1. WHEN AND HOW INTO ACCRUAL ACCOUNTING IN PUBLIC FINANCE Ljubljana, 16.-17.02.2006

2. 2 1. STRATEGY OF DEVELOPMENT OF INTERNAL CONTROL OF PUBLIC FINANCE -Accepted by the government in June 2005 -Relating on period of 2005 – 2008 -One of the goals was creating efficient system of finance operations -Finance operations include implementing and performing accounting and reporting – renovation of accounting

3. Ljubljana, 16.-17.02.20063 2. 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

4. Ljubljana, 16.-17.02.20064 3. 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

5. Ljubljana, 16.-17.02.20065 4. 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

6. Ljubljana, 16.-17.02.20066 4. 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

7. Ljubljana, 16.-17.02.20067 4. 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)

8. Ljubljana, 16.-17.02.20068 4. 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