TUTORIAL: PUBLIC SECTOR ACCOUNTING

QUESTION 1 (25 MARKS:45 MINUTES)

In the true spirit of transparency, accountability and unbiased disclosure, the performance of the

Government Transformation Programme (GTP) is published in the 2010 Annual Report. While

the GTP has delivered significant results, the nature of stretched targets means that we are likely

to fall short in certain areas. This report provides an accurate account of wins and shortcomings

and how we plan to continue improving in the interest of the rakyat. The GTP is supported by the

National Key Result Areas (NKRAs) and Ministerial KeyResult Areas (MKRAs). The NKRAs

are deemed as priority areas that require quick and big wins to address the urgent needs of the

people.

(JabatanPerdanaMenteri, 2011)

REQUIRED:

(a) Discuss the effects of corruption to the accountability of public sector.

(10 Marks)

(b) Discuss the role of legislation to ensure transparency and accountability in government

financial management

(7 Marks)

(c) Suggest four (4) ways to improve accountability.

(8 Marks)

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ANSWER FOR QUESTION 1

Question 1a

Corruption can be defined as the use of public office for private gain, or in other word, use

official position, rank or status by an office bearer for own personal benefit. From the definition

the activities that can be classified as corruption is including bribery, extortion, fraud,

embezzlement, nepotism, cronyism, appropriation of public asset and property for private use

and influence peddling. When either or all this type of corruption activities or scandal issue arise,

it already show that there is a lack of transparency and accountability in institutional or

organization

Corruption poses a serious development challenge. In the political realm, it undermines

democracy and good governance by flouting or even subverting formal processes. Corruption in

elections and in legislative bodies reduces accountability and distorts representation in

policymaking; corruption in the judiciary compromises the rule of law; and corruption in public

administration results in the inefficient provision of services. It violates a basic principle of

republicanism regarding the centrality of civic virtue. More generally, corruption erodes the

institutional capacity of government as procedures are disregarded, resources are siphoned off,

and public offices are bought and sold. At the same time, corruption undermines the legitimacy

of government and such democratic values as trust and tolerance.

A few remarks about accountability are necessary as it occupies an importance place in

considering the corruption question. Accountability has to de with the fact that proper

observance of rules and regulation, those administering the rules must held responsible for their

action. If there is a corruption among the public worker in the government, it can be said that the

accountability among them is really weak because they use their power to their own advantages

and gain. As a result, it can bring the bad effect to the government administration and economic

reform. This is because, reform in economic require greater transparency, accountability, free

and fair competition, deregulation, and reliance on market forces and and private initiatives, as

well as limiting dicretionary powers, special previlages and price distortions- all of which will

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reduce opportunities for economic rent on which corruption thrives. The rich and powerful, the

main gainers of power system. Will therefore oppose reforms.

Question 1b

Legislation or statutory law is law which has been enacted by a legislature or other governing

body, or the process of making it Before an item of legislation becomes law it may be known as

a bill, and may be broadly referred to as "legislation" while it remains under consideration to

distinguish it from other business. Legislation can have many purposes: to regulate, to authorize,

to proscribe, to provide (funds), to sanction, to grant, to declare or to restrict. Under the

Westminster system, an item of primary legislation is known as an Act of Parliament after

enactment. Legislation is usually proposed by a member of the legislature (e.g. a member of

Congress or Parliament), or by the executive, whereupon it is debated by members of the

legislature and is often amended before passage. Most large legislatures enact only a small

fraction of the bills proposed in a given session. Whether a given bill will be proposed and enter

into force is generally a matter of the legislative priorities of government.Legislation is regarded

as one of the three main functions of government, which are often distinguished under the

doctrine of the separation of powers. Those who have the formal power to create legislation are

known as legislators; a judicial branch of government will have the formal power to interpret

legislation (see statutory interpretation); the executive branch of government can act only within

the powers and limits set by the law.

The first critical step in financial management – and indeed all records – effectively is to

ensure the development and maintenance of a strong legislative and regulatory framework for

record keeping. Without consistency in the practice of creating, managing, and keeping records;

there can be no accountable or transparent mechanisms for the provision of access to records. An

essential part of this accountability is to assign to the National Archives or to the Departmental

Records Office formal, legislated responsibility for the management of records throughout their

life cycle.

In access legislation, many governments around the world have implemented access to

information legislation. Such legislation is critical to the establishment of accountable and

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transparent operations. Access legislation must state that access to government information is a

right, not a privilege. The legislation should ensure that the government will not have discretion

to decide what will or will not be made available, except for certain specific categories of

records, such as those critical to national security. Access legislat ion should shift the burden of

proof from citizens, who must explain why they should have access, to government, who must

explain why they should not provide records or information.mCritical to access legislation – as

with any legislation – is the inclusion of penalties for abuse, neglect or mismanagement.

Access legislation alone will not protect the record. Access legislation requires – or should

require – that, with limited and explicit exceptions, any record created by government and still

in existence will be made available to the public upon request. But access legislation does not

require that any record must be created or that any record must be kept, or for how long. Without

a requirement that governments create and protect records of important actions, transactions, and

decisions, the public has no recourse when such information cannot be made available. Along

with access legislation, governments must develop effective and comprehensive records and

archives legislation. Such legislation must define the record-keeping process and ensure that

government is required to manage public information in an accountable, transparent, and

effective fashion. Comprehensive and up -to-date records and archives legislation is a critical

prerequisite of effective records care and, consequently, of accountable records management.

