The Crown land accounting dilemma in New South Wales local government
Journal of Public Budgeting, Accounting & Financial Management
Article publication date: 6 January 2022
Issue publication date: 26 April 2022
The paper addresses the question of whether Crown land managed by local authorities in the New South Wales (NSW) local government system should be recognised as assets on municipal balance sheets.
The paper provides a synoptic review of the literature on accounting for public goods assets followed by a critical analysis of the official requirements of the NSW government on the recognition of Crown land.
The NSW government holds that Crown land managed by local councils should be recognised as an asset on council books. However, following an assessment of the problem through the analytical prism of financial accounting, it is argued that councils do not possess control over Crown land and that such land should thus not be recognised by councils.
The paper covers the legal and accounting framework applicable to NSW local government. However, it has broader implications for other local government systems with similar institutional and legislative foundations, such as other Australian states, New Zealand and South Africa, and these implications are highlighted in the paper.
It is argued that NSW government policymakers should re-consider the requirement for Crown land to be recognised on councils' books. Local authorities would then be able to save money and time on external auditing, management of land asset registers and the mandatory valuation of land.
Although Crown land shares some of the characteristics of other public good assets, unique accounting challenges arise due to the existence of a market in which such land could be traded not by councils, but by its legal owner (the Crown). In financial accounting, legal ownership is not considered as the main criterion over assets. However, the authors argue that for Crown land vested with councils, it becomes a critical factor in decision making.
The authors would like to acknowledge contribution of David Edgerton FCPA from APV Valuers and Asset Management for insightful comments on control questions and on earlier drafts of the paper.
Ivannikov, I., Dollery, B. and Bayerlein, L. (2022), "The Crown land accounting dilemma in New South Wales local government", Journal of Public Budgeting, Accounting & Financial Management, Vol. 34 No. 3, pp. 430-445. https://doi.org/10.1108/JPBAFM-01-2021-0014
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