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The questionable economics of governmental accounting

Patricia Stanton (University of Newcastle, Callaghan, New South Wales, Australia)
John Stanton (University of Newcastle, Callaghan, New South Wales, Australia)

Accounting, Auditing & Accountability Journal

ISSN: 0951-3574

Article publication date: 1 May 1998

2640

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.

Keywords

Citation

Stanton, P. and Stanton, J. (1998), "The questionable economics of governmental accounting", Accounting, Auditing & Accountability Journal, Vol. 11 No. 2, pp. 191-203. https://doi.org/10.1108/09513579810215464

Publisher

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MCB UP Ltd

Copyright © 1998, MCB UP Limited

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