Although most countries are united in the desire to shift to accrual accounting, many fail in their aim. But there are some simple ways to keep the process on track.
Following the sovereign debt crisis, there has been steady progress towards enhancing transparency and greater accountability in public finances through the implementation of more robust accounting practices.
This is where accrual accounting is far better than cash – it provides information on not just the cash spent but what has already been committed through previous policy decisions and actions.
In this way, policymakers can make more informed decisions and, by analysing how well government funds have been spent, they can ensure better value for (public) money.
According to PwC research, by 2025 over 70% of countries aim to have implemented accrual accounting; and IFAC CIPFA International Public Sector Accountability Index found that 65% of countries will do so by 2023.
Unfortunately, many struggle and don’t fulfil these ambitions.
There are numerous reasons why.
Here are 10 top tips to ensure success:
- Secure political support
- Stay disciplined
- Keep communicating
- Develop capacity and capability
- Start with the big things
- Be realistic
- Use others’ experience
- Fail fast and adapt
- Choose the ‘vanilla’ option
- Celebrate successes
This article is adapted from the original feature published in Public Finance International available at https://www.publicfinanceinternational.org/feature/2018/10/moving-accrual-accounting-how-make-your-efforts-count
The IFAC CIPFA International Public Sector Accountability Index 2018 status report can be found here https://www.ifac.org/ipsfai-2018-status
Kalar Consulting have also made contributions to the development of international public sector accounting standards by responding to consultations
- Response to ED65 Improvements to IPSASs 2018 https://www.ifac.org/system/files/publications/exposure-drafts/comments/ED65ImprovementstoIPSAS2018Consultationresponse_06072018_MK.pdf
- Response to IPSASB Strategy and Work Plan 2019-2023 Kalar Consulting (United Kingdom) https://www.ifac.org/system/files/publications/exposure-drafts/comments/StrategyWorkPlanConsultationresponse_15062018_MK.pdf
- Response to ED64 Leases http://www.ifac.org/sites/default/files/publications/exposure-drafts/comments/ED64LeasesStandardConsultationresponse_04072018_MK.pdf
- Response to ED63 Social Benefits http://www.ifac.org/sites/default/files/publications/exposure-drafts/comments/ED63_Socialbenefitsconsultationresponse_31032018_MK.pdf
- Response to ED62 Financial Instruments http://www.ifac.org/sites/default/files/publications/exposure-drafts/comments/ED62_Consultationresponse_31123017_MK.pdf
- Response to Accounting for Revenue and Non-exchange expenses http://www.ifac.org/system/files/publications/exposure-drafts/comments/RevenueNonexchangeexpensesConsultationresponse_15012018_MK.pdf