5. Government accounting and the use of the accruals basis

5.1 Government accounting

Government accounting is the process of recording, analyzing, classifying, summarizing communicating and interpreting financial information about government in aggregate and in detail reflecting transactions and other economic events involving the receipt, spending, transfer, usability and disposition of assets and liabilities. The purposes of government accounting are:

• To carry out the financial business of government in a timely, efficient and reliable manner (e.g. to make payments, settle liabilities, collect sums due, buy and sell assets etc.) subject to necessary financial controls.

• To keep systematic, easily accessible accounting and documentary records as evidence of past transactions and current financial status, so that detailed transactions can be identified and traced and all aggregates can be conveniently broken down into their constituent parts.

• To provide periodic financial statements, containing appropriately classified financial information, as a basis for (a) stewardship and accountability and (b) decision-making.

• To maintain financial records suitable for budgetary control, internal control and the needs of auditors.

• To provide means for effective management of government assets, liabilities, expenditures and revenues.

In government, the producers of accounting information are rarely qualified accountants. Therefore few have experience of accrual accounting. But they usually belong to a separate cadre allowing for training and the acquisition of specialist accounting skills. In some countries, those who supervise the accounting process are not themselves trained in accounting. Accounts are kept for a wide variety of administrative entities: ministries, departments, taxing authorities and spending units