The questionable economics of governmental accounting

Patricia Stanton · John L. Stanton

61 citations0/0 files storedAccounting Auditing & Accountability Journal

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Accounting Theory and Financial Reporting Accounting and Financial Management Economic Growth and Fiscal Policies

Abstract

General purpose financial reporting by Australian government entities is claimed to be in the public interest, providing users with information to monitor use of government resources and to make resource allocation decisions. This study argues that these claims to economic usefulness cannot be discharged by the financial reporting procedures. The requirements of the government accounting standard are analysed, the suitability of its neo‐classical economic foundations questioned, and the translation of economic concepts into accounting practice criticised. The inclusion and valuation of public heritage assets and stewardship lands in statements of financial position are shown to require a subjective estimate of the future economic benefits of such assets, whilst ignoring the social, institutional and legal environment. The paper concludes that accounting’s use of the economic concept of value is inadequate and unreliable. Application of the government accounting standard will result in information which reflects neither the financial nor the economic position of the reporting entity.

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References

1960The Problem of Social Cost 1984The value of corporate accounting reports: Arguments for a political economy of accounting 1982The normative origins of positive theories: Ideology and accounting thought 1980Towards a political economy of accounting: An empirical illustration of the cambridge controversies 1992Elements of a Theoretical Framework for Public Sector Accounting 1993Time, discounting, and value 1999Cost and choice 1980Discussion of towards a political economy of accounting

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