New development: The limits of business accounting in the public sector context—the case of concessionary leases and right-of-use assets in-kind

IMPACT

Public sector accounting developments have been mainly driven by reforms and innovations developed in the private sector. There is a growing trend internationally to adapt private sector accounting standards to the public sector context. However, there are some transactions that simply do not resemble private criteria. This article reflects on two of these—concessionary leases and right-of-use assets in-kind. Importantly, the use of market values in these cases may result in financial statements that could mislead the user. The article provides interesting insights for practitioners and standard-setting boards, who need to be aware of the risks when adapting accrual accounting principles to public sector entities.

ABSTRACT

The article analyses the limits and risk of applying business accounting to public sector entities when the transactions are specific of public sector context, examining the case of concessionary leases and right-of-use assets in-kind. It contributes to the literature on public sector accounting standard setting and, in the field of international harmonization, it evidences the need to be cautious in adapting accounting standards from the private sector. The case study makes a contribution to the debate about public sector accounting particularities and developing specific accounting criteria.

KEYWORDS:

• Accrual accounting; accounting standards; assets measurement
• concessionary leases
• governmental accounting
• International Public Sector Accounting Standards
• public sector accounting
• public sector particularities
• right-of-use assets in-kind

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Isabel Brusca

Isabel Brusca is a Professor of Accounting in the Department of Accounting and Finance at the University of Zaragoza, Spain. Her research and professional interests are focused on accounting and performance management in public sector organizations.