This presentation by Ken Warren was made at the 14th Annual OECD Public Sector Accruals Symposium, Paris 3-4 March 2014. Find out more at http://www.oecd.org/gov/budgeting/14thannualoecdpublicsectoraccrualssymposiumparis3-4march2014.htm
• Principles for the faithful representation of financial results for accountability purposes and to provide relevant information for decision-making purposes.
The accrual budgeting approach will reflect economic decisions in a standard way (as determined by generally accepted accounting principles) The increased consistency leads to greater understandability and more reliable budget reports. Readers of budget documents can focus on what the budget reports say, rather than investing effort in trying to determine how they are prepared. Cash budgets document just the cash flow. Accrual budgets also document the activity that generates the cash flow. To the extent that users of budget document are interested in the activities of the Government, accrual budget information provides more relevant information. The accrual budgeting approach improves accountability in two ways. First, it makes transparent the full financial implications of policy decisions and proposed programs. Second, it provides a basis for comparison with audited financial statements prepared in accordance with generally accepted accounting practice. Therefore the accrual budget process provides a better basis for holding the government of the day accountable f for its stewardship as a financial manager. Cash budgeting can only be relied on to show information on the cash and debt flows of the bank accounts and borrowings that are stipulated to be within the budgetary system. Accrual budgeting integrates such information with the forecast financial and operating position of the entity