Government and Private Sector Accounting Discussion Chapter

Fixed assets are assets and property that cannot be easily converted into cash. The public sector deals with those that mainly involve expense, whilst the private sector deals with tangible property such as machinery, factory buildings, and large computer systems.

3. The public sector account analysis reports public accounts (i.e. those applicable to the nation and its people as a whole), whilst the private sector, obviously reports accounts that are congruent, relevant, and applicable just to its own peculiar concerns.

4. The public sector account deals with fixed assets not depreciation, whilst the private sector account deals with fixed assets and depreciation included. In other words, the private sector -- working on matters of gaining profit -- also takes into account the gradual and possible permanent decrease of value in the stock. The public sector, on the other hand, does not concern itself with this matter.

In short, the exercise of accountability and the purposes of government accounting cause the accounting and the financial systems of the public and private sector to differ one from the other.Government accounting has three purposes: 1. To safeguard the public treasury; 2. To facilitate sound financial management, and 3. To help the government discharge its accountability and responsibility. In all of these factors, there must be, and is existent, a system of powers and checks and balances between all the different divisions of the government (i.e. between the executive, legislative, and judicial branches).

The private sector, on the other hand, has none of these responsibilities or checks and is responsible and accountable purely to itself. It is for these reasons that differences in accounting and finance are so acute between the government and private sector.

References

Barton, A. (1999). Public and Private Sector Accounting: The Non-identical Twins Australian Accounting Review, 9, 22-31

Chan, J.L. (2003). Government Accounting: An Assessment of….....