Accounting for infrastructural assets : perspectives from within New Zealand local government

摘要

There is no generally accepted accounting practice for infrastructural assets with respect to either their definition or how to account for them. Renewal accounting is an alternative to the generally accepted basis of accounting for fixed assets-traditional depreciation. It assumes that infrastructural networks have indefinite useful lives. Expenditure on maintenance is expensed and no depreciation is charged, provided the network's service potential is maintained. This thesis examines recent developments in accounting for infrastructural assets in New Zealand local government. A survey, comprising 18 senior managers from within 12local authorities, was undertaken with the aim of ascertaining accounting practices and gaining their views on key issues identified from the literature. The survey found that local government managers perceive asset management planning to be very important. Consequently, there is a concerted effort toward collecting information on infrastructural assets and developing asset management plans (AMPs). Developments in these areas will improve both the reliability of information for internal management purposes and for general purpose financial reporting, whether under renewal accounting or traditional depreciation. It is concluded from the study that infrastructural assets should be defined as a conceptually distinct group which have the characteristics of networks with indefinite useful lives. The study also revealed that renewal accounting has widespread acceptance within New Zealand local government and is, arguably, the preferred alternative for infrastructural assets. This is because it contributes to better asset management; it makes maintenance and deferred maintenance on infrastructure transparent; and it supports the democratic process, where levels of service in AMPs are agreed in consultation with the public. Following the direction suggested by the interviewees' views canvassed in this thesis, the next stage requires the development of a financial reporting standard which addresses renewal accounting and the circumstances under which it should be applied.