Interpreting management accounting rules: an initial study of public bodies

Much has been written on the potentially institutionalized nature of management accounting practices in the past decade or so. In particular, the interactions of rules and routines, over time, provide explanations for the stable or changing nature of management accounting. Recent work has focused more on the conceptual nature of routines in particular. This paper will focus on an organizational environment where rules are more prevalent and explore the role of rules in rules/routines interactions. Such studies focusing on rules are lacking in the extant literature. This paper provides some evidence from initial interviews at two Irish local authorities which have recently changed internal costing systems at the behest of central government. Management accounting rules were forced upon the local authority by an external party (central government), and we explore how these rules were interpreted by actors, and thus can become routinized. This interpretation led us to examine the notions of formal versus informal rules. Based on the empirical evidence we propose a more detailed interaction of rules and routines which bring about potentially institutionalized management accounting practices than that proposed in extant literature.