14 positive effects of applying the accrual accounting principle in the federal budget

The Ministry of Finance has identified 14 positive impacts of applying the accrual accounting principle in the Federal Government's general budget for 2021, stressing that this principle keeps pace with international best practices in recording financial operations.

The Undersecretary of the Ministry of Finance, Yunus Haji Al-Khoury, stated that "the accounting accrual principle is the accounting standard that is used when recording revenues, expenses and assets, during a specific financial period, regardless of the date of payment or actual collection."

Khoury reviewed the most important positive effects of the principle of entitlement in the federal budget, the foremost of which is raising the effectiveness of financial planning in the country in accordance with international best practices, in addition to increasing the efficiency of preparing the Union’s general budget and optimal use of the state’s financial resources, indicating that this principle contributes to achieving the objectives. UAE Vision 2021, and reinforces the country's leading position in global competitiveness indicators.

The list of positive impacts also includes, according to the Undersecretary of the Ministry of Finance, that the principle of accrual is consistent with the principles of scientific accounting, as it is characterized by accuracy and fairness, and each financial year is considered an independent personal, and therefore any receivables or advances in relation to both revenues and expenditures are taken into account, in addition to It helps in applying the principle of matching revenues with expenditures, regardless of cash collection or payment, which allows for financial comparisons to be made between different years within the same unit or between different units.

In addition to its contribution to determining the calculation of the cost of an activity unit or service unit performed, in light of the zero budget, it also achieves control over activities and evaluates their performance, facilitates the preparation of estimates of resources and uses for the coming financial years, and assists in separating ongoing operations from capital operations.

The accrual principle is characterized by accuracy and realism in explaining the results of budget execution and the ease of linking through it between government and national accounting, which aims to measure the national product of the state and the degree of economic growth in all economic sectors. It is also considered more suitable for financial and administrative planning purposes.

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