Investigating standard setting: accounting for the United Kingdom’s private finance initiative

Abstract

This paper provides a case study of the use of Walker and Robinson’s (1993) model of the elements of an accounting standard setting process. The objective of the paper is to extend the existing literature through an examination of the process by which accounting regulation was developed in the context of the private sector and subsequently adopted by the public sector, including consideration of the interaction between the rule–making bodies of the two sectors.

The empirical element of the paper draws upon the development of rules of accounting for the Private Finance Initiative (PFI) in the U.K. The empirical material illustrates the difficulty of conducting research into accounting regulation as documentation that is in the public domain reveals, but does not disclose, the presence of other significant influences.

Walker and Robinson provide a useful model to analyse the process of standard setting. The case study supports their view that research addressing the genesis of any accounting standard will be deficient to the extent that it does not include reference to the influences that are not publicly revealed. Failure to include consideration of all the forces weakens any claimed causal links, a weakness that is not overcome simply by acknowledging the existence of other, uninvestigated aspects. This must be balanced against a recognition that it will never be possible to identify and weight all of the forces acting in a political process and so it is not possible fully to meet all of the standards of investigation set by Walker and Robinson.