It is assumed that state-owned enterprises engaged in commercial activities are already budgeting, accounting, and reporting on full accrual basis.Īccrual accounting is an accounting methodology under which transactions are recognized as the underlying economic events occur, regardless of the timing of the related cash receipts and payments. These guidelines are intended to apply primarily to general government departments and agencies within national, provincial/state, and local jurisdictions. The guidelines address a number of issues associated with the implementation of accrual-based accounting, and are intended to provide broad guidance on the preconditions necessary for the successful transition to accrual accounting, the appropriate sequencing of the reform steps, and the milestones that could serve as yardsticks for the measurement of progress. The main purpose of this note is to assist technical advisors with the provision of advice to developing countries on the design, planning, and implementation of an accrual-based accounting regime. The Board also concluded that the migration strategy should recognize a three-phase approach: presentation involving reclassification of existing data into GFSM 2001 format (short term), reporting of fiscal statistics (flows and stocks) using the GFSM 2001 framework (medium term) and full implementation of accrual reporting and the associated underlying systems (long term).Īlthough only a few countries have, so far, successfully implemented a full accrual accounting framework, other countries, ranging from transition economies in Europe to developing countries in the Middle East, are considering such a move and are increasingly expressing an interest in receiving technical advice on various aspects of undertaking such a major reform (see Box 1).ġ“Full accrual basis” means financial statements are prepared on the basis of accrual-based national or international accounting standards, also sometimes referred to as generally accepted accounting principles (GAAP). In November 2005, the IMF Executive Board reaffirmed its commitment to GFSM 2001 and agreed, in principle, that Fund staff should move in a phased way to present fiscal data using the GFSM 2001 framework in staff reports. GFSM 2001 is based on the accrual accounting concept, in contrast with the previous cash accounting based framework (GFSM 1986). In 2001, the Fund adopted the Government Finance Statistics Manual of 2001 (GFSM 2001) as the new framework for collection and dissemination of government finance statistics.
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