability to be reviewed by the auditors and through the use of principal‐agent (PA) theory to identify the problems that may arise in holding persons accountable. Design/methodology/approach – The paper shows how PA theory can be used to structure and analyse the intricate situation in Swedish local government. The model is particularly suitable in complex systems of accountability. Therefore, the paper explores two cases where the outcomes were discharge from liability. Based on the two case studies, the paper extends the empirical investigation to a list of 63 qualified audit reports in local government for 2002 and 2003. Findings – PA theory facilitated the understanding and structuring of the complex accountability situation and helped to identify important weaknesses in the system. The analysis underscored that neither better accounting nor better auditing systems alone will resolve the dilemma in improving accountability. The link between auditors and elected officials and civil servants needs to be investigated and clarified. Among other things, this means that the focus of today's debate should shift toward the lack of clear responsibilities within local governments. Research limitations/implications – This paper explores an area of research where few studies have previously been conducted – therefore, the paper is to some extent exploratory. In the future the number of empirical examples could be increased, and the different problems in the system of accountability in local government could be discussed in more detail. Practical implications – This research paper is based on an empirical investigation – as far as we know no such study has previously been performed in Sweden The principle of public access to information in Sweden provides unique opportunities for openly studying the work of auditors in the system. Originality/value – The research shows that PA theory may be used to structure complex issues of accountability. In addition, the study recommends a new focus for the debate on accountability.

Journal

Journal of Human Resource Costing & AccountingEmerald Publishing

Published: Jul 1, 2005

Keywords: Management accountability; Local government; Sweden

References