Budget Classification & Chart of Accounts in Albania

Historical View In the beginning of the ’90-s Albania passed from the centralized economic system to the trade market system. This process was followed by: Re-conception of revenues’ register, changing its elements; The preparation and the adaption of the new tax rates. The changing of the methods used for the revenue destination The changing of the revenue types and building capacities The changing of structure and classification for the budgetary revenues and expenditures, which gradually formed a budgetary and accounting classification, which has evolved continuously.

Budgetary Classification’s Reform. From the year 2008 in the Republic of Albania is implemented the new Organic Budget Law no. 9936, date 26.06.2008 “On Management of Budgetary System in the Republic of Albania” Every year The General Directorate of Budget prepares the Medium Term Budget Program (MTBP) for the next three years, together with the next year draft budget, which is also the first year of the MTBP. Based on the annual budget law the Ministry of Finance prepares 2 detailed Budgetary Instructions for the implementation of the budget in both governmental levels. (central & local)

Budgetary Classification’s Reform (continues) According to the Organic Budget Low the budgetary classifications are: a) Economic classification Expenditures: from 600-606 current expenditures from 230-232 capital expenditures Revenues: from 700-709 tax revenue 750 revenues from the social security contributions 710-719 secondary revenues (non-tax revenue) 720-721 internal & external current grant 105-106 internal & external capital grant b) Functional classification – 10 functions, according to COFOG c) Program based classification – nearly 120 programs d) Classification by source of financing – 5 chapters e) Administrative classification – by spending units and TDOs (geographic) This budgetary classification for the expenditures and revenues is applicable for both budgetary and accounting processes.

Chart of Accounts’ Reform Chart of accounts’ structuring started on 1998, adjusting the legal provisions of the law enforcement no.7661 dated 19 January 1993, "On Accounting". On the basis of this law came the CMD no.248 dated 10 April 1998 "On approval of the Public Chart of Accounts“, amended by CMD no.25 dated 20 January 2001, which set out the creation of Public Accounting for accounting register and compilation or assembling of financial statements by each budgetary institution, on: system-wide ministries and other central institutions local level by district , institutions which are not fully on Treasury scheme , nationally basis for all ministries, central institutions and local institutions.

Chart of Accounts’ Reform (continues) Currently, all accounting issues are regulated by the Law no.9228 date 29 April 2004, amended by Law no.9477 dated 09 February 2006 "On Accounting and Financial Statements", which requires the implementation of: National Accounting Standards (NAS) International Accounting Standards (IAS, IFRS). This law applies to: Commercial companies Other not-for profit units, when the financial statements and accounting are not object of other laws. Currently, the implementation of accounting procedures by central and local budgetary units, is a combined approach of both “modified cash“ and “modified accrual” basis.

The future action plan On BC & CA exists an action plan which aims to fully implement IPSAS criteria. The implementation of IPSAS will start in 2013 There will be gradual progress up to the authentic “Full Accrual" accounting basis for : budgetary units non-budgetary public entities public corporations .

Integrated Treasury System (Oracle-based) Since 2007 Ministry of Finance started the implementation of the Integrated Treasury System (Oracle), which assures the real-time and on-line link among budget, accounting and treasury procedures. The configuration of its core parameters and dimensions it is shown in the below table: