IFRS for public bodies – surely a joke?
Richard Murphy was spitting feathers about the suggestion public bodies adopt IFRS. He is right to be annoyed but leaves open the question of a viable alternative.
UK government seems hell bent on making everything based on private sector principles. I have no problem with that as a way of encouraging efficiency. But as Richard correctly points out, current standards of business reporting are designed with little more than the investor in mind. Public bodies don’t fit into that mould.
However, the reliance on a system of quasi cash accounting that encourages year end profligacy is no good either. Where I have seen good public body results is in the application of commitment accounting principles that encourage shared services and collaboration.
I can think of several local authorities, police and fire service groups where this has worked extremely well. The problem arises when politics get in the way, when there’s a reorganisation or where authorities are set up in artificial competition with one another over resources.
The present system isn’t all bad by any stretch. I like that accountability is baked into the way numbers are represented, even if they are sometimes a tad inscrutable. On the other hand, the lack of consistency in the way numbers I’ve seen reported over time is troubling. That should not happen, but it does.
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