WHEN AND HOW INTO ACCRUAL ACCOUNTING IN PUBLIC FINANCE Ljubljana,

2 1. STRATEGY OF DEVELOPMENT OF INTERNAL CONTROL OF PUBLIC FINANCE -Accepted by the government in June Relating on period of 2005 – One of the goals was creating efficient system of finance operations -Finance operations include implementing and performing accounting and reporting – renovation of accounting

Ljubljana, RENOVATION OF ACCOUNTING -Implementing changes of contents – introduction of accrual accounting -Composing of total property balancesheet statement (statement of state assets and liabilities) and establishing a net value -Improving structure of accuntants -Defining authorized accountant

Ljubljana, CURRENT SYSTEM -Indirect budget users – accrual accounting -Direct budget users – cash accounting -Budget reporting on business events when executing budget -Accounting reporting on business events when executing budget -Benefits of current system -Weaknesses of current system

Ljubljana, INTRODUCTION OF UNIFIED ACCOUNTING FOR BUDGET AND ALL BUDGET USERS 1.Basic conditions: - Connecting accounting and budget preparation - Understanding of accounting rules - Political obligation and stability - More stress on controling results over inputs - More education and training for all accounting workers - Adapting IT

Ljubljana, INTRODUCTION OF UNIFIED ACCOUNTING FOR BUDGET AND ALL BUDGET USERS 2.Fulfiling conditions in Slovenia: - Connecting accounting and budget preparation – wider analysis of all public revenues is needed - Understanding of accounting rules –moving towards goals too slow - Political obligation and stability – moving towards goals too slow - More stress on controling results over inputs –moving from traditional towards ‘results orientated budget’ - More education and training for all accounting workers – acquring certificate of certified accountants for public sector - Adapting IT – adapting of current software and expansion of current software to local level

Ljubljana, INTRODUCTION OF UNIFIED ACCOUNTING FOR BUDGET AND ALL BUDGET USERS 3.Development and modernization of accounting system in Slovenia: - Passing over to accrual accounting can be done at once or gradually - Three optinons: -Accrual accounting implemented for state budget, local budgets and all budget users – total implementation -Accrual accounting implemented for all budget users, but not for state and local budgets -Accrual accounting implemented for all budget users, except for four state treasuries of public finance (state budget, local budgets, pension and disability fund, health fund)

Ljubljana, INTRODUCTION OF UNIFIED ACCOUNTING FOR BUDGET AND ALL BUDGET USERS 3.Development and modernization of accounting system in Slovenia (continued) : - Benefits and weaknesses of each of three options - Fulfiling basic conditions in Slovenia is optimal when: -Method of slow steps is taken -Through introduction of third proposed option gradually moving to implementation of full accrual accounting