WHEN AND HOW INTO ACCRUAL ACCOUNTING IN PUBLIC FINANCE

1. WHEN AND HOW INTO ACCRUAL ACCOUNTING IN PUBLIC FINANCE Ljubljana, 16.-17.02.2006

2. 1. STRATEGY OF DEVELOPMENT OF INTERNAL CONTROL OF PUBLIC FINANCE • Accepted by the government in June 2005 • Relating on period of 2005 – 2008 • One of the goals was creating efficient system of finance operations • Finance operations include implementing and performing accounting and reporting – renovation of accounting Ljubljana, 16.-17.02.2006

3. 2. RENOVATION OF ACCOUNTING • Implementing changes of contents – introduction of accrual accounting • Composing of total property balancesheet statement (statement of state assets and liabilities) and establishing a net value • Improving structure of accuntants • Defining authorized accountant Ljubljana, 16.-17.02.2006

4. 3. CURRENT SYSTEM • Indirect budget users – accrual accounting • Direct budget users – cash accounting • Budget reporting on business events when executing budget • Accounting reporting on business events when executing budget • Benefits of current system • Weaknesses of current system Ljubljana, 16.-17.02.2006

5. 4. INTRODUCTION OF UNIFIED ACCOUNTING FOR BUDGET AND ALL BUDGET USERS • Basic conditions: • Connecting accounting and budget preparation • Understanding of accounting rules • Political obligation and stability • More stress on controling results over inputs • More education and training for all accounting workers • Adapting IT Ljubljana, 16.-17.02.2006

6. 4. INTRODUCTION OF UNIFIED ACCOUNTING FOR BUDGET AND ALL BUDGET USERS • Fulfiling conditions in Slovenia: • Connecting accounting and budget preparation – wider analysis of all public revenues is needed • Understanding of accounting rules –moving towards goals too slow • Political obligation and stability – moving towards goals too slow • More stress on controling results over inputs –moving from traditional towards ‘results orientated budget’ • More education and training for all accounting workers – acquring certificate of certified accountants for public sector • Adapting IT – adapting of current software and expansion of current software to local level Ljubljana, 16.-17.02.2006

7. 4. INTRODUCTION OF UNIFIED ACCOUNTING FOR BUDGET AND ALL BUDGET USERS • Development and modernization of accounting system in Slovenia: • Passing over to accrual accounting can be done at once or gradually • Three optinons: • Accrual accounting implemented for state budget, local budgets and all budget users – total implementation • Accrual accounting implemented for all budget users, but not for state and local budgets • Accrual accounting implemented for all budget users, except for four state treasuries of public finance (state budget, local budgets, pension and disability fund, health fund) Ljubljana, 16.-17.02.2006

8. 4. INTRODUCTION OF UNIFIED ACCOUNTING FOR BUDGET AND ALL BUDGET USERS • Development and modernization of accounting system in Slovenia (continued): • Benefits and weaknesses of each of three options • Fulfiling basic conditions in Slovenia is optimal when: • Method of slow steps is taken • Through introduction of third proposed option gradually moving to implementation of full accrual accounting Ljubljana, 16.-17.02.2006