From Rhetoric to Practice: The Case of Spanish Local Government Reforms

• Author: Vicente Montesinos,Isabel Brusca
• Date: 01 November 2013
• Published date: 01 November 2013
• DOI: http://doi.org/10.1111/faam.12019

Financial Accountability & Management, 29(4), November 2013, 0267-4424

From Rhetoric to Practice: The Case

of Spanish Local Government

Reforms

ISABEL BRUSCA AND VICENTE MONTESINOS∗

Abstract: This paper aims to explore what performance management tools

are implemented in practice in Spanish local governments and whether they

have led to an improvement in public management and accountability. We also

analyse the usefulness of performance reporting, comparing it with that of accrual

financial reporting. The results show that most of the entities that have introduced

performance indicators do not use them for decision-making or accountability. After

two decades of reforms in financial and management systems, financial directors still

consider that budgetary reporting is the most useful, basically because the control

of expenditure is still based on the budget.

Keywords: performance reporting, local government, public management, perfor-

mance indicators, local accounting

INTRODUCTION

Local government management in the last two decades has been characterised

by the adoption of reforms to improve efficiency and effectiveness in the delivery

of public services and, especially, to provide better services to citizens and to

increase the transparency and accountability of governments. These changes

in management can also be seen as a way to increase democratic practice in

local government and, in fact, many governments have voluntarily introduced

participative budgets.

The performance management movement has driven these reforms (Sanger,

2008). The actions taken include accrual accounting reforms, in some cases

∗The authors are respectively Professor, Accounting and Finance Department, University of

Zaragoza, Spain; and Professor, Accounting Department, University of Valencia, Spain. This

study was carried out with the financial support of the Spanish R&D Plan under research

project ECO2010–20522.

Address for correspondence: Isabel Brusca, Departamento de Contabilidad y Finanzas,

Facultad de Ciencias Econ´

omicas y Empresariales, Gran V´

ıa, n◦2, 50005-Zaragoza, Spain.

e-mail: ibrusca@unizar.es

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FROM RHETORIC TO PRACTICE 355

accompanied by accrual budgeting, performance management systems, results-

oriented and performance budgeting and performance benchmarking. New

assessment and management tools, such as balanced scorecards, have also been

developed and put into use.

The literature has revealed the insufficiency of strictly financial information

for accountability purposes and the necessity of adding non-financial infor-

mation, especially performance indicators (Walker, 2002). The Governmental

Accounting Standards Board (GASB) recommended the use of this type of

information in the Statement of Concepts 2 and it also features in many

articles in the literature (de Lancer et al., 2008) where a long list of the uses of

performance measurement has been identified (Sterck and Van Dooren, 2004).

There is, however, some scepticism about the implementation of these

recommendations, about whether entities really do elaborate performance

measures and, especially, about their usefulness. Many studies have been carried

out, mainly in the US, to try to answer these questions. The development of

similar studies in other countries will make it possible to carry out international

comparisons and new conceptual advances.

Although researchers recognise the role of performance measurement and

reporting, many have warned of the difficulties of using them (Guthrie, 1994;

Rivenbark and Kelly, 2000; and Pollitt and Bouckaert, 2004) and others of

the unintended consequences of performance measurement (Smith, 2004).

Furthermore, many authors observe that there is a gap between the intended

and real changes that take place with the introduction of performance

measurement systems. This has been explained by Vakurri and Meklin (2006)

on the basis of the ambiguity theory, which maintains that decision-making

and performance measurement are not completely rational. There are many

limitations, conflicting interests, uncertainties, paradoxes and ambivalences

which make performance measurement a tricky undertaking. For example, there

is ambiguity about what users should do with performance measurement as

well as unintended uses of performance measurement information. For other

authors, there are severe measurement problems which may render ideas of

results-oriented management cultures untenable. NPM has been considered by

many to have failed in terms of outcomes; this has been a bitter disappointment

for policymakers and users (Lapsley, 2008 and 2009).

In Spain, institutional bodies try to guide and promote performance manage-

ment systems. For example, since 2006, larger local entities have had to include

performance indicators in their financial reports. The objective of this paper

is to study the real state of the art in Spanish local governments and whether

the changes have improved public sector management and accountability. In

particular, we want to analyse whether the legal reforms that have been

carried out really have been implemented in practice and what advantages and

usefulness the reforms have in the decision-making process and accountability.

The aim is to analyse what is behind the rhetoric of the reforms discourse.

We base our study on a questionnaire sent to Spanish local governments with

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