adminEnacy Mapakame Business reporter
GOVERNMENT anticipates full migration to accrual accounting in public entities by 2021, as it moves towards enhancing transparency, accountability, service delivery by public enterprise and attracting investment into the country.
Accrual accounting is an accounting method that measures the performance and position of a company by recognising economic events regardless of when cash transactions occur.
Speaking to The Herald Business, Accountant General Mr Daniel Muchemwa said this was also in line with international best practice which seeks to improve transparency and accountability.
“It is expected to be complete by 2021. It is mostly to improve transparency and providing information on what the public doesn’t know including how much we owe and how much we are owed,” said Mr Muchemwa in an interview at the Public Accountants and Auditors Board (PAAB) workshop in Harare yesterday.
“There are people who always come to my office saying they are owed money from Operation Maguta, yet nothing in my records shows that.
“So accrual will show that whatever commitment has been made will be recorded and published. Whatever we expect to receive is due for receipt and published. It will show how much cash I spend or receive, how much cash I expect to receive or to pay,” said Mr Muchemwa.
Currently, public entities are formally on cash accounting. Under the cash basis of accounting, revenues are reported on the income statement when the cash is received.
Under accrual, expenses are matched with the related revenues and or are reported when the expense occurs, not when the cash is paid.
Mr Muchemwa said Zimbabwe could not afford to lag behind in the transition to accrual accounting, as this would be one of the aspects potential investors would look at before making any commitments.
“Investors will look at how effective we are in adopting to the new system. We are behind others in the region. If we do not do this, we will be left behind in terms of investment,” he said.
In a presentation made on his behalf by Permanent Secretary for Corporate Governance Unit in the Office of the President and Cabinet Ambassador Stuart Comberbach, Chief Secretary to the President and Cabinet Dr Misheck Sibanda emphasised the need for accountability in the public sector as well as enhance service delivery.
He said Government was working on initiatives that were aimed at improving transparency and accountability, a subject he said could not be over-emphasised.
“A key component of those initiatives focuses on financial management within the public sector and, in this regard the very evident need for greater transparency and accountability in how Government records, reports and utilizes the wealth of financial data it receives and processes at any given time,” he said.
PAAB chairman Mr Brian Njikizana said other African countries had already started implementation of the accrued accounting system and it was about time Zimbabwe adopted the system too.
“We think this is the right time for Zimbabwe to do this, we want to be among other countries who adopt this early enough so that we are not left behind. Why should we be the last to do this,” he said.
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