Reconciliation of budgeting and accounting

IMPACT

Using an archival study of financial statements prepared in accordance with International Public Sector Accounting Standards (IPSAS), this article reports on inconsistent practices and the lack of explanation of the differences between budget execution and accrual accounting. If the recommendations in this article are followed, public sector financial statements will be more accessible and comparable, adding to the credibility of public sector financial reporting.

ABSTRACT

Budget execution statements and accrual accounting financial statements are complementary but report different revenues, expenses, and surplus amounts. To make these differences understandable, IPSAS requires a reconciliation of the actual amounts in the budget execution statement with the financial performance or cash flow statements. This article analyses financial statements and demonstrates that entities approach this reconciliation differently, making a comparison challenging. This article recommends that more extensive guidance should be issued to improve comparability.

KEYWORDS:

• accrual accounting
• budgeting
• government accounting
• IPSAS
• public sector accounting
• reconciliation

Disclosure statement

No potential conflict of interest was reported by the author.

Correction Statement

This article has been corrected with minor changes. These changes do not impact the academic content of the article.