Accrual Accounting and the Australian Public Sector: A Legitimation Explanation

The move from the cash basis to the accrual basis of accounting in the Australian PublicSector (APS) was a key element of the New Public Management (NPM) reform programand an event of historical significance. The aim of this paper is to identify key events inthis transition and to analyse them through the theoretical lens of Habermas' (1976)theory of legitimation. Key elements of the literature concerning accrual accounting in theAPS are reviewed, together with a discussion of the relevance of Habermas (1976) to thisstudy. These critical historical events are then analysed according Habermas (1976). Thecentral argument expressed within this paper is that accrual accounting can be seen to bea device used by different levels of government in the APS in an attempted to combat thetendencies for economic, rationality and legitimacy difficulties that are commensuratewith welfare state societies such as Australia.