Accrual Accounting for More Effective Public Policy
FEE’s Alert provides an overview of a key issue for the public sector, namely accrual accounting.
Many governments in Europe and worldwide are adopting accrual accounting and the European Commission has recently completed a project to introduce accrual accounting for its own financial statements from 2005 onwards.
Accrual accounting is a method of recording financial transactions where the full characteristics of those transactions are recorded in the period to which they relate, as opposed to cash accounting which simply records the cash effects of transactions in the periods in which they occur.
Accrual accounting has major benefits facilitating better planning, management and decision making as well as providing a means with which to assess financial resilience.
The publication is available in electronic format only.