Records and archives legislation establishes the infrastructure within which appropriate records

and archives systems can be created and implemented. While many governments have been

implementing access legislation, however, far fewer have also revised or modernized their

records legislation. Thus in many countries records legislation – often known as the Public

Records Act or the Public Archives Act – is often seriously out of date. Often such legislation

does not even recognize the importance of managing records throughout the life cycle, let alone

address the need to manage new types of records and archives in an electronic age. Historically

archives legislation would assign to the Public or National Archives the responsibility for

protecting the historical record; specifically, the institution would be charged with “acquiring,

preserving, and making available” the records of government and society. Implicit in such a

statement, however, was the idea that the Archives was at the end of a process; that someone else

was looking after the records in offices and departments and that the records would flow,

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naturally and inevitably, to the archival facility for permanent retention. Traditionally, archives

legislation that focused on the historical and research use of records resulted in ad hoc decisions

about what is kept and what is destroyed, based on research trends or historical interests not on

the needs of citizens and government. As the quantity of paper in government offices increased,

however, and as electronic information systems have come into existence, valuable records

cannot be protected, and unneeded records destroyed, unless someone – ideally the

professionally trained archivist –intervenes in the process of creation and identifies those records

worthy of permanent retention. Otherwise, the Archives ends up either having to sort through

boxes and boxes of garbage to find a few files of critical value or, worse, receiving no records at

all since they have been lost or destroyed long before making their way to the archival facility.

The two other legislation is privacy legislation and other record- related legislation.

Question 1c

Four ways to improving accountability:-

i. Standard- publishing standard and progress against commitments enables customer to

put pressure on those responsible for public services to deliver a high quality service.

ii. It is incumbent for all controlling officers to ensure that corrective action are

effectively taken and their officers and staff are adequately trained to handle their

task.

iii. Public Sector leaders must exercise segregation of powers, checks and balances,

means of transferring power and transparency in ensuring accountability. They must

guide the actions of public officials throughout the system.

iv. Putting things right- the charter must stress that if sometimes things go wrong, public

services should offer an apology, a full explanation and a swift and effective remedy.

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QUESTION 2

1. Differentiate between public sector accountability and private sector accountability by giving

examples.

2. To what extent government agencies have been practicing public accountability compared to

private sector’s firms ?

ANSWER FOR QUESTION 2

Answer No 1

The Automatic accountability provided by market data for private corporations is useful

but notably narrow. It deals only with the parties to market transaction. The concern in the public

sector is much wider. For instance, it is possible to keep track of contributions of workers and

employers to the unemployment insurance fund as well as of payments of benefits to

unemployed workers. The concern of elected officials and tax payers however extend beyond the

efficiency of transaction between beneficiaries and the unemployment insurance commission.

The effectiveness of public intervention as a whole is a major concern and is not readily

captured by the workings for administration. In a democracy, the oppoturnity of tax payers

(consumer) to shift allegiance (preference) to a differ government through elections every four

years constitutes accountability. It does indeed, but is not punctual, nor are the signals very rich

in information to guide other than global decisions. To use the business vocublary, elections tell

more about consumer preference with regard the supplier than with regard of the goods

themselves.

Answer No 2

The structures of accountability appear to be generally more stringent in the public than the

private sector, particularly in terms of the accountability of organisations for the processes by

which they determine their general directions and policies. While some private institutions have

established effective complaints procedures for individual cases, many industries still lag in this

respect and few, if any, are prepared to tolerate the degree of general scrutiny expected of

governments and public agencies. The private sector has no equivalent of parliament as an

institution of public accountability nor are private sector. Companies subject to continuous

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public scrutiny from a political opposition competing for public support as an alternative

management team. Though the private sector focus on profitability is a powerful instrument of

accountability, the range of activities for which private sector managers are held publicly

accountable is considerably narrower than that which applies to politicians or senior public

servants. In the public sector, the absence of a clear ‘bottom- line’ is more than adequately made

up for by a greater variety of accountability mechanisms applied at more points in the decision-

making process.

We may speculate whether these distinctions between the public and private sectors are

likely to continue or whether the gap between the two sectors is narrowing, leading to more

common standards of acceptable account ability. Some evidence points to a growing

convergence. For instance, the continuing use of private sector management practices as the

model for public sector management and the growing tendency to appoint private sector

managers to public sector positions are bringing pressure to bear on areas of public

accountability which are foreign to the private sector and unwelcome to private sector managers.

Thus, for example, we can expect growing resistance from politicians and public servants to the

comparatively high degree of scrutiny of appointment procedures and executive expenses

traditionally required in the public sector.

At the same time, convergence may be encouraged from the opposite direction, that is, by

the private sector moving closer to the public sector. Pressure to increase accountability in the

private sector comes from individual members of the public, partly in their role as customers

seeking redress against high-handed companies and also as part of the growing army of

shareholders wishing to know more about the performance of companies in which they have

invested. Such trends are linked to the worldwide consumer movement aimed at confronting the

self-interested actions of private companies, especially large multinational companies. These

efforts at improving accountability are intended not so much to extend the mechanisms of public

accountability to private organisations as to establish separate, parallel mechanisms, mimick-ing

to some extent those found in the public sector.

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