Academic journal article Public Administration Research

The Role of Accounting in the Municipal Performance: An Empirical Study in the Central Region of Portugal

Academic journal article Public Administration Research

The Role of Accounting in the Municipal Performance: An Empirical Study in the Central Region of Portugal

Article excerpt

Abstract

This article examines the differences in the adoption and implementation of the reform of financial accounting in the Portuguese municipalities. This study is based on a questionnaire sent to the financial officers of the Portuguese municipalities of Central Region of Statistics of Portugal, who had previously adopted the double entry accounting based on Official Accounting Plan of Local Authorities (POCAL). The questionnaire was structured in the same way for the whole target population. This study will be possible to verify, based on the responses obtained, if local authorities do what they are legally defined to do in the provision of financial information on the allocation of resources as well as on the development of performance indicators, based on accounting data.

Keywords: municipality, public accounting, indicator, performance, economy, efficiency and effectiveness

1. Introduction

1.1 Introduce the Problem

The accrual accounting in the public sector has attracted great interest from researchers and academics. This approach was developed based on the idea that one way to modernize public sector management will be adopting similar accounting practices to the private sector.

Since the 1990s some people have claimed that users of financial reporting in the public sector need complete and detailed financial information on the value of assets, liabilities, depreciation and net income. It is argued that this information is needed to determine the full cost of providing public goods and services and better evaluate the performance of politicians and managers.

This article examines the differences on the adoption and implementation of the reform of financial accounting in the Portuguese municipalities. This study is based on a questionnaire sent to the financial officers of the Portuguese municipalities in the Central Region of Portugal, who had previously adopted the double entry accounting based on POCAL. The questionnaire was structured in the same way for the whole target population.

With this study will be possible to verify, based on the responses obtained, if local authorities do what is legally defined about the provision of financial information on the allocation of resources as well as on the development of performance indicators, based the accounting data.

1.2 Characterization of Portuguese Municipalities

The Local Government corresponds to the activity carried out by local authorities. These are territorial legal persons, with representative bodies that seek to pursue specific interests of citizens in their area (part of the national territory).

In truth, there is no place to set local authority if it is not administered by the representative of the populations that comprise organs. It is through elections that are chosen representatives of the citizens that will protect and direct the policies for the various administrative bodies of local governments. Of all the political-strategic management performed by responsible, result in greater or lesser developments of its territorial space.

There are three types of local authorities in Portuguese territory, as shown in the table below:

Local authorities are territorial legal persons with representative bodies, to pursuit the own interests of respective populations (Article 235 of the PRC; Articles 1 and 2 of Decree-Law No. 100/84 of 29 March). Are traditionally designated by the City Council, have administrative and financial autonomy to manage the territorial space, designated "county", but that the 1976 Constitution enshrined as Municipality.

The strength of free peoples is in the Municipality "(...) without local institutions a nation may have a free government, but will lack the spirit of freedom (Alexis de Tocqueville: 1856)".

The supra-local authority is designated district, although it can admit its abolition and replacement by a broader supra-local authority designated by administrative region, that still remains elusive and is only been formally established in the CRP. …

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