UAE’s Ministry of Finance (MoF) announced on Sunday the successful launch of the first phase of government entities to transition to accrual accounting. The process took place during the work-from-home period.
The transition to accrual accounting represents a critical step that increases the efficiency of the federal budget and improves public financial management in the country.
The first phase of the project included the Ministry of Economy, the Ministry of Community Development, the Ministry of State for Federal National Council Affairs, the Federal Tax Authority, the Federal Customs Authority, and the UAE Space Agency.
Sheikh Hamdan bin Rashid Al Maktoum, deputy ruler of Dubai and minister of finance, reaffirmed the UAE government's keenness to plan for the future through innovative projects that support the wise leadership’s vision to make the UAE the best country in the world by the UAE Centennial 2071.
He also indicated that the successful launch of the accrual accounting program is another step towards achieving the goals of the UAE Vision 2021, which aims to enhance the country's position on global competitiveness indices.
Minister of State for Financial Affairs Obaid Humaid al-Tayer noted that the launch of federal government transition program was a success, despite the exceptional circumstances that the country and the world are witnessing. There were continuous efforts from the teams in MoF in cooperation with all federal entities, as MoF led and directed 36 federal entities during the transition phase.
"An accrual basis of accounting will have a positive effect on the country’s economy and society, in terms of achieving the development and sustainability of the financial system, as well as managing the financial resources of the federal government efficiently and effectively. It will also enable competent authorities to enhance the transparency of financial reports in line with the requirements of the International Monetary Fund and global competition standards," Tayer added.
Minister of Economy Sultan bin Saeed al-Mansouri said that the UAE government’s transition program from cash basis accounting to accrual accounting is a vital step in public financial management - one that will enhance the UAE’s leadership in government, financial and economic performance in line with the best international standards.
The integrated financial system that allows the transition to accrual accounting has been launched, through which all transactions, balances, and closings are recorded on June 1, and the opening balances of all federal entities are prepared according to the approved transformation plan.
Furthermore, all transactions, balances, and accounts are converted into the accrual principle (revenue, expenses, liabilities, employee benefits, monthly closings).
This is in addition to preparing the comprehensive assets record for the federal government, continuous training on accounting activities and standards for all federal agencies, setting guidelines for accounting policies and worksheets to apply accounting on an accrual basis, training materials for accounting standards for the federal government, and a guide to standardizing financial statements for the federal government. An update of the approved accounting standards guide is underway.
