Accrual Accounting

DO PRIVATE SECTOR FINANCIAL STATEMENTS PROVIDE A SUITABLE MODEL FOR PUBIC SECTOR ACCOUNTS?
Paper to be presented at the European Group of Public Administration annual conference on “Public Law and the Modernising State” in Oeiras (Portugal), 3-6 September 2003-08-09
By Andy Wynne
Head of Public Sector Technical Issues
Association of Chartered Certified Accountants
Correspondence:
Andy Wynne
Technical Department
ACCA 29 Lincoln’s Inn Fields
London WC2A 3EE e-mail: [e-mail] tel: [phone]
Abstract
• IFAC Public Sector Committee issued their standard on the cash basis of accounting and the ASB (UK) issued its draft interpretation for public benefit entities (not-for-profit organisations) earlier this year. In each case the private sector model of accounts was followed closely.
• What is the experience in the UK of producing full accrual based accounts for public sector organisations? Have the increased value of these accounts been realised in practice?
• Who is the defining class of user for the accounts of public sector entities?
• What are the main objectives of public sector financial reporting? What are the key financial aspects which should be reported on in the accounts?
• Should public sector organisations clearly account for the level of their borrowings or debt? How should this be measured?
• How should public sector organisations account for aspects not found in the private sector, for example, heritage assets, military equipment, social policy obligations and taxation?
• Should public sector organisations be required to report on the extent to which they have adequately maintained their operational assets?
• What is the relative importance of financial accounting statements and budget out-turn reports in terms of public sector accounting?
The views expressed in this paper are the views of the author only and do not necessarily represent the view of the ACCA Council.
Andy Wynne
Head of Public Sector Technical

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