Evaluation of assets in Swedish local governments : a comparative study between Kristianstad and Landskrona municipality

A good and functioning accounting system is vital for public sector entities, therefore, they have to observe all requirements and disclosures that are recommended in the accounting standards of financial reporting. When a public sector entity acts and follows the legislation correctly it will affect the citizens’ participation, which in turn will also lead to increased democracy. Because of the IPSAS’s and the SCMA’s standards which in turn are influenced by the business accounting standards (IAS and IFRS), the public sector entities have had issues whether to follow some of the standards. One example of this issue is the evaluation of assets which has been problematic, therefore, the imitation of the private sector has been criticized by academics, like for example Mautz (1981) and Pallot (1992). The main objective with this study is to explore to which extent Swedish municipalities are following the recommendations from SCMA regarding the evaluation of the assets. The purpose of the article is also to compare two municipalities and explore differences and similarities between them. Further we can explore if the quality of the financial information is affected by the size of the municipality, that is, if a small municipality does have a poorer quality in comparison to a bigger one; which many assume. We also want to discover the main similarities and differences between the IPSAS and SCMA, that is, when it comes to the standards regarding the evaluation of assets. To achieve the purpose of this case study, we will interview two people from two different municipalities, that is, two employees on the financial department who have accounting and the annual report as their main tasks. This study shows that there are mostly similarities and not major differences between these two municipalities regarding the evaluation of assets. Hence, both municipalities follow the national standards from the SCMA, but with very few exceptions when it comes to assets evaluation. This study also showed that the IPSASB and the SCMA recommend different methods when measuring the value of an asset, therefore, there is a difference between them two in this matter. In brief, the SCMA rather recommends the cost method; the IPSASB on the other hand proposes the fair value method as the most appropriate. This study shows that there are no major deviations between the two municipalities when it comes to following the standards regarding the evaluation of assets, hence, the quality mostly does not differ