he International Federation of Accountants (IFAC) and the Chartered Institute of Public Finance and Accountancy (CIPFA) in 2018 issued a report captioned “65% of Governments Globally will report on an Accrual Basis by 2023”. The essence of the report is that currently governments accounts are prepared and reported using the Cash Basis on a global scale. Since November 2019, the Premier of the Cayman Islands mandated all Public Sector Ministries and Departments to move away from the Cash Basis of accounting, and adopt the Accrual Basis. The implementation of the Accrual Basis is expected to be complete by December 2020. The Ministries’ and Departments’ heads had reservations whether changing from the Cash Basis of doing accounts which they deem worked perfectly in recording and reporting financial results to the public is a sensible move. You are asked by the Accounting Committee of Government Assemble of the Cayman Islands under the guidance of the British Government to perform a critical analysis of Cash Accounting Basis and Accrual Accounting Basis. Your analysis should cover the following: Comprehensive definitions of Accrual Accounting and Cash Accounting as defined in the Standards International Standard(s) governing Cash and Accrual Accounting (including first time adoptions). Advantages of using Accrual Accounting and Cash Accounting 6 marks Disadvantages of using both Accounting Conclusion & recommendation Your analysis, findings and recommendation should be presented in the form of a report to the Accounting Committee and should convince them whether the Cayman Islands should continue using the Cash Accounting Basis or change to the much talked about Accrual Basis of accounting.
The International Federation of Accountants (IFAC) and the Chartered Institute of Public Finance and Accountancy (CIPFA) in 2018 issued a report captioned “65% of Governments Globally will report on an Accrual Basis by 2023”. The essence of the report is that currently governments accounts are prepared and reported using the Cash Basis on a global scale. Since November 2019, the Premier of the Cayman Islands mandated all Public Sector Ministries and Departments to move away from the Cash Basis of accounting, and adopt the Accrual Basis. The implementation of the Accrual Basis is expected to be complete by December 2020. The Ministries’ and Departments’ heads had reservations whether changing from the Cash Basis of doing accounts which they deem worked perfectly in recording and reporting financial results to the public is a sensible move.
You are asked by the Accounting Committee of Government Assemble of the Cayman Islands under the guidance of the British Government to perform a critical analysis of Cash Accounting Basis and Accrual Accounting Basis. Your analysis should cover the following:
Comprehensive definitions of Accrual Accounting and Cash Accounting as defined in the Standards
International Standard(s) governing Cash and Accrual Accounting (including first time adoptions).
Advantages of using Accrual Accounting and Cash Accounting 6 marks
Disadvantages of using both Accounting
Conclusion & recommendation
Your analysis, findings and recommendation should be presented in the form of a report to the Accounting Committee and should convince them whether the Cayman Islands should continue using the Cash Accounting Basis or change to the much talked about Accrual Basis of accounting.
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