Bridging the GAAP across the UK public sector

Abstract

Most of the UK public sector has made the transition to accruals based accounting e.g. central government departments, local government and the National Health Service. All have claimed an adherence to UK GAAP and it is intended to produce Whole of Government Accounts 2005/06 on a GAAP basis. This paper questions whether UK public sector accounting is really converging on GAAP and the extent to which there is comparability between the various parts of the public sector and between the public sector and the private sector. Using illustrations from the MoD, a local authority and a NHS trust, the compliance of public sector accounting practice with the Accounting Standard Board's Statement of Principles and reporting standards is investigated. The reasons for modifications to UK GAAP are then considered. It is concluded that the UK public sector is making unique and ad hoc adaptations to GAAP. These adaptations have been fragmentary and lack uniformity across the public sector. Furthermore, in its extensive use of current values the UK public sector could be argued to be ahead of the private sector rather than in alignment. Much work needs to be undertaken on an underpinning theoretical framework to enable accounting within and between the sectors to be bridged.