GTZ Report on Accrual Accounting Status Quo - LGCDP

How to implement Accrual Accounting 23
Accrual Accounting Implementation Plan
• A detailed implementation plan with major project milestones from a macro (national) as well as micro (municipal) perspective is needed to clarify
the different assignments of the relevant stakeholders.
• The micro level implementation plan needs to be flexible enough to be adjusted to the different situations and needs in the municipalities
(especially with regard to the components of the accrual accounting).
• The macro level accrual accounting implementation plan displays the overall national perspective of accrual accounting implementation.
• Both types need to include specified inputs, activities, milestones, project phases, timelines, objectives and outcomes.
• These plans must be available for interested stakeholders in written and digital version to enhance the transparency of the process.
Obtaining information (databases, past records and documentation)
• Central government agencies (e.g. Land revenue office) and the municipalities have to integrate their information on assets, receivables (e.g.
tax), payables etc. into one database. This has to be done before accrual accounting software implementation. Otherwise a comprehensive
asset, debt and tax management will not be possible.
• If these information are not available, the municipalities should start the valuation of capital and floating assets according to the guidelines well in
advance.
• In the end the obtained information and databases should be integrated into a ready available accrual accounting software.
Chart of Accounts
• Before accrual accounting implementation, a new standardized chart of accounts for public accrual accounting needs to be developed.
• A chart of accounts organizes the different accounting heads based on specific number digits. That makes the classification and coding of
transactions and events possible, so that they can be tracked down to specific cost centres (e.g. a bus park or individuals).
• The digits should be similar to the private sector chart of accounts. That would facilitate the knowledge and staff exchange between the public
and private sector.
• The chart of accounts should allow the integration of current tax reform programs in Nepal (i.e. adding PAN to four to six digit account numbers
to track tax payments).
Inventory
Who is supporting
Udle (MLD-<strong>GTZ</strong>), the
Institute of Chartered
Accountants, MuAN,
LBFC, private software
company, consultants
Who is supporting
MLD, Central
Government Agencies
(e.g. Land Revenue
Office), MuAN, a private
software company, all
municipalities
Who is supporting
Udle (MLD-<strong>GTZ</strong>), LBFC,
Comptroller General
Office and the Institute of
Chartered Accountants, a
private software company
Who is supporting