The financial instruments of capital accounting in local authorities

The paper examines the development of the financial instruments (land audits, property reviews, information systems, registers and approaches to valuation) required to replace the expenditure‐driven logic of public sector finance with the system of capital accounting in local authorities advocated by the Chartered Institute of Public Finance and Accountancy. The examination draws on the findings of a research project undertaken to survey the steps local authorities have taken to develop the property registers and valuation procedures for such purposes. It highlights the critical role property valuation plays in introducing a system of capital accounting that ensures that the financing of the public sector is not expenditure‐driven, but subject to value‐for‐money tests, and meets the economy and efficiency criteria which this requires.