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Transition to the Accrual Accounting

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Transition to the Accrual Accounting
Transition to the Accrual Accounting
The transforming from cash basis accounting to accrued accounting are associated with several general issue which including factor influencing the nature and speed of the transition, options in respect of the transition paths, and the management of the transition process.
The factors that may influence the nature and speed of the transition to accrual accounting which the system of government and the political environment are the major basic requirement. Beside that issue whether the reforms are focused solely on accounting change or whether they encompass other wider scale reforms also the key transition to the accrual accounting. Further the factor changes are being driven from the top down, or bottom up for example the changes driven by the top level of government may be mandatory for all entities within that government and may have fixed time frames can be also influence the nature and speed of the transition.
The current basis of accounting used by entity in Malaysia which the capability of existing information system and the completeness and accuracy of existing information particularly in relation to assets and liabilities are the key driver that cause an effect to reform the current cash basis accounting to the accrual accounting.
The application for the reform accrual accounting may apply to all public sector entities within a government. The transition to accrual accounting may be mandatory for certain types of entities, or it may be voluntary for some or all of them. The advantages of allowing entities to choose to adopt accrual accounting which the voluntary choice for the sector are that the individual entities are then motivated and committed to the reform process. However based on our research indicate that the voluntary transitions can cause difficulties in that the use of different bases of accounting by various entities within a government restraint the preparation of consolidated financial statement for
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