New development: Do accounting and asset management at governments evolve together?

The article will help high-level policy-makers, decision-makers, and technical experts involved in the modernization of public financial management by better recognizing and leveraging the potential synergies between accrual accounting (AA) and management of non-financial (property) assets. In particular, it discusses how policies and practices can more effectively link inventorying and valuation conducted for both AA and property assets management (AM). The article illustrates the practical benefits of simultaneous AA and AM reforms, highlights the important role that independent auditors can play in improving AM and summarizes recent suggestions for the co-ordinated application of AA and prudent AM as integral components of public financial management.ABSTRACTThis article discusses how the evolution of accounting and the management of non-financial assets in governments have been interrelated, and whether accrual accounting (AA) and asset management (AM) have benefited from these connections to the extent initially expected. The article focuses on two foundational elements—asset inventorying and valuation—to highlight missed opportunities and recent examples of productive links. It also acknowledges the natural gaps between AA and AM, which have become more evident in recent years and outlines areas that warrant further research. Finally, the article summarizes the latest thinking on how a combination of AA and effectively governed strategic AM can help improve the financial position of many governments. The article is based on an analysis of government documents and literature, as well as the authors’ extensive international experiences in providing advisory services and technical assistance on AA and AM reforms to governments of various levels.