nep-acc 2019-11-25 papers

on Accounting and Auditing

Issue of 2019‒11‒25
two papers chosen by

Ineffective Fiscal Rules? The Effect of Public Sector Accounting Standards on Budgets, Efficiency, and Accountability By Florian Dorn; Stefanie Gäbler; Felix Rösel
CECL and the Credit Cycle By Bert Loudis; Benjamin Ranish

Ineffective Fiscal Rules? The Effect of Public Sector Accounting Standards on Budgets, Efficiency, and Accountability

By:	Florian Dorn; Stefanie Gäbler; Felix Rösel
Abstract:	International organizations have encouraged national governments to switch from traditional cash-based to business-like accrual accounting, on the presumption that long-run benefits may outweigh substantial implementation and operating costs. We use a quasi-experimental setting to evaluate whether changing public sector accounting standards is justified. Some local governments in the German federal state of Bavaria introduced accrual accounting while others retained cash-based accounting. Difference-in-differences and event-study results do not show that (capital) expenditures, public debt, voter turnout, or government efficiency developed differently after changes in accounting standards. Operating costs of administration, however, increase under accrual accounting.
Keywords:	Fiscal rules, public accounting, budget transparency, sustainability, government efficiency, accountability, local government
JEL:	D02 D73 H72 H83
Date:	2019
URL:	http://d.repec.org/n?u=RePEc:ces:ifowps:_312&r=all

CECL and the Credit Cycle

By:	Bert Loudis; Benjamin Ranish
Abstract:	We find that that the Current Expected Credit Loss (CECL) standard would slightly dampen fluctuations in bank lending over the economic cycle. In particular, if the CECL standard had always been in place, we estimate that lending would have grown more slowly leading up to the financial crisis and more rapidly afterwards. We arrive at this conclusion by estimating historical allowances under CECL and modeling how the impact on accounting variables would have affected banks' lending and capital distributions. We consider a variety of approaches to address uncertainty regarding the management of bank capital and predictability of credit losses.
Keywords:	Current expected credit loss ; Allowance for Loan and Lease Losses ; Accounting policy
JEL:	E1 E3 G21 G28 M41 M48
Date:	2019–08
URL:	http://d.repec.org/n?u=RePEc:fip:fedgfe:2019-61&r=all

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