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May 14, 2013

More than 75% of governments still use cash accounting: PwC

by Daniel Milroy Maher

Only 24% of governments globally use accrual accounting, according to a recent survey by PwC.

The Big Four firm found the majority of governments still rely on cash accounting, which has been the primary method used by the public sector for many years.

"This form of accounting – which is based on cash payments and receipts being recorded as they occur – fails to capture information on public sector assets and liabilities and therefore presents a very short-term view of public finances," according to PwC.

PwC global leader Jan Sturesson said that there is a real need for more solidity and transparency in government reporting, "And this can only be fully achieved by applying accrual accounting".

Sturesson also said that by applying accrual accounting, "governments demonstrate their commitment to achieving greater transparency and accountability, and also to producing better information for decision-making".

Despite the low percentage of governments currently utilising the accrual method, the PwC report, Momentum growing for better public accounting, revealed that "37% of the surveyed governments plan to accrual accounting in the next five years, bringing the total adoption rate to 63%".

Africa is due the biggest shift, with 11 countries transitioning to the new method, closely followed by Asia with 10, and Latin America with 8.

PwC conducted its survey in more than 100 countries.

Related linksPwC report: Momentum growing for better public accountingPwC

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