GTZ Report on Accrual Accounting Status Quo - LGCDP
GTZ Report on Accrual Accounting Status Quo - LGCDP GTZ Report on Accrual Accounting Status Quo - LGCDP
How to implement Accrual Accounting 25 • As a proposal for sustainable asset management, maintenance costs and reserve allocation for reinvestment into the asset should be connected to the depreciation. This could be done by using a certain percentage of the booked depreciation as an estimated lump sum for maintenance costs and reserve allocation. That way, investments might get more costly on the first glimpse but with proper planned maintenance one can extent the usage time of an asset and, when devalued, even replace it through available reserves. • Depreciations and reserve allocation should be compulsory for crucial assets according to the individual capacity of the municipality. 4.1.2. General accrual accounting recommendations and preconditions Table 3: General accrual accounting recommendations and preconditions Project Management • It is a major and difficult task to coordinate and steer a nationwide municipal accrual accounting implementation. • A possible approach could be to decentralize the coordination process by empowering regionally based coordinators in the five development regions (according to the Regional Learning Centres) to facilitate the implementation process. This coordinator needs to have sufficient knowledge in manual as well as computerized accrual accounting. The coordinator would be the contact person for the municipalities in the development region, udle and the government. • The Regional Learning Centres (RLCs in Dhanagadhi, Nepalgunj, Butwal, Hetauda, Dharan) could play a more active role in the facilitation of a decentralized knowledge transfer among the municipalities in the development regions. One needs to revise if the RLCs can accomplish these aims at the moment. • The efforts of the regional based coordinator and the RLC would provide a knowledge transfer platform within a development region. • The UDTC could be a knowledge transfer platform at the national level. One needs to revise if the UDTC currently can accomplish such a task. • Udle would primarily monitor, evaluate and control the implementation process from a macro perspective according to the implementation plan. Secondly udle would provide technical back up on demand. Activities would be reported by the regional coordinators, the RLCs and UDTC to udle. Please have a look at Annex 3 and Annex 4 (p.31) to get a better impression of this implementation approach. Who is supporting Udle (MLD-
How to implement Accrual Accounting 26 Training and Education • A comprehensive training and general education has to ensure that adequate human resources are available for an accrual accounting implementation. These efforts also have to take the different starting points in the municipalities into account (see Table 1, p.18). This report proposes four training and education categories: 1) Firstly, there should be a general training. The aim of the general training is that everybody understands the concept of manual accrual accounting and related topics. Each course lasts 5 days and ends with final examination. For the successful participation of a course a certificate should be provided in cooperation with or by the Chartered Accountants of Nepal. That would be a sufficient incentive for course participants since they have an official document that enhances their careers. The structure of the general education is as follows: a) Manual Basis of Accrual Accounting b) Expenditure Administration c) Debt Management d) Asset Management (with special focus on inventory, valuation and management of municipal assets) e) Revenue Administration (with special focus on municipal revenue titles like taxes) 2) Secondly, only after successfully finishing the general training, an accrual accounting software training should be conducted. This software training lasts 14 days and should be facilitated by the same private software company that also provides the accrual accounting software. The concept is as follows: a) First week the functions and possibilities of the software and its modules are presented. b) Second week is aimed to use the knowledge gained in exercises, ideally based on case studies from municipalities. 3) Thirdly, there should be further needs based training on demand and refresher trainings. Knowledge transfer between municipalities should also be enhanced in this training category. 4) Fourthly, a mid-career degree to improve the general municipal finance capacity should be established. This degree has the aim to ensure long term, sustainable public sector education and should not only focus on accrual accounting but also on all other important municipal public finance and management issues (e.g. revenue and tax management). The degree could be financed to a certain level by the central government, the municipalities and through a donor basket fund. Who is supporting Udle (MLD-
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- Page 37: References 34 Schiavo-Campo, S. & T
How to implement <strong>Accrual</strong> <strong>Accounting</strong> 25<br />
• As a proposal for sustainable asset management, maintenance costs and reserve allocati<strong>on</strong> for reinvestment into the asset should be c<strong>on</strong>nected<br />
to the depreciati<strong>on</strong>. This could be d<strong>on</strong>e by using a certain percentage of the booked depreciati<strong>on</strong> as an estimated lump sum for maintenance<br />
costs and reserve allocati<strong>on</strong>. That way, investments might get more costly <strong>on</strong> the first glimpse but with proper planned maintenance <strong>on</strong>e can<br />
extent the usage time of an asset and, when devalued, even replace it through available reserves.<br />
• Depreciati<strong>on</strong>s and reserve allocati<strong>on</strong> should be compulsory for crucial assets according to the individual capacity of the municipality.<br />
4.1.2. General accrual accounting recommendati<strong>on</strong>s and prec<strong>on</strong>diti<strong>on</strong>s<br />
Table 3: General accrual accounting recommendati<strong>on</strong>s and prec<strong>on</strong>diti<strong>on</strong>s<br />
Project Management<br />
• It is a major and difficult task to coordinate and steer a nati<strong>on</strong>wide municipal accrual accounting implementati<strong>on</strong>.<br />
• A possible approach could be to decentralize the coordinati<strong>on</strong> process by empowering regi<strong>on</strong>ally based coordinators in the five development<br />
regi<strong>on</strong>s (according to the Regi<strong>on</strong>al Learning Centres) to facilitate the implementati<strong>on</strong> process. This coordinator needs to have sufficient<br />
knowledge in manual as well as computerized accrual accounting. The coordinator would be the c<strong>on</strong>tact pers<strong>on</strong> for the municipalities in the<br />
development regi<strong>on</strong>, udle and the government.<br />
• The Regi<strong>on</strong>al Learning Centres (RLCs in Dhanagadhi, Nepalgunj, Butwal, Hetauda, Dharan) could play a more active role in the facilitati<strong>on</strong> of a<br />
decentralized knowledge transfer am<strong>on</strong>g the municipalities in the development regi<strong>on</strong>s. One needs to revise if the RLCs can accomplish these<br />
aims at the moment.<br />
• The efforts of the regi<strong>on</strong>al based coordinator and the RLC would provide a knowledge transfer platform within a development regi<strong>on</strong>.<br />
• The UDTC could be a knowledge transfer platform at the nati<strong>on</strong>al level. One needs to revise if the UDTC currently can accomplish such a task.<br />
• Udle would primarily m<strong>on</strong>itor, evaluate and c<strong>on</strong>trol the implementati<strong>on</strong> process from a macro perspective according to the implementati<strong>on</strong> plan.<br />
Sec<strong>on</strong>dly udle would provide technical back up <strong>on</strong> demand. Activities would be reported by the regi<strong>on</strong>al coordinators, the RLCs and UDTC to<br />
udle.<br />
Please have a look at Annex 3 and Annex 4 (p.31) to get a better impressi<strong>on</strong> of this implementati<strong>on</strong> approach.<br />
Who is supporting<br />
Udle (MLD-<str<strong>on</strong>g>GTZ</str<strong>on</strong>g>),<br />
Regi<strong>on</strong>al Coordinators,<br />
Regi<strong>on</strong>al Learning<br />
Centres, UDTC
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