Public Sector Accounting: Definition According to Experts, Objectives, Types

Public Sector Accounting – To find out the meaning of accounting can be seen from two main sources which are used as guidelines. The first is based on the American Accounting Association (AAA), accounting is the process of identifying, measuring, and reporting from various information which will later be used as an assessment and decision making that is useful for those who will use the information.

While the second according to the American Institute of Certified Public Accountants (AICPA), accounting is the art of recording, calculating and summarizing accurately and expressed in the form of units of currency, there is a transaction process from various events that are financial in nature and the interpretation of the results.

From the notion of accounting according to the two sources above, the notion of accounting is simply a process that begins with identifying, measuring, recording and reporting various financial information that will be used as an assessment and decision-making that is useful for those who need this information.

Accounting is also often referred to as a business language which is meaningful for measuring the results of economic activities in a company while conveying information to various parties such as management, investors, creditors and regulators. 

In addition, many people interpret that the science of accounting is related to arithmetic systems. But basically the science of accounting is not that simple. As time goes by, the development of accounting knowledge is increasing so that many people want to learn it. 


Definition of Public Sector Accounting According to Experts

Public sector accounting is an entity whose activities are related to efforts to produce useful public goods and services to meet the needs and rights of the public. In several ways, public sector institutions have similarities with the private sector. Both use the same resources and almost the same control process. However, in certain tasks, the public sector cannot be replaced by the private sector as is the case with government functions.

This is the definition of public sector accounting according to experts:

  • Indra Bastian (2014: 6)
    Public sector accounting is a technical mechanism and accounting analysis applied to state high institutions and their subordinate departments for implementing the management of various public funds.
  • Mardiasmo (2015:14)
    According to Mardiasmo, public sector accounting is an information tool either from the government as management or an information tool for the public.
  • Halim (2014: 18)
    Public sector accounting is a service activity in order to provide quantitative financial information based on government entities that are useful for decision making for interested parties.
  • Erlina, et al (2015)
    Public sector accounting is the process of recording economic events in an organization which is often carried out in the public sector such as political parties, communities, schools, universities and others.
  • Dwi Ratmono (2015)
    According to Dwi Ratmono the notion of public sector accounting is the process of identifying, measuring, recording, and reporting financial transactions of local government entities for making economic decisions that benefit external parties.

To better understand the basic concepts and how to implement them, you can use the Public Sector Accounting book below with a total of seven chapters that have been arranged systematically.


Characteristics Of Accounting For The Public Sector

  • Relevant
    Financial statements in public sector accounting must be relevant. What is meant by relevant is that it contains information that can influence decision-making and evaluate past and future events.
  • Reliable
    Financial reports on public sector accounting have useful information for consideration with previous financial reports.
  • Easy to Understand
    Public sector accounting financial reports have information characteristics that can be easily understood by all parties, both internal and external parties.

Components Influencing Public Sector Organizations

The following are some of the components that influence public sector organizations.


  1. Inflation rate
  2. Exchange rates or currency exchange rates
  3. Productive workforce
  4. Per capita income growth rate
  5. Infrastructure or infrastructure facilities


  1. Government legal legitimacy 
  2. The types of government in power
  3. Ideology or basic adherence 
  4. International network 
  5. Relations between countries and their citizens 
  6. Inter-agency relations 


  1. community Values, 
  2. Diversity of ethnicity, race, religion, culture and religion
  3. History or history
  4. Level of education, 
  5. Sociological condition of society
  6. Characteristics of people from various regions
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  1. population Growth Rate, 
  2. Migration, transmigration, immigration
  3. Public health 
  4. Age distribution of the population
  5. Life expectancy

Public sector institutions must also pay attention to the value of money or the concept used when managing public sector institutions. The concept must be guided by three elements, namely economy, efficiency, and effectiveness. These three elements will later become the main value of money which has the benefit of improving public services, reducing public costs and increasing the effectiveness of public services that are evenly distributed according to the target.

Objectives of Accounting for the Public Sector

The purpose of public sector accounting according to the American Accounting Association (1970) is stated in the following: 

1. Management Control

The first objective of public sector accounting is management control . Management control is providing information that is really needed in proper, efficient and economical management of the operations and allocation of resources of an organization or institution.

2. Accountability

The next goal of public sector accounting is accountability . Accountability aims to provide useful information for public sector managers in preparing accountability reports for fields, divisions or resources under their auspices. It also aims to report various activities on government operations and use of the budget to the public.

Meanwhile, according to the conceptual framework of public sector accounting, it is explained that the financial reports of the Regional Government must be able to explain various information that has benefits for assessing accountability and making appropriate decisions. Here are some of the objectives of public accounting:

  1. Provide information regarding the source, allocation, and use of financial resources. 
  2. Provides information relating to the adequacy of current period revenues to finance all expenses.
  3. Informs the amount of economic resources used for the activities of the reporting entity as well as the corresponding results.
  4. Informing the financial position in accordance with the condition of the entity making reports according to sources of income in the short and long term.

You can also find a discussion of public sector accounting in the book Public Sector Accounting by V Wiratna Sujarweni which discusses in full the theories, concepts, and how to apply them to the government and other non-profit organizations.

Types of Public Sector Accounting

Public sector accounting is divided into several types including:

1. Government Accounting ( Governmental Accounting )

Government accounting in its application uses accounting data as information related to various government economic and financial transactions provided to the executive, legislative, judiciary and the community in it.

In this government accounting can be divided into two, namely central government accounting and local government accounting. Meanwhile, regional government accounting is still differentiated into provincial accounting and district or city government accounting.

2. Social Accounting ( Social Accounting )

Social accounting or Social Accounting is a field of accounting that records economic events in non-profit and non-profit organizations that are run specifically for macro institutions such as political parties, mosques and various other community institutions.


