Proceedings of 8th Asian Business Research Conference
1 - 2 April 2013, Bangkok, Thailand, ISBN: 978-1-922069-20-7
Organizations and Accountability
*Bahareh Banitalebi Dehkordi
Today, due to rapid changes in science, technical, and society, we need to
adjust ourselves with not anymore permanent occurrences of the world. Since,
there is always this concern in management that along with being more
complicated and expanded, organizations tend to follow redundant rules and
bureaucrat’s; if such a process does not controlled, the organizations begins
to stop their work. There for, always it is stated that through controlling and
supervising systems how one can prevent from appearance of such a
negative process, and/or prevent from its rate and main ten the organization in
dynamic state. All aspect development of most of the countries, grows the
people requesting, and auditors and accoutants as responsive experts of a
society should have the power to arrange and provide required reports for the
awareness of managers, merchants, producers, and other people. Accordingly
different people of the society could receive their needs, and requests such a
changes in the human being life have leaded to make people familiar with
their social and Haman rights. In the other words, in previous decades people
are often passive, hearer, obedient, and with no chance to opining, while
today people ask their requests from organization/ governments in different
forms. They entitle to ask question from agents and receive their answer;
and/in charge people should respond them how they consume their
resources. Here is the point that accountability finds its place. This study will
address accountability types, theoretically framework for accountability based
accounting, consumers of the federal government’s financial reports, the
needs of these consumers, and the main components of structure of the
management control system.
Key words: Accountability, Financial reporting, Consumers, Management Control
System, Theoretical Framework Accounting
1- Introduction
With economical & industrial development of the countries in different parts, it is
necessary that we seriously try to maintain public financial resources, and to manage
the government’s planes & services correctly. Thus, financial reporting is suggested
as integral part of the public accountability. Applying the financial reporting in public
accounting forms an important part of the public accountability, being foundation of
public auditory & financial reporting. Financial reporting helps the government to
provide applicable information for achieving different goals, and to do the duty of
public accountability/ giving account. Also, it provides the needs both the consumers,
having limited facilities to access information, and the persons, being dependant on
the financial reporting as an important information resource. [Safar,2002]
Indeed, theoretical framework for public accounting, being accountability based, is
bidirectional. At the one hands it helps the government to perform its own public
accountability role, and at the other hands it enables the consumers to evaluate so
called accountability & to provide the required information for making decision via
financial reports [Aghaee & Alijani,2002].
_____________________________________________________
*Bahareh Banitalebi Dehkordi, Department of accounting, Shahrekord Branch, Islamic Azad
University, Shahrekord, Iran . Email :banitalebi76@yahoo.com
Proceedings of 8th Asian Business Research Conference
1 - 2 April 2013, Bangkok, Thailand, ISBN: 978-1-922069-20-7
In this regard, in the introduction of the accepted standards book for public auditory
in use, which is called yellow book, has been written that official authorities,
legislators, and citizens want to not only know that public finds have been used
correctly and these costs will be adjust with rules but they also want to know whether
do the public organizations have been achieved to the approved and allocated
goals on the plans and services, and are there efficiency in it? [Abdollahpoor,2011]
Since, there is always this concern in management that along with being more
complicated and expand eat, organizations tend to follow redundant rules and
bureaucracies; if this process is not controlled and appropriate precautions are not
considered, usually organizations began to stop their work there for, there is always
this concern that through controlling and supervisory systems how one can prevent
from such a negative process and/or reduce its speed to keep dynamic the
organization. In this case, in public sector (i.e. the part that it’s systems have not
necessarily appeared with making money goals, but they have created to fallow their
own goals, being some time non-profited ones and leading to welfare), there was
always this challenge whether plans implementing method is more preferred or only
on the achievement of goals are focused. However, today it empathized that the
organization should achieve its own goals and implement. The plans, however it is
sufficient that the minimum and possible resources are consumed in this respect.
[Rahimian,2002]
2- Accountability types
Accountability or giving account means that a staff, an agent, or any other one is
responsibly against the task having appointed for, or the work having performed.
Performing such a responsibility is done through document (s) that make possible
the identification of that work’s doer, so called accountability is measured base on
the cash, total properties or any other predetermined criteria. In a democratic
society, people are the main and final rulers, and they can delegate the power to
agents through their own toe in an election, and by giving over the capitals and
financial resources to them, they can expect them to rule over. Among this one can
recognize the government (regime) as a super stock company in which all people
are its stockholders, the cabinet is its board of managers, its executive manager and
the head of the board of the managers is president, its general assembly is
parliament, and commutation court is its legal inspectors. Payers (citizens) as
resource providers of the government request it to give service to them, and in this
regard they will entitle to ask question from agents, and request their answers
[Abdollahpoor,2011]. Officials should also answer to this question of them how they
have consumed their resource. Government answers to their question in the form of
financial reporting, and it provides them the information needed for activities
evaluation, reserve allocation method, investments, and other decision. Due to this
accountability agents are the main goal of financial reporting in public sector.
