services, carried out by public enterprises. This is done mainly for purposes of nation-building, providing economic or financial infrastructure for a country, or carrying out risky ventures in the public interest, which private enterprises cannot or will not do.
The selection of governing instruments is guided by several considerations. One is public acceptability. For example, the legal regulation of discrimination was not generally acceptable in Western countries before World War II. Given the common view that discrimination was best met through education and goodwill, policymakers were left only with the options of self-regulation or exhortation. But after the war, with public demand for legislation, policymakers could and did choose the instrument of regulation.
Another consideration is the level of public expectations of the state. For example, before World War II, there was little expectation of the state to provide for social welfare. But after the war, with a shift to the belief that it was the responsibility of the state to ensure a basic level of social welfare, policymakers were under pressure to select the instrument of large-scale expenditure for social programs.
Finally, another factor is government revenue. In the relatively affluent postwar period, policymakers could and did choose the instrument of expenditure. But since the 1970s, in a period of declining revenues and middle-class tax resistance, regulation (and deregulation) has become a much more attractive instrument than expenditure or public ownership. It is more cost effective-in areas where it can be done-to control behavior through enacting regulations than through spending or operating public enterprises.
R. BRIAN HOWE
Doern, G. Bruce, and Richard W. Phidd, 1992. Canadian Public Policy: Ideas, Structure, Process. 2d ed. Toronto: Nelson Canada.
Lowi, Theodore J., 1972. "Four Systems of Policy, Politics, and Choice". Public Administration Review 33 (July-August): 298-310.
Spitzer, Robert, 1987. "Promoting Policy Theory: Revising the Arenas of Power". Policy Studies Journal 15 (June): 675-689.
GOVERNMENT ACCOUNTING . The financial and managerial accounting performed by governmental units to ascertain the level of efficiency and effectiveness in their activities. Audited financial reports on these activities provide accountability to the general populace on the actions of government officials to maintain a balance between taxing and spending policies.
Even though tax collectors were recognized in biblical writings, government accounting as a separate discipline is a relatively recent development, with extensive activity beginning early in the twentieth century. This activity has been driven by the desire for public budgets and the need for greater accountability by elected officials. Initially, government accounting developed at the local level, where taxpayers are closest to their elected representatives, then spread to the state and national levels. At present, extensive effort is being exerted in the international arena due to the increasing emphasis on globalization.
The major objectives of governmental accounting are to account for funds raised and to allocate public resources. The actual results of operations are compared with budgeted targets or goals in the financial statements where the efficiency and effectiveness of the governmental unit can be assessed.
The differences in the focus of accounting between governmental units (the public sector) and private enterprise (the private sector) are numerous. In the public sector, there is no private ownership. That is, power belongs to the people through their elected representatives. Further, there is no profit motive in the public sector, and revenues (i.e., taxes) received from individual taxpayers have no relationship to the services or benefits delivered to these same taxpayers.
During the first decade of the twentieth century, considerable interest in government accounting was exhibited. In 1901 and 1902, financial statements were issued by the cities of Newton, Massachusetts; Baltimore, Maryland; and Chicago, Illinois. A Handbook of Municipal Accounting was issued by the City of New York in 1910 to standardize accounting practices in the city.
Interest dropped off, however, until the National Committee on Municipal Accounting was organized in 1934, under the auspices of the Municipal Finance Officers Association (MFOA). This committee published numerous position papers during its developing years. In 1951, these publications were formally issued in a book titled Municipal Accounting and Auditing. This book was revised in 1968, retitled Governmental Accounting, Auditing, and Financial Reporting, and continues to be revised periodically by the Government Finance Officers Association (GFOA) -- the successor organization to the MFOA.
The National Committee on Municipal Accounting was replaced by the National Council on Governmental Accounting (NCGA) in 1974. It attempted to address many accounting issues among governmental units during a turbulent period of financial crises and bank defaults. The