Essay on Accounting Standards

The governments all over the world are now introducing new strict rules to make the companies more accountable, but the government bureaucrats are still playing their own rules and are far from being honest and precise. There is one set of accounting standards for business and a completely different one for the governments.

According to the USA Today reports, the American Government deficit would be many times larger if it employed the kind of accounting that applies to companies and business. Pentagon also has great problems in tracking the numbers and shows absolutely unrealistic statistic data. Another country where the government is using its own standards and rules is Australia.

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The companies and ordinary people in Australia are very dissatisfied with the fact that their government uses the accounting standards that differ from those applied to business. They require taking measures in order to make the public sector more accountable and solve the main problems with the figures tracking. Many of the economists claim that the government departments usually have no idea of the quantity and the location of the equipment they own. These departments are to follow international accounting rules with special carve-outs in certain clauses that are supposed to apply to the public sector. But the accounting experts state that many of those carve-outs are no longer relevant in our modern world and make the accounting process in the public sector more complicated. I’ve found a very interesting example that shows the typical problems of the governmental accounting. The Australian newspapers have recently reported that the defense bureaucrats have been asked about how they can classify an account for missiles. One missile costs more than $500 000, but missiles often appear in the books as property or inventory. There are also strong concerns about how the Australian government deals with various heritage objects and all this leads us to one conclusion – the accounting standards for business and governments should be the same and rely on the market reality.

It is obvious, that the governments are using their own accounting standards to present the favorable facts and figures and give the statistic data that will help to create an attractive country’s image. But it is also obvious to me that the public should be given the truth and the facts should be fair and precise. If the governments are made more accountable, they will be more careful in their actions and policy measures and the public will have more control over the country’s assets and property.