Social accounting is broadly understood as involving the preparation, presentation and reporting of information about ‘social’ factors or conditions, with the ‘social account’ being juxtaposed or competing with economic factors and values. Yet while recent work in relation to a sustainability agenda has begun to discuss what accounting for ecological sustainability might incorporate, there is a paucity of work which elaborates what might be at stake if accounting is to tackle issues of social justice. There is a similar discrepancy in the practice of social accounting, where whilst an increasing numbers of companies claim they are producing ‘sustainability reports’, a critical examination demonstrates that they have largely side-stepped the issue of accounting for, and reporting on, their social obligations or role in a more socially sustainable future. Such emphasis on ecological sustainability in the social accounting literature seems curious given that, for many, the argument for sustainability is itself presaged on the more transcendental principle of justice. Indeed, as Bebbington has argued (2001, p. 136), “the moral imperative of sustainable development (SD) is focussed on the achievement of social justice for the very poorest occupants of the planet.”

The statutory and political roles of many public service organisations, and local government authorities in particular, mean that (unlike companies in a capitalist society) it is impossible for these organisations to avoid engaging with issues of social justice. Although we argue that their role has been diminished in recent years, local authorities in England, for example, have been central to the delivery of education and social services, and in responding to wider social crises such as race riots.

The purpose of this paper is to explore whether there is a possibility of ‘social accounting’ in relation to local government, and what its impact might be. What we mean here is an accounting which, beyond concerns with an environmental agenda, helps us in understanding what is at stake in accounting for social justice. We argue that understanding existing and possible future accounting processes in public service organisations might be key to understanding what social accounting means, and whether it could make a difference.

Given this central concern with the social, the paper builds upon an extant literature on social justice, or ‘fairness’, in accounting. In calling for a return to ethical approaches in accounting research, this body of work has explored how theories of justice translate in an accounting context. Pallot (1991) in particular sought to stimulate discussion by proposing ‘fairness’ (i.e. justice) as the “transcendent principle in accounting” (Pallot, p. 202). We see the aims of this work as consistent with elaborating the aspirations of a social accounting agenda.

The paper draws on some fieldwork on budgeting carried out in two local government authorities. These organisations provide a window on how communities make decisions about distributing their social resources. In order to draw out what is at stake in the distribution of social resources, we focused on contrasting organisations: ‘Southshire’ (an affluent county council in the South of England) and ‘Eastmet’ (a metropolitan authority in the North of England). The fieldwork in these authorities was carried out over an 18-month period (ending January 2004), focussing on budgeting in personal social services for children, families and other individuals with a range of personal, practical and emotional problems.

The study was part of a wider project that researched how New Labour modernising policies have affected UK local government budgeting. We argue that budgeting in local government is an inherently political process, characterised by a certain logic of democracy, which means that the process has an openness which contrasts with the “unobservable” nature of corporate activities and accounting processes. As the central accounting process in local government, budgeting is an obvious starting point for understanding the relationship between accounting and the social dimensions of local government.

Apart from the routine observations of physical phenomena made during frequent visits to the case authorities, the research drew on two main sources of data. First, there is a wealth of documents produced by both local and central government, which, as public sector bodies, they have published on the web. The second and main source of data came from anonymized semi-structured interviews and observations of budgetary committees which provided insights into the less planned, less consensual and less reverential views of real organizational actors. The fieldwork period extended beyond the annual budgetary cycle and involved at least two sets of interviews with the main players, with appropriate time lapses. The main interviews were with local authority senior offices and council members (politicians) in the two local authorities; politicians and officials in central government departments who have an interest in local authority budgeting; and managers who are responsible for managing services at the operational level.

In most cases, interviews were carried out by two researchers lasting about one hour per session. This method ensured that as accurate a record as possible was kept of the interview, and helped maintain a balance in the questioning. The aim of the case study approach was to give both an in depth view of the impact of any budget changes and take a longitudinal perspective.

The paper contributes the idea of a new type of social accounting which we argue is a matter of enacted accommodation between financial discipline and social pressures. Recognising the inherent fragility of the modernising project, we show how social accounting can be seen as less a system and more a local “accomplishment”. The opportunity for accomplishment stems from the service delivery potential of budgetary controls combined with an implicit acceptance by key actors of their inherent public service ethos. These findings suggest that social accounting may have most impact where it is linked to specific social problems, and where it is produced outside of the mainstream performance and reporting system.

The paper is structured as follows. The next section of the paper reviews the long running problems and attempted reform agendas in English local government. Drawing on a review of ‘fairness’ (social justice) and accounting literature, the third section sets out what social accounting for local government might incorporate. The fourth section of the paper draws on fieldwork at Southshire and Eastmet. In this section we set out our findings in relation to the budgeting process and the phenomenon of enacted social accounting, whereby the justice dimensions of accounting are recognised and budgeting is used an enabler to achieve social goals. A final section draws conclusions in relation to our understanding of social accounting and its potential.