Governmental Accounting

Governments have traditionally relied on budgetary accounting, often on a cash- and commitment-basis. Against this background, managerial reforms have advocated the adoption of accruals accounting as a way to make managers and politicians more responsible for the use of resources, to allow a longer term perspective on governmental financial sustainability, and to strengthen transparency and accountability. After several decades of experiments with accruals accounting, its consequences and implications remains the subject of significant controversy, among scholars and practitioners alike. This contribution reflects on the contingent factors influencing governmental accounting features, and their implications; introduces the distinction between purposes (compliance with budget vs assessing financial viability) and bases of accounting (cash vs accruals); presents the main features, strengths and weaknesses of budgetary, financial/accruals accounting and cash-, and commitment bases; draws conclusions on current governmental accounting evolutions.