IS ACCRUAL ACCOUNTING APPROPRIATE FOR GOVERNMENTAL ORGANIZATIONS?

Norvald Monsen, NHH, Helleveien 30, N-5045 Bergen, Norway

Salme Näsi, University of Jyväskylä, P.O. Box 35, FIN-40351 Jyväskylä, Finland

Abstract

Business enterprises and governmental organizations differ strongly, and as a consequence of these differences, historically different accounting models - accrual and cameral accounting, respectively, have been used by these types of organizations. In later years, however, we can observe an international trend towards the replacement of cameral with accrual accounting in governmental organizations, without a debate about the organizational differences and their accounting consequences. The purpose of this paper is therefore to compare (1) business enterprises and governments (governmental units) as accounting contexts, (2) business (accrual) accounting and governmental (cameral) accounting, and (3) to relate this discussion to the recent developments of accounting in governments. A special focus will be on discussing whether or not accrual accounting is appropriate for governmental organizations, bearing in mind the different organizational contexts of business enterprises (for which accrual accounting has been developed) and governmental units (for which cameral accounting has been developed). The paper ends by arguing that we should bear in mind the different organizational contexts in the further important discussions about how to develop governmental accounting, focusing on the perpetually existing demand for control of public money.