Research On Information Disclosure Of Local Government Contingent Liabilities

The problem of local government debt has become a heated topic in recent public debates, among which the opaque and high-risk local government liabilities attracts the greatest attention from the authorities. At present, China enjoys steady economic growth and is in the crucial stage of adjustments of economic structure and reform. However, the current government accounting system does not entitle the authorities to obtain sufficient statistics and maintain firm control of local government debts, thus creating a gap in the availability of public data on local government liabilities, which prevents the government from providing information and statistical support for the management of local debts. Another factor that needs to be taken into account is, recently, the sovereign credit rating of the Chinese government has been lowered by international rating agencies out of concerns for the high risks of Chinese local government debts, which worsens the already severe situation. All things show that it is now an imperative for local governments to strengthen powers in local government liabilities management, prevent the risks of local government debts, and increase the transparency of information disclosure. It is also sensible for these to be listed as objectives of Government Accounting Reform. In order to better understand the grim facts of local government debts, this paper relates to previous research and expands its scope on the information disclosure of local government or liabilities accounting in the hope of making a small contribution to the current government accounting reform.Firstly, this paper orderly presents the concepts of government contingent liabilities, local governments contingent liabilities and other related concepts, and then divides them into direct explicit liabilities, direct recessive liabilities, explicit or implicit liabilities and contingent liabilities following the mainstream point of view according to the four dimensions of government property or liabilities. Moreover, this paper shows the characteristics of these four government or liabilities with the form of a detailed block diagram. Subsequently, this paper discusses progressively the local government liabilities definition and detailed structure of their situation. Then, the theoretical basis, as the entry point, begins with the description of specific theories such as: Public Finance, Information Economy, New Public Management and Financial Reporting theories. Secondly, this paper analyzes the current status of information disclosure of contingent liabilities of the local government in China from many angles included disclosure content, form, time, channels and hierarchy. With this trail, we further explore the reasons why this situation generated from the perspective of subjective and objective including local government, local officials, fund users, the financial accounting system and measurement technology and other reasons. Then, we introduce the practice in government contingent debt information disclosure in other western countries, such as America and New Zealand gonernment, and summarize the beneficial enlightenment. Finally, this paper presents recommendations to improve local government contingent liabilities on information disclosure. In general we not only need advanced experience from abroad but also need to in line with our special conditions in China. In this paper, on the basis above, we put up with a targeted policy,for example : Implement the government financial report compiled to the introduction of accrual basis, eliminate non-disclosure motivation of officials and the local government, establish disclosure system of rewards and punishments compiled local government debt quota management mechanism and establish the contingent liabilities project funds performance management.