Date:04/07/2008 URL: http://www.thehindubusinessline.com/2008/07/04/stories/2008070452001000.htm

Back Govt will shift to accrual system of accounting

Our Bureau

New Delhi, July 3 The Centre has accepted in-principle to gradually move towards accrual basis of accounting.

This was stated by the Controller General of Accounts (CGA), Mr V.N. Kaila, at a conference organised by the Institute of Chartered Accountants of India (ICAI), which is celebrating its 60th year.

Stating that there were definite benefits of accrual accounting that cannot be ignored, Mr Kaila said that decision makers can know the full cost of services they were providing. Adoption of accrual basis of accounting would create a desirable measure of the complete financial health of the Government, he said.

On the issues involved in transitioning to the accrual system of accounting, Mr Kaila said that there were various factors that had created a demand for a transition to accrual system of accounting, such as changing information needs of the decision makers, the implications of the FRBM Act, outcome-oriented budgeting.

The Government, at present, follows the cash basis of accounting. The CGA is the principal advisor to the Government on all accounting matters.