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COMMUNITY IS THE STARTING POINT
Community is central
It has been said that all politics is local ... but even more so, all life is local. More
than anything else, this is the central concept of Community Accountancy.
People in their own community know what is going on ... and have an ability to hold people accountable
most of the time. People in a community often know about things ... even if they cannot do anything
about them. People need a structure that will make it possible for what they know to be used for the good
of society ... to make their knowledge valuable ... and people need to be able to see metrics about society
that have local meaning.
The challenge is to build a structure that does the job of facilitating the collection, transmission and
storage of data without the structure becoming the dominant piece of the system. The data are at the
center of everything ... with the structure being merely something to facilitate the data related activities.
Reality ... data ... analysis ... activity ... impact
Community Accountancy is a datacentric management process. The process goes from reality to data, to
analysis, to activity, to impact. Data are critical to decision making ... and the management process. The
following graphic shows how pervasive data need to be in the management process. Without data,
decision making is nothing more than guesswork, and the results are unlikely to be very good.
Implementation is at the center of making progress ... but before successful implementation there is
planning and organizing ... and everywhere there is data collection and the use of data to improve
everything so that results and impact are optimized.
The following graphic shows the connection between implementation interventions and results. An initial
development intervention may need to be quite substantial because there are many big things to fix. As
time goes on things needing fixing get smaller and things fixed have continuing value. When done well, a
much smaller intervention will sustain progress into the future ... sustainable development.
Part of a possible functional structure
Community Accountancy has the metrics to put all the dimensions of socio-economic progress “on the
record”. There needs to be a functional structure so that data may be collected and put into a system
where the data can be used. With this, where results are good, there can be replication ... where the results
are poor, changes can be made and the responsible organizations and people held to account. Community
Accountancy provides some of the essential checks and balances so that resources are not lost or wasted.
The following shows something of how the Transparency and Accountability Network (Tr-Ac-Net) might
serve as the catalyst for the widespread deployment of Community Accountancy.
In order for community accountancy to work, there has to be system management, and this system needs
to operate independent of the entities needing measurement. The basic framework provides for the
following:
- Independence
- Reliability
- Objectivity
- Neutrality
- Low cost
- Timeliness
FUNCTIONAL STRUCTURE
Design of the structure
The structure or framework must be totally unobtrusive. There is a need for a framework but it is merely
present to facilitate what needs to be done to have data. The goal is (1) to have data; and, (2) to have
progress. Structure is needed to frame the data, to facilitate the data collection and is not an end in itself.
There are different functions that a structure must facilitate ... and the best structure is one that does not in
any way distort the connection between the reality and the data representing the factual reality.
The cost of community accountancy
The cost of community accountancy must be small relative to the economic activities that are going on.
Because community accountancy aims to be useful in low income communities, the cost of the system is
designed to be very very low ... and using only ultra low cost technology and systems.
This is possible ...
A good accounting system does not come free, but it should not be excessively expensive. Good design
especially of analytical codes helps to reduce cost without sacrificing analytical power.
A Community Accountancy system can be deployed with very low costs making use of existing available
infrastructure. Good design, together with effective use of the Internet and relational database systems
makes Community Accountancy much lower in cost than its value.
The purpose of Community Accountancy is to facilitate the easy access to data that will help improve
decision making and help the public to hold decision makers and their organizations accountable.
Comparison with corporate structures
In the following tables the structure needed to facilitate universal deployment of Community Accountancy
is contrasted with the Corporate Accountancy functional structure. There are similarities between the
structure of the accountancy functions for accountancy in a large global organization ... with Community
Accountancy not constrained within organizational boundaries but reaching into everything.
The dislike for objective accountancy in the corporate world is likely to be replicated in Community
Accountancy ... objective neutral data about performance are not the first step in winning popularity
contests ... rather a declaration of war on those that have unfair advantage and want to keepp it that way.
