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Public Sector Accounting and Auditing in Denmark
Abstract
Denmark is a constitutional monarchy, which has three levels of government: national (staten), regional (regioner) and local (kommuner). In addition, since Denmark is a member of the European Union, there is the European level. At the EU level, legal harmonization is carried out through the issuance of Directives, thus far accounting harmonization has been limited to private sector accounting practices, 1 but with the development of European Public Sector Accounting Standards (EPSAS) harmonization will also be undertaken in the public sector arena (see EC, 2012a, 2012b, 2013). In addition to these three levels, Denmark also segregates out financial governance of its social funds as they follow private sector accounting standards.
... A recent study (Buylen and Christiaens, 2016) shows that cash-based issues (such as current expenditures by destination or capital expenditures by destination) are used to a larger extent than accrual elements (such as depreciation of assets) in Flemish local government. Second, in Denmark, municipalities have the option to choose between accrual and cash for budgeting (Aggestam Pontoppidan, 2015), while this is not the case in the other countries. Third, several countries seem to have what is referred to as 'integrated accounting systems', indicating that both cash information about budget appropriations and budget execution, as well as accrual information for the income statement and balance sheet, can be derived from the same system. ...
This paper discusses the phenomenon that governments in many Western
countries have transferred their cash-based systems into accrual-based
systems for reporting purposes during the last decades, while still retaining cashbased
budgeting systems. The main question we want to answer is whether there
are more substantial reasons why governments prefer cash above accruals for
budgeting. Our paper is the result of a comprehensive literature review. At first
glance, combining accruals for both budgeting and reporting seems to be preferable
above combining cash for budgeting and accruals for reporting: there is
consistency between the budgeting and reporting logic, and accrual information
is richer than cash information. However, we are in favour of a more nuanced
perspective. The combination of cash for budgeting and accruals for reporting
can be defended through the lens of a fundamental budgeting logic that identifies
all expenditures and revenues expected for the budget year and sees the comparison
between cash-based appropriations and actual cash outflows as an easy
and straightforward control mode. Moreover, this combination aligns with the
dominance of budgeting over reporting and the limited accounting expertise of
many accounting information users (for example, public sector managers and
especially politicians). We argue that the ultimate transfer from cash to accruals
in budgeting needs to be based on a solid assessment of its added value to these
users, and not due to pressures of accounting experts.
This article discusses the possibilities of applying International Financial Reporting Standards for the public sector in Russian universities to increase accountability when making decisions on budget preparation. The introduction of International Financial Reporting Standards for the Public Sector (IPSAS) is an important step to optimize the preparation of budgets of higher education institutions. The purpose of the study is to disclose the substantive aspects of the implementation of International Financial Reporting Standards for the public sector to ensure accountability and transparency of the budgetary financial statements of universities. In the course of the research, such methods as induction, deduction, analysis and synthesis were used. The result of the study is expressed in the justification of the importance of preparing budgets for higher educational institutions of the Russian Federation in accordance with International Financial Reporting Standards for the Public sector.
With the vast acceptance of the International Public Sector Accounting Standards (IPSAS) worldwide, the auditing profession has been making a substantial progress within the public sector. This paper takes a comparative approach through the analysis of documentation from France, South Africa, and Denmark to investigate the regulations of statutory auditors’ engagements within the public sphere
and the prospects of standardisation. Findings reveal major divergence between studied countries; France depends on the government in managing statutory auditors’ engagements, the Supreme Audit Institution has extensive authorities for this task in South Africa, while local authorities have significant independence in managing their relationship with statutory auditors in Denmark.
Key words: Statutory Auditors, Governmental Audit, France, South Africa, Denmark.
The aims of this chapter are to take stock of the diffusion of common public sector accounting standards and to set the scene for the subsequent chapters in this book. First, the goals and challenges of harmonization attempts in public sector accounting are outlined. Next, light is shed on the current state of diffusion of the International Public Sector Accounting Standards around the globe. Here, the variations in adoption are also discussed. Finally, a discussion on accounting harmonization in the European Union and the project of developing common European Public Sector Accounting Standards is presented. Further avenues for research are presented.
