Premium
Accounting for Infrastructure Service Delivery by Government: Generational Issues
Author(s) -
McCrae Michael,
Aiken Max
Publication year - 2000
Publication title -
financial accountability and management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.661
H-Index - 44
eISSN - 1468-0408
pISSN - 0267-4424
DOI - 10.1111/1468-0408.00108
Subject(s) - valuation (finance) , accounting , business , equity (law) , mark to market accounting , depreciation (economics) , economics , cost accounting , accountability , neutrality , accounting information system , finance , throughput accounting , financial accounting , profit (economics) , microeconomics , financial capital , capital formation , philosophy , epistemology , political science , law
Infrastructure service provision by government creates huge distributional issues about service availability and performance over time and the relative funding burdens borne by successive generations of consumers across time. But providing financial disclosure on these issues through inter‐generational accounting pre‐supposes that accounting measurement is both generationally neutral (temporal neutrality) and does not legitimate any particular pattern of distribution. At the very least, accounting measurements of service provision costs should possess the attribute of distributional fairness. They should not bias the inter‐generational allocation of cost or funding burdens. We argue that the forced application of inappropriate commercial accounting concepts of asset valuation, depreciation and capital maintenance does produce significant generational bias. More flexibility is required to produce the necessary accounting measurement attributes for financial disclosure on whether government has discharged its continuing accountability for inter‐generational equity in burden sharing. We discuss three conceptual issues and illustrate the need for flexibility by proposing an alternative ‘flow of obligations’ approach which does not require reference to valuations of community service resources or arbitrary cost allocations under depreciation.