Accrual accounting switch by end of 2022/2023 fiscal period

Accrual accounting switch by end of 2022/2023 fiscal period

NASSAU, BAHAMAS — The government has developed a road map for the transition to accruals-based accounting by the end of fiscal year 2022/2023, according to Deputy Prime Minister and Minister of Finance Peter Turnquest.

While addressing the Bahamas Institute of Chartered Accountants (BICA) Accountant’s Week conference, Turnquest said: “The current crisis underscores the need for a resilient and responsive public sector that is able to effectively partner with the private sector to further advance the financial stability of The Bahamas.

“The government has already begun work on transitioning from the modified cash basis of accounting it currently employs to an accruals-based accounting system in compliance with the International Public Sector Accounting Standards (IPSAS) and has dedicated significant resources to making this transition a reality.”

Deputy Prime Minister and Minister of Finance K Peter Turnquest (FILE PHOTO)

The government operates currently on a cash-based accounting system, which only recognizes revenues when they come in, and expenditures when they become due for payment.

An accrual-based system, however, will give a more accurate picture of the government’s finances, as it will also recognize expenditures for which future commitments have been given, but monies not yet released.

Turnquest yesterday noted that while more details will be released in the coming weeks, a roadmap has been developed for the transition to a full IPSAS reporting by the end of the 2022/2023 fiscal year.

“At various stages throughout the IPSAS transition, the government will need to partner closely with BICA members; tapping into your advanced knowledge of accruals-based financial reporting as it is currently being applied to the private sector in The Bahamas,” Turnquest said.

“This uniformity as it relates to financial reporting will only further strengthen The Bahamas’ ongoing commitment to transparency and accountability in both the public and private sectors — and will require the combined efforts of our entire accounting profession in order to be successful.”

He noted that progress has been made to move from cheques to electronic payments, the reductions in the number of bank accounts and in automating the capture of receipt information.

“Work must be done on the modernizing of internal controls and the production of manuals and instructions,” Turnquest said.

“Additionally, the implementation of the new Integrated Financial Management Information System (IFMIS) will modernize and organize public financial information under the new Chart of Accounts, to provide timely, coordinated and comprehensive data on the fiscal position of the country.

“This system is a key component of the Public Financial Management (PFM) loan taken up with the Inter-American Development Bank (IDB).

“This implementation process is a measured and meticulous process that has taken some countries five to 10 years to fully implement.

“We are making steady progress towards this necessary tool for prudent fiscal management.”