Using Accounting Controls to Ratify Decisions and Scan for Surprises

DOI: 10.5176/2251-1997_AF15.64

Authors: Associate Professor Christina Boedker and Dr Kar-Ming Chong

Abstract:

This article examines the impact of accounting controls on employees’ perceived creativity and productivity in Australian public sector organisations. Drawing on Self-Determination Theory (SDT) [1], we develop a theory of control which suggests that accounting controls can support and restrict an individual’s autonomy. Inspired by Simons [2], we argue that when employees use accounting controls interactively, they: (1) ratify strategic decisions and policies already made by top management (decision ratification) and (2) scan the organisation’s environment for significant changes (scanning for surprise). A Partial Least Squares approach is used to analyse survey data from 1118 Australian employees. The results support our predictions that employees reported lower creativity and higher productivity when using accounting controls to ratify decisions (autonomy-restrictive). We also find support for our prediction that employees reported higher creativity when using accounting controls to scan the environment for surprises (autonomy-supportive). However, using controls to scan the environment is not significantly related to an employee’s productivity. Our findings suggest that employees must be allowed to use the accounting controls for purposes other than decision ratification. Indeed, if controls are used for decision ratification only, there is a risk there will be limited creativity. Therefore, employees must be encouraged to also engage in scanning activities when they interact with and use an organisation’s control systems.

Keywords: accounting controls, autonomy, creativity, productivity, public sector