Accounting organization
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Corporate Accountancy
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Community Accountancy
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In a typical corporate setting, the Chief Financial
Officer is responsible and there is an accounting
department to do the work. Accounting is
essentially something that is done within the
organization and for the organization.
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In Community Accountancy there is a need for
data ... but the organization to collect data is not
obvious. What is clear is that no single
organization should have the responsibility for
collection of data nor control of the data.
So Community Accountancy looks to have
multiple flows of data that relate to the same fact
so that together they provide data that are reliable.
An organization with a interest in the facts my be
a very reliable source of data ... but this is only
going to be so when there is a strong independent
system that validates the data.
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Accounting for whom?
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Corporate Accountancy
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Community Accountancy
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Corporate accountancy provides data and reports
for the corporate stakeholders.
In efficient corporate organizations accounting
data are used for reporting to management and to
the stockholders. Accounting is used for day to
day analysis and for the control of corporate
resources. The same data are serving many
purposes.
Reporting to the public is not a part of the
corporate accounting system. The public may get
information from the public but it is because of
either legislation or public relations, and not an
integral part of any system of accounting that
embraces community issues.
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Community Accountancy is a system that aims to
provide important data for the public ... all the
stakeholders in society.
The public ought to know how resources are being
used in their community, who benefits and who
does not. The role of knowledge is to make the
market mechanisms of economics work, and to
make it more difficult for those that have unfair
advantage to keep it in perpetuity.
Reporting to the public is the essential core of
Community Accountancy. But who are the public?
The simple answer is that “we” are the public ...
but that is not enough since most of this
community has little appreciation of either rights,
responsibilities or the use of data to build
understanding and opportunity.
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The accountancy profession and legislators and
regulators have spend hundreds of years trying to
ensure that corporate investors should not be
defrauded by those entrusted with the investors'
money.
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Nobody has seen fit to do the same to ensure that
the interest of the public is similarly protected.
Rather the system has been allowed to develop
into a rule of law where due process stands too
frequently to protect crooks and those in power at
the expense of everyone else.
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Accounting by whom?
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Corporate Accountancy
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Community Accountancy
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Corporate Accountancy provides reports that are
useful for analysis ... but in areas of significant
public interest the reports suggest more questions
than they provide answers. The corporate entity is
rarely required to give meaningful answers to the
stakeholders of society, merely to its own
stakeholders.
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Community Accountancy is accounting for the
public ... for everyone ... with dataflows about
socio-economic transactions and issues originating
anywhere and everywhere. Community
Accountancy provides a system and repository for
these data so that the data may be used for
analysis and conclusions drawn about socioeconomic performance.
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Bits of the needed oversight have been set up ...
but it is by no means a universal system, and is
hardly recognizable as a system. It is largely
missing in most countries. Examples are rules
about safety, about product labeling, checks and
balances in government financial management ...
but the whole thing does not work an an integrated
coherent way, and is not very effective viewed
from a global perspective.
Community Accountancy is accounting for the
public ... to let the public know how well
resources are being allocated and how well
resource are being used
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Accounting by the public
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Corporate Accountancy
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Community Accountancy
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This idea is totally alien in the corporate
accountancy framework.
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Community Accountancy on the other hand has a
place for everything that is important to the public.
Community Accountancy puts everything in its
place as accurately and as meaningfully as
possible.
In the corporate setting, there is no mechanism for
public input into the corporate accounting system.
There is no role for data that are important to the
public ... from a corporate accounting perspective
the public does not exist.
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Audit
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Corporate Accountancy
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Community Accountancy
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Audit has its name because in the early days of
accountancy someone listened to the account. In
modern times, independent audit has been a
requirement in most corporate and organizational
settings. The aim of audit is to get an independent
assessment of the accounting system and the
reports being prepared for the stakeholders.
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Audit is not a big part of the Community
Accountancy system. There is a need to have valid
data, but this is done by means other than
independent external audit.
