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Financial black holes

Author

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  • Jean Shaoul
  • Anne Stafford
  • Pam Stapleton

Abstract

Purpose - This paper aims to examine empirically whether the system of public expenditure reporting is capable of delivering financial accountability, focusing on the UK government's use of private finance for roads. Design/methodology/approach - Publicly available documents from the public and private sector partners for 11 roads contracts are examined, together with a publicly provided bridge paid for via tolls as a comparator. Findings - Reporting by both public and private sectors is limited and opaque, such that accountability to the public is inadequate. The evidence also shows that the scale of the additional expenditure generated by private finance warrants greater disclosure and scrutiny than is currently the case. Research limitations/implications - These findings, which occur in the roads sector where projects are large and visible, are likely to be replicated elsewhere in the public sector. Accountability issues may be even more problematic in public bodies where reporting is more diffuse. Furthermore, the proliferation of other forms of private finance increases the problems of reporting clear financial information, the lack of which not only makes informed public debate about public and fiscal policy impossible but also may lead to the wrong policy choice. Originality/value - There has been littleex post factoexamination as to whether extant reporting requirements permit understanding and scrutiny of the cost of private finance. The paper presents a desired list of annual disclosure, highlighting an information gap.

Suggested Citation

  • Jean Shaoul & Anne Stafford & Pam Stapleton, 2010. "Financial black holes," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 23(2), pages 229-255, February.
    • Handle: RePEc:eme:aaajpp:v:23:y:2010:i:2:p:229-255
    DOI: 10.1108/09513571011023200
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    References listed on IDEAS

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    1. Eduardo Engel & Ronald Fischer & Alexander Galetovic, 2006. "Renegotiation Without Holdup: Anticipating Spending and Infrastructure Concessions," NBER Working Papers 12399, National Bureau of Economic Research, Inc.
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    Cited by:

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    3. Dónal Palcic & Eoin Reeves & Anne Stafford, 2018. "Lifting the Lid: the Private Financing of Motorway PPPs in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 49(2), pages 217-239.
    4. Marie Caussimont & David Carassus, 2015. "L’audit financier en contexte territorial : vers un audit de performance de la gestion locale ?," Post-Print hal-02141946, HAL.
    5. Daniel Albalate & Germà Bel & Albert Gragera, 2018. "“When politics and lobbyism combine to promote white elephants by using PPPs”," IREA Working Papers 201823, University of Barcelona, Research Institute of Applied Economics, revised Oct 2018.
    6. Zhe Cheng & Zhenshan Yang & Huina Gao & Hui Tao & Ming Xu, 2018. "Does PPP Matter to Sustainable Tourism Development? An Analysis of the Spatial Effect of the Tourism PPP Policy in China," Sustainability, MDPI, vol. 10(11), pages 1-15, November.
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