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 Public Sector (APS) was akey element of the New Public Management (NPM) reform program and an event of historical significance.The aim of this paper is to identify key events in this transition and to analyse them through the theoreticallens of Habermas' (1976) theory of legitimation. Key elements of the literature concerning accrualaccounting in the APS are reviewed, together with a discussion of the relevance of Habermas (1976) to thisstudy. These critical historical events are then analysed according to Habermas (1976). The central argumentexpressed within this paper is that accrual accounting can be seen to be a device used by different levels ofgovernment in the APS in an attempt to combat the tendencies for economic, rationality and legitimacydifficulties that are commensurate with welfare state societies such as Australia.