The UAE Ministry of Finance (MoF) has launched the third and final phase for government entities to switch to an accrual accounting system, which provides an improved infrastructure that would enhance the country’s position in global competitiveness indexes.
Accrual accounting is a method under which the revenue or expenses of entities are recorded when a transaction occurs rather than when a payment is received or made.
The third phase will cover major entities in the federal government namely, the ministry of interior, ministry of education, ministry of health and prevention, ministry of foreign affairs and international co-operation, among others.
The entities began applying accrual accounting from January 1, the statement added. The first group to transition to accrual accounting program was launched on June 1, 2020, while the second group was launched on October 1, 2020.
The ministry has given 18 interactive training courses that were attended by more than 2,000 federal government employees and has made available videos of the recorded workshops through the digital library for future references.
“To help complete the project on time, the ministry allocated a specialized team to provide technical and accounting support to federal entity users, provide advanced technical forms and solutions, and direct them in preparing opening balances and collecting and exchanging information and data.”
As per the multinational professional services firm PwC’s research, the public-sector entities at all levels of the government are facing unmatched demands to improve the management of public finances and one essential reform is to implement accrual accounting.
“By introducing accrual accounting, public entities demonstrate a commitment to improving the use and management of resources, a desire to promote enhanced financial reporting and transparency, plus greater accountability and a pledge to fight fraud and corruption,” PwC said.