Unrecognized assets created by public-sector investments in health and social services
Journal of Public Budgeting, Accounting & Financial Management
ISSN: 1096-3367
Article publication date: 13 October 2020
Issue publication date: 19 July 2021
Abstract
Purpose
This paper analyzes two types of potential intangible public-sector assets for consideration by public-sector accounting boards. Government investments in health and social programs can create two potential intangible assets: the intangible infrastructure used to deliver the health or social program and the enhanced human capital embodied in the recipients of program services. Because neither of these assets is currently recognized in a government's year-end financial statements or broader general-purpose financial reports (GPFR), these reports may underrepresent the government's true fiscal and service capacity.
Design/methodology/approach
The paper uses an international accounting standards framework to analyze: whether investments in health and social programs create intangible assets that meet the definition of an asset as set out by International Public Sector Accounting Standards (IPSAS), whether they are assets of the government and whether they are recognizable for the purpose of financial reporting.
Findings
The intangible infrastructure asset created to facilitate the delivery of health and social programs would often qualify as a recognizable asset of the government. However, the enhanced recipient human capital asset created through the delivery of health and social programs would, in most instances, not qualify as a recognizable asset of the government, though there likely would be benefits from reporting on it through GPFRs or other mechanisms.
Originality/value
This paper makes two contributions. First, it identifies a previously overlooked intangible asset – the infrastructure created to facilitate the delivery of health and social programs. Second, it presents an argument regarding why, even when it fails to generate a recognizable intangible asset to government, it would be valuable for government to report such investments in supplementary statements.
Keywords
Acknowledgements
This work was funded through a joint initiative of the McConnell Foundation and the Canadian Institute of Health Research (Grant #156947). The authors would like to thank the following individuals who contributed importantly to this work: Laura Anderson, Gioia Buckley, Denis Desautels, Emmanuel Guindon, James Hughes, Mike Joyce, Michael Puskaric, and Martha Tory.
Citation
Milinkovic, D., Hurley, J., Sweetman, A., Feeny, D., Tarride, J.-É., Longo, C.J. and McCracken, S. (2021), "Unrecognized assets created by public-sector investments in health and social services", Journal of Public Budgeting, Accounting & Financial Management, Vol. 33 No. 4, pp. 409-426. https://doi.org/10.1108/JPBAFM-04-2020-0044
Publisher
:Emerald Publishing Limited
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