Accruals Accounting in Government – Developments in Malaysia

Abstract

Accruals accounting by governments has been successfully adopted in several countries. This study examines the move to accruals accounting in the United Kingdom and compares this with developments in Malaysia. In the UK, it is argued that the principles of accruals accounting were introduced primarily for managerial accounting and control purposes. Malaysia has also focused primarily on management accounting initiatives for the development of governmental accounting and is now considering the use of accruals accounting in an attempt to improve further its financial management procedures. The work draws on the results of a questionnaire survey of government accountants in Malaysia.

Keywords:

• Government accounting
• accruals accounting
• Malaysia
• United Kingdom
• management accounting initiative

Notes

¹ For a summary of the benefits of accruals accounting see, for example, H.M. Government (1994); Evans (1995); Guthrie (1998).

² For a discussion of the accounting treatment of cultural and heritage assets and infrastructure assets see, for example, Mautz (1988); Pallot (1990); Stanton & Stanton (1998); Barton (1999); McGregor (1999).

³ In the UK the term used for the accruals accounting system used in central government is ‘resource accounting and budgeting’. Resource accounting essentially follows the techniques of accruals accounting and resource budgeting involves the planning and controlling of public expenditure on a resource accounting basis. The first set of published resource accounts was for the 1999/2000 financial year.

⁴ The actual questionnaire used in this survey covered a broad range of questions about the accounting practices and procedures of the Malaysian government and also sought perceptions about the purpose, quality and potential for the improvement of government accounting. Many of the issues covered in the full questionnaire were not relevant to the aims of this study. The questions that were relevant are as follows:

• A question which asked respondents to indicate the importance they attached (on a 7-point scale) to the financial reporting objectives of the Malaysian government. The responses are reported in Table 1.

• A question which asked respondents to indicate their level of agreement (on a 7-point scale) with the statement that ‘the financial reports provided by government to external users should be improved’. The responses are reported in Table 2. This question also provided space for examples of areas for improvement to be ‘written in’ by respondents.

• A question which asked respondents to indicate the importance they attached (on a 7-point scale) to factors which might affect the development of Malaysian governmental accounting. The responses are reported in Table 3. This question also provided space for respondents to ‘write-in’ other factors that they felt to be important in the development of governmental accounting.

The questionnaire also asked for background information on the respondents covering their

experience, qualifications, and so on. The complete anonymity of all respondents was

assured.