Monday, March 17, 2008

BVI government announces transition to accrual accounting

BVI Financial Secretary Neil Smith said on March 16, 2008 that the territory is adopting accrual accounting policy, which determines revenues and expenses when a debt is incurred rather than after a payment is made. The switch from cash accounting to accrual accounting system will take two years.

Accrual accounting is preferred by the private sector, and is recommended by international accounting experts to ensure highest reliability. It is increasingly adopted by the world's governments.

Neil Smith said in his statement: “the government is the largest business in the territory, and it needs high quality financial information with which to manage itself ... Cash accounting is simply too poor a system to deliver that quality of information."

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