The Diversity of Accrual Policies in Local Government Financial Reporting: An Examination of Infrastructure, Art and Heritage Assets in Germany, Italy and the Uk

Abstract

This paper examines the norms and practices for infrastructure, art and heritage assets in six cities, across three European countries, to determine how the national norms of accrual accounting compared with each other, and with IPSAS, and how the practices in each city compared with the norms. We identify significant diversity between actual practices and the norms imposed by national policy‐makers or set by IPSAS. Given that a longstanding concern of the literature has been on whether these kinds of assets should be included in governmental balance sheets and operating statements at all, it is striking how often the question was settled in practice by excluding art and heritage assets, even when this meant non‐compliance with national norms. In our three countries, it is clear that comparability of the financial statements between countries was not a concern of policy‐makers, and comparability between cities within each country not a concern of preparers.

Governmental Financial Reporting of Heritage Assets From a User Needs Perspective

“…This paper analyzes t o what extent IPSAS 17 responds to the needs of users as regards governmental financial reporting of heritage assets . Our analysis focuses on Italy's heritage, which comprises over 4,100 museums, 1,400 theatres, 11,400 libraries, 6,000 archaeological sites, 367 archaeological areas, 85,000 National Trust churches, and 40,000 historical residences, entrusted by public administration, and in particular local entities (Farneti et al, ; Lacerra, ; and Adam et al., ). For this reason it is particularly important to study the Italian case.…”

EPSAS and the Unification of Public Sector Accounting Across Europe

“…Many public accounting scholars highlighted the fundamental difficulties generated by the adoption of accrual accounting (Adam, Mussari, & Jones, 2011;Barton, 2009;Biondi, 2012;Guthrie, 1998;Lapsley et al, 2009;Pina, Torres, & Yetano, 2009) as well as the practical difficulties of public administrations to effectively implement and/or utilize accrual accounting information in decisionmaking processes (Torres, Matsuo, & Pina, 2009). There had only been limited evidence available on the effectiveness of these systems so far.…”

Making Comparisons in Government Accounting

“…The study of local government accounting by Adam (from Germany), Mussari (from Italy) and Jones (from the UK) has the hallmarks of a classic spatial international comparative CIGAR study (Adam et al, 2011). This study may be regarded as focusing on an area of the public sector which is well researched, but Adam et al have conducted a novel study.…”