All for Nothing? Accounting for Land under Roads by Australian Local Governments

Elhawary, H and West, B 2015, 'All for Nothing? Accounting for Land under Roads by Australian Local Governments', Australian Accounting Review, vol. 25, no. 1, pp. 38-44.


Document type: Journal Article
Collection: Journal Articles

Title All for Nothing? Accounting for Land under Roads by Australian Local Governments
Author(s) Elhawary, H
West, B
Year 2015
Journal name Australian Accounting Review
Volume number 25
Issue number 1
Start page 38
End page 44
Total pages 7
Publisher Wiley-Blackwell
Abstract Accounting for land under roads by local governments has been one of the most controversial and protracted episodes in the setting of Australian accounting standards. However, after more than two decades of exposure drafts, regulation, transitional provisions and re-regulation, most land under roads has not been recognised in local government balance sheets. Australian Accounting Standard AAS 27 Financial Reporting by Local Governments was first issued in 1991 and, among other significant reforms, proposed that local governments report land under roads as an asset in their financial reports. However, persistent opposition to this requirement and practical difficulties associated with its implementation gave rise to a succession of transitional provisions deferring its mandatory application. Finally, in 2007 - 16 years after AAS 27 was first promulgated - the Australian Accounting Standards Board (AASB) sought to bring closure to this issue with the release of AASB 1051 Land Under Roads. However, in the interim some state governments had pursued their own resolutions, forbidding the recognition of land under roads. This research reports the results of a survey of the impact of land under roads on local government financial reports. After two decades of debate and regulation, diversity is found to persist in the extent and manner of recognition of this 'asset'. However, recognition remains the exception rather than the norm and is typically confined to recent acquisitions that comprise only a very small portion of total assets. These circumstances are suggestive of an episode of regulatory failure.
Subject Accounting Theory and Standards
Accounting, Auditing and Accountability not elsewhere classified
DOI - identifier 10.1111/auar.12056
Copyright notice © 2015 CPA Australia.
ISSN 1035-6908
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