Generational accountability of public sector management ‐ A case study of the State Authorities Superannuation Board of New South Wales

Abstract

Examines the financial accountability implications arising from the adoption of accrual‐based accounting principles by Australia’s largest public sector employee pension fund manager, the State Authorities Superannuation Board of the Australian State of New South Wales (SASB), during its brief existence from 1988 to 1996. While the adoption of accrual‐based accounting principles increased management’s political accountability concerning the performance of SASB’s commercially‐managed asset portfolio, it reduced the level of generational accountability concerning the under‐funding of its major pension fund, the State Authorities Superannuation Scheme (the SAS). Negative political visibility associated with management’s voluntary compliance with a controversial financial reporting standard, together with government’s adoption of accrual accounting, resulted in two major changes in the SASB’s organizational structure. The impact of political visibility on the generational accountability behavior of SASB management is examined by comparing stock and flow funding trends of the SAS over time.