Government Accounting Reform Under The Perspective Of Local Government Debt Management

In 2009, some European countries’ sovereign debt crisis happened and some of the relevant governments were unable to afford the huge government debt. Thus the debts began to default. The sham government financial information was a reason for the crisis. The European debt crisis is a wake-up call to China. Although China has been rapid developed in recent years, we can not ignore the fiscal deficit and government debt especially the risks of local government deficits and debt. The tax reform made the local government debt increase possible. Apart from above, in 2008, the global financial crisis happened and Chinese government implemented the 4 trillion plan. Faced the fiscal pressure, the local governments had to use irregular channels to raise matching funds which made the risk expand and spread. Government accounting information is the source of debt information. The cash basis government accounting system are doubted under the debt accumulation and expand situation. The current government budget accounting can’t satisfy the needs of the local government debt accounting management, providing comprehensive, accurate, timely information, playing the function of the government accounting reflect and supervision, predicting the debt risk of local government in a timely manner. The government accounting reform began under this kind of background.Government accounting should be one of the effective tools to strengthen local government debt management at the present stage, but the current government budget accounting cannot play this proper role right now. Through government accounting reform, the information users can get comprehensive, accurate, reliable and timely information of debt thus they can calculate index, analyze and compare properly. It also helps reasonably estimate local government debt risk, strengthen local government debt management and control government debt risk timely. This paper researches the reform of Chinese government accounting based on the current situation of local debt which hopes to improve to the process of reform.This paper bases on the principal-agent theory, public finance related theory, stakeholder theory, game theory and study the important and urgency of obtaining local government debt information from the aspects of reducing information asymmetry and constraining government borrowing. This article argues the necessity of accounting reform. In addition, this article also uses empirical method to analyze the present situation of local government debt finding that Chinese local government debt has big scale, quick growth, complex constitution and significant risk characteristics. Thus from the perspectives of local government debt management this paper surveys the existing problems of government accounting in our country.By analyzing the development history and current situation of government accounting, this paper surveys the accounting problems from the longitudinal comparison perspective. Through the analysis of the foreign practices, this paper summarizes experiences from the horizontal comparison perspective. Combined with the special political system and reality in our country, this paper offers some suggestions for the reform of government accounting. This paper suggests introducing the accrual basis government accounting in our country step by step, improving the content of government debt accounting, setting up the government accounting system and accrual basis comprehensive financial reporting system, making the local government debt information public properly, providing reliable and timely debt information and thus helps to identify, evaluate, control local government debt risk and to meet the needs of local government debt accounting management.