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Government Gearing Towards Accrual Accounting

30/03/2015

(L- R) Tan Sri Dato’ Setia Haji Ambrin Buang, Prof. Dr. S. Susela Devi, Dean Faculty of Business & Information Technology, UNITAR International University, Managing Director, Zinkin Ettinger Sdn Bhd Datuk John Zinkin and Datuk Nur Jazlan Mohamed.

In an effort to enable the public sector to improve its financial management, the Government is moving towards accrual-based accounting. This would enhance the accountability and transparency in its financial management, improve decision making and, gain trust from its stakeholders. Currently, the Federal Government is applying modified cash basis accounting.

In accrual-based accounting, financial events are recognised when they occur regardless of when cash transactions occur. This means financial events are recognised at the time in which the transaction occurs rather than when payment is made (or received).

According to the Auditor General of Malaysia Tan Sri Dato’ Setia Haji Ambrin Buang there are several benefits of adopting accrual accounting in the public sector, for example, it enhances transparency and accountability especially on information relating to Government assets and liabilities. As a result, decision makers would be able to make informed decisions that are instrumental for our economic growth.

“More effective management of national credit and national debts is another benefit for adopting accrual accounting,” he explained, during the Government Accrual Accounting Conference 2015 in Kuala Lumpur.

Agreeing to the statement made by Auditor General of Malaysia Tan Sri Dato’ Setia Haji Ambrin Buang is Public Accounts Committee’s Chairman Datuk Nur Jazlan Mohamed.

“We can study on how some countries have adopted accrual accounting and, adopt the best practices that suit the Malaysian landscape,” he said.

According to the Malaysian Institute of Accountants, Registrar, Sudirman Masduki the adoption of accrual-based accounting will put the practices of Malaysian public sector finance in line with developed countries, but he cautioned that the move is not without its challenges.

“The respective employees in the public sector, for example, that deal with consolidated funds, statements of accounts and the various accounting procedures will have to be trained to ensure that accrual-based accounting will be successfully adopted,” he said during his welcome address at the Government Accrual Accounting Conference 2015 in Kuala Lumpur.

With this in mind, MIA, The Malaysian Institute of Certified Public Accountants (MICPA) and The Chartered Institute of Public Finance and Accountancy (CIPFA) UK have signed a Memorandum of Understanding (MoU) at the conference today. The three parties are committed to work together to strengthen public financial management through the enhancement of skills and identifying areas of capacity building in the accountancy profession and the public sector in Malaysia.

The Government Accrual Accounting Conference 2015 is a two-day conference, which attracted over 100 participants comprising accountants and auditors in the public sector and, head of Government departments and agencies. The conference was also attended by head of Government training agencies, private sector accountants who have dealings with the public sector and agencies, auditors who are assigned to audit public sector and agencies, and academicians.