Financial Sustainability, Accounting and Society

This paper develops the concept of generational imbalance within a broader framework of financial sustainability in the public sector, by evaluating the inter-generational financial dimensions and management performance and control implications of long-term societal demographic trends. We argue that a financial sustainability framework identifies material generational accounting imbalances that will empower stakeholders to better evaluate the currently hidden inequities and resource allocation problems afflicting organizations whose services, funding and resource allocations are particularly sensitive to the effects of long-term societal demographic shifts. Our analysis focuses on reporting practices of two UK health-care provider trusts, developing statements of financial sustainability and comparing performance measures based on the existing accrual measurement basis with our proposed framework. We propose an alternative conceptual framework to the currently adopted resource accounting model in order to more equitably evaluate the long term financial sustainability of public sector entities subject to financial sustainability constraints in their quality of service delivery; and identify an agenda for research which can usefully further apply the proposed framework to other contexts