Accounting Standards and Limitations in Public Sector: Report

This project report analyzes the role of accounting in public sector companies, using the University Hospital Leicester (NHS) as a case study. It defines accounting and explores the concept of public value. The report delves into the role of accounting standards, emphasizing their importance for clear, accurate, and comparable financial results, and specifically examines the 'going concern' principle. It also outlines limitations of using accounting standards in the public sector, such as rigidity, challenges in choosing the right standard, and the costs associated with implementation. The report references various accounting standards and the annual reports of the NHS organization. The conclusion emphasizes the crucial role of accounting in financial transaction tracking and summarizes the accounting theory used by the NHS organization and limitations of accounting standards.

Public Sector Accounting

Contents
INTRODUCTION.......................................................................................................................................3
MAIN BODY..............................................................................................................................................3
CONCLUSION...........................................................................................................................................5
REFERENCES............................................................................................................................................7

INTRODUCTION
The project report is based on analysis of role of accounting for public sector companies.
The organization which is selected in this project report is University Hospital Leicester that is a
NHS organization. Basically, the term accounting can be defined as a way of recording financial
transaction of a business entity in an effective manner (Mnif Sellami and Gafsi, 2019). The
project report covers detailed information about role of accounting standard for public sector as
well as limitation upon usefulness of accounting in public sector companies.
MAIN BODY
Public value- The value a business brings to community is defined by public interest. Originally,
Harvard Professor Mark H. Moore invented the word, which he saw as equal to the global
governance stock valuation. In other words, Government value shows the interest generated by
programs, rules, legislation and other steps by policy (Steccolini, 2019). Public supervisors are
thoroughly characterized to navigate an organized in three, which includes: Produce valued
results. Under the limitations of capital and energy available. Such as the above University
Hospital Leicester contributes in a huge manner in order to provide better service to the public.
Role of accounting standards for public sector companies:
Various governmental documents are Accounting principles (AS). Their primary goal is to insure
that financial results are clear, accurate, reasonable and comparable. That is achieved by the
standardization of national / economic accounting practices and values. The activities of both
entities are also reported in the same manner because such accounting principles are followed.
The Accounting Standards (AS) is provided explicitly by an administrative agency or a
governing commission. In the context of above University Hospital Leicester, a vital range of
accounting standards is used that helps them in an effective manner. On the basis of annual
report of above NHS organization, below mentioned accounting standards are explained:
 Going concern- The Trust Committee has managed these reports on a continuing basis.
Public non-commercial entities. Sector issues are presumed when the delivery of a
facility is ongoing in the future. Guidelines for monitoring guides have to be planned on

the grounds of a ongoing issue whether arrangements are made for them or not. Realistic
solution rather than dissolving the relationship by moving the assets to any public-sector
agency. The Audit Committee regarded the role of the Trust at its meeting, with an
authority delegated from the Trust Board.
The following primary fields were taken into account: 24 May 2019:
In 2018/19, the shortfall announced by the trust was £44,879K. Throughout 2018/19, the
Trust received international funding worth £ 49,495 billion to fund its role in the budget.
The 2019-20 budget strategy of the trust calls for a shortfall of £10 656 billion which
includes the usage of the Single Currency Interim Tax assistance program, cash credit
from this sum. When evidenced by the high fiscal strategy during the year, the proposed
financial aid in 2019-20 was approved by the Trust Board. The department of health and
human Care will acknowledge the trust’s average cash flow estimate of 13 weeks of the
date of each medication for the intent of using this service.
At the moment the trust is not pursuing extra NHS Improvement (NHSI) cash assistance
in 2019/20 in relation to the money needed by its shortfall. However, the Trust must
adopt the NHSI procedure to apply for income protection in cash for working capital
assistance. The trust and community expects it to take some time to reach a secure
financial equilibrium. The Board of Directors has taken good note of the 'going risk'
theory and has determined that there is
Content incertitude’s relevant to the confidence and group's financial viability
(profitability and liquidity) will throw considerable doubt on its potential.
Limitation of using accounting standard for public sector companies:
In the context of above University Hospital Leicester, they use different kinds of
accounting standards. Herein, below key limitations of using accounting standards are mentioned
in such manner:
 There are benefits for any possible approach to any accounting problems. This
contributes to rigidity by suppressing the options of these alternatives. The
implementation of accounting rules limits versatility (van Helden and Reichard, 2019).

 Therefore, it is a struggle to pick the right alternative for norm itself. That alternative has
its own reasons.
 The statute cannot be overridden by accounting standards. We ought to be interpreted in
the framework of the laws in effect.
 Accounting principles are essential when financial reporting when their entirety. They
lead to standardization. The right to a real and equal image of the company is quite
necessary for investors. Accountants will also be active. Such criteria help to develop and
sustain trust in the performance of accountants in comparability and efficiency. Despite
consideration of the aforementioned drawbacks, they perform an important role in the
preparation of financial accounts.
 The downside in utilizing accounting principles is that the auditor will follow the
inflexible structure. GAAP is unbelievably clear and precise as to how to achieve
accuracy and coherence. Every company provides multiple experience of working to
meet the GAAP standards continuously. The accounting firm must adapt the company to
the rules of reviewed accounting principles for its singular procedures and processes. It
can be achieved by a contracted accountant more effectively than with a company where
the firm owner wants to reach GAAP without preparation.
 The expense of the Business to reach the requirements is another downside under GAAP.
The organization will understand the specifications of the guidelines, the steps it needs to
do to meet the regulation and the costs (Baskerville and Grossi, 2019). In many cases, the
company needs to devise new regulations that involve an investment in equipment
involving workers wages and system improvements and training for employees.
So these are the limitations which are being faced by above University Hospital Leicester
during implementation of accounting standard.
CONCLUSION
On the basis of above project report this can be concluded that accounting is too crucial
for different kinds of business entities. By help of this companies can track various financial
transactions in an effective manner. The report concludes about accounting theory used by

chosen NHS organization that is going concern. In the further part of report different kinds of
limitations are mentioned that occurs during implementation of accounting standards.

REFERENCES
Books and journal:
Mnif Sellami, Y. and Gafsi, Y., 2019. Institutional and economic factors affecting the adoption
of international public sector accounting standards. International Journal of Public
Administration, 42(2), pp.119-131.
Steccolini, I., 2019. Accounting and the post-new public management. Accounting, Auditing &
Accountability Journal.
van Helden, J. and Reichard, C., 2019. Making sense of the users of public sector accounting
information and their needs. Journal of Public Budgeting, Accounting & Financial
Management.
Baskerville, R. and Grossi, G., 2019. Glocalization of accounting standards: Observations on
neo-institutionalism of IPSAS. Public Money & Management, 39(2), pp.95-103.