Should business and non-business accounting be different? A comparative perspective applied to the new French governmental accounting standards

With the enactment of the General Law of Finances of 2001 (LOLF, 2001), the French Government introduced a new set of accounting standards shaped by an explicit conceptual framework. This legislation retains for public sector accounting the logic of financial reporting that had been in effect for business enterprises, but also addresses the “specificities” of accounting for public sector entities. The advent of LOLF has raised a number of questions about how to make non-business entities “accountable.” In this context, this paper analyzes the new French “accounting constitution” from a theoretical perspective that compares business enterprise and non-business accounting representations. The concept of non-business entity is used to explore further the nature and role of public sector activities within the economic system and their economic and monetary significance. Following this approach, three different views of accruals-based accounting for business enterprises are addressed: the wealth-basis (static), the cash-basis, and the flow-basis (dynamic). Whilst the wealth-basis refers to fair value and results to be at odds with the specificities of the public sector economics, a dynamic view of the accruals basis is developed and adapted to these specificities. This dynamic view is applied to a conceptual assessment of the new French accounting set. In particular, the notions of “produit” (revenue) and “actif” (asset) create an ambiguity between the static view and the dynamic view.