Cash or accruals for budgeting? Why some governments in Europe changed their budgeting mode and others not Christoph Reichard

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Uploaded by Christoph Reichard     Uploaded date: February 27, 2019    
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Publication date
October 12, 2018
Paper language
Abstract
This paper investigates why central governments in some countries (especially the UK and Austria) have moved from a cash-based system to accruals for budgeting, while others (par-ticularly Belgium and Portugal) keep using a cash basis for their budgeting, given that both groups of countries share that their financial reporting system have become accruals-based. Our research shows that the two countries opting for a complete change to accruals empha-size the importance of consistency of the entire accounting system and the imperative to inform about resource consumption also in the budget. In sharp contrast, the two countries deciding for a partial change and for staying with cash budgeting argue that a clear and un-ambiguous view at cash spending is authoritative for their budgeting concept and that politi-cal decision makers would not accept an accrual-based budget. The change process in all four countries was influenced by several contextual factors, such as cash-accounting lega-cies and previous NPM-reforms. We conclude that stakeholders in government show more reluctance when deciding about a budgeting concept than about a financial reporting change which is perceived as less essential. We also conclude that the less ambitious reform mode (cash-based budgeting with accrual financial reporting) takes more implementation time than the more ambitious reform mode (accruals for budgeting and reporting).
Preferred Citation
Helden, Jan van, Christoph Reichard (2018): Cash or accruals for budgeting? Why some governments in Europe changed their budgeting mode and others not. OECD Journal on Budgeting, Vol. 18, No 1, pp. 89-113.
Keywords
cash budgeting; accrual budgeting; international comparison
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Category
  • Comparative Research
  • Financial accounting
Type of Paper
Published paper

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