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Your assignment is to prepare and submit a paper on application of modern accounting standards to enhance efficiency in the public sector.
Your assignment is to prepare and submit a paper on application of modern accounting standards to enhance efficiency in the public sector. Conversion of governments to use International Public Sector Accounting Standards (IPSASs) which is based on the principles of accrual is being advocated by the donor community for adoption by the developing countries (Aggestam-Pontoppidan, 2011, p. 29). Proposers of the adoption of accrual-based accounting standards in the public sector argue that the approach will increase accountability and transparency in addition to allowing for improved monitoring of the public debt and liabilities against their economic implications to the country (Chang, Chen, and Chow, 2008, p. 483).
The adoption of accounting standards seeks to serve various reasons. serving both internal and external functions. Accounting standards are used to track financial information which is in turn used for the presentation of financial statements (Hughes, 2007, p. 26). Moreover, accounting is used for taxation and budgeting. The best accounting standards should aim at recording transactions in a proper manner from which sorting out and interpreting of the results can be carried out in a systematic way for interruption by clients (Pina and Torres, 2003, p. 334). This paper seeks to assess the contentions that modern commercial accounting approaches are important as central governments seek to improve efficiency in service delivery based on the arguments advanced on the conversion to modern accounting standards.
The main area of concern of donors in public sector accounting is that the majority of central governments adhere to the cash basis of accounting, therefore, offer little disclosure in relation to what is expected from commercial entities by investors, banks and public (IFAC, 2012, p. 3. Simpson, 2002, p. 46). Cash-based accounting standards are not good for decision-makers where for instance cash-based reporting systems could lead to misplaced decisions when the government is considering whether to raise the wages of workers or increase their retirement benefits. Since the cash-based .accounting does not require recording of the pension benefits it will be chosen by the politician (IFAC, 2012, p. 3). .