Accountability is the foundation (base) of the financial reporting in public sector.
Accountability requires the governments to answer citizens’ questions:
1- How did the general financial resources increase have been?
2- In what goals the resources have been used? In other word, what is the origin
of them, and what does the way of consuming them?
Proceedings of 8th Asian Business Research Conference
1 - 2 April 2013, Bangkok, Thailand, ISBN: 978-1-922069-20-7
Provision of accountability relationship in the respite of the way of providing
economical and financial resources and consuming them is not possible among
governors (officials) and other people. As, people entitles to delegate their own
authority right, they hove delegated their right of asking question and requesting
account to their representatives in Islamic consulate assembly through voting, and
the assembly in turn has obligated it to commutation court. [Cox,2008]
There for, executive systems and the agents of the ministry of finance are
accountable (accountee), and commutation court is as asking one (accountor). To
being provided accountability relationship both accountor and accountee should
transfer financial information under a series of agreed rules between them salves.
Also, to provide financial reports for accountability, one should have an accounting
system that its frame work is in this base (sir, accountable), and this is what
professor Yogi Ijiri presented the theoretical framework for accounting at conference
appeared in accounting collage of Harwood university in October 1982; it is very
useful for recognition of final goals of auditory and accounting in public sector,
familiarizing the provider of auditoria and accounting instructions, auditors and agent
of the ministry of finance with this theoretical framework. Accountability has different
ayes, and each certain part of information might be considered a different way for
accountability issues.
Different levels of accountability are: [Rahimian,2011]
1- Policy accountability that its subject is accountability instead of decided/
rejected policies (value).
2- Plan accountability that its subject is accountability about implementing and
the amount of achieving to a plan’s goals (results or efficacy).
3- Performance (management) accountability, that its subject is accountability
about performance manner (efficiency and to be economical).
4- Process accountability, that its subject is accountability about process,
including implementing methods or measurement criteria for implementing
determined tasks (planning , allocation, and governing).
5- Legitimacy accompanying accountability, that its subject is the consumption of
approved budget/ values (consideration). [Eskandari,2011]
1-2-Conceptual frame work for accounting based on accountability
Conceptual framework for accounting can be either based on decision making, or
accountability. Selecting each of them affects basically the Conceptual framework’s
results. Based on decision making conceptual framework is focused on the decision
made by accounting information consumers. In this type of framework, information
providers might have uninspired goals, because their interests about information is
not considered on the other hands, a framework being found on accountability
relationship, is based on a relationship between accounted as provider of accounting
information, and account or as consumer of accounting information.
Accounting goal in decision making based conceptual framework is to provide useful
information for economical decision, and information’s subject is not important. More
information is useful than less information until the end price will be less than its
Proceedings of 8th Asian Business Research Conference
1 - 2 April 2013, Bangkok, Thailand, ISBN: 978-1-922069-20-7
resource, and mental information is optimal so long as it will be suitable for decision
making. [Favchi,2011]
In a system, being based upon the accountability principles, accounting’s goal is to
provide a rather efficient system of information between accounted and account or
that is based on the accountability relationship between both of them. Based on the
accountability relationship, accounted has the right of knowing things, and similarly
account or has the right of keeping confidential information. Mental information
seriously can remove the accountor’s interests, even if they will be largely useful for
accountee. It appears that decision making based conceptual framework will be
more unidirectional, and exclusively is used by consumers. The conceptual
framework, basing on accountability, should measure both parties’ interests, which is
called bidirectional. Accountability relationship might be in/out of the commercial unit.
A commercial unit might be generally responsible to stockholders, loan-holders,
government, labor union, customers and/ or other. Also, in a company, staffs and
employees will be responsible to their supervisor and agent hierarchically. Based
upon accountability relationship, the accountor is required to provide the given
information for the accountee, and the accounting will be focused as a third port to
ensure that there is a fined steam of information.
In fact, in a system basing upon accountability, befor one can develop a correct
information system, three parts should be presented. Accountor should be interested
to hold the information, accountee should want to provide the information, and
accounting system should be something that it can provide the information through
an observed and validated way. And the information objectification responsibility in
organizations is on the auditory part. [Shabahang,2001]
3- Federal government’s financial reports users
The consumers of the federal government’s financial reports are classified into four
groups: [Banifatemi,2003]
1- Citizens: citizens are focused by federal government from many aspects, and many
people in this group are of the consumers of the federal government’s financial
reports, that some of them include:
Individual citizens, news media, commercial magazine, organized groups with
common interests, legislators, local executive officials, analysts, universities and
research institutes.
