Commercialisation of Public Sector Accounting and Public Accountability

Commercialisation of public sector accounting in Australia has essentially been achieved through extension of private sector accounting standards to the public sector, with the exception of two standards. The first standard relates to financial reporting by segments and the second to related party disclosures. This paper briefly outlines the commercialisation process of public sector accounting as a vehicle to promote privatisation and provides both a theoretical analysis and empirical evidence on the effects of the exclusion of the two standards for public accountability. It is found that the exclusion of the two standards has been a significant factor that has facilitated the erosion of public accountability in the country. Information for monitoring performance and identifying instances of potential or actual conflicts of interest is found to be seriously lacking. Mandatory application of the two standards will fill much of this information expectation gap and help restore public accountability. [