Accrual Based Accounting and Budgeting System in Public Financial Management

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Küçükaycan D.

7. Middle East International Conference On Contemporary Scientific Studies, Bayrut, Lebanon, 03 March 2022, pp.318-324

  • Publication Type: Conference Paper / Full Text
  • City: Bayrut
  • Country: Lebanon
  • Page Numbers: pp.318-324
  • Eskisehir Osmangazi University Affiliated: Yes


Government accounting is an important tool that provides accountability and transparency in the use of these resources against the society, which finances basic public services from taxes collected from citizens (Öz, 2008, p.6; Karaaslan, 2014, p.7). Changes have been made in accounting practices over time so that government accounting can provide reliable, real information. Especially with the public reform that started in the 1990s, the leading countries in terms of economy have made the transition from the common state accounting systems and the cash-based accounting system to the accrual-based accounting system, which provides more detailed information to users and managers. It is foreseen that the application of the accrual principle will increase the accountability and transparency of fiscal reports prepared by governments and their institutions (Martí, 2006, p.45). It is envisaged that the accounting records will be kept on an accrual basis by showing the public revenues and expenses in the accounts of the financial year in which they are accrued. On the other hand, it was decided to keep the records of budget accounts on a cash basis by adopting the method of accounting for the year in which budget revenues are collected and budget expenses are paid. Despite the use of accrual basis in accounting, International Public Sector Accounting Standards Board (IPSASB) is not impose in the use of accrual basis in budgeting. Accrual budgeting is a new development for most governments (Monteiro & Gomes, 2013, p.104). The aim of this study is to evaluate accrual-based accounting and budgeting from a theoretical perspective. Some budgets record government expenditures at the time of payment (on a cash basis) and some budgets record expenditures at the time of the event take place (accrual basis). In the study, the positive and negative aspects of switching from cash-based budgeting to accrual-based budgeting are emphasized by scanning the relevant literature. Proponents of accrual-based budgeting point to many specific benefits. However, the transition of accruals to budgeting is still a controversial issue.