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

Jan van Helden, Christoph Reichard


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    This paper investigates why central governments in some countries (especially the UK and Austria) have moved from a cash budgeting system to accrual budgeting, while others (particularly Belgium and Portugal) continue to use cash 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 emphasise the importance of consistency of the entire accounting system and the imperative to inform
    also about resource consumption 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 unambiguous view at cash spending is authoritative for their budgeting concept and that political 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 legacies and previous NPM-reforms. We conclude that stakeholders in government show more reluctance when deciding on 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).
    Originele taal-2English
    Pagina's (van-tot)89-113
    Aantal pagina's25
    TijdschriftOECD Journal on Budgeting
    Nummer van het tijdschrift1
    StatusPublished - 30-sep.-2018

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