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Rationality, accountability reform and accounting for land under roads in an australian local government

Rationality, accountability reform and accounting for land under roads in an australian local... Recently the inclusion of land under roads as an asset in financial reports by Australian local governments has led to several concerns arising from dissatisfaction with certain elements of the new accounting standards and concepts, particularly, the Australian Accounting Standard AAS 27 “Financial Reporting by Local Governments” and the Standard Accounting Concepts SAC 4 “Definition and Recognition of the Elements of Financial Statements.” These concerns have also meant that most local governments are opposing the recognition of land under roads as an asset for financial reporting purposes. With the inclusion of land under roads dominating the asset element of financial reports, the relevance and reliability of valuation of land under roads needs to be examined. Using an Australian case, this paper examines whether this information provides greater relevance and reliability to users. The paper suggests that, as lands under roads do not affect the Council’s economic position and this information has no value to the users of the information, there is no point in increasing the council’s financial reporting costs. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Public Budgeting, Accounting & Financial Management Emerald Publishing

Rationality, accountability reform and accounting for land under roads in an australian local government

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1096-3367
DOI
10.1108/JPBAFM-16-01-2004-B001
Publisher site
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Abstract

Recently the inclusion of land under roads as an asset in financial reports by Australian local governments has led to several concerns arising from dissatisfaction with certain elements of the new accounting standards and concepts, particularly, the Australian Accounting Standard AAS 27 “Financial Reporting by Local Governments” and the Standard Accounting Concepts SAC 4 “Definition and Recognition of the Elements of Financial Statements.” These concerns have also meant that most local governments are opposing the recognition of land under roads as an asset for financial reporting purposes. With the inclusion of land under roads dominating the asset element of financial reports, the relevance and reliability of valuation of land under roads needs to be examined. Using an Australian case, this paper examines whether this information provides greater relevance and reliability to users. The paper suggests that, as lands under roads do not affect the Council’s economic position and this information has no value to the users of the information, there is no point in increasing the council’s financial reporting costs.

Journal

Journal of Public Budgeting, Accounting & Financial Management – Emerald Publishing

Published: Mar 1, 2004

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