Accountability in local governments: trends, initiatives and effects of the implementation of result-oriented accounting

At the end of seventies, a reform process started in the international environment concerning public administrations, particularly New Public Management (NPM) succeeded in affirming a few basic principles which relate to the management of these organizations. Among these principles is accountability (Hood; 1995). The NPM trend on result-oriented government has caused a wide variety of initiatives to come to a more result-oriented budgeting, accounting and accountability. In some countries like Italy this has led to the implementation of formal accountability framework, which focuses more on observing normative prescriptions, rather than the individual responsibility (Farneti F. 2003 a). It is necessary to recognize the importance of accountability behaviour of those people assuming a responsible position, in order to account to stakeholders who require financial and non financial, quantitative and qualitative, political, social information and to ensure control in a transparent way (Pezzani; 2003). The aims of the paper are threefold: 1. The first refers to the benefits which can be achieved by Italian local governments, from a theoretical perspective if the accountability principle is observed. It is worthwhile mentioning that since January 2004 the National Observatory for local governments accounting and finance at the Ministry of Home Affair, which aims at identifying accounting standards for local governments, suggested the application of the accountability principle in its fourth publication about annual reporting (rendiconto). Thus the local government accountability framework in Italy, in the sense of the direction suggested by the National Observatory, explains the shift in focus, from formal to substantial accountability, where public organizations are treated in the "economia aziendale" context. The proposed Italian accounting standards for local government assume a wider meaning than the international accounting standards (e.g. a focus just on financial aspects), since they include social and political accountabilities, planning-programming activities and tools needed to measure efficiency, effectiveness and outcomes. 2. The second refers to a more result-oriented focus, which is not only limited to reporting to superior institutions (Parliament, National Audit Office …) or citizens, but also an instrument for management. The best tool recognized as useful in identifying accountability is the balanced scorecard (BSC). The BSC is applied to support management in local governments in applying strategies and in providing accountability to the various stakeholders in the economic, social and political decision making environment (Farneti F. 2003 b). It is in this sense that the framework of BSC both for Italian local government and case-studies for Dutch local governments will be illustrated. 3. Lastly, it aims at showing the effects of result-oriented budgeting, accounting and accountability on management, based on research in Dutch local governments where unforeseen cultural effects will be explored. Some topics on the implementation and effects of ‘accountability on results’ will be discussed. The research methodology is based on a bibliographic survey, on case-studies and involves a normative prospective as well. The output of the study will help to know and understand the Italian and Dutch public local governments through the accountability principle and to contribute to its success management.