How to Profit From Defence: A Study in the Misapplication of Business Accounting to the Public Sector in Australia

The financial statements of the Australian Department of Defence portray it as a highly profitable business which sells defence services to the Government, earns a large profit, pays a substantial dividend and is largely self-funding. It is argued that the statements seriously misrepresent the financial performance and position of the Department. It is funded from a budget appropriation to provide defence services to the nation, but it is required to report as if it were a commercial business under New Public Management reforms adopted by the Government. But Government accounting systems must be adapted to their unique operating environments if their financial statements are to faithfully represent their financial results.