Truth in Accounting (TIA) applauds the steady global shift toward accrual-based financial reporting and budgeting, as highlighted in the International Federation of Accountants (IFAC) and the Chartered Institute of Public Finance and Accountancy (CIPFA) International Public Sector Financial Accountability Index 2025 Status Report.
This report, supported by the International Public Sector Accounting Standards Board (IPSASB), shows governments worldwide moving from cash-based accounting, which records transactions only when cash changes hands, to accrual accounting, which records the economic substance of transactions when they occur. This provides a far clearer, more honest picture of a government's true financial position.
Why This Matters: Transparency, Accountability, and Better Decisions
Accrual accounting captures the full reality of government obligations and resources. It recognizes liabilities such as pensions and retiree health benefits when promises are made, not years later, when payments come due. Cash accounting often hides these long-term costs, allowing short-sighted decisions that burden future taxpayers.
As IFAC CEO Lee White stated, "Accrual-based reporting is essential for public sector transparency and accountability. It is also the foundation for the use of global IPSAS Standards." CIPFA’s Owen Mapley added that strengthening public financial management through accrual reporting is fundamental to addressing today’s fiscal challenges.
Key Findings from the 2025 Index
-
Steady Progress: By 2030, 56% of jurisdictions are projected to report on an accrual basis. This builds on gains since the 2020 Index, though the pace has slowed due to pandemic-related strains.
-
Shifting Landscape: High-income countries led adoption in 2024 (57% of accrual users), but by 2030, 60% of accrual-reporting jurisdictions will be middle- and low-income economies—showing broad global relevance.
-
Standards Leadership: By 2030, 81% of accrual-reporting jurisdictions are expected to apply International Public Sector Accounting Standards (IPSAS), directly or as a foundation.
This international momentum reinforces what TIA has long advocated: governments must move beyond outdated cash-basis or modified-accrual methods to full accrual for true accountability.
TIA’s FACT-Based Approach: Full Accrual Calculations and Techniques
At Truth in Accounting, we promote what we coined as FACT-based accounting—Full Accrual Calculations and Techniques. This goes beyond many standard practices by ensuring that budgets and reports fully reflect all costs, including promised retirement benefits, regardless of when cash is paid.
FACT-based accounting:
-
Records revenues and expenses when earned or incurred.
-
Provides a complete view of assets, liabilities, and the true “Taxpayer Burden™.”
-
Enables better performance measurement and informed budgeting.
-
Prevents tricks like counting borrowing as revenue or understating long-term obligations.
Our annual Financial State of the States reports and city analyses use this lens to expose hidden debts and grade fiscal health honestly. Too often, official reports understate liabilities, leaving taxpayers on the hook.
The Path Forward
While global progress is encouraging, many U.S. state and local governments lag in full transparency. GASB standards still permit cash-like elements in key statements, which can obscure the full picture.
TIA urges:
-
Adoption of full accrual accounting in governmental funds statements and budgeting.
-
Timely, audited reports that citizens can easily understand.
-
Policymakers to prioritize IPSAS-inspired reforms for better decision-making.
The IFAC/CIPFA report proves the shift is not only possible but underway worldwide. It delivers clearer finances, better accountability, and sustainable public services. Truth in Accounting will continue to push for these standards to join this global movement toward fiscal truth.