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CREATIVE ACCRUAL ACCOUNTING IN THE PUBLIC SECTOR: ‘MILKING’ WATER UTILITIES TO BALANCE MUNICIPAL BUDGETS AND ACCOUNTS
Author(s) -
Vinnari Eija M.,
Näsi Salme
Publication year - 2008
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/j.1468-0408.2008.00448.x
Subject(s) - accrual , accounting , business , public sector , context (archaeology) , balance (ability) , management accounting , accounting standard , revenue recognition , financial accounting , fund accounting , earnings , accounting information system , economics , medicine , paleontology , economy , physical medicine and rehabilitation , biology
Traditionally, the financial balance of public sector economic entities has been determined by balanced budgets and cash‐based or modified cash‐based budgetary accounting. Since the 1990s the superiority of accrual accounting in the public sector context has been emphasized by both practitioners and academics. This paper demonstrates that accrual accounting also offers opportunities for the use of creative accounting, or earnings management, in the public sector, at least as long as accounting is performed in accordance with diverse national norms instead of internationally acceptable accounting standards.