Performance Budgeting—Is Accrual Accounting Required?

Jack Diamond

No 2002/240, IMF Working Papers from International Monetary Fund

Abstract: This paper reviews the role of accounting in budget system reform from the perspective of emerging economies who wish to adopt the OECD's performance budgeting reforms. While many OECD countries, pursuing the reforms associated with the New Public Management, have moved their accounting systems from a cash to an accrual basis, this paper argues that given the costs involved, such a move is perhaps only worthwhile in the context of adopting much wider public sector management reforms. Moreover, while recognizing that accrual accounting does support public expenditure management best practices, it is also argued that many of the objectives of performance-oriented budgeting can be attained by less than full accrual accounting, and that unless certain preconditions are met it is safer for countries to remain with, and improve, their cash-based accounting systems. For those countries with sound enough cash-based systems the paper describes a possible phased approach to the introduction of accruals, as well as the parallel stages of adopting the new international GFSM 2001 reporting requirements.

Keywords: WP; accounting system; cash accounting; operating statement; accounting process; accounting requirement; accounts receivable; cash flow; Government Accounting; Budget Systems; Fiscal Reporting; accrual accounting; cash accounting regime; heritage assets; asset valuation unit; closing balance; Accrual accounting; Fiscal accounting and reporting; Currencies; Financial statements; Budget planning and preparation (search for similar items in EconPapers)
Pages: 30
Date: 2002-12-01
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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