Why Governments Should Produce Balance Sheets

This contribution to a controversy argues that accrual reporting at the whole of government level is appropriate and necessary as it provides a full picture of a government's financial position, discloses the impact of policy over the longer term (and therefore the sharing of the burdens between current and future taxpayers), focuses the attention of governments and public sector managers on the management of total resources and obligations and introduces discipline in financial reporting and therefore ensuring the integrity of the reported information.
Yet, accrual reporting, whether at the whole of government level or individual agency level, will not bring about changes of behaviour necessary to realise the full benefits of financial and other management reforms unless it is complemented by an accrual planning and budgeting regime to ensure that financial performance is planned and assessed on the same basis.