Interpreting financial balance in local government: a case study from Finland

Abstract

Long-term economic balance in local government is often interpreted based on accrual accounting information. This case study from Finland shows that accruals information has limitations. The author distinguishes four different interpretations of economic balance: results-related, resource-related, needs- related and value-related. She concludes that accrual accounting information should be complemented with information about efficiency and equity of services.

Keywords:

• Accrual accounting
• ambiguity
• balance of a municipal economy
• interpretation
• measurement