GTZ Report on Accrual Accounting Status Quo - LGCDP

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How to implement Accrual Accounting 27 User Friendly Accrual Accounting Information Technology • The is a need for a user friendly, network based, integrated and modular accrual accounting software that integrates other existing software and databases for accounting, tax management, fees etc. As a result receivables or payables would be much better documented and transactions could be tracked down to specific cost centres. • The software needs to be easily adjustable according to the status of the municipality (a basic, standard and sophisticated versions must be available). Please see again Table 1, p.18 for the different municipality types. • However it is in the interest of all to prevent the chaos of many different software types and software languages. Therefore the property rights of such software should be in public hands. This would also allow the cheap distribution to small and remote municipalities. The private software company would earn its revenue through the software training, on demand services and technical back up. Available Technical and Financial Resources • As explained before on p. 6 accrual accounting implementation involves high fixed costs at the beginning and during the implementation phase (training costs, consultant costs, software costs etc.). The financial resources should be provided by donors, central government funds and municipalities together. • Another way to give monetary incentives for accrual accounting implementation is the mentioned MC/PM system (see p.19). Besides simply supporting accrual accounting implementation with this tool, one could that way also promote specific aspects of accrual accounting. An example would be the usage of performance targets for a proper asset management or a low debt level. • One also has to revise funding possibilities directly through LGCDP. Political Commitment • Accrual accounting implementation needs the acceptance and support of all relevant stakeholders since this will ease the process significantly. Therefore it is crucial to communicate the benefits of accrual accounting to local and central political parties, local and central government, political associations, civil servants, mayors and other relevant stakeholders (for advantages see p.5). Communication • A significant emphasis should be placed in communicating necessary information about the purpose and objectives of the reform process. A wider group should be addressed by these information, including the general public (e.g. tax payers), journalists, the scientific public finance Who is supporting Joint software development programmed by a private software company Who supports Udle (MLD-<strong>GTZ</strong>), Donor community, MC/PM, LGCDP, municipalities Who is supporting Udle (MLD-<strong>GTZ</strong>), Municipalities and Mayors Who is supporting Udle (MLD-<strong>GTZ</strong>), MuAN, LBFC, Institute of
How to implement Accrual Accounting 28 community, donor organizations etc. Part of broad reform • Accrual accounting implementation should be understood as part of a broad based public finance reform since it will affect municipal and national budgeting, reporting and auditing procedures in the long term as well. Moreover accrual accounting implementation should be interlinked to other municipal finance reforms (own resource mobilization, revenue management, expenditure management etc.). In this context one has to revise feasible ways to integrate reform efforts e.g. in training. Chartered Accountants, the municipalities and mayors Who is supporting Udle (MLD-<strong>GTZ</strong>), all municipalities 4.2. Development of a macro and micro implementation plan An accrual accounting implementation strategy for Nepalese municipalities has to fit all municipalities by taking into account their needs, different starting points. (please see Table 1, p. 18). The approach should neither slow down the, in terms of accrual accounting, advanced municipalities, nor should it overburden those municipalities which are at the very beginning of accrual accounting implementation. However, all municipalities should be provided with the same user friendly, integrated, modular, network based accrual accounting software which is easily adjustable to the needs and status of the municipalities. Of major strategically importance is the post implementation support since this is a very crucial phase as drawn as a lesson learnt from past udle experiences. The following overview is a proposal for a macro as well as micro level implementation plan including important milestones. The different components have been explained in the previous chapters.
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 17 and 18: Findings and observations in the Ne
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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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