Public Sector Governance and Accountability Series: Budgeting and ...

Accrual Accounting in the Public Sector 183
to facilitate this is being undertaken by the international accountancy
profession, with the support of these multilateral institutions” (Hepworth
2003: 37).
International accounting bodies such as IFAC have been in the forefront
of efforts to encourage the move of the public sector to accrual
accounting:
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. (Wynne 2004: 2)
The IMF, in particular, has been a champion of public sector accrual
accounting. In 2001, the IMF argued, “Best practice is that the accounting
system should have the capacity for accounting and reporting on an accrual
basis, as well as for generating cash reports” (IMF 2001b: 51). The IMF now
requires that countries’ submissions to one of its key statistical publications,
Government Financial Statistics Manual, present government revenue and
spending statistics in accrual terms:
Although a cash overall balance will continue to be used by many countries for
some time, the revised GFS Manual will use accrual standards for fiscal reports,
in line with other economic statistics standards. Moreover, the need to supplement
cash basis financial reporting by at least some elements of accrual reporting
is being increasingly recognized. Several countries are adopting an accrual or
modified accrual accounting standard. (IMF 2001b: 50)
In his introduction to the 2001 Government Financial Statistics Manual,
Horst Kohler, then managing director of the IMF, added his particular
encouragement to move toward the standards of accrual accounting:
Of particular note is that the Manual introduces accrual accounting, balance
sheets, and complete coverage of government economic and financial
activities. Although only a few countries are currently capable of meeting
the standards promulgated in this Manual, the number is increasing steadily
and I hope that the trend continues. I commend the Manual to compilers
and users as an important instrument in their work and urge member
countries to adopt the guidelines of the Manual as the basis for compiling
government finance statistics and for reporting this information to the
Fund. (IMF 2001a: vii)