Should Business and Non-Business Accounting Be Different? A Comparative Perspective Applied to the New French Governmental Accounting Standards

Abstract

A conceptual framework of for the economics of non-business entities is developed and applied to the new French accounting constitution of governmental accounting. The concept of non-business entity is used to investigate the nature and role of non lucrative organizations within the economic system and their specific economic and monetary process. This theoretical perspective compares business and non-business representations. Accordingly, concerning business entities, three different models of accruals are addressed: the wealth-basis (static), the cash-basis, and the flow-basis (dynamic). Whilst the wealth-basis refers to current (fair) values and results to be at odds with the of the non-business economics, a dynamic model of the accruals basis is retained and adapted to these specificities. This dynamic model is then applied to a conceptual assessment of the new French standards set. With the enactment of the General Law of Finances of 2001 (LOLF, 2001), the French Government introduced a new set of standards shaped by an explicit conceptual framework. This legislation retains for governmental the logic of financial reporting that had been in effect for business enterprises, but also addresses the specificities of for public sector entities. According to our analysis, the concepts of produit (revenue) and actif (asset), and some specific standards create an ambiguity between the static and the dynamic model. Our conceptual framework may be applied further to the analysis of other standards sets such as the International Public Sector Accounting Standards (IPSAS).