SFPALC Senate Finance and Public Administration Legislation Committee UPF

Sfpalc senate finance and public administration

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SFPALC = Senate Finance and Public Administration Legislation Committee UPF = Uniform Presentation Framework 7.2 THE STATE OF PUBLIC SECTOR ACCOUNTING, THE IDENTIFICATION OF PROBLEMS AND THEIR ASSOCIATION WITH GAAP/GFS REPORTING 7.2.1 Assumptions in the policy debate: paradigms and public sentiment The GAAP/GFS harmonisation agenda setting process occurred in a Westminster form of government in the context of the New Public Management reforms, in which the role and content of financial reporting had been reviewed and redefined (Hood 1991, 1995). As part of these reforms, accrual accounting and alternatives to historic cost valuations were implemented in public sector accounting throughout Australia (see, for example, Barton 1999, 2002; Barton 2005, 2006, 2009; Carlin 2005; Guthrie
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177 1995, 1998; Guthrie and Humphrey 1996). GAAP/GFS harmonisation was influenced by the introduction of accrual accounting in Australia in a number of ways. GFS reports were based on cash accounting whereas GAAP reports were prepared on an accrual basis. Users, and in particular politicians, were confused by the new accounting techniques, and it is argued that policymakers and PEs associated these issues with the dual GAAP/GFS reporting regime to further GAAP/GFS harmonisation policy solution. At the onset of GAAP/GFS harmonisation, there were two predominant financial reporting paradigms in Australian governmental accounting, which influenced the range of potential policy solutions. They were a statistical macroeconomic accounting perspective (GFS) and a microeconomic accounting view (GAAP). GFS principles were traditionally dominant for whole of government reporting, as Treasuries are typically the domain of economists. Macroeconomic accounting was developed to measure the financial performance (flows) and position (stocks) of whole economies. Microeconomic accounting was concerned with single entities, such as households or companies. These differences were reflected in the respective accounting frameworks. The GFS Manual 2001 stated that statistical measures are developed: “for purposes of economic anal ysis, decision- taking and policy making” (IMF 2001, paragraph 1.5) During the period considered in this thesis, the purpose and objectives of GAAP accounting were set down in Statements of Accounting Concepts (SAC) 2 Objective of General Purpose Financial Reporting . It was to “provide information useful to users for making and evaluating decisions about the allocation of scarce resources” (PSASB et al. 1990, paragraph 43).
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178 Data analysis from the interviews and written documents highlight that the two frameworks were considered to serve different purposes. For example, a submission by the Australian Bureau of Statistics (ABS 2001b) to the Joint Committee of Public Accounts and Audit (JCPAA) in the context of the Review of the Accrual Budget Documentation in 2001 states: GFS and AAS 31 are equally valid systems. GFS is a framework designed to facilitate macro-economic analysis, including the integration of government financial activities within a broader statistical framework - the national accounts. AAS31 is designed for general purpose financial reporting. While
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  • Fall '13
  • Government, The Land, International Financial Reporting Standards, Financial Accounting Standards Board, Australian Accounting Standards Board, Snow

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