OFF BALANCE SHEET ASSETS ARE THEY UNIQUE OR ARE THEY REALLY ASSETS?

Salme Näsi, Ph.D.

School of Business and Economics

University of Jyväskylä

P.O. Box 35 FIN-40351

Jyväskylä, Finland

Phone: 358 14 602 941

Fax: 358 14 603 331

E-Mail: snasi@cc.jyu.fi

Kathryn Hansen, Ph.D.

School of Business and Economics

California State University, Los Angeles

5151 State University Dr.

Los Angeles, CA 90032

Phone: 323-343-2854

Fax: 323-343-6439

E-mail: khansen3@calstatela.edu

Abstract

Some government standard setting bodies are adopting or moving towards full accrual accounting. As part of this process, standard setters must define the elements to be used in the accounting system. As a result public sector accounting bodies have adopted varied definitions of assets. All these definitions, in contrast to corporate accounting definitions, make allowance for some physical or infrastructure assets to be accounted for off the balance sheet. In this paper, we explore the varied definitions promulgated by the standards from IFAC, Finland, and the United States. Secondly, we discuss the assets that are excluded form balance sheet recognition and the basis for the conclusions to mandate off balance sheet status. Finally, we discuss if this existing treatment of off balance assets is consistent with the use of the assets and the conclusions drawn by the standards setting bodies.