Study of the effect public sector organizations’ accountability in the relationship between financial reporting quality and their performance

Document Type : Research Paper

Authors

1 University of Sistan and Baluchestan

2 Assistant Professor of Accounting, University of Sistan and Baluchestan, Zahedan, Iran.

3 Assistant Professor of Accounting, Department of Accounting and Finance, Faculty of Economics, Management and Accounting, Yazd University, Yazd, Iran.

10.22099/jaa.2022.40470.2130

Abstract

Introduction
Accountability in the workplace is a well-researched organizational phenomenon that has been recognized as a fundamental component of successful organizations. In recent years, programs that try to increase transparency and accountability have been widely explored as tools to improve access to and quality of public services.  The public sector in developing countries (such as our country) is now demanding strong accountability for governmental agencies (Adhikari and Mellemvik, 2011). The delegation of responsibility and the demand for an accounting of the execution of that responsibility, establishes an accountability relationship between an actor (such as an employee) and a forum (such as a manager).
New public management and agency theory are relevant for understanding accountability mechanisms in public sector organizations. The new public management theory is a multi-dimensional concept (Hood, 1995). The Organization for Economic Co-operation and Development’s recommendations for financial transparency and increased efficiency in the public sector are in line with new public management theory (Arellano-Gault and Lepore, 2011). Agency theory has thereby become relevant to public-sector reform under the new public management framework (Boston, 2016). Accordingly, the new public management theory and agency theory are the basis of this paper.
Similar to other developing economies, Iran's economy faces problems such as low institutional capacity, lack of transparency, and high levels of corruption. In recent years, corruption in Iran has increased significantly compared to other countries (Rezaei et al., 1394). The aim of the present study is to rectify the preceding limitations. Actually, achieving optimal performance in all areas is one of the main goals of any organization. According to this, drawing on the new public management and agency theory, this paper examines the mediating role of accountability in the relationship between financial reporting quality and the performance of governmental agencies.
 
 Research Hypotheses
Based on the theoretical literature and the conducted studies, research hypotheses were developed as follows. The present study has four primary hypotheses.
First hypotheses: financial-reporting quality has a positive impact on governmental agencies’ performance.
Second hypotheses: financial-reporting quality has a positive impact on governmental agencies’ accountability.
Third hypotheses: governmental agencies’ accountability has a positive impact on their performance.
Fourth hypotheses: accountability has a mediating role on the relationship between financial reporting quality and governmental agencies’ performance.
 
 Methods
The statistical population of this research consists of all accountants and managers with a minimum of three years’ work experience in the governmental agencies in Sistan and Baluchestan province. The study used simple random sampling for its statistical population. In spite of the pursuit of the researchers via the HR department of the Sistan and Baluchestan governorate, the exact number of the accountants and managers was not found. However, the approximate number of accountants and managers in different governmental agencies was considered a large statistical population. Using Morgan’s table for large populations (from 100,000), the sample size consisted of 384 persons. After removing unsuitable questionnaires, totally 209 (54.4%) questionnaires were completed and used in this study.
In the present study, financial reporting quality was the independent variable. The questionnaire developed by Tran et al. (2021), as a prominent questioner, which consists of 13 questions was utilized. Also, to measure the performance of governmental agencies,   a questionnaire developed by the authors based on the face validity, consisting of 31 questions was used. In addition, a scale of 14 items developed by Mack and Ryan (2006) is used to measure accountability, comprising eight items of public accountability and six items of financial accountability. Finally, the environmental uncertainty is used as a control variable for measuring a questionnaire developed by Namazi and Rezaei (1396). Possible answers to questions in this study are categorized on a 5-point scale. Also, the collected data was calculated using Excel software and it was analyzed using SPSS-23 and AMOS-24.
 
Results
The result of research’s final model showed that at a confidence level of 95%, financial reporting quality and accountability has a positive and direct effect on the organizational performance. Also, the financial reporting quality has positive and direct effect on the accountability of governmental agencies. In addition, the results show the mediating effects of variable accountability on the relationship between financial reporting quality and performance.
 
 Discussion and Conclusion
The goal of this research is to study the effects of mediating role of accountability in the relationship between financial reporting quality and the performance of governmental agencies in Sistan and Baluchestan province. In general, based on the results of the present study and according to the significant effect of the financial reporting quality and accountability on the performance of governmental agencies, and since the main objective of financial reporting (a component of which is financial reporting), provides useful data to help actual and potential users (such as managers) in their logical decision making, disclosure of information, more quality will lead to the usefulness of decision making and  better accountability for users. These findings suggest that governmental agencies seeking to improve their performance need to improve financial reporting quality and accountability system.
 

Keywords

References

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Journal of Accounting Advances
Volume 13, Issue 2 - Serial Number 81
December 2021
Pages 123-155

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History

  • Receive Date: 26 April 2021
  • Revise Date: 03 January 2022
  • Accept Date: 03 January 2022

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