Issues in Accrual Budgeting

Abstract

There would appear to be a growing consensus among OECD member countries concerning the merits of adopting accrual accounting in the public sector. Nearly one-third of member countries have adopted full accrual accounting and a number of other member countries have adopted accrual accounting for specific transactions – most frequently for the recording of interest on the public debt and employee pension costs (see Table 1). There would appear to be less consensus regarding the adoption of accrual budgeting (accrual appropriations) 1 where views diverge widely on its desirability. Only three member countries have adopted full accrual budgeting, although several member countries have adopted accruals for specific transactions in the budget – again, most frequently for the recording of interest on the public debt and employee pension costs (see Table 2). This paper is not designed to advocate a specific stance in regards to the adoption of accrual budgeting. Rather, it is designed to focus attention on some of the key issues involved in accrual budgeting. The adoption of accrual budgeting often offers a wide range of options for implementing many of the key issues, and the paper aims to highlight these. The paper attempts to isolate the issues relevant to accrual budgeting specifically. For a more general discussion of accruals, see “Accrual