Accounting Reforms

The public sector accounting as the ex post recording and reporting of financial operations of government represents the fundamental management process in public sector entities. Even before, but especially in time of financial and economic crisis, countries are facing a challenge to improve the information served by public accounting for the state budgeting purpose; most often by reforming accounting principle from cash flow into accrual. The financial and economic crisis revealed that accounting based on accrual principle provides more transparent budgeting. Accrual accounting is an accounting methodology under which transactions are recognized as the underlying economic events occur, regardless of the timing of the related cash receipts and payments while the cash flow accounting recognizes the revenues and expenditures when cash is received and paid respectively. The accounting on accrual principle obtains more transparent and complete review of the business activities and property of the users of public funds then cash principle does. The paper analyses the three accounting models (on the examples of Slovenia, Croatia and Serbia) and principles of state budgeting in order to assess the connection between stages of accrual principle implementation and budgeting. It identifies that regardless of the stage of accruals implementation in the national accounting legislation, the planning and execution of the state budgets (the budget accounting) is still on the cash principle.