Accounting for intangible assets by the government of Malta

Abstract

Purpose: The purpose of this dissertation is to identify the types of intangible assets that the Government currently holds; to describe how these intangible assets would be accounted for under IPSAS 31; and to analyse the effects that IPSAS 31 will have on government reporting and any problems that may arise during the adoption. Design: The objectives of this study were achieved through the collection of primary data using a qualitative research approach. Primary data was collected through seven semi-structured interviews; three of which were conducted with high-ranking Government officials and the other four were conducted with accounting professionals that work in different private audit firms. Findings: The majority of intangible assets that the Government holds have already been identified through an analytical exercise. Most of these intangible assets are relatively easy to account for as they have a measurable cost attributed to them. However, there are other intangible assets that are exclusive to the Government which are more difficult to account for. Furthermore, the approach taken by the Treasury is to limit the accounting options that are allowed by IPSAS 31 as much as possible. This approach has several benefits but it also has some drawbacks. Conclusions: This study concludes that the adoption of IPSAS 31 will result in increased transparency, accountability and comparability but will still exclude important intangible assets such as the government’s power to tax. Therefore, the increase in liabilities under IPSAS will still not be matched with the corresponding assets because the most important intangible assets owned by government do not meet the definition of an asset and cannot be recognised. Implications: It is expected that this study will become useful to government officials if any amendments are made to IPSAS 31 and as new intangible assets become exploitable throughout the years.