Accrual Accounting versus Cash Accounting in Reporting the Financial Performance of the Public Sector Entities
Author:Prof. Aurelia ŞTEFĂNESCU, Ph.D., Prof. Eugeniu ŢURLEA, Ph.D, Ovidiu VLADU, Ph.D. Student
Keywords:public sector entity, accrual accounting, cash accounting, financial performance, result
The public sector entities must answer the users’ increasing demands of quality public services, the requests for more responsibility and transparency in terms of allotment and usage of public resources into a coercive environment created by the existing regulations, resource limitations and difficulties in providing relevant, credible and comparable information regarding the financial performance of the entity. \r\nThis fundamental research considers the problem of adopting the (integral) accrual accounting, as a basis of reporting the financial performance of the public sector entities at national and international levels. \r\nThe study takes into account a synthesis of the articles published by national and international accounting regulators, works put forward on the matter. There are explained the concepts of accrual accounting and cash accounting from the point of view of accounting theoreticians and regulators, the adoption of cash and accrual accounting is analysed as a reporting basis in the European and international public sector, there are identified the advantages and limitations of using accrual and cash accounting as reporting basis. There is analysed the basis of reporting the financial performance in the public sector in Romania and it is proposed the integral adoption of accrual accounting, basis responding to the real informational needs of the public sector entities, too.