International Journal on Governmental Financial Management – 2008 119
Taken from Wynne 2007.
Several of the central governments of the largest economies in the world have yet tointroduce such changes, for example, China, Germany, Italy, Japan and Russia. InDecember 2007, Mike Hathorn (chair of the IPSAS Board) said that only six governmentsacross the world had actually issued financial statements on the full accrual basis (at theFEE Public Sector meeting, Brussels).In their summary of the extent of adoption of IPSAS, the IPSAS Board (IPSAS Board,2008a: page 4) list more than 50 countries which have made moves towards adoptingIPSAS, but then admit that only five countries have fully adopted accrual accounting inline with their approach:
Governments that already apply full accrual accounting standards and applyaccounting standards that are broadly consistent with IPSAS requirements:
United States of America.
So what is the actual evidence of the real benefits achieved by introducing full accrualaccounting in these countries? In the following sections we review the evidence from theUK, Australia and New Zealand.
Evidence from the UK
The UK has possibly the most extensive experience of adopting this approach for its publicsector financial statements. Birmingham City Council, then the sixth biggest economicentity in the UK, moved to a form of accrual accounting in 1850, other local governmentsslowly followed over the next century. However, the current moves to accrual accountingin the UK only really started with the health service in 1991. Central government onlyintroduced accrual accounting from around 2000 (Wynne, 2007).Despite this long experience of using accrual accounting in the public sector, the use of cash accounting and budgeting, for central government at least, was almost universallyaccepted until relatively recently. So, for example, Andrew Likierman (the person who waslater responsible for the transition to accrual based accounting in UK central government)was able to say, in a book published as late as 1992 that:
“Those who believe that private sector accounts are superior need to bear two factors in mind. First, that there are no immutable accounting or other financial reporting rules which apply irrespective of the nature and purposes of the