Budgeting in French public Sector:
The use of accrual basis and cash basis systems
Danièle LAJOUMARD,
Inspecteur général d...
Summary
• A glance at the Budgeting Systems in the
French Public Sector
• A focus on the Central General
Government budget...
A glance at the budgeting systems (1)

.
Public Entities

French Central
Government

Budgeting System

Three ceilings for ...
A glance at the budgeting systems (2)

.
Public Entities

French Central
Government

Budgeting System

Three ceilings for
...
A Focus on the Central Government budgeting and
accounting integrated system


The budgeting legal framework: the Constit...
The integrated Central Government system :

Recognition of expenses

Recording of
commitments for
budgetary purpose

Gener...
The integrated Central Government system :

Recognition of revenues

General Purpose accounting
(Full Accrual basis accoun...
The integrated Central Government system :

Reconciliation : budgeting result and accrual accounting result

•

The financ...
A reform in progress for Government-organizations
(Agencies)
• A new regulatory framework : The Regulation on budgetary an...
For more details…
• The English text of :
– The Constitutional bylaw regarding budget procedure
of 1. August 2001
– And ot...
Thank you for your attention
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OECD Public Sector Accruals Symposium - Daniele Lajoumard

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This presentation by Daniele Lajoumard was made at the 14th Annual OECD Public Sector Accruals Symposium, Paris 3-4 March 2014. Find out more at http://www.oecd.org/gov/budgeting/14thannualoecdpublicsectoraccrualssymposiumparis3-4march2014.htm

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OECD Public Sector Accruals Symposium - Daniele Lajoumard

  1. 1. Budgeting in French public Sector: The use of accrual basis and cash basis systems Danièle LAJOUMARD, Inspecteur général des Finances Ministère de l’Economie et des Finances
  2. 2. Summary • A glance at the Budgeting Systems in the French Public Sector • A focus on the Central General Government budgeting and accounting system • A reform in progress for Governmentorganizations (Agencies)
  3. 3. A glance at the budgeting systems (1) . Public Entities French Central Government Budgeting System Three ceilings for : - Financial Commitments (multi year) -Appropriations (cash basis) -Staff Government-organizations (“Agencies”) Accrual basis Social Security organizations (SSO) Accrual basis Local authorities Modified accrual basis Financial accounting system Accrual basis (French public GAAP so call “RNCE”) Accrual basis (French GAAP) Accrual basis (French SSO Standards) (so call PCUOSS) Modified Accrual Basis
  4. 4. A glance at the budgeting systems (2) . Public Entities French Central Government Budgeting System Three ceilings for - Financial commitments (multi year) -Appropriations (cash basis) - Staff Government-organizations (“Agencies”) Accrual basis Social Security organizations (SSO) Accrual basis Local authorities Modified accrual basis Nature of Budget Revenues : forecasting Commitments, expenses, Staff: Limited allocations for each program Only Forecasting Only Forecasting Revenues : forecasting Commitments and expenses : limited allocations
  5. 5. A Focus on the Central Government budgeting and accounting integrated system  The budgeting legal framework: the Constitutional Bylaw of 1.8.2001  Before the passage of this law, the Parliament has considered the use of an accrual basis budget but decided to retain different complementary systems, each with a specific purpose:  Allowance for Commitments (Capped allocations with a recording system)  Appropriations (Capped appropriations with a cash basis accounting)  Staff Ceiling (Capped Ceiling with a recording system)  Financial accounting (Full accrual basis)  These complementary systems are integrated :  Publication of a statement (audited) of reconciliation between budget outturn and financial accounting result  Use of an ERP integrated all these accounting and monitoring systems
  6. 6. The integrated Central Government system : Recognition of expenses Recording of commitments for budgetary purpose General purpose accounting (Full Accrual basis accounting) Debit : expenses or fixed assets Budgetary accounting Debit : payables Credit : cash Credit : payables Budget expenditures ERP « CHORUS » Purchase order Delivery Invoice + control payment order Process of expenditure (ERP Workflow) Payment
  7. 7. The integrated Central Government system : Recognition of revenues General Purpose accounting (Full Accrual basis accounting) Debit : receivable Debit : cash Credit : revenues Credit : receivable Budget receipts Budgetary accounting ERP « Chorus » Event giving rise to the debt of the debtor Document issue : order to pay by the debtor Process of revenues (ERP Workflow) Collection
  8. 8. The integrated Central Government system : Reconciliation : budgeting result and accrual accounting result • The financial reporting (« compte général de l’Etat ») includes a statement of reconciliation between budgeting result and accrual accounting result (standard 1 of French public GAAP) Budgetary result + Reste à recouvrer sur produit de l’année - Recettes au titre des produits des années antérieures + Acomptes d’impôts rattachés à l’exercice +/- Dépenses et recettes se traduisant par une inscription au bilan (= ne constituant pas des charges et produits) +/- Opérations à impact patrimonial (charges n’ayant pas données lieu à dépenses budgétaires, produits n’ayant pas donné lieu à recettes budgétaires) : exemples valeur nette comptable des actifs cédés , variation des stocks… +/- autres opérations = Accrual accounting result
  9. 9. A reform in progress for Government-organizations (Agencies) • A new regulatory framework : The Regulation on budgetary and accounting public Governance of November 7, 2012 (so call GBCP): – Extension of the Budgeting Central Government system to the public Agencies : • From an accrual basis budgeting system (for forecasting purpose) • To a cash basis budgeting system (with ceilings for : – commitments, – appropriations, – staff – Maintaining financial forecasting and accounting (Full accrual basis) • The aim of this reform is to strengthen control on the public Agencies
  10. 10. For more details… • The English text of : – The Constitutional bylaw regarding budget procedure of 1. August 2001 – And other documents about French reform are available on the French Government’s site: www.performance-publique.budget.gouv.fr (Accueil : “ressources documentaires” “documentation en Anglais”) • The English text of the Central Government Accounting Standards are available on the CNoCP site: www.economie.gouv.fr/cnocp
  11. 11. Thank you for your attention

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