Better public asset management with Sri Lanka govt move to accrual accounting
ECONOMYNEXT – Public assets will be managed better with the Sri Lankan government’s planned shift to accrual accounting, from cash-based accounting today, the head of the public sector wing of the Institute of Chartered Accountants of Sri Lanka said.
“Large amounts of resources are spent on capital assets in government which are not properly accounted for and reported – accountability is not properly discharged," said V. Kanagasabapathy.
Today, progressive countries are moving away from input controls, conformity and compliance, he told a conference for public sector accountants.
“They are going for results-based, performance-based accounting, auditing and budgeting – accrual-based accounting.”
Accounting of public assets had been ignored for many years, said Kanagasabapathy, President of the Association of Public Finance Accountants of Sri Lanka (APFASL), the public sector wing of the Institute of Chartered Accountants of Sri Lanka.
“We have a short coming in financial reporting. Large amounts of money are spent annually from the budget which are not accounted for and reported to parliament,” he told the conference organised by the APFASL
“To ensure a proper asset management process, accrual accounting is required, taking charge of inventories. This will be looked after with the introduction of the accrual system.”
The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) has been urging the government to adopt accrual-based International Public Sector Accounting Standards just like the country adopted the International Financial Reporting Standards.
In accrual accounting, revenues and expenses are recorded when they are earned or incurred, at the time in which transactions occur.
It is considered a more accurate measure of an entity’s financial status, because economic events are recognised by matching revenues to expenses, than cash accounting in which reporting is done when payment is received or made.
Kanagasabapathy said the government had invited consultants to conduct a one-year program to convert its cash-based accounting to accrual accounting.
“All these developments, if not for your co-operation will not be successful,” he told the forum of public sector accountants. “We as professionals have an important role to play.”
Risk-based auditing was also becoming very important and was among the major challenges faced by public sector accountants, he said.
“Because we have an obligation with public money. Now it has become nobody’s money.”
(Colombo/February 15/2019 – SB)