As intimated, the business model for accounting and report defines financial success and conditions differently than the compliance and liquidity model. Success depends on matching all costs against all revenue for the period, regardless of when the cash exchange takes place. If a business promises large pension benefits the business must calculate the cost of those benefit for the current period even though the actual benefits will not be paid until future dates. Financial conditions in the business accounting model include both current and long term debt. For a business to have good financial conditions or health it must be able to cover both money due this year as well as have assets that will be able to cover future obligations.
Governmental accounting is concerned mainly with current debt.
Future obligations can be covered by the full faith and credit of the jurisdiction. . The accrual and consolidation model has been proposed for over a hundred years but never adopted. Now, both those who want to reinvent government and reduce government, think that the accrual and consolidation model is essential to efficient government. Other countries in the world, such as New Zealand and Australia, have moved to an accrual and consolidation model for governmental accounting and financial reporting. They feel that if government is to be competitive with business and survive in a globally competitive world, government must move to the more disciplining model of business accounting.