ABSTRACT There are two schools of thought on government financial reporting: one emanating from societal values and accountability to citizens; and one based on investment decisions and a business approach. There are staunch proponents of these different perspectives, which are rooted in economic thought and values. Using an analytical frame informed by competing values, and the lens of essentially contested concepts, we examine how controversy nests in government financial reporting. The controversy is apparent in the diverse goals and values in government financial reporting. The controversy nests in accounting conceptual frameworks. The controversy is reflected in accounting principles, in particular, recognition and measurement, but also in factors determining the reporting boundary and the content and presentation of the account. The controversy leads to twists and turns in producing public sector accounting standards. Our normative study analyzes government financial reporting as an essentially contested concept and considers whether attempts to align conflicting values and goals lead to confusion or meaningful development. The tensions in determining accounting standards for heritage and social benefits led to long‐awaited standards tempered with pragmatism and flexibility. Overall, we identify meaningful development, but a lack of acknowledgement of non‐business values and collective public value(s) in government financial reporting.
Ellwood et al. (2026) studied this question.