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Audit - conflict of interest
In recent times, audit has been weakened by an
inherent conflict of interest. The fees for
conducting and audit are paid by the organization
being audited ... and it is to be expected that the
client that is paying the auditor would want one
that sees things from the client perspective.
Accountants need to be paid ... and it is easier to
be nice to the client in order to continue being
paid for their work.
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Internal audit
Internal audit helps to make the independent audit
less costly.
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Government audit
Government accounts are usually subject to audit,
and normally done by government auditors that,
while independent of the operating units, are still
a part of the civil service. The typical audit is
usually done way too late, and its content often
suppressed when it is inconvenient.
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ODA sector
Audit has been used excessively in the official
relief and development sector to compensate for
bad accounting ... a misguided approach that has
failed to solve major accountability issues.
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Internal check and internal control
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Corporate Accountancy
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Community Accountancy
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Good corporate accounting systems put accurate
and reliable data into the record. This is done by
the use of internal check, which can be described
as the technique where all data are given some
form of double check to ensure that the data are
good and valid.
Internal control is another element of a good
accounting system ... and is used as another level
of effort to ensure that the accounts have good
data and there is control over these data and the
underlying transactions.
The labels used to describe internal check and
internal control do not matter ... what does matter
is that the system has good reliable data in the
records (referred to here as internal check) ... and
that the system has the depth to stop
inappropriate transactions being undertaken
(referred to here as internal control).
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Community Accountancy needs to work with
reliable data ... and must handle the data at the
least possible cost.
The techniques if internal check and internal
control form the basis for validation of data that
flows within the Community Accountancy system.
Data must be an accurate reflection of the fact that
is measured. This is a simple idea ... and must
remain simple and very clear even as Community
Accountancy as a whole scales.
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Internal audit
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Corporate Accountancy
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Community Accountancy
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Internal audit helps management with oversight
of the accounting function of the organization. It
helps to get feedback about the performance of
the accountants and the correctness of their
reporting.
Internal audit exists in many forms in the GAAP
environment. Internal audit may serve as a way
for an external audit to be done at less cost or to
ensure tat internal rules are followed.
Internal audit has a role in Community
Accountancy. Every possible step has to be taken
to help get the data as accurate as possible as as
reliable as possible ... and for reports to reflect a
responsible interpretation of what is going on and
what could be improved.
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There is a role in Community Accountancy for a
similar activity ... but this is the mainstream
oversight of the system.
The oversight element of the system is essential
and central to success.
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Monitoring and Evaluation
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Corporate Accountancy
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Community Accountancy
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Monitoring and evaluation (M&E) is used by
organizations in the international relief and
development industry as a management tool. It
serves as a way for donors and implementing
organizations to have the appearance of having
management control with a minimum of change.
But it really is ineffective, and serves as window
dressing more than anything else. M&E is used
instead of adequate accounting and related
management reports, and has been largely
ineffective because M&E is almost always too
little and too late.
M&E is widely used as a way of showing funding
agencies than an implementing entity has done
the work responsibly. It is rarely a deep analysis
of performance.
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Community Accountancy does not use standard
M&E. In the Community Accountancy system,
there is a strong system of data collection, data
analysis and reporting provides a means for all
stakeholders to be informed.
Community Accounting is in time and on time in
contrast to M&E that is too little too late.
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Structure for collecting data
Community data collection
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Corporate Accountancy
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Community Accountancy
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None
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Everyone may be involved
The system allows everyone who has information
to contribute to the pool of data ... the system uses
ALL techniques for putting data on the record.
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Structure for organizing data and putting it on the record
Getting data organized
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Corporate Accountancy
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Community Accountancy
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None
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A system of accounts
The system
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Account codes
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Local data stores
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Area consolidating data stores
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Global data store
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Structure for global data storage
Data store ... the relational database
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Corporate Accountancy
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Community Accountancy
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| The text being discussed is available at
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