The 2016 accruals survey aimed to evaluate the adoption of accrual accounting in OECD countries, noting an increase from 24% in 2003 to 73% in 2016. Despite the widespread implementation of accrual accounting, the practice of accrual budgeting is less common, with diverse reporting practices and numerous challenges in both preparation and implementation. Significant benefits in transparency and accountability have been recognized, but there remains a need for better utilization of accrual information.

1. ACCRUALS PRACTICES
AND REFORM EXPERIENCES
June 9-10, 2016
Delphine Moretti
Budgeting and Public Expenditures Division
Public Governance and Territorial Development
Directorate, OECD

2. Foreword
• Objective of the 2016 Accruals Survey:
– Stock taking on accrual accounting frameworks in OECD countries,
incl. standard-setting and audit, accrual budgeting spread and
practices, and trends in the coverage of fiscal reports ;
– Assessment of reform experiences: implementation challenges and
perceived benefits.
• Responses initially collected from “Financial
Management/Accruals Network”; presentation to the SBO to seek
additional comments.
• Joint publication with IFAC and Accountability! Now! Initiative by
end of 2016.
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3. ACCRUAL ACCOUNTING
FRAMEWORKS
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4. Accounting
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• 73% of OECD countries
implementing accrual accounting,
up from 24% in 2003.
• Supplementary accrual data in all
cash basis accounting systems.
Selected Transactions Not Reported in B/S
(28 OECD Countries, 2016)
Accounting Basis for Financial Report
(34 OECD Countries, 2016)
• Reporting practices are still diverse,
potential explanatory factors are:
– Operational difficulties;
– Lack of reference accounting
treatment;
– Disclosure, or reporting in other
fiscal reports.

5. Standard Setting and Audit
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Type of Standards
(34 OECD Countries, 2016)
External Audit
(34 OECD Countries, 2016)
• MoF is the accounting standard
setter in a majority of countries.
• National standards favoured but
IFRS and IPSAS are explicit or
implicit references in most cases.
• Most countries that have adopted
accrual accounting have also
moved from away from
“traditional” compliance audits.
• High proportion of qualified audit
opinions.

6. ACCRUAL BUDGETING
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7. Foreword
Why differentiate ‘budgets’ and ‘appropriations’ ?
– In some countries, the budget bill is the fiscal forecast and
vehicle used by the legislature for deciding how expenditures
should be allocated.
– In other countries, the budget bill is a fiscal forecast debated in
Parliament in the form of a vote of confidence, and the annual
authority to spend is granted through Appropriation Acts or
other laws. The ‘accounting basis’ (accrual or cash) may
therefore be different between the two documents.
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8. Budgets and Appropriations
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Budgets
(34 OECD Countries, 2016)
Appropriations
(34 OECD Countries, 2016)
• Less than a quarter of countries use full accrual appropriations, but more than one
quarter implement accrual budgeting.
• Variety of practices: cash budgets often include commitments , as well as forecasts of
some assets and liabilities, and accrual budgets may differ in terms of statements and
elements forecasted.

9. INSTITUTIONAL COVERAGE
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10. Institutional Coverage
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• Variety of consolidation practices due to different choices of consolidation criterion, and
national circumstances.
• Usefulness of consolidated financial statements vs. fiscal statistics questioned by some
respondents.
• Financial statements have a broader coverage than budgets in a majority of countries.
Coverage of Annual Financial Statements
(34 OECD Countries, 2016)
Comparison of coverage for Budgets and F/S
(34 OECD Countries, 2016)

11. REFORMS’ STOCK-TAKING
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12. Two Dominant Models in OECD Countries
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Accounting and Budgeting Models
(34 OECD Countries, 2016)
• More than three quarters of countries consider have completed or currently
implement their reform program: accrual accounting is institutionalized, but
accrual budgeting less so.
• The adoption of accrual does not only entail reporting on more assets and
liabilities, but also increasing the coverage of the fiscal reports, and drives
changes to standard-setting and auditing practices.
Coverage of fiscal reports, by Model
(34 OECD Countries, 2016)

13. Preparation and Implementation Challenges
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• Similarities in challenges pointed out by countries.
• Most countries underline the importance of :
– Allowing sufficient time to preparers (ministries/departments and agencies) and providing
guidance/assistance.
– Human resources management (training and/or recruitment).
– Collaboration with external auditor.
Preparation Phase Implementation Phase

14. Challenges Ahead
Satisfaction with Achievement of Objective
(25 OECD Countries, 2016)
• The consensus on the benefits of
accrual accounting with regards to
transparency and accountability is
fairly clear, and increasingly
recognized, but the ways of making
use of this information are less so.
• On-going initiatives to meet
objectives : analysis of the
performance in managing the
balance sheet; fiscal ratios ;
shortening delays for establishing
the financial statements; "Citizen
Accounts”…
Completed reforms.
Completed and on-
going reforms.