Countries moving towards accruals accounting, survey finds

25 Jun 13
There is a clear global trend towards the adoption of accruals accounting, with the proportion of countries reporting their finances this way set to more than double over the next five years, a survey has found.

By Mark Smulian | 26 June 2013

There is a clear global trend towards the adoption of accruals accounting, with the proportion of countries reporting their finances this way set to more than double over the next five years, a survey has found.

PricewaterhouseCoopers looked at public sector accounting practice in some 100 countries and found growing recognition that traditional accounting frameworks were not fit for modern needs.

Its report Towards a new era in government accounting and reporting found accrual accounting is currently used in only 24% of countries, but 37% planned to adopt it within the next five years.

Most governments still relied on cash accounting, but PwC said this method was inadequate as it gave only a short-term view of public finances.

PwC global leader for government and public services Jan Sturesson said: ‘It is important that governments – which regulate accounting in the private sector – lead by example and have a high standard in their accounting system.

‘This is not the situation today, but we see great interest in seeking improvement.’

The greatest shift to accrual accounting is expected in developing countries. Half of the non-OECD countries surveyed plan to make this move in the next five years, including 11 African countries, 10 Asian and Middle Eastern ones and eight in South America.

Governments say citizens and politicians will be the main beneficiaries of the proposed change as it would provide them with more accurate information, the report said.

It added that in many countries, the move to accrual accounting begins with an intermediate objective of complying with the cash-basis International Public Sector Accounting Standards as part of a gradual approach to adopting an accrual accounting framework and, in many cases, accrual Ipsas.

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