IS THE MOVE TO ACCRUAL BASED ACCOUNTING A REAL PRIORITY FOR.pdf

A century of innovation and responsibility in accounting 1904 – 200 IS THE MOVE TO ACCRUAL BASED ACCOUNTING A REAL PRIORITY FOR PUBLIC SECTOR ACCOUNTING? Andy Wynne Head of Public Sector Technical Issues ACCA September 2004 A century of innovation and responsibility in accounting 1904 – 2004 Page 1 ACCA is the largest and fastest-growing international accountancy body. Over 320,000 students and members in 160 countries are served by more than 70 staffed offices and other centres. ACCAs mission is to work in the public interest to provide quality professional opportunities to people of ability and application, to promote the highest ethical and governance standards and to be a leader in the development of the accountancy profession. Further information on ACCA is available on ACCAs website, A century of innovation and responsibility in accounting 1904 – 2004 Page 2 INTRODUCTION Over the last 20 years, there have been increasing calls for governments and public sector organisations to move to accrual based accounting and adopt private-sector-style financial statements. Thus, for example, the IFAC Public Sector Committee has set itself the task of developing a full set of international public sector accounting standards and ensuring that these are adopted as widely as possible. Despite this, there are increasing doubts over whether such reforms are worth the costs and the additional risks involved. ACCA, for example, has called for a different set of principles for public sector financial reporting from those developed for the private sector. In July 2003 FEE (the European Federation of Accountants) issued a paper outlining the risks to European governments of moving to the accrual basis for their accounts (www.fee.be/publications/main.htm under Public Sector). In a recent working paper (Performance Budgeting – is Accrual Accounting Required? /external/pubs/cat/longres.cfm?sk=16197.0) the IMF has said that often “emerging economies