Accounting for public sector capital: the nationalised industries. (current cost accounting use in UK privatized firms), (part one of two)
Article Abstract:
The capital costs accounting of the nationalized industries in the UK is based on current costs accounting (CCA) due to the influence of the Byatt report. Four organizations still remain nationalized, British Coal, British Rail, the Post Office, and British Shipbuilders, and all four use CCA, though there are differences in interpretation and implementation. A major concern with the use of CCA is that the proposals for CCA embedded in the Byatt report are not congruent with current practice in the private sector. Although the legislation enabling the nationalization of firms requires them to comply with 'best commercial practice', CCA is no longer used by the private sector. CCA offers confusing and contradictory determinations of asset values. More relevant financial information would be produced by alternatives to CCA, such as preparing financial statements based on discounted cash flows or the use of performance indicators.
Publication Name: The Accountant's Magazine
Subject: Business
ISSN: 0001-4761
Year: 1990
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Accounting for public sector capital: the National Health Service
Article Abstract:
The UK National Health Service (NHS) is adopting current cost accounting similar to nationalized UK firms. In its history, the NHS has mirrored government accounting practice, and its accounts are basically returns on income and expenditure using 'bed numbers' as a crude approximation of assets held. The adoption of the current cost accounting is different from the previous accounting system in which assets where not recorded or written off in over their useful lives. The NHS hopes to implement a system similar to those used in the private sector in order to generate information that would help its managers track and plan the replacement of assets. However, current cost accounting is no longer used by the private sector, and the adoption of this system of capital accounting will undermine efforts to promote comparability between the NHS and the private sector.
Publication Name: The Accountant's Magazine
Subject: Business
ISSN: 0001-4761
Year: 1990
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