Based on the article “Challenges of Accrual AccountingImplementation in Malaysian Accountant General’s Department” (NurulNadiah,Santer, Saiyidah,Muhamad Hadi, 2015) Accrual accounting is an accountingphilosophy under which exchanges are perceived as the basic occasion happens,paying little heed to the planning of the related money receipts and instalmentsto be made. Accrual accounting will record the transaction when the revenue isearned and when the expenses is incurred. The purpose of being migration to theaccrual accounting is to become a high-income nation. Dato’ Sri Najib Tun Razakwas highlighted in his speech that “We need a government that enables and empowersthe private sector.
This means re-shaping and energizing the public sector tobe more responsive and accountable to the needs of private citizens andbusinesses”. The initiativeof implement an accrual accounting is to facilitate asset-liability management.The International Public Sector Accounting Standards Board (IPSASB), which isunder the Federation of Accountant (IFAC), is accountable in developing InternationalPublic Sector Accounting Standards (IPSAS). Malaysia is in the process of becomingpart of developed countries and assuming that the accrual accounting will be usedin five years.
Basically, there are advantages for developing accrualaccounting especially for public sector in Malaysia. One of the preferredstandpoint is the administration can without much of a stretch access toprecise data with the end goal of responsibility. Executing the gatheringbookkeeping is required to help and energize the nature of data that willutilized for basic leadership. Moreover, it helps in enhancing executionadministration, money related straightforwardness and responsibility out in theopen associations. However, there are a lot of challenges that publicsector need to face in order to implement accrual accounting. The difficultiesare comprise of the need to concentrate on mindfulness, administrativestructures, building limit, competency and coordinating frameworks for thegeneral population workers as to encourage by utilizing gathering accrualaccounting. In order to realising these accrual accounting, the management needto support their servant by encourage them with training program provided sothat they can improve their skills and knowledge align with the objective of implementingaccrual accounting.
Accrual accounting is unlike cash basis in term of thereceivables and payables where there is no receivables and payables recorded oncash basis while there is receivables and payables recorded on accrual basis. Receivablesand payables when payment is not received on sales and in time of purchase. Nevertheless, insufficientdata on financial details lead to the developing new basis of accounting whichis accrual accounting. The complete document is essential for constructingcharts of money owed and establishing balance sheet.