Accounting policies in the public sector: Characteristics and consequences of accounting for capital assets |
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| Institution: | 1. IESE Business School, Camino del Cerro del Águila, 3, 28023 Madrid, Spain;2. LeBow College of Business, Drexel University, Philadelphia, PA 19104, United States;1. Hanyang University, Republic of Korea;2. Seoul National University, Republic of Korea;1. Department of Accounting, Deakin Business School, Deakin University, Level 3, Building LB, 221 Burwood Highway, Burwood, VIC 3125, Australia;2. Department of Accounting, Monash Business School, Monash University, Level 3, Building H, 900 Dandenong Road, Caulfield East, VIC 3145, Australia |
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| Abstract: | We study the evolution of American state and local governments’ capital asset accounting policies from the initial adoption of Governmental Accounting Standards Board Statement No. 34 through the fiscal year ending in 2016. We document substantial cross-sectional and time-series variation in capital asset accounting policies, which potentially diminishes the comparability of capital asset accounting information across governments and over time. We also explore the economic implications of those policies in terms of capital investment decisions and capital asset condition ratios, as reported in governments’ annual financial reports. Our findings, which are relevant to the Governmental Accounting Standards Board and its constituents, extend prior research examining the adoption and application of generally accepted accounting principles in the public sector. |
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| Keywords: | Accounting policies Capital assets GASB statement No 34 State and local governments H76 M41 M48 |
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