Abstract

This study analyzes the usefulness of accrual budgeting focusing on Australia model and suggests the adoption plan for the Korean government. The accrual budgetary system in which budgetary spendings are prepared and authorized in accrual terms, is a new way of budgetary decision making. Based on the evaluation of Australia’s system, the accrual based full cost estimates are useful to enhance allocative efficiency, accountability and particularly long-term fiscal condition of government. However, it has weakness on the control of noncash budget. Korean government already has been adopted the accrual basis financial reporting system, but for the budgetary system, it is still questionable that the conditions are right for moving onto an accrual basis. Under the presidential system, the budget control by the National Assembly is important compared to the British Commonwealth system and business-like financial management techniques are not work well in Korean government. However, the usefulness of accrual information can not be neglected on budgetary decision anymore. Thus this study suggests the adoption of no-cash-in-hand accrual budgeting system. Under no-cash-in-hand model, government prepares the budgetary spendings in accrual basis, but the Assembly approves appropriation Bill in cash basis. As for the first phase, business like program, like public officials pension plan prepares it budget aggregates and budgetary financial statements in accrual basis in addition to cash basis. The test period should be sufficient because the accrual estimate process is very complex and potentially risky to fiscal discipline. In second phase, the government can prepares its accrual budget as a whole.

Keywords

• Accrual Budgeting
• Government Accounting
• Budget Accounting
• Usefulness of Accounting Information
• Australia

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