The country’s priorities. In one Budget.

Accrual accounting records revenue when it is earned and expenses when costs are incurred, even if the money changes hands at another time. Cash accounting records money when it is received or paid.

For example, an agency uses electricity in June and pays the bill in July. The expense belongs to June under accrual accounting; the cash payment belongs to July.

Why use it? It helps show the cost of services provided during a year, including costs that have arisen but have not yet been paid. The result is less dependent on when bills happen to be paid.

Long-lasting assets are treated differently from day-to-day bills. Buying equipment generally creates an asset. Its cost is recognised as an expense over its useful life through depreciation. The cash view records when the purchase is paid for. Capital investment is also reflected separately in the fiscal balance.

Both views are useful. Cash shows money received and paid; accrual helps show revenue, operating costs and obligations. Timing and coverage can differ, so the totals need not match.

Parliamentary Budget Office: accrual accounting ↗

Department of Finance: Budget measures ↗