When and how into accrual accounting in public finance
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WHEN AND HOW INTO ACCRUAL ACCOUNTING IN PUBLIC FINANCE. Ljubljana, 16.-17.02.2006. 1. STRATEGY OF DEVELOPMENT OF INTERNAL CONTROL OF PUBLIC FINANCE. Accepted by the government in June 2005 Relating on period of 2005 – 2008 One of the goals was creating efficient system of finance operations

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1. STRATEGY OF DEVELOPMENT OF INTERNAL CONTROL OF PUBLIC FINANCE

  • Accepted by the government in June 2005

  • Relating on period of 2005 – 2008

  • One of the goals was creating efficient system of finance operations

  • Finance operations include implementing and performing accounting and reporting – renovation of accounting

Ljubljana, 16.-17.02.2006


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2. RENOVATION OF ACCOUNTING FINANCE

  • Implementing changes of contents – introduction of accrual accounting

  • Composing of total property balancesheet statement (statement of state assets and liabilities) and establishing a net value

  • Improving structure of accuntants

  • Defining authorized accountant

Ljubljana, 16.-17.02.2006


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3. CURRENT SYSTEM FINANCE

  • Indirect budget users – accrual accounting

  • Direct budget users – cash accounting

  • Budget reporting on business events when executing budget

  • Accounting reporting on business events when executing budget

  • Benefits of current system

  • Weaknesses of current system

Ljubljana, 16.-17.02.2006


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4. INTRODUCTION OF UNIFIED ACCOUNTING FOR BUDGET AND ALL BUDGET USERS

  • Basic conditions:

    • Connecting accounting and budget preparation

    • Understanding of accounting rules

    • Political obligation and stability

    • More stress on controling results over inputs

    • More education and training for all accounting workers

    • Adapting IT

Ljubljana, 16.-17.02.2006


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4. INTRODUCTION OF UNIFIED ACCOUNTING FOR BUDGET AND ALL BUDGET USERS

  • Fulfiling conditions in Slovenia:

    • Connecting accounting and budget preparation – wider analysis of all public revenues is needed

    • Understanding of accounting rules –moving towards goals too slow

    • Political obligation and stability – moving towards goals too slow

    • More stress on controling results over inputs –moving from traditional towards ‘results orientated budget’

    • More education and training for all accounting workers – acquring certificate of certified accountants for public sector

    • Adapting IT – adapting of current software and expansion of current software to local level

Ljubljana, 16.-17.02.2006


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4. INTRODUCTION OF UNIFIED ACCOUNTING FOR BUDGET AND ALL BUDGET USERS

  • Development and modernization of accounting system in Slovenia:

    • Passing over to accrual accounting can be done at once or gradually

    • Three optinons:

      • Accrual accounting implemented for state budget, local budgets and all budget users – total implementation

      • Accrual accounting implemented for all budget users, but not for state and local budgets

      • Accrual accounting implemented for all budget users, except for four state treasuries of public finance (state budget, local budgets, pension and disability fund, health fund)

Ljubljana, 16.-17.02.2006


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4. INTRODUCTION OF UNIFIED ACCOUNTING FOR BUDGET AND ALL BUDGET USERS

  • Development and modernization of accounting system in Slovenia (continued):

    • Benefits and weaknesses of each of three options

    • Fulfiling basic conditions in Slovenia is optimal when:

      • Method of slow steps is taken

      • Through introduction of third proposed option gradually moving to implementation of full accrual accounting

Ljubljana, 16.-17.02.2006


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