مقاله انگلیسی رایگان در مورد بررسی اهمیت صورت های مالی حساب های عمومی – الزویر 2023

Abstract

     Many governments are introducing business-like accounting systems. This paper examines the fiscal effects of compiling business-like financial statements on the expenditures of local governments in Japan as a complement to cash-based reporting. Using the variation in the deadlines for compiling new statements given by the central government in a difference-in-differences instrumental variable approach, we found that business-like financial statements have limited effects on municipalities’ expenditures but have short-run effects on social assistance expenses. This might be a part of the reconstruction of their expenditure structure.

Introduction

     Traditionally, public-sector budgets have been prepared and settlements have been reported through cash-based accounting. Cash-based accounting statements generally do not report assets and liabilities, while business-like accrual-based accounting statements do report them. Cash-based accounting recognizes transactions only when the associated cash is received or paid, while accrual-based accounting recognizes transactions when they occur. Therefore, a reform from cash-based to accrual-based accounting can provide relatively comprehensive and long-term insights into the impacts of such a policy. This paper investigates the fiscal effects of compiling business-like financial statements in addition to traditional cash-based settlement documents by exploiting a change for Japanese subnational governments, using the variation in the deadlines set by the central government.

     Following the arguments favorable to accrual accounting, in 2016, approximately three-quarters (25 out of 34) of the central governments of countries in the Organization for Economic Cooperation and Development (OECD) had adopted an accrual accounting basis for annual financial reports, and approximately 30% of these countries (10 out of 34) had done so for budget preparation (Moretti, 2016). The financial statements of subnational governments are also becoming accrual-based. An OECD survey showed that two-thirds (21 out of 32) of OECD countries use accrual-based accounting for the statements of subnational governments (Irwin and Moretti, 2020). The central government of Japan, similar to those of other developed countries, has compiled balance sheets since 2000; however, they are complementary to cash-based fiscal reports (Moretti and Youngberry, 2018). Local governments are also asked to compile balance sheets and other related financial statements.

Discussion and conclusion

     This paper investigates the fiscal effects of the introduction of business-like financial statements by exploiting the context of Japanese local governments. The central government asked local governments to compile balance sheets and other related financial statements in addition to traditional cash-based settlement documents. It set two different deadlines depending on the type and population size of the local governments. These conditions were exogenous to the local governments. Since the deadlines were not very strict and following the request was not mandatory, we apply DID-IV estimation. Our data are comparable before and after the introduction of the new statements because the traditional cash-based statements were continuously published as the main settlement documents

     Our findings are summarized below. First, the new financial statements do not affect the primary expenditures of ordinary accounts. Second, the new statements negatively affect social assistance expenses. This result is robust across the specifications. Third, the new statements decreased fee revenues while increasing intergovernmental transfer revenues and ‘‘other revenues’’, most of which are revenues from the principal and interest of loans to others. Fourth, the effects of the different coverage of the new financial statements do not differ substantially. Here, we discuss these findings from the perspectives of the technical-rational and institutional views explained in Section 2.