The need for public sector consolidated financial statements

The public sector has undergone a series of reforms, reforms that have had a great influence on the development of public accounting and reporting system. We consider that the most important issue that has resulted from these reforms refers to the introduction of consolidated financial reporting in the public sector. The public sector consolidated financial statements represent a challenging topic of worldwide research and also, became a debated issue both for international regulatory body (IPSASB) and for governments. However, the objective of this article is to analyze if there is a need for consolidated financial statements in the public sector and to outline the activity of the international regulatory bodies regarding the issuance of specific standards regarding this current topic. So as to reach this main objective of the research we explore the scientific literature regarding this issue and we followed the steps taken by regulators in the development of standards regarding consolidated financial statements that can be globally used. This theoretical paper emphasizes the importance of the introduction and presentation of consolidated financial statements by public sector entities and reveals the link between these types of reports prepared by entities from private sector and public one. The main conclusion of this conceptual paper is that public sector entities should prepare these consolidated reports and the regulators and governments play an important role in taking and introducing these practices into the public sector. So, we believe that there can be no excellence in accounting without excellence in reporting or vice versa. © 2013 Published by Elsevier Ltd. Selection and/or peer-review under responsibility of Emerging Markets Queries in Finance and Business local organization