Capital assets in governmental accounting reforms: comparing Flemish technical issues with international standards

Abstract

Although some efforts have been made over the last twenty years, governmental capital assets are still the subject of many unresolved questions. This paper first presents an overview of the current differing accounting standards or research efforts with respect to governmental capital assets and then analyses the criteria of recognition, valuation and disclosure of capital assets in the reform of three kinds of Flemish governments. Their reformed accounting system is compared with IPSAS 17 (IFAC), which is an important internationally driven milestone in respect of capital assets. There appears to be a lack of a conceptual framework regarding capital assets and an attempt is made to structure the existing ideas. Another important issue in governmental accounting is drawing up the ‘first balance sheet’, which is necessary when accounting reforms are implemented. This study indicates that the fact that no separate accounting framework for capital assets with respect to the first balance sheet is distinguished, causes a lot of confusion in the discussion about accounting standards. Finally, the paper aims to provide actual cases as illustrations in analysing governmental accounting standards for capital assets. The examination of the adoption of the governmental accounting reforms, reveals that such reforms do not usually take the specific governmental characteristics of capital assets into account.