Accrual accounting is for the public sector too
ME PoV Fall 2015 issue
A perspective for Arab central governments
Over the past decade central governments in various countries around the world have adopted or are implementing accrual accounting, moving from their legacy cash or modified cash basis of accounting. This is illustrated in Figure 1 and this trend is expected to continue in the years to come.
Many central governments are also electing to adopt International Public Sector Accounting Standards (IPSAS): standards issued by the International Public Sector Accounting Standards Board (IPSASB) that develops accounting standards for public sector entities.
The accrual IPSAS are based on International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB) where the requirements of these standards are applicable to the public sector. The accrual IPSAS also deal with public sector-specific financial reporting issues that are not dealt with in IFRS.
Central governments implementing accrual accounting IPSAS have identified a number of expected benefits and these are described in Figure 2 below.
Clearly this global trend is proof that central governments see the benefits of implementing accrual accounting IPSAS