WHEN AND HOW INTO ACCRUAL ACCOUNTING IN PUBLIC

FINANCE

Ljubljana, 16.-17.02.2006

Ljubljana, 16.-17.02.2006 2

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 3

2. RENOVATION OF ACCOUNTING

- 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 4

3. CURRENT SYSTEM

- 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 5

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

1. 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 6

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

2. 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 7

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

3. 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 8

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

3. 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