Accounting for infrastructure assets in the public sector: The state of the art in academic research and international standards setting

The political, social and economic importance of public sector infrastructure assets means that they need to be accurately accounted for in financial statements. Research interest in this issue grew in the mid 1980s as a result of concerns over the deterioration of public infrastructure and as a consequence of the shift towards the use of accrual accounting in the public sector. After more than 30 years of debate, there is still no consensus in the academic literature regarding the best accounting treatment for infrastructure assets. Following a request from the International Public Sector Accounting Standards Board (IPSASB), the authors examined the existing international literature to define the state of the art in academic research. In this paper, they also examine and compare different countries’ approaches to standard setting in this area. This paper looks at the seven key issues identified by IPSASB.IMPACTInfrastructure assets in the public sector account for a large proportion of total assets and are a major source of government spending but, in spite of their importance, there is no consensus about the proper accounting treatment for these economic resources in either the academic literature or at the standard setting level. This paper brings policy-makers and practitioners up to date with this issue, analysing and comparing the main accounting rules at international level.