Accrual-Based Accounting and the Reform of Public Financial Management

Abstract

Public financial management reform represents a strategic effort to strengthen state financial governance through enhanced transparency, accountability, and fiscal efficiency. The transition of the accounting system from a cash basis to an accrual basis constitutes a crucial component of this reform, as it provides a more comprehensive view of the government’s financial position. The accrual basis enables the recognition of revenues, expenses, assets, and liabilities at the time economic transactions occur, rather than when cash is exchanged. Nevertheless, the implementation of this system encounters several challenges, including limitations in human resources, technological infrastructure readiness, and the complexity of regulatory frameworks and institutional coordination. This study aims to examine the dynamics of accrual-based government accounting reform in relation to improving public transparency and accountability. Using a historical study approach, the research analyzes the evolution of public financial policies and the implementation of accrual accounting to identify the key success factors and obstacles encountered during its application in the public sector