Accounting for infrastructure assets within the Maltese Government : the implications of the move from cash to accrual accounting

Abstract

The accruals accounting system entrusts government with the responsibility to take account for all assets and liabilities, including specialized assets such as infrastructure assets. The Maltese government has not yet decided on the valuation approaches, which he intends to use on the acquisition, post-acquisition, and disposal of infrastructure assets. Moreover, uncertainties exist on the accounting treatment of such assets, which are owned by government prior to the introduction of accrual accounting and which are still being used by government. Various descriptions of the term infrastructure assets have been found and it has been discovered that some of the foreign governments which were reviewed, adopted different valuation approaches to account for infrastructure assets. Despite these diversities, the common characteristics of infrastructure assets have been highlighted and the traditional accounting method (historical cost less depreciation) has been shown to be the preferred method, both locally and internationally. As regards to the value attached to infrastructure assets which need to be sold, there seems to be a general consensus that when determining the disposal value, the value recorded in the financial statements should be ignored Finally, it is recommended that the infrastructure asset definition is determined on the common characteristics highlighted and that uniform accounting policies are applied throughout all government departments.