Government Expenses and Sustainability Reporting

Posted: August 26th, 2021

Government Expenses and Sustainability Reporting

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Government Expenses and Sustainability Reporting

Question 1

            Expenses are reported in financial statements. In other words, an expense is recorded on the income statement after the expiry of the period in which the costs match with the related sales(Calmon & Salamatian, 2018). They include funds that have been spent to ensure that revenues will be earned during the period for which they are paid. A common example of government expenses includes salaries and rent paid to civil servants executing government duties, interest expense incurred, and commissions earned by the government’s commercial attachés. On the other hand, expenditures refer to payments made for services or goods to be delivered. In this case, there is usually no expectation of revenue returns after the payments have been made (Calmon & Salamatian, 2018). For example, the government might spend mammoth amounts of money to clear its liabilities or to buy pieces of land meant for future expansion.

            For every expended expense, a certain amount of revenue is usually expected in return. Governments around the world have devised ingenious ways of recording and managing these revenues(Calmon & Salamatian, 2018). One such way is the use of Special Revenue Funds. By definition, a special revenue fund refers to a fund that is used within a government agency to record the proceeds from certain revenue sources for which the fund usage was restricted (Eichenauer & Hug, 2018). In other words, it is an account that is created by the government to make money collection for utilization by certain projects (Calmon & Salamatian, 2018). Special revenue funds are many and they vary in nature and complexity. They include funding for libraries, wastewater management, parks, and schools. The purpose of a special revenue fund is to provide increased accountability and transparency that taxpayers’ money is spent on the purpose for which it was initially intended.

Question 2

The Triple Bottom Line Accounting (TBLA) is an accounting framework comprised of three parts. These are, social, environmental, and financial. Thus, TBLA is a method of measuring the economic, environmental and community services impacts of an organization(Calmon & Salamatian, 2018). Previously, accounting practices only focused on measuring just the financial bottom line of their operations. The originator of TBLA – John Elkington – posited that sustainable development occurs when organizations simultaneously pursue economic prosperity, social equity, and environmental quality (Calmon & Salamatian, 2018). As such, some organizations have adopted TBLA frameworks for evaluation of their overall performance in broad perspectives to create greater business value. The organizational success framework has motivatedgovernments to start working toward adopting this concept(Calmon & Salamatian, 2018). Some of these countries include Germany, Canada, Japan, the United States of America, Britain, and Australia.

Through the Triple Bottom Line Accounting, it has become easier for businesses to further expansion of their stakeholder’s knowledge about their operations. Being that it goes beyond the traditional financial aspects of businesses, TBLA reveals to stakeholders a given company’s exact impacts on the world around it(Hsu, et al., 2018). Thus, governments and companies alike are being encouraged to focus on the people, planet, and profits. In this regard, the economic line of TBLA ties the growth of organizations to economic growth and how well these companies contribute to supporting it (Hussain, Rigoni, & Orij, 2018). The social line of TBL entails the conduct of beneficial and fair practices by governments and organizations. This is achieved through such practices as enacting and enforcing fair wages, strengthening community development and employee relations. The environmental line of TBLA calls for businesses and governments to engage in practices that are not harmful to the environmental resources to ensure efficient and sufficient usage by future generations(Hsu, et al., 2018). As a result, globally, governments have taken an active interest in advocating for factories to reduce greenhouse emissions. Thus, this simple but wise act is evident enough that governments are slowly starting to engage in sustainability accounting of their operations.

References

Eichenauer, V. Z., & Hug, S. (2018). The politics of special purpose trust funds. Economics & Politics, 30(2), 211-255.

Hsu, H., Calmon, F. P., Calmon, A. P., & Salamatian, S. (2018). Correspondence Analysis of Government Expenditure Patterns. arXiv preprint arXiv:1812.01105.

Hussain, N., Rigoni, U., & Orij, R. P. (2018). Corporate governance and sustainability performance: Analysis of triple bottom line performance. Journal of Business Ethics, 149(2), 411-432.