Abstract:
The use of depreciation by municipalities has been discussed in the accounting history literature
previously. Coombs and Edwards (1992) indicated that the issue of the accounting for fixed assets
by British municipalities was “substantially resolved” by 1914. While Potts (1982) indicated the
issue in the USA was resolved in 1935 by the National Committee on Municipal Accounting. Both
of these key papers focused on the debates as recorded in various professional publications and/or
academic publications at the time.
This paper provides an historical case study focusing on one municipality, and its accounting for
depreciation and reserve funds for a subset
of its assets. As a case study, the paper includes the
perspective of many of the participants, including judges, politicians, auditors, local government
officials, central government officials and the significantly underheard
voices of ratepayers and
consumers.
Following a 1915 court case and concerns expressed by their auditor, the WCC sought legislation
to permit it to operate a depreciation fund and create other funds. The appropriateness of such
funds was debated, with the government and the Parliament receiving advice both in favour and
against the creation of such funds. It is these voices, mainly from outside the accounting
profession, that this paper discusses. Of particular note are the various views of capital
maintenance and principles of financial management for local government.
