As the FT notes:
Hundreds of billions of pounds of additional debt will appear on the government’s books on Wednesday when the Treasury publishes accounts drawn up on the same basis as those of companies.
After years of delay, the government will give the first glimpse of what the UK’s public finances would look like if the UK were a listed company such as Marks & Spencer or BT.
The new accounting standards have required the government to consolidate information from 1,500 public bodies, and report figures using the International Financial Reporting Standards followed by big businesses.
But why should the government do this? The International Accounting Standards Board who are responsible for International Financial Reporting Standard are currently reforming their constitution. In the consultation document on this reform they say:
In carrying out the IFRS Foundation’s mission as the standard-setting body, the IASB should develop financial reporting standards that provide a faithful presentation of an entity’s financial position and performance. Those standards should serve investors and other market participants in their economic and resource allocation decisions. The confidence of all users of financial statements in the transparency and integrity of financial reporting is critically important to the effective functioning of capital markets, efficient capital allocation, global financial stability and sound economic growth.
I discuss this in more depth here, but the key point is a simple one: nothing in the way International Financial Reporting Standard are developed makes them suitable for use by government.
They are designed for reporting by a body whose capital is traded on a market for the use of those who undertake short term speculative trading. According to the International Accounting Standards Board they have no other purpose. But this is far, far removed from the role and structure of government. That means IFRS are wholly inappropriate for its use and will lead to but economic decision making and inappropriate allocation of resources.
It's another mistake resulting from the ethos that thinks the UK is a PLC. It isn't. And it's about time we realised that fact.