Public-Sector Consolidated Financial Statements: An Analysis of the Comment Letters on IPSASB’s Exposure Draft No. 49

Abstract

Public sector consolidated financial statements can be drafted according to different approaches, especially the “control approach” or “budgetary perspective.” Considering the growing importance of the International Public Sector Accounting Standards (IPSAS) in the international scenario, the aim of the article is to investigate these approaches through an analysis of the comment letters submitted to the Exposure Draft no. 49, which will replace the current IPSAS 6. The main finding concerns the acceptance of the key role played by the control approach, even though it needs to be better specified, in order to take into account the public sector characteristics.

Keywords:

• consolidated financial statements
• control approach
• budget approach
• public-sector entities

Notes

¹ Moreover, and in more general terms, some recent studies (Robé, 2011; Viganò, 2012) have criticized agency theory on the grounds that, in the private sector, shareholders do not own the firm or its assets, they only own shares. One of the main consequences is that agency theory (which is based on the overlapping among two distinct concepts: firm and corporation) should be considered incorrect, because the supposed contrast of interests between the principal (i.e., the proprietor) and the agents (i.e., managers) is based on a representation that does not correspond to the reality of the legal relationships among managers, shareholders, and the corporation (Robé, 2011).