2- Assembly (congress): congress (assembly) means the elected representatives of
the assembly, commutation court, and employees. According to general policies
applied in plans writing, tax, finance support, and plans implementing way, he
assembly is one of the consumers of the federal government, financial reports.
3- Executive officials: including president and all who work under his supervision.
Usually executive officials emphasize implementing plans and strategic programs in
order to achieve president’s goals.
4- Plans’ executors: this group includes those who direct the governments’ plans. They
are focused on the operation of plans & budget application.
Proceedings of 8th Asian Business Research Conference
1 - 2 April 2013, Bangkok, Thailand, ISBN: 978-1-922069-20-7
1-3- The needs of the federal governments’ financial reports consumers:
The needs of these kinds of consumers are more various than their selves. Table 1
shows these needs in four general topics: consideration and accompanying the
budget, operation implementing, agency, systems and control.
Table1- federal government financial reports consumers’ need:
[Rahimian,2011]
Categ
ory
1
Title
Subject
Main goals
Other goals
Considering
(observing)
* information for
ensuring the
acquisition and
consumption of
funds according
to laws
1- existence of legal
approvals for
financial support
activities and funds
consumption
1- how did the
budget resources
enquired/
consumed, and
whether did they be
in accordance with
the legal
approvals?
The budget
2- performing
* gathering
activities in
financial policies accordance with the
legal approvals
3- finding the
amounts of the
remained funds
2
Implementin
g the
operation
* recognizing
consumed costs
for the plans.
* information
about efficiency
amount of part
of the plans
1- amounts of
different plans
costs, and finance
support mummer for
them.
2- Plans results and
yields.
3- efficiency amount
of part of the plans.
3
Agency
* evaluating
effective
information on
the financial
status of
government and
2- budget resource
status.
3- the relationship
between the budget
resource
information and
operational costs.
1- the costs of
implementing
certain plans and
activities and any
changes in these
costs.
2- conducted
activities and plans’
projection.
4- debts’ amount
and the manner of
clearing them.
1- whether did the
government
condition become
better or worse?
3- management
efficiency on
properties and
debts.
1- Making strong or
weak the finance
condition of the
government.
2- what is thought
2- sufficiency of the
Proceedings of 8th Asian Business Research Conference
1 - 2 April 2013, Bangkok, Thailand, ISBN: 978-1-922069-20-7
society
for the future?
budget resource for
the future.
3- evaluation of the
government
operation for future
welfare of the
society.
4
Systems
and controls
* sufficiency of
internal control
systems about
accounting and
management
1- whether do the
appropriate system
existed?
2- whether the
government find the
problems?
3- whether is the
problem improved in
the right time?
2-3- The main components of the management control’s system structure
It is as fallowing: [Eslami Bidgoli,2003]

Determining the organization’s goal”
An organization which does not know what is its wanting, rarely could be efficient.
Above mentioned goals state the long term expectation of the organization that
usually is being stated generally, and includes expected strategies and results for
short and intermediate term. The goals’ gathering and the appropriate
acknowledgement of the managers and staffs in all levels, form the most important
part of the management control system’s structure. An organization becomes
efficient when it will acquire to its predetermined goals. Usually the organization’s
goals are determined by the management from inside and/ or outside its.
Formulating the plans, policies, and politics:
Each year, while an organization determines its goals and illustrates them, it should
formulate the suitable plans, policies, and politics to achieve these goals. An
organization is called efficient and economical when the ways of achieving expected
goals provide the possibility of reaching to the optimal results in the best conditions.
[Department of the Auditor General of Pakistan Performance Audit Guidelines,1992]
Proceedings of 8th Asian Business Research Conference
1 - 2 April 2013, Bangkok, Thailand, ISBN: 978-1-922069-20-7
Structure and hierarchy of the organization:
To reach to its goals, an organization needs to have a suitable organizing structure,
so that the organization has separated the goals in a way from each other and some
device has been determined to implement and to goals efficiently.
Formulating task details, accountabilities, and authorities:
In organizing, qualified and acknowledged persons should be appointed to work.
Also, formulating suitable task details, accountabilities, and authorities for the staffs
in such a way that they have been familiarized with their tasks and responsibilities
sufficiently, and all of them act in respect with the organization’s goals are of
necessities related to management staff control.
