This presentation was made by Sandra Kaiser, Austria, 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. Accrual Accounting and its Practical
Uses
Austrian experiences
Sandra Kaiser
18th Annual Meeting of OECD Senior Financial Management and
Reporting Officials
1-2 March 2018

2. Contents
• Introduction
• First lessons learned
• Merits of accrual approach
• Challenges faced by implementation of accruals
• Ongoing problems and next steps
2

3. Austrian Federal Budget
Reform - Overview
Result-oriented
management of
administrative units
Performance Budgeting
New budget
structure:
„lump-sum budgets“
Accrual budgeting
and accounting
 Budgetary discipline and planning:
binding medium term expenditure framework
 Flexibility for line ministries through full
carry-forward of unused funds
new budget principles: outcome-orientation; efficiency; transparency; true and fair view
3
Introduction

4. Accrual statements
• Implementation of accrual accounting and
accrual budgeting in 2013
• Opening balance sheet as of 1st January 2013
was published in December 2014
• 2013: first double entry year-end financial
statement, compiled in 2014
4
Introduction

5.  Comparative Calculations
- Comparison Budget Statements of the cash flow statement
- Comparison Budget Statements of the operating statement
- Notes
5
Federal annual report
 Consolidated Statements
- Statement of Financial Position
- Operating Statement
- Cash-Flow Statement
- Notes
submitted by the CoA to
the National Council by
June 30th
Introduction

6. First lessons learned
• Commitment of political and senior administrative
level is key
• Skills of stakeholders need to be enhanced (civil
servants, politicians, media, interested public)
 Extensive training required
• Removing any teething troubles
• Retaining new knowledge + intensify and enlarge
the new instruments
• Continue training
• Don‘t stop to communicate
• Repeat the added value and benefits
• Take more time
6
Lessons learned

7. Merits of accrual approach
• Awareness of operating statement and balance
sheet
• Awarness of „new“ items (e.g. provisions,
depreciation, write-downs, etc.)
• Positive side effect  stocktaking
• Gaining know-how on accrual accounting within
public administration
• More transparency of public finances
• Helps to steer public finances according to fiscal
reality
7
Merits of accrual approach

8. Why Accrual Accounting
and Budgeting?
Accrual system provides more and better information than a mere cash
system
- Sale of assets: Cash shows revenue but not the reduction of assets  creates fiscal illusions
- Order now, pay later: Cash does not show liabilities as long as they are not paid  creates fiscal
illusions
- Doubtful receivables: not shown in a cash-perspective  ignores financial risk
- Is a country poorer or richer than a year ago: Cash does not provide an answer, accruals do
Accruals do not replace cash but provides additional perspective
- Cash management is integral part of accrual system
Accrual budgeting makes accruals relevant
Old system had already accrual components
- IT-system on accrual basis
- Transition costs, therefore, were not so high
8
Merits of accrual approach

9. Benefits in medium term fiscal planning
• If you want to plan cash flows for multiannual periods you need an
instrument to monitor deferrals  Accrual Accounting
• Medium Term Fiscal consolidation needs cut of structural cost 
Accrual Accounting
• Enhancing Resource Responsibility needs management information 
Accrual Accounting
9
Merits of accrual approach

10. Challenges
• A new system with a new philosophy: accrual
accounting and accrual budgeting as new key-
elements
• The new instruments have still not found its way
into the minds of politicians and senior
administrative level
• Rather tight timetable, limited staff and know
how
• Responsibility for the quality of the books as a
key question
• Commitment of each line ministries to their
books
10
challenges

11. Challenges - training
• a rather large number of employees in all
ministries
• decentralised budget organisation in the line
ministries  many more civil servants involved
in detailed parts of budgetary matters (e.g.
provisions for legal costs, write-downs of
receivables)
11
challenges

12. Internal and external evaluation
• Internal evaluation in 2014
- Reporting
- Administrative burden vs. benefit
• External evaluation in 2017
- Comprehensive evaluation carried out by OECD, IMF
and national university
- The reports are not yet published
- Aims
 Strengthen of new instruments
 elimination/ adjustments of non successful instruments (e.g. system of
reserves)
 How to emphasise the added-value of accruals?
 How to make accruals relevant for decision-makers?
12
Ongoing problems and next steps

13. Next steps
• Rating and prioritizing broad range of
recommendations out of evaluation
• Implementation of adjustments (amendment of
organic budget law)
• Commentary to chart of accounts
• Accounting Handbook for all governmental
levels
• Training strategy (e.g. standardized accounting
course)
• …
13
Ongoing problems and next steps

14. 14
Thank you for your attention!
Sandra Kaiser
Directorate for Budget and Public Finance
Austrian Federal Ministry of Finance
Phone: +43 1 51433 502009
s.kaiser@bmf.gv.at
www.bmf.gv.at