Fund accounting : theoretical and empirical study

2013

The public sector operates in the context of increasing demand for transparency and

accountability and better control of financial resources spending. Governmental organizations

differ from business enterprises in their missions, ways of revenue acquisition and

performance evaluation. At the same time, international discussion about how to develop and

improve governmental accounting uses commercial accounting as the only accounting

framework and do not provide an attention to other available accounting models, such as fund

accounting and cameral accounting. The thesis aims to introduce fund accounting into this

international debate. The study acquires knowledge about fund accounting as an accounting

platform, which is used when carrying out an empirical study, analyzing the financial

statements of the City of Wolverhampton, UK. The study discusses if fund accounting, or

some of its elements, could be of interest to use as a part of the accounting framework in the

public sector. The study finds that even though, municipal accounting uses some elements

based on the original fund approach, the fundamental fund accounting concepts changed their

meanings affected by the current accounting trends of business accounting standards adoption

in the public sector. The study takes into consideration the advantages of fund accounting,

such as focus on budgetary control and fiduciary stewardship and suggests its improvement

and simplification in order to serve the public sector better, but not the replacement by the

commercial (accrual) accounting.