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Implementation of accrual accounting in the public sector remains a significant priority across many jurisdictions. According to the International Public Sector Financial Accountability Index 2018 Status Report, only 25% of the 150 jurisdictions included in the Index currently report on an accruals basis, and of these 51% make use of the International Public Sector Accounting Standards (IPSAS). Encouragingly though, the Index projects that by 2023 65% will be reporting on an accruals basis (and of these 73% will make use directly or indirectly of IPSAS).

An accrual implementation project requires an integrated approach, where the accounting workstream is managed alongside the information technology (IT) workstream. The general recommendation at the very start of a reform project is to conduct an integrated gap analysis covering four key interrelated aspects: the accounting gap, the technology gap, the data gap, and the knowledge gap.

Based on the results of the integrated gap analysis, a multi-disciplinary team including accountants, IT experts, end users and stakeholders need to develop a reform roadmap and action plans.

Understanding the technology

Whatever approach to accrual implementation is taken, technology has to be an integral part of the implementation strategy to succeed. It is difficult to imagine how to implement new accounting rules and procedures without a strong financial information management system to support it.

Technology considerations include:

  • Enterprise resource planning (ERP) system – including the choice of ERP system itself, as well as consideration of whether the ERP system is compatible with existing IT infrastructure. There may be existing sub-systems that do not have a suitable interface to a modern accrual ERP system. Another key decision at a jurisdictional level is whether the ERP systems are run centrally or decentral, and if decentral whether entities should be free to select the system. A decentralized approach allows more flexibility, but a centralized approach may be more efficient.
  • Robotic process automation (RPA) – which involves data collection, workflow and process automation based on existing systems. RPA can be used for mass transactions such as accountants payable and accounts receivable.
  • Blockchain – which is particularly helpful where there is data fragmentation and siloed systems, and can be used for consolidation and transactions reconciliations, avoiding inter-company differences.
  • Application programming interfaces (APIs) – which allow applications and systems to talk to each other.

Capacity building

The complexity of the technology needed to implement accrual accounting is often a huge challenge, requiring massive investment in human capital development to train, and build the knowledge of, preparers and users of the systems.

The importance of capacity building to the success of accrual implementation projects cannot be underestimated. A key project risk is the uncertainty of people being impacted by PFM reforms, leading to a massive lack of buy-in into the objectives of the project if not addressed appropriately.

Three phases of training need to be distinguished:

  • Training needed before the implementation phase especially for the core project team;
  • Knowledge transfer during the implementation for key users; and
  • Post go-live support from internal champions/experts including regular refresher courses for end users.

This last point is crucial - a very common mistake is to heavily invest in training at the front end of implementation projects but leave end users alone when they actually have to apply the new tools. This causes major frustrations and can hinder not only operations but also the use of accrual information.

Knowledge transfer is important to avoid any sort of “consultant dependency”. Agreeing structured knowledge transfer procedures upfront as a key deliverable in a contract with any consultants is good practice.

Five Critical Success Factors:

  1. Establish an integrated project organization without silos - ONE team
  2. Set common goals and clearly identify the respective contributions
  3. Clearly communicate that success is defined as reaching ALL common goals, which means a shared responsibility
  4. Do not allow use of “techi language“ to hide behind - plain language is a precondition for shared understanding of tasks and potential solutions
  5. Involve final end users (preparers) in the IT system design and configuration —> but, implement as much standard ERP template as possible and avoid “special user requirements“ in order to stick to time and budget frames!


Those converting from cash-accounting to accrual accounting can learn valuable lessons from other jurisdictions who have already made, or are in the process of making, the transition. Two examples recently presented to the IPSASB Consultative Advisory Group (CAG) include:

Malaysia - The Malaysian PFM reform is following a multi-dimensional and integrated approach. The reform has the objective to table the First Accrual Financial Statement for the Federal Government to Parliament in 2021. The Malaysian implementation strategy is divided into four strategic areas:

  • Development of standards and policies;
  • Adaptation of national rules and regulations;
  • Design and development of the accrual accounting system; and
  • Human Capital Development.

Capacity building and strengthening of human resources is seen as a necessary precondition for the implementation phase which started in 2018. Consequently, before 2018 the project included two training workstreams:

  • Accounting training workstream from 2012 - 2017 with nearly 1,000 sessions and over 45,000 participants.
  • System training sessions from 2014 - 2017 with over 46,000 participants. Accompanied by continuous class room training and eLearning modules.

Canada - In Canada, during their Financial Information Strategy Implementation between 1999 and 2002 (as a preparation for their first full accrual financial statements in 2003) they ran a decentralized approach and left it to the departments to choose and acquire their ERP system within a selection of 7 providers. This was to allow flexibility and avoid reluctance and opposition. In hindsight, the Canadian CAG Member who presented to the CAG, admitted that it would have been more efficient if all departments had been required to use the same system. This would also enhance consistency of reporting and comparability between departments.

Further material - IPSAS 33, First-time Adoption of Accrual Basis IPSASs International Public Sector Accounting Standard (IPSAS) 33 grants transitional exemptions to entities adopting accrual basis IPSASs for the first time, providing a major tool to help entities along their journey to implement IPSASs. It allows first-time adopters three years to recognize specified assets and liabilities. This provision allows sufficient time to develop reliable models for recognizing and measuring assets and liabilities during the transition period.

Thomas Müller-Marqués Berger


Thomas Müller-Marqués Berger is Global Head of International Public Sector Accounting Standards (IPSASs) for Ernst & Young GmbH, as well as Chair of the Public Sector Group of the Fédération des Experts-comptables Européens. He also serves on the European Commission (EC) and EUROSTAT European Public Sector Accounting Standards Task Forces, and is a member of the EU Advisory Group on Accounting Standards and a member of the German Public Sector Committee of the IDW.

In addition, he serves as the Director of the Center of Competence for New Local Government Accounting for all of Germany and Director of Public Services in South-West Germany. 

Previous to these roles, Mr. Müller-Marqués Berger was a member of the International Public Sector Accounting Standards Board, and has served as an expert for the “DAS Think Tank” of the European Court of Auditors. 

He has intensively published on the subject of Public Sector Accounting, and he has spoken globally on adoption and implementation of IPSASs. Mr. Müller-Marqués Berger graduated as a Diplom-Kaufmann at the University of Mannheim in 1993, before he passed the tax advisor exam in 1997. In 1999 he passed the exam for the German Wirtschaftsprüfer.