New Local Government Accounting in Portugal

Local government accounting in Portugal has changed significantly over the past five years bringing local government accounting closer to business accounting. The previous system was basically cash-based and budget-oriented, now cash-based budgeting is used with accrual-based financial and cost accounting, using double-entry in order to provide more useful information for decision-making. In this article, the authors show how the new accounting and budgeting system can lead to misinterpretations of an organization's economic and financial situation.