On 1 July 1996, the ACT Government became the first Australian public sector organisation to move to accrual budgeting.
This, together with other financial management reforms, was designed to achieve best practice using a fully accountable business management approach. The reforms were introduced to establish a customer focus, improve efficiency in the delivery of services and give greater transparency to the Government’s financial dealings.
As a result, both the Government and people of the ACT now have a more accurate picture of the costs and benefits of all Government programs. Improvements to service quality and a reduction in costs continue to be the central plank of the ACT’s financial reform package.
In achieving this, the ACT Government is working to address the following major challenges.
€ The high cost of maintaining the infrastructure of a capital city.
€ Reduced Federal funding.
€ Emerging liabilities such as superannuation.
Presenting finances using an accrual basis, includes recognising not only bills paid and revenues received, but also money owing for goods and services received and money due from charges, taxes and fees. This means the complete picture is presented not just part of it.
Using accruals also recognises that capital expenditure should not be written off in the year it was acquired, but rather incorporated into the balance sheet and depreciated over the useful life of the asset.
In this way, the ‘lifecycle’ costs of the asset are fully accounted. This greatly assists with asset management, thereby not creating excessive financial burdens for future generations.
