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Government concerns and tensions in accounting standard-setting: the case of accounting for the Private Finance Initiative in the UK

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  • Jane Broadbent
  • Richard Laughlin

Abstract

The setting of accounting standards in the UK has always and will always be surrounded by tensions due to the different interests of those who are involved either in the production or operation of the resulting standards. While some interests come and go, the UK's governments, over time and of all political persuasions, have a continuing concern that the actions of the accounting profession more generally, and the content of accounting standards specifically, should be perceived to be in the public interest. Although the views on what is in the public interest change over time, what is clear is that where this public interest is perceived not to be upheld, then tension between the government of the time and (primarily) the accounting standard-setting bodies is inevitable. At these times various forms of questioning of the actions of accounting standard-setting bodies occur. However, it is important to stress that when the public interest is perceived to be upheld, no overt tension is apparent, but this does not mean that this underlying concern does not exist. This paper's main focus is on one of the most recent points of overt tension related to accounting for the Private Finance Initiative (PFI). It locates this specific tension in an historical analysis of the battles that have led to and challenged the accounting profession's hard-won ability to regulate itself. It also compares and contrasts the disagreement surrounding accounting for PFI with a not dissimilar point of tension surrounding accounting for inflation in the 1970s and 1980s. This comparison is used to provide a richer historical understanding of what is argued to be a general and ongoing watching brief by any UK government (of any political persuasion) over the self-regulatory processes of the UK's accounting profession that they are working in the public interest.

Suggested Citation

  • Jane Broadbent & Richard Laughlin, 2005. "Government concerns and tensions in accounting standard-setting: the case of accounting for the Private Finance Initiative in the UK," Accounting and Business Research, Taylor & Francis Journals, vol. 35(3), pages 207-228.
    • Handle: RePEc:taf:acctbr:v:35:y:2005:i:3:p:207-228
    DOI: 10.1080/00014788.2005.9729988
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    References listed on IDEAS

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    1. Karen Handley & Elaine Evans & Sue Wright, 2020. "Understanding participation in accounting standard‐setting: the case of AASB ED 192 Revised Differential Reporting Framework," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(4), pages 3621-3645, December.
    2. Laughlin, Richard, 2007. "Critical reflections on research approaches, accounting regulation and the regulation of accounting," The British Accounting Review, Elsevier, vol. 39(4), pages 271-289.
    3. Weetman, Pauline, 2006. "Discovering the ‘international’ in accounting and finance," The British Accounting Review, Elsevier, vol. 38(4), pages 351-370.
    4. Thomson, Ian & Grubnic, Suzana & Georgakopoulos, Georgios, 2014. "Exploring accounting-sustainability hybridisation in the UK public sector," Accounting, Organizations and Society, Elsevier, vol. 39(6), pages 453-476.
    5. Cristian Carini & Laura Rocca & Claudio Teodori & Monica Veneziani, 2017. "The Reporting Entity in Private-Public Accounting Harmonisation. Is Control Enough for the Local Government Consolidated Financial Statements?," FINANCIAL REPORTING, FrancoAngeli Editore, vol. 2017(1), pages 5-29.
    6. Philip D. Palmer, 2013. "Exploring attitudes to financial reporting in the Australian not-for-profit sector," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 53(1), pages 217-241, March.
    7. Hodges, Ron & Mellett, Howard, 2012. "The U.K. private finance initiative: An accounting retrospective," The British Accounting Review, Elsevier, vol. 44(4), pages 235-247.

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