Suitable separation of tasks:
The tasks of those who determine policies and make decisions, usually are
distanced from the tasks of those who implement. The decisions, and/ or have an
access to the properties or resources, or they are of those people who have an
responsibility to maintain accounts and reporting. Another case is separation of
different managements’ duties. Some managers have the task of approving policies
and plans, and some others have the task of implementing operations, and other
ones have the task of keeping accounts and reporting.
Of other cases is separation of mal adjusted tasks from each others. Mal adjusted
(unadoptable) tasks mean that a person or department can commit some mistakes
or flats in his/ her/ its daily work, and hide them.
Planning and budget procurement:
To meet efficiency and effectiveness as well as observing economical methods, it is
necessary to plan and budget. An organization would face with crisis with out
planning.
Essentially, planning and possibility of the plans needs to budgeting. Budget concept
usually does not equal in government and non-government systems. It means a
budget that provides the operational plan for all systems’ manager in future year. In
other words, through budget it is determined that which works, when, and in which
costs should be performed. Implementing a suitable budget system could increase
the efficiency of the organization. All the above maintained factors in a management
controlled system are called internal factors. [Favchi,2011]
Identifying environmental factors:
In a management control system, it must be focused on external factors beside
internal ones. Environmental factors mean to consider which limitations the
surrounding environment creates for the management. In public sector, these
limitations could be produced via legislators or legislative power. In an under
protection institute or organization might be determined some limitations by general
Proceedings of 8th Asian Business Research Conference
1 - 2 April 2013, Bangkok, Thailand, ISBN: 978-1-922069-20-7
assembly or board of trustees, and in private sector, market conditions, economics,
and competitors will produce some restrictions for them. There for, the management
should recognize the factors and environmental restrictions in its control system, and
consider it in the planning process.
Developing control (supervising) systems:
Developing control systems to direct the activity toward organization’s goals is also a
part of management control system’s structure. This means that to equire given
results and goals, the sufficient control should locate such a way that always
provides assurance for in time achieving the goals, and operations and activities
should be controlled in a continuable and suitable way. Locating a modern internal
evaluating and auditory system, which is the subject of the study, is a part of
management control system. [Aghvami,2001]
3.Conclusion:
Since, in the recent century, a ruling system has a flexible structure in developing the
relationship between all government levels to direct public plans, officials and staffs,
who are responsible for managing these plans, should provide a complete financial
reporting from their activities to the publics.
Although, accountability always is not determined by the law, but it essentially has in
the process of governing the national region.
Necessity to accountability resulted in requesting for receiving more information
about government plans. Public and legal qualified officials and citizens want to
know whether the public funds is not only governed correctly and rules and laws me
observed on them, but also public organizations and planning have reached to the
approved goals that funds allocated for them, and they have been some how
efficient and economical. This means that the public unit’s auditory range is mainly
larger than the auditory of commercial units.
Commutation court decrees that in any public auditory, auditors might be a
combination of auditory the financial lists, financial index, economical auditory,
efficiency and planning. There for, the standards related to the planning of
implementing operation lay dawn that officials providing the certification to auditory,
should conduct the limits of public auditory operation or work planning in such a way
that provide potential needs of the consumers of the operation results. In previous
decade, there are significant increase in number, plans’ funds (money mounts), and
public service. As such, we can refer to the large amount costs that in the form of
national funds are consumed in solving the social problems of the financial, public,
and industrial sections.
This increase resulted in a serious need for the responsibility of both keeping public
cash and correct governing the planning and public service, there for, financial
reporting has changed as an un separable part of the public accountability.
Nowadays, public system is based on the regular network of mutual relationships
between all the government levels that take the responsibility of public plans.
Proceedings of 8th Asian Business Research Conference
1 - 2 April 2013, Bangkok, Thailand, ISBN: 978-1-922069-20-7
Financial reporting in public accounting forms an important part of the public
accountability task process, so that it can say that accountability is the foundation of
financial repairing and public auditory.
Accountability task requires the government, being responsible against its citizens,
and in order to increase financial resources, being mainly provided by them, and the
goals to which these national resource is consumed, it provides rational reasons.
Such a task is based on this belief that all people entitle to know and receive the
facts through observed expression and general negotiating with then or their
representatives. And financial reporting take the main role on the government
accountability task performing, and one of the major device in this regard is taking
such a task.
Consumers groups in evaluation of the government accountability task must be able
to:
a) Compare the real financial results with the approved budget
b) Evaluate the financial state and operation results.
c) Ensure from the observation of the financial rules/ laws, and the related
calculations.
d) Ensure from the financial resource consumption in the correct place and in
accordance with the appropriation.
e) Evaluate the efficiency and affectivity of the government operation.
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