Public Sector Accounting and Budgeting

Public Sector Accounting and Budgeting

Examining the evolution of consolidated financial statements in the UK public sector

Document Type : Review Article

Author
Mehdi Faraji
Department of Accounting, Qazvin Branch, Islamic Azad University, Qazvin, Iran
Abstract
The ongoing Covid-19 epidemic has put significant pressure on governments, both financially and to maintain effective public service delivery. The UK's experience with whole of government accounts (WGA) shows that, first, although this tool is not the cure for all problems, But the WGA has highlighted assets and liabilities (such as future retirement debts, clinical negligence claims, and public-private partnership obligations) that are not currently covered by public accounting principles. Second, there is evidence that WGA helps with planning, facilitates asset decision making, increases public sector financial transparency, and facilitates discussions about long-term risk management and fiscal policy. The end of 2021 marks the 10th anniversary of the first consolidated financial statements in the United Kingdom, representing the first set of audited financial statements prepared in accordance with International Accounting Standards for the UK public sector. Given that governments around the world are investing significant resources in modernizing their financial reporting practices and systems, we need to consider whether these changes will increase monetary value and whether they will result in tangible benefits. Due to the need for further research to realize the practical benefits of public sector accounting reform, this article examines the usefulness of WGA in a country like the United Kingdom and outlines the limitations and challenges ahead. Given the increase in future liabilities and rising debt levels, this article explains how WGA information can help governments make decisions. 
Keywords
Government Consolidated Financial Statements
Public Sector
Covid-19
United Kingdom

Subjects

رستمی، شعیب؛ کهنسال، ثمین. (1395). بررسی مفهومی لزوم تهیه صورت­‌های مالی تلفیقی در بخش عمومی. مطالعات حسابداری و حسابرسی، 5(18)، 134-152.
Bergmann, A., Giuseppe, G., Rauskala., Eliisa, I., & Fuchs, S. (2016). Consolidation in the public sector: Methods and approaches in organisation for economic co-operation and development countries. International Review of Administrative Sciences, 82(4), 763–783.
Carini, C., Giacomini, D., & Teodori, C. (2019). Accounting reform in Italy and perceptions on the local government consolidated report. International Journal of Public Administration, 42(3), 195–204.
Chow, D., Pollanen, R., Baskerville, R., Aggestam-Pontoppidan, C., & Day, R. (2019). Usefulness of consolidated government accounts: A comparative study. Public Money & Management, 39(3), 175–185.
Day,R., & Guthrie, J. (2008). Whole-of-government reports in Australia: A case of early adoption and innovation (August 31, 2008). Presented to the Whole of Government Financial Reporting: International Trends Workshop, Italy. https://ssrn.com/abstract=1358743.
Heald, D., & Georgiou, G. (2011). The macro-fiscal role of the U.K. whole of government account. Abacus, 47(4), 446–476.
HM Treasury. (1998). Whole of government accounts. HMSO.
HM Treasury. (2020a). Whole of government accounts: year ended 31st March 2019 (HC 500). https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/902427/ WGA_2018–19_Final_signed_21-07-20_for_APS.pdf.
HM Treasury. (2020b). Balance sheet review. https://assets.publishing. service.gov.uk/government/uploads/system/uploads/attachment_data/file/937804/The_Balance_Sheet_Review_report.pdf.
HM Treasury. (2020c). Government as insurer of last resort: managing contingent liabilities in the public sector. https://assets.publishing. service.gov.uk/government/uploads/system/uploads/attachment_data/file/871660/06022020_Government_as_Insurer_of_Last_Resort_report__Final_clean_.pdf.
Hood, C. (1995). The ‘New Public Management’ in the 1980s: Variations on a theme. Accounting, Organizations & Society, 20(2-3), 93–109.
International Monetary Fund. (2017). How to strengthen the management of government guarantees. https://www.imf.org/en/Publications/ Fiscal-Affairs-Department-How-To-Notes/Issues/2017/10/19/HowtoStrengthen-the-Management-of-Government-Guarantees-45201.
Ministry of Finance Estonia. (2018). Estonia’s journey to efficient public sector accounting and consolidation process. Estonia’s journey to efficient public sector accounting and consolidation process.
Public Accounts Committee. (2021). Whole of Government Accounts 2018–19. https://committees.parliament.uk/publications/4339/documents/44418/default/.
Stewart, E., & Connolly, C. (2021). Recent UK central government accounting reforms: Claimed benefits and experienced outcomes. ABACUS, 57(3), 557–592.

  • Receive Date 02 November 2021
  • Revise Date 22 December 2021
  • Accept Date 22 January 2022