Accounting for Government Guarantees: Perspectives on Fiscal Transparency from Four Modes of Accounting Ron Hodges

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Uploaded by Ron Hodges     Uploaded date: March 30, 2020    
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Publication date
November 01, 2018
Paper language
Abstract
Government guarantees are increasingly important as a policy instrument in public infrastructure investment and to assist the banking and financial sectors following the global financial crisis. This paper analyses how different modes of accounting characterize such guarantees in the contexts of public sector financial reporting, statistical accounting, budgeting and long-term fiscal projections. Guarantees are difficult to specify for accounting treatment and consistent conceptualization of liabilities. These difficulties make it attractive for governments to treat obligations as off-budget and off-balance sheet contingent liabilities, rather than recognize them in financial statements and statistical accounts. Miller and Power’s territorializing, mediating, adjudicating and subjectivizing roles of accounting are utilized to analyse the
reporting of UK government guarantees. Provisioning for guarantees is complex in financial reporting statements and often absent in national accounts, a deficiency which Eurostat has attempted to address by devising the concept of standardized guarantees and by securing more disclosure of contingent liabilities. There is potential for future research especially where there is greater mediation between the four modes of government accounting.
Preferred Citation
Heald, D. and Hodges, R. (2018), “Accounting for Government Guarantees: Perspectives on Fiscal Transparency from Four Modes of Accounting”, Accounting and Business Research, vol. 48, no. 7, (Nov) pp. 782-804. http://doi.org/10.1080/00014788.2018.1428525
Keywords
guarantees; government financial reporting; statistical accounting; fiscal transparency
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Category
  • Financial accounting
  • International Accounting / Accounting Harmonization
Type of Paper
Published paper

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