Sri Lanka govt to adopt accrual accounting
ECONOMYNEXT – Sri Lanka’s government is considering shifting towards accrual-based accounting as proposed by the main accounting body in keeping with international standards, a senior official said.
“We proposed to government that they need to get into accrual accounting. The government is actively considering it,” said Arjuna Herath, president of the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka).
The government now operates on a modified cash accounting basis but accrual accounting is the accepted norm of accounting across the world although many countries have not yet got into it, he said.
CA Sri Lanka wants the government to adopt accrual-based International Public Sector Accounting Standards just like the country adopted the International Financial Reporting Standards, Herath told a news conference.
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 recognized by matching revenues to expenses, than cash accounting in which reporting is done when payment is received or made.
(Colombo/October 21 2015)