Accrual Accounting
What is Accrual Accounting
Accrual accounting was fully Implemented in Malaysia since 2015 with aim to prove financial management procedures in the public sector. However, accrual accounting always deals with challenges that may influence the migration process and bring a huge impact on many parties. Under accrual accounting, governments recognize all assets and liabilities including financial assets (such as equities), non-financial assets (such as land and buildings), and liabilities other than debt securities and bonds (such as payment arrears and pension obligations).
Which type of accounting system does the Government use and why?
Accrual basis accounting system which is the fundamental of modern government accounting system records all kinds of financial transactions regarding all the assets and liabilities, including tangible assets, regardless of collection and payment.
Importance of Accrual Accounting
By providing a comprehensive view of government finances, accrual reporting helps ensure that expenditure of public funds is transparent, public officials are held accountable, and future liabilities are recognized officially and planned for properly.