Accruals (accrual accounting, accrual budgeting)

"Accruals" and "cash" are often portrayed as opposing end-points on a spectrum of possible bases for accounting and budgeting.

• The cash basis recognises a transaction when the cash is received or when cash is paid out.
• The accruals basis recognises a transaction when the activity (decision) generating revenue or consuming resources takes place, regardless of when the associated cash is received or paid.

The use of full accrual accounting is widespread in OECD countries, whereas most countries apply full cash budgeting or apply accruals to only a limited number of transactions in the budget.

The OECD Working Party of Senior Budget Officials has created a network to discuss the topic of accruals, among others. The Network on Financial Management meets regularly. Click here for agendas and presentations from previous meetings.

Some of the major published outputs are listed below:

• Accrual Accounting and Budgeting: Key Issues and Recent Developments (OECD Journal on Budgeting, Volume 3, Number 1, 2003
• Issues in Accrual Budgeting (OECD Journal on Budgeting, Volume 4, Number 1, 2004)
• Performance Budgeting and Accrual Budgeting: Decision Rules or Analytic Tools? (OECD Journal on Budgeting, Volume 7, Number 2, 2007)
• Accrual Budgeting and Fiscal Policy (OECD Journal on Budgeting, Volume 2009/1)

For more information, please contact Jón R. Blöndal, Deputy Head of Division.