This presentation was made by Daniele Lajoumard, ministry of Finance, France, at the 18th Annual Meeting of OECD Senior Financial Management and Reporting Officials held at the OECD Conference Centre, Paris, on 1-2 March 2018

1. 18th Annual meeting of OECD Senior Financial
Management and Reporting Officials
1-2 March 2018
“Getting Added Value Out of Accrual Reforms”
The French Experience

2.  The report identifies three main issues related to implementing reforms to
introduce accrual accounting concepts in the public sector: transparency,
accountability and improving management.
 All three of these issues have two aspects: the macroeconomic aspect (a country’s
fiscal position and management and the question of fiscal sustainability) and the
microeconomic aspect (the financial position and management of a public entity
and the use of accounting in its management).
 The report examines all of these aspects, analyses reform outcomes and puts
forward some proposals for improvements.
 The conclusions are very interesting and well balanced: the report finds some
indisputable, albeit limited, successes. It does not call the reforms into question,
but it does raise some helpful questions on their actual impact. The proposed
improvements seem relevant and merit closer study.
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An interesting OECD’s report with well balanced conclusions

3.  France has carried out accrual reforms throughout its public sector (in the General
Government sector, as defined by SNA 2008 and ESA 2010), but objectives and
pace of these reforms differed depending on the General Government categories
(Central Government, Local Governments, Social Security).
 Reforms are still on-going and outcomes are being evaluated: no definitive
conclusions yet.
 Two aspects are considered particularly important in France with regards to
impacts and limitations of reforms: i) the links between accounting and budgetary
accounts and ii) impacts on macro-fiscal analysis .
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France broadly agrees with the report’s analysis and conclusions

4. Bases for forecasts, spending limits and accounts
Different budget systems and accounting bases used at each level of
government:
 France’s central government sector:
 cash and commitment spending limits/appropriations (“the budget”);
 accrual financial statements.
 Local government sector:
 Accrual-based system for budget and financial statements;
 accrual spending limits/appropriations.
 Social security sector :
 A budget based on forecasts and objectives (accrual forecast and accounts);
 no spending limits/appropriations.
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5. Central Government Accounting and Budgeting system
The Central Government financial organization at a glance
Commitments
recording
(consumption of
commitment
appropriations)
Accrual general purpose
accounting
(Accrual basis)
Budget accounting
(consumption of
cash
appropriations)
Purchase
order Delivery/invoice
or
other economic
event
Payment
IT system
(E.R.P)
CHORUS
Financial Statements Budget reporting

6. France’s experience is that the links between accounting and budgeting are a
complex issue
 Local government’s accrual budgeting created challenges: i) difficulty in reconciling a
spending authorisation system featuring spending limits and a balanced-budget rule
with an accrual-based accounting system that is also supposed to produce a budget
outturn statement ; ii) the question of the one-year budget rule
 For Central government, the disconnection between budget (cash/commitment
authorisations) and accrual general purpose accounting makes it possible to avoid this
problems. However, a bridge table needs to be produced to make the fiscal balance
consistent with the accounting data.
 Social security’s accrual forecasting and accounts system functions well because there
are no spending limits/appropriations to manage.
This experience converges with the OECD’s report :
 The report states (in 2.2) that countries using accrual-based budgeting tend to reduce
the role of spending limits and adopt a forecasting approach, rather than a spending
authorisation approach, putting more store in multiyear outlooks
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Bases for forecasts, spending limits and accounts

7.  Accrual accounting supposed to provide information about individual entities’
financial position.
 Accrual accounts are however inevitably “incomplete”, due to accounting principles
– e.g. time lag between political commitment and recognition of a liability on the
balance sheet, measurement of certain commitments not possible, the power to
levy taxes cannot be recognised as an asset.
 Accrual accounts can track only some of the elements underlying the commitments
and sources of funds that will partially shape the future of public finances.
Conclusion: challenge remains to integrate these elements reported in financial
statements in other reports.
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Accrual and macro-fiscal analysis

8. Is consolidation a requirement/solution for using accrual accounts for macro-fiscal
analysis ?
 Consolidation raises very thorny institutional questions (concept of control vs.
constitutional provisions in France)
 But, even if very broad definitions of the scope of consolidation are used, the
contents of the consolidated financial statements may be very different from those
of the entities’ individual financial statements.
 This is why a special report may be considered, or the provision of additional
information in the notes to the financial statements.
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Accrual and macro-fiscal analysis

9. 13
Thank you for your attention