GTZ Report on Accrual Accounting Status Quo - LGCDP

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Cash Accounting vs. Accrual Accounting 13 Malaysia introduced accrual accounting only on the local level (IFAC, 2000, p.65). Similarly, Bangkok Metropolitan City of the Thailand, introduced an accrual accounting system in 2006. The Fiji Islands recently purchased accrual accounting software and plan to move to accrual accounting in the medium term (Athukorala & Reid, 2003, p.30; ADB, 2002, p. 33-34). The same holds for Sri Lanka, Indonesia, The Philippines, China (ADB, 2002, p.33-34). However in these cases it is not sure if this also holds true for the local government level. Singapore currently uses both types of accounting; cash based accounting and accrual based accounting (CPA Australia, 2004). According to a SAFA study from 2006 Bangladesh is on the way to move to an accrual based accounting system. Other countries like Chile, UAE, Tanzania, Romania, Estonia, and Latvia implemented accrual accounting at least at local level. Russia, Azerbaijan, Barbados, Cayman Islands, Mongolia, South Africa, Israel, Jamaica and Slovenia etc. appear to be in the process of accrual accounting implementation, but it’s not possible to assess on which level of government or how far this process is on the way (IPSASB, 2008c; IFAC, 2006, p.65). Furthermore The European Union pushes for accrual accounting implementation in new member states or prospective member states. Although this might look very promising, one has to be very careful when implementing accrual accounting systems in developing countries since these usually face even greater problems when introducing this system compared to more developed countries (see p.6). Overview 3: Worldwide efforts by local governments to implement accrual accounting OECD implemented Non OECD implemented Non OECD in the process Switzerland, the Netherlands, Sweden, Spain, Portugal, Finland, France, Great Britain, Germany, Italy, USA, New Zealand, Australia, Canada and Iceland, Poland and Slovakia Chile, UAE, Tanzania, Romania, Estonia, and Latvia, Malaysia, Singapore (both systems) India, Fiji Islands, Sri Lanka, Indonesia, The Philippines, Russia, China, Azerbaijan, Barbados, Cayman Islands, Mongolia, Bangladesh, South Africa, Israel, Jamaica and Slovenia, Nepal EU pushes for accrual accounting
Findings and observations in the Nepalese municipalities 14 03. Findings and observations in the Nepalese municipalities 3.1. Accrual accounting history and past udle experiences • Since 1960/1961 municipalities are using the current government accounting system which was developed with the technical assistance of UNDP and USAID at that time 2 (see also World Bank, 2007, p.2; World Bank, 2003, p.46). • Accrual accounting activities in Nepal did not begin until the restoration of democracy in 1990. However, efforts did not start until the Asian Development Bank (ADB) first made the implementation of accrual accounting a condition for Kathmandu Metropolitan City (KMC) for receiving loans. As a result KMC formed a taskforce for the implementation of accrual accounting, developed a new chart of accounts and started further preparations for accrual accounting implementation. These efforts were financed by the then existing Kathmandu Town Development Project. • Ever since the starting point of this discourse in Nepal, accrual accounting was usually referred to as “corporate accounting system or CAS”. • Beginning in 1992 the technical assistance to Nepalese municipalities in finance and management became one of the areas of support, provided by the udle programme. Since then efforts focussed mainly on mobilizing municipal resources, improving municipal financial management, supporting computer skills training, computerization, DOS based cash accounting and tax software and the reforming of the accounting system (udle, 2006). • Starting in 1996 udle supported the introduction of accrual accounting with a sensitization workshop at the UDTC in a joint effort with MuAN. • In August 1997 udle assisted in the preparation of an accrual accounting manual which was supported in a joint effort with the Nepali Chartered Accountants. • In March 1998 another workshop, focussing on the merits of accrual accounting as well as the above mentioned manual was conducted for municipal accountants. • In November 1998 a six days accrual accounting training at UDTC was conducted for the accounting staff of the municipalities of Kathmandu, Lalitpur, Bhaktapur, Butwal, Dharan, Hetauda, Pokhara, Siddharthenagar, Dhangadhi and Biratnagar. It was sponsored by the Kathmandu Town Development Project. After that a computer accrual accounting training was conducted for the same municipal accountants. • In June 1999 Kathmandu itself organized a two weeks training in accrual accounting for its own accounting staff. • In October 1999 the MuAN presented an agenda stressing the implementation of accrual accounting. On that meeting KMC also announced that it would implement accrual accounting in 2001. Therefore, accrual accounting was well established on the municipal reform agenda in Nepal around 1999. 2 This was reported by different municipalities during the research.
Page 1 and 2: Urban Development through Local Eff
Page 3 and 4: Contents 01. Executive Summary (p.1
Page 5 and 6: Cash Accounting vs. Accrual Account
Page 15: Cash Accounting vs. Accrual Account
Page 19 and 20: Findings and observations in the Ne
Page 25 and 26: How to implement Accrual Accounting
Page 33 and 34: Annex 30 05. Annex Annex 1 IPSAS Li
Page 35 and 36: References 32 06. References ADB (2
Page 37: References 34 Schiavo-Campo, S. & T

GTZ Report on Accrual Accounting Status Quo - LGCDP

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