accruals in oecd member countries jón r. blöndal directorate for public governance santiago de...

ACCRUALS IN

OECD MEMBER COUNTRIES

Jón R. Blöndal

Directorate for Public Governance

Santiago de Chile

29January 2003

AGENDA

• Why Accruals?• Application of Accruals

– Overview of Member Countries’ Practices

• Key Issues– Recognition Issues– Valuation Issues – Accounting Standards– Implementing Accruals

• Conclusion: Importance of Cash

WHY ACCRUALS ?

• Major Trend in OECD Member countries• Making the True Cost of Government Services Transparent• Linkages with Wider Public Sector Reforms

SPECTRUM OF ACCRUALS (1)

• Cash Basis, But Supplementary Information Presented on Accrual Basis

• Cash Basis, Except Certain Transactions on Accrual Basis

• Accrual Basis, Except No Capitalisation or Depreciation of Assets

• Full Accrual Basis

SPECTRUM OF ACCRUALS (2)

• Departmental/Agency Financial Statements

• Consolidated, Whole of Government Financial Statements

• Budget

Recognition Issues

• Heritage Assets ?• Military Systems ?• Infrastructure Assets ?• Natural Resource Assets ?• Social Insurance Programs ?

Valuation Issues

• Historical Cost• Current Market Value

Accounting Standards

Three Basic Models for Deciding Them

• Traditional: Finance Ministry Decision, with or without Consultative Group • Australia/New Zealand: Single Standard Setter for Private and Public Sectors• International Public Sector Accounting Standards

Implementation Issues

• Too Slow vs. Too Fast• Education and Training Issues

– Including Members of Parliament, the Media and the Public

• Computer Systems• Assets Registers• Determining Accounting Standards

Conclusion:Cash Still Very Important

• Role of Cash-Flow Statement• Focus on Economic Impact

– Cash Injection/Withdrawal

• Fiscal Policy Setting• In-Year Control

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