Understanding the Relationship between Budget Classification, Chart of Accounts, and GFS, Lecture notes of Accounting

Download Understanding the Relationship between Budget Classification, Chart of Accounts, and GFS and more Lecture notes Accounting in PDF only on Docsity! 1 Relationship between budget classification, chart of accounts and GFS PEMPAL Conference Istanbul 24-27 February Mark Silins 2 Defining Chart of Accounts – International Federation of Accountants A chart of accounts is a systematic coding system for the classification and coding of transactions and events within the accounting system It defines the organization of ledgers used within the accounting system 5 Why have a Budget Classification?  It is a systematic way to classify all financial flows (often limited to cash transactions)  It is simply a filing system for financial data  A budget classification is the mechanism through which (cash based) financial information is collected, processed and reported on 6 What is the difference between a CoAs and a Budget Classification?  In many countries the terms are interchangeable  In some developing and transition countries these terms have evolved to mean two different systems for recording financial information – even though the two systems are closely related to one another 7 What is the difference between a CoAs and a Budget Classification? (2)  Budget Classification - records cash or modified cash transactions - is controlled centrally through a treasury - provides reports against budget appropriations or estimates -could easily be termed a cash-based chart of accounts  Chart of Accounts - generally uses modified accrual accounting - supports detailed account keeping in budget institutions 10 What is GFS?  It is a statistical classification system designed for the public sector by the IMF  GFS 1986 - Cash-based  GFS 2001 - Accrual  COFOG - Classification of the functions of Government 11 Why is GFS important?  It provides a mechanism to create uniformity in public sector finances across all countries’ public sectors  It assists within transition countries by creating discipline around classification of financial transactions Budget Classification General Chart of Accounts GFS 2001 Consistency between Budget Classification and COAsGFS -Template for international comparison and reporting