Centre to adopt accrual basis accounting in five years

The government is planning to shift to a system of accounting where transactions are recorded in the books even if cash changes hands later, in five years.

"The Comptroller and Auditor General of India (CAG) plans to move from cash to accrual basis accounting in government within a five-year time frame," an official statement said today.  

The Department of Posts and selected departments of Andhra Pradesh, Madhya Pradesh, Haryana and West Bengal have embarked on accelerated pilot studies on accrual basis accounting.  

"These pilot studies would be a precursor to a national rollout which is aimed for within a five-year time frame," the statement said adding that the World Bank is funding these pilot studies.      

The pilot studies would be conducted by teams from the State Accountant General offices with international and national consultants with the support of state governments. 

"The accrual-based financial statements are expected to provide more appropriate presentation of financial performance and position of the government," the government said. 

The Union and states would have a common format of financial statements, including a balance sheet, a statement of financial performance and a cash flow statement, it said.