Developing Public Sector Cost Accounting Systems - Case Finnish Defence Forces

Journal of Modern Accounting and Auditing, Vol. 7, No 2, pp. 97-110, 2011

14 Pages Posted: 6 Apr 2011

See all articles by Timo Hyvonen

Timo Hyvonen

Tampere University; Tampere University - School of Business Administration

Janne Jarvinen

University of Oulu

Salme Näsi

University of Tampere

Jukka Pellinen

University of Jyväskylä

Tapani Rahko

Tampere University

Date Written: April 1, 2011

Abstract

This paper addresses the relationship between “new” and the “old” public performance management; the dialogue between imported idealistic designs and the inherently stable existing (performance) management systems (Carmona & Grönlund, 2003; Hyvönen, Järvinen, Pellinen, & Rahko, 2009; Scapens & Ter Bogt, 2009). We see the co-existence of imported and traditional, both idealistic and realistic models of performance management as problematic. Such performance management models are based on different institutional logics that are the taken-for-granted rules guiding behavior of field-level actors, and related practices that predominate in an organizational field. These logics help to explain connections that create a sense of common purpose and unity within an organizational field (Scott, 2001; Kitchener, 2002). The purpose of this paper is to analyze and illustrate how institutional pressures for management accounting change are formed. Most studies on change and stability of management accounting pay little attention on how institutional pressures for accounting change are formed, especially on the political field level. Our study demonstrates how various actors at the political field level participate in creating institutional pressures in diverse and sometimes contradictory ways. Drawing on archival data and 20 interviews with public officials, we seek to illustrate how different organizational field-level actors’ views on implementing cost accounting differ, and how these views have influenced the outcome of cost accounting development in the Finnish Defence Forces. Our results suggest that contradictory institutional logics exist in relation with Finnish central government management-by-results, performance management and cost accounting systems. A value-for-money ideology in the armed forces sector (see e.g., Grönlund & Catasus, 2005) at times seems to challenge and even contradict the “legalistic” tradition of developing cost accounting that conforms to budgetary laws and statues. Similarly, the New Public Management based performance prism model (Fryer, Antony, & Ogden, 2009; Neely, Adams, & Crowe, 2001), when implemented at a local level, seems to conflict with notions common in accounting literature, according to which management accounting systems should be aligned with organizations’ strategy and structure (see e.g., Abernethy, Lillis, Brownell, & Carter, 2001).

Keywords: management-by-results, performance management, cost accounting, military

JEL Classification: M40

Suggested Citation

Hyvonen, Timo and Jarvinen, Janne and Näsi, Salme and Pellinen, Jukka and Rahko, Tapani, Developing Public Sector Cost Accounting Systems - Case Finnish Defence Forces (April 1, 2011). Journal of Modern Accounting and Auditing, Vol. 7, No 2, pp. 97-110, 2011, Available at SSRN: https://ssrn.com/abstract=1800643

Timo Hyvonen (Contact Author)

Tampere University ( email )

Kanslerinrinne 1
Tampere, 33014
Finland

Tampere University - School of Business Administration ( email )

Kanslerinrinne 1
Tampere, 33014
Finland

Janne Jarvinen

University of Oulu ( email )

Finland

Salme Näsi

University of Tampere ( email )

Tampere, FIN-33101
Finland

Jukka Pellinen

University of Jyväskylä ( email )

Seminaarinkatu 30
Jyväskylä, 40100
Finland

Tapani Rahko

Tampere University ( email )

Tampere, FIN-33101
Finland

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