n Journal of Public Administration - Costing of public services : a necessity to ensure good governance?
|Article Title||Costing of public services : a necessity to ensure good governance?|
|© Publisher:||South African Association of Public Administration and Management (SAAPAM)|
|Journal||Journal of Public Administration|
|Author||H.A Van Wyk and H. Kroukamp|
|Publication Date||Nov 2007|
|Pages||262 - 271|
|Keyword(s)||University of the Free State|
The changes been brought about by public sector reforms influenced inter alia financial arrangements to ensure efficient and effective service delivery and consequently good governance practices. One are specifically earmarked is the introduction and the application of new accounting practices. Government departments on the national and provincial sphere in South Africa provide various services through the utilization of resources at their disposal. Currently government expenditure are allocated and assigned to departments and not to the services that are provided by government departments. The cost effectiveness of these services cannot be assessed, controlled and managed under the current accounting structures that are focused on departmental budgetary control. During the latter part of 2006 an empirical study was undertaken with a questionnaire been developed and distributed among Chief Financial Officers (CFOs) and senior finance staff of all the departments of the Free State Provincial Government. Separate questionnaires, with the same content as above, were also sent to Senior Auditor General Officials and External Auditors involved in auditing Free State Provincial Government departments to determine whether costing will be useful to enhance good governance practices. The research revealed that while most public sector accounting guidelines and legislation are in place, government departments are still using cash accounting and not accrual accounting as required by Generally Recognized Accounting Practices (GRAP1). The current accounting information system thus seems to be unsuitable for accrual accounting and effective cost management of services. The consequence of this situation is that the outsourcing of services is frequently occurring and decisions are taken on a tender basis without comparing the tender prices with actual costs of the services being outsourced. Due to the fact that cash accounting is still applied in provincial government departments, the heads of departments do not have accurate cost information to determine the costs of services. The purpose of this paper is to highlight the need for effective cost accounting systems on the provincial sphere of government and in the public sector in general to ensure good governance. Attention will be focused on the need for cost accounting and the current state of cost accounting in the government sector ensure that the changes envisaged with public sector reform programmes lead to good governance practices.
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