Editorial: Use of accounting information by politicians

Do politicians use accounting information? If not, why not, and what could make them use it (more)? In this issue of Public Money & Management (PMM) we publish several debate articles reacting to our theme on ‘Politicians’ use of accounting information’ guest edited by Tjerk Budding and Jan van Helden (PMM, April 2022, Vol. 42, No. 3; https://www.tandfonline.com/toc/rpmm20/42/3). The theme itself, as well as the large number of diverse debate articles published in this edition of PMM, show that the last word has probably not been spoken on this issue.

In his debate article, Mark Christensen (2022) examines what factors may be relevant to politicians’ risk assessments when they consider the possible outcomes from recourse to accounting information. Sandra Cohen (2022) argues that the use of accounting information by politicians can be expanded, if appropriate training is provided to them, focusing more on effects and implications, including risks. Alexander Kroll (2022), but similarly also Jens Weiss (2022), suggest looking at social mechanisms and group decision-making or, more generally, management practices: since, as Weiss puts it, these practices explain how politicians use information, in general as well as specifically in the case of accounting information. Finally, Polzer and Seiwald (2022) argue in their joint debate article that there should be translation process, which can be assisted by intermediaries, such as parliamentary budget offices. Overall, the debate articles in this issue of the journal paint a more positive picture than some of the articles in the theme. They all highlight relevant factors in the work of politicians, which should be considered in order to better understand their use of accounting information.

Arguably, it is necessary to distinguish between the headline news and the often a little bit boring, but much more relevant, political work done behind the scenes. Accounting information seldom makes it to the headline news. But parliamentary committees, the cabinet of government ministers and senior civil servants use accounting information much more often than the headline news would suggest. They use it in group decision-making, effectively managing the government and its dependent entities.

Of course, they do not usually debate the accounting or accounting documents as such but, rather, the information provided in financial statements or reports. Examples include information about financial guarantees provided by government, about the development of revenues and expenses, the impairment of certain assets, the provisions for uncertain obligations, to name just a few. And sometimes, they are not using the ‘end product’, i.e. consolidated financial statements, but financial reports, for example prepared by consolidated entities. Such discussions rarely make it to the news—let alone the headline news. And, if they do make it to the news, it is not because of the accounting information, but because of the underlying matter presented through accounting information. Accounting information is taken into consideration, not because it is accounting information, but because it contains information relevant for political debate and decision-making. Also, politicians hardly ever use the entirety of accounting information available, but certain aspects, which seem relevant to them, in order to take decision on a specific matter.

For the supply side, i.e. the preparers of financial statements, it is almost impossible to predict which piece of information will be used, because this also varies over time, as do political priorities. There are arguably no other options than to provide the entirety of information and let the demand side, the politicians and senior civil servants, select the information relevant to them. It is not reasonable to expect politicians to shout out loud when they use accounting information. They will just use the accounting information to argue their political case, like any other information source. Even if they do not use a certain piece of accounting information in their discussions, this may be since they are satisfied with information observed and do not see any need for political debate.

Bottom line, accountants and accounting researchers should not be overly self-critical. Accounting information is being used—even if it does not produce any headline news.