Without definitional clarity the “quango debate” is inherently flawed and meaningful progress undermined. A possible solution to this problem is proposed in this article by way of a subsectional map which aims to clarify the quango topography. This accepts the diversity inherent in the quango debate while allowing for increased clarity and focused research. This, the authors believe, is the only way forward for practitioners, academics and policymakers working within the sphere of quasi-government. There is a need to address precise forms or subsections of the quango continuum as studies or reforms which focus on one type of quango would not necessarily work if applied to all quangos, or quangos in other countries.
One measure of the health of the Social Security system is the difference between the market value of the trust fund and the present value of benefits accrued to date. How should present values be computed for this calculation in light of future uncertainties? We think it is important to use market value. Since claims on accrued benefits are not currently traded in financial markets, we cannot directly observe a market value. In this paper, we use a model to estimate what the market price for these claims would be if they were traded. In valuing such claims, the key issue is properly adjusting for risk. The traditional actuarial approach – the approach currently used by the Social Security Administration in generating its most widely cited numbers - ignores risk and instead simply discounts “expected†future flows back to the present using a risk-free rate. If benefits are risky and this risk is priced by the market, then actuarial estimates will differ from market value. Effectively, market valuation uses a discount rate that incorporates a risk premium. Developing the proper adjustment for risk requires a careful examination of the stream of future benefits. The U.S. Social Security system is “wage-indexedâ€: future benefits depend directly on future realizations of the economy-wide average wage index. We assume that there is a positive long-run correlation between average labor earnings and the stock market. We then use derivative pricing methods standard in the finance literature to compute the market price of individual claims on future benefits, which depend on age and macro state variables. Finally, we aggregate the market value of benefits across all cohorts to arrive at an overall value of accrued benefits. We find that the difference between market valuation and “actuarial†valuation is large, especially when valuing the benefits of younger cohorts. Overall, the market value of accrued benefits
In Denmark, nearly all public services for individuals and families are delegated to local authorities, resulting in high quality and flexible delivery. The financing of these services is mostly ensured by tax revenues determined by the individual local authority but linked to the central government income tax. Local accountability in this regard has recently been called into question. Although local borrowing is strictly controlled, the system of grants and equalisation does not give incentives for cost efficiency in local government. Other accountability instruments (matching grants, general grants, the long tradition of negotiations) are analysed in light of their impact on control.
Public sector reform in Denmark has not been studied extensively, despite the country's tireless reorganization efforts and track record of trying new ideas. This article thus seeks to fill a gap in the literature. It does this by examining the reorganization of the public sector in terms of the transformation of organizations, and by assessing how successive governments have evaluated the initiatives taken with the aim of knowing whether or not reorganization has worked. The discussion shows that reorganization has been incremental and pragmatic, and that governments have rarely evaluated their reorganization efforts in any systematic way. One of the primary reasons for this has been the desire of politicians and top civil servants to have political and administrative flexibility and freedom to seize on strategic opportunities, unconstrained by the findings of detailed evaluations.
This paper seeks to measure the degree of accrual implementation in EU local government accounting systems and also tries to give an answer to the question of why accrual accounting has overcome the resistance to other New Public Management (NPM) reforms in countries relatively suspicious of them. We carry out our analysis through the comparison of the accrual accounting legal requirements in force in each country, and the published financial statements, taking the IPSASs of the IFAC as a benchmark. The results show different degrees of accrual accounting implementation and legal compliance. The reason of accrual accounting dissemination lies partially in that the dual systems implemented in European Continental countries do not require the introduction of deep organizational changes and answer the democratic demands of citizens for higher responsiveness, transparency and accountability, while traditional budgetary statements are maintained for monitoring compliance with legality and for administrative decision-making purposes.
Offentligt regnskab og revision-Et dansk og international perspektiv
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