Scope of Public Sector Accounting

Public sector accounting was formed due to the emergence of various supporting factors that assisted the formation process. The parliamentary government system applied in Indonesia is the first factor. Therefore, a public sector accounting system emerged whose implementation was under the influence of executive and legislative institutions in a state of checks and balances. The second factor is resources which are indirectly related to the results. And the last influential factor is the country’s political conditions which lead to negotiations between government agencies and the legislature.

You can study the running of public sector accounting yourself in Mardiasmo’s book entitled Public Sector Accounting which also explains the techniques of existing public sector financial accounting.

Public sector accounting has been proven to have an important role in the government system and is the backbone of the country’s economy. If there is a limitation on the discussion of public sector accounting in government, it will have an impact on the vacancy of regulating accounting practices in the sector itself. 

The scope of public sector accounting is wider than that of the private sector. The field of public sector accounting covers a broad scope for the common good. Public sector accounting covers

  1. Financial planning and development
  2. Monitoring and inspection system
  3. Financial implications according to government policy. 

In addition, public sector accounting has the scope of high state institutions and their subordinate departments, regional governments, foundations, political parties, universities and other organizations. However, public sector organizations are strictly limited to organizations that use public funds. Therefore public sector accounting only covers the following main areas:

  1. Central Government Accounting
  2. Local Government Accounting
  3. Political Party Accounting
  4. NGO accounting
  5. Foundation Accounting
  6. Educational Accounting
  7. Health Accounting
  8. Accounting for Places of Worship

Characteristics of Public Sector Accounting

Public sector accounting is accounting that is usually used by public or government agencies. Almost every public institution is required to manage financial reports transparently.

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Therefore accounting in the public sector is often used as a means of accountability to the public. Therefore, in the process there is something called public sector auditing which is fully explained in the Latest Edition of Public Sector Accounting.

Public sector accounting is often interpreted as a process of collecting, classifying, analyzing and reporting financial management and public institutions. These financial reports will be used as information to be conveyed to interested parties. Of course this management report will later help the process of making the right decisions, quickly and efficiently.

In practice, every public institution is required to manage social and economic costs more efficiently. If the demands of public institutions regarding public accountability are stronger, then public sector accounting will be recognized as a science for managing public finances. Public sector accounting can also be said as a form of transparency to the public in fulfilling public rights. 

In public sector accounting, this is closely related to accountability for the sources of funds used. Therefore, this field certainly requires people who have the qualifications of competence, honesty, and a sense of responsibility in its implementation. Because graduates in this program will later be directed to careers in the public sector both in government offices as civil servants and non-PNS. Professions that public sector accounting graduates can engage in include:

  1. Public Sector Accounting Staff
  2. Public Sector Auditors
  3. Government procurement of goods and services management
  4. Tax Staff of the Department of Public Sector Accounting

Apart from that, the existence of public sector accounting also increasingly embodies the characteristics of good governance . These characteristics include:

  • Transparency
    Character formed because of freedom in obtaining information
  • Participation
    Character formed because of the freedom to socialize, speak, and participate constructively.
  • Accountability
    Character that is realized because of a real sense of responsibility to the public.
  • Consensus Orientation
    This character has a full orientation towards the public.
  • Equity
    With this character will realize equal rights, justice and public welfare.
  • Rule of Law
    This character has a goal to realize the law in a more upright and not underestimated.
  • Responsiveness
    A character who is alert and responsive to public services.
  • Strategic Vision
    Character with the aim of realizing the vision and mission explicitly.
  • Efficiency and Effectiveness
    This character will manage resources from collection to their use efficiently and effectively and responsibly.


Differences in Public and Private Sector Accounting

There are several differences between public and private sector accounting. The following are discussed one by one.

Organization goals

Each organization has different goals according to the specifications to be achieved. Likewise with public sector accounting and private sector accounting which have different objectives. This difference is very prominent, especially in the achievement of profit. In public sector accounting, it is not only about making profits but also providing the best possible public services. While in the private sector, the maximum profit is achieved.

Sources of financing

Differences in public sector and private sector accounting can then be seen from the source of funding or capital structure used. In the public sector, sources of funds come from taxes, levies, debt, government bonds, BUMN/BUMD profits, sales of state assets, etc. While the private sector comes from internal financing which includes own capital, retained earnings, sales of assets and external financing which includes bank loans, bonds, stock issuance.


Accountability in the public sector is different from the private sector. The public sector is responsible to the community because the source of funds used to provide public services comes from the community. Meanwhile, the private sector is responsible to company owners or shareholders and creditors for the funds provided.

Organizational structure

The organizational structure of public sector accounting is bureaucratic, rigid and hierarchical. Meanwhile, the private sector is more flexible.

Characteristics of the Budget and Stakeholders

The characteristics of the budget in the public sector are more openly published for discussion with the public. For the government, the budget is no longer a secret that must be covered up. In contrast to the private sector which is more closed and has become a company secret. 

Accounting System 

Private sector accounting applies accrual-based accounting (accrual accounting) while public sector accounting still uses a cash-to-accrual- based accounting system . which you can learn from the book entitled Anthology of Public Sector Accounting Systems by Abdul Halim below.


Public Sector Accounting Book

This public sector accounting book discusses accrual-based local government financial accounting in full. This book focuses more on discussing the technical aspects of financial accounting in local government. This book can also be used as a basis for accounting descriptions at the government level. In addition, there is also a discussion regarding the relationship between regional financial management and local government financial accounting. And equipped with the preparation of financial reports at the regional level. 

In addition, there are introductory accounting books, financial accounting books, and cost accounting books from sinaumedia


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