Component depreciation is a relatively new accounting method for the public sector. 2014, the Swedish Council of Municipal Accounting introduced new directives about component depreciation in municipalities. Harmonization has proved to be the basis for the new directives, which affects the Swedish municipalities.
The purpose of the study is to identify if there are factors that affect whether a municipality has implemented component depreciation or not. The theoretical framework, containing relevant accounting theories and concepts, has helped to achieve the purpose. The main methodology was to collect data from annual reports in all 290 municipalities. To complete the answers, a telephone survey was performed, where 57 municipalities responded.
The result showed that only few factors affect the implementation of component depreciation. Something that clearly affects the choice of implementation is the accounting choice and the CFOs own interest. The results of this study indicate that municipalities do not comply with the law and there are evidence that all municipalities will not fully comply with the law in the future. The results also showed that there is uncertainty about what benefits component depreciation would provide. The study increases the understanding of the public sector accounting, focusing on in which extent municipalities have implemented component depreciation.
The survey showed that the theory and practice did not match. The study provided indications that there are uncertainties in the municipalities, which means they would like to learn from each other. Future research could provide deeper knowledge of why component depreciation has not been introduced.
|Date of Award||2017-Jun-26|
|Supervisor||Jennifer Emsfors (Supervisor) & Sven-Olof Collin (Examiner)|
- Degree of Bachelor of Science in Business and Economics
- 15 HE credits
Swedish Standard Keywords
- Business Administration (50202)
- component depreciation
- municipal accounting
- agent theory
- institu-tional theory and positive accounting theory.