Land under roads and the power of politic

The purpose of this paper is to answer the following questions: What are the theoretical and practical antecedents for recognising land under roads (LUR) as an asset in local government financial reports? Why was the process of regulating this aspect of accounting practice so protracted and so controversial?

The method used a critical analytical review and synthesis of relevant literature.

This study rejects the recognition of LUR, and suggests that the requirements to account for LUR should be withdrawn immediately. Regardless of the way that the debate has evolved as to the need or otherwise to value LUR or the methodology to be adopted, until the issue of a consistent, standards-based data set is addressed, there is unlikely to be a unified useful outcome.

The study’s findings provided opportunity to reach an overall conclusion and make policy recommendations regarding the saga of accounting for LUR by Australian local governments. However, the ability to generalise beyond Australia to other countries would need to be tested by additional research.

The study’s findings provided assessment of the impact of valuing LUR on financial reporting by local governments and suggested policy recommendations.

This study provided an understanding of Australian local governments’ accounting choices in regard to the valuation of LUR and documented the history of early adoption of valuation of LUR by local governments.

The literature on the public sector and accrual accounting is extensive and varied. However, there have been only isolated studies on the specific issue of LUR (Barton, 1999a, 1999b; Hoque, 2004; Rowles et al., 1998a, 1998b, 1998c, 1999). This study adds to the few isolated studies on the specific issue of accounting for LUR. Originality/value – This study provided policymakers with rich information about accounting for LUR and, it should have the capacity to impact on the future policy directions and recommendations.