Oficialus vertimas
2007 06 07

resolution No 718

of 29 June 2005

on the Conceptual Framework of the PUBLIC SECTOR ACCOUNTING AND FINANCIAL REPORTING SYSTEM reform and the formation of a Commission for the Coordination and Monitoring of the Reform

(as amended by Resolution No 774 of 4 August 2006)

Vilnius

Pursuant to Articles 22(15) and 27 of the Law of the Republic of Lithuania on the Government (Valstybės žinios (Official Gazette) No 43-772, 1994; No 41(1)-1131, 1998; No 92-2843, 2000; No 41-1527, 2002; No 67-2405, 2005), the Government of the Republic of Lithuania seeking to reform the system of accounting and financial reporting of the public sector h a s r e s o l v e d:

1. To approve the Conceptual Framework of the Reform of the System of Accounting and Financial Reporting of the Public Sector (as appended);

2. To form a Commission for the Coordination and Monitoring of the Reform of the System of Accounting and Financial Reporting of the Public Sector (hereinafter referred to as the Commission) with the following members:

Undersecretary of the Ministry of Finance, in charge of accounting issues (President of the Commission);

Representative of the Ministry of Finance (Deputy President of the Commission);

Representative of the Ministry of the Economy;

Representative of the Ministry of Justice;

Representative of the State Social Insurance Fund Board under the Ministry of Social Security and Labour;

Representative of the State Patients’ Fund under the Ministry of Health;

Representative of the Department of Statistics under the Government of the Republic of Lithuania;

Representative of the Association of Local Authorities of Lithuania.

3. To instruct the Ministry of the Economy, the Ministry of Justice, the State Social Insurance Fund Board under the Ministry of Social Security and Labour, the State Patients’ Fund under the Ministry of Health, and the Department of Statistics under the Government of the Republic of Lithuania and to ask the Association of Local Authorities of Lithuania to delegate their representatives to the Commission.

4. To establish that:

4.1. the Commission shall be responsible for strategic management and overall monitoring of the reform of the system of accounting and financial reporting of the public sector;

4.2. the Commission shall make proposals to institutions responsible for measures implementing the reform of the system of accounting and financial reporting of the public sector regarding the formation of working groups to be in charge of measures implementing the reform of the system of accounting and financial reporting of the public sector (hereinafter referred to as working groups) and shall be responsible for the coordination of activities of the working groups;

4.3. the personal composition of the working groups shall be approved by the heads of institutions responsible for the implementation of the measures;

4.4. the Commission shall draw up, biannually, conclusions about measures taken in the last half-year to implement the reform of the system of accounting and financial reporting of the public sector and shall make proposals to the Ministry of Finance regarding amendments to the Plan of Measures implementing the reform of the system of accounting and financial reporting of the public sector;

4.5. taking account of the proposals made by the Commission, the Ministry of Finance shall put forward to the Government of the Republic of Lithuania amendments to the Plan of Measures implementing the reform of the system of accounting and financial reporting of the public sector;

4.6. the personal composition of the Commission shall be approved by the Minister of Finance;

4.7. the Commission’s decisions shall be taken in meetings. A meeting shall be deemed to be properly constituted if at least 2/3 of the members of the Commission are present in the meeting. Decisions shall be adopted by a simple majority of votes cast by an open roll-call ballot. In the vote is equal, the President of the Commission shall have the casting vote;

4.8. ordinary meetings of the Commission shall be convened at least every three months. Extraordinary meetings of the Commission shall be convened by the President of the Commission or 1/3 of members of the Commission.

4.9. The Commission shall be technically supported by the Ministry of Finance.

Prime Minister	Algirdas Brazauskas

Minister of Finance	Zigmantas Balčytis

approved by

Resolution No 718 of 29 June 2005 of the Government of the Republic of Lithuania

the Conceptual Framework of the PUBLIC SECTOR ACCOUNTING AND FINANCIAL REPORTING SYSTEM Reform

I. GENERAL PROVISIONS

1. The Conceptual Framework of the Public Sector Accounting and Financial Reporting System Reform (hereinafter referred to as this Conceptual Framework) has been prepared with the view to reforming the system of accounting and financial reporting of the public sector to ensure that it generates reliable and objective information necessary for the adoption of economic decisions. It should contribute to a more effective management of public resources at all management levels and to a more transparent use of the resources.

2. For the purpose of this Conceptual Framework, the public sector shall include budgetary institutions, State and municipal enterprises, public and private limited liability companies and public institutions in which the State and/or municipality have a significant influence in decision-making, also the Bank of Lithuania, social insurance funds of the State, other monetary funds of the State, as well as the State and municipalities as separate legal persons. There is no intention to change accounting basis applied by public and private limited liability companies and public institutions in which the State and/or municipality have a significant influence in decision-making, State and municipal enterprises, the Bank of Lithuania and the State Social Insurance Fund, since these economic entities already handle their accounting on the accrual basis.

3. Depending on the degree of control of management of resources, this Conceptual Framework identifies the following levels of compilation and usage of accounting information:

3.1. the lowest level: budgetary institutions, State and municipal enterprises, public and private limited liability companies and public institutions in which the State and/or municipality have a significant influence in decision-making;

3.2. the medium level: all entities of the public sector which have institutions or economic entities subordinate to them and which prepare and deliver consolidated financial statements to the Ministry of Finance or municipalities or to the State Social Insurance Fund Board under the Ministry of Social Security and Labour (hereinafter referred to as the State Social Insurance Fund Board) or to the State Patients’ Fund under the Ministry of Health (hereinafter referred to as the State Patients’ Fund);

3.3. the higher level: municipalities, the State Social Insurance Fund Board, the State Patients’ Fund and the State as a separate legal person (at the level of the State budget of the Republic of Lithuania), except in the case specified in paragraph 3.4 of this Conceptual Framework;

3.4. the highest level: the State as a separate legal person which prepares consolidated financial statements covering assets and liabilities, and income and expenditure of the State, municipalities and monetary funds of the State.

4. Users of accounting information and financial statements of the highest and the higher levels of the public sector are the Seimas of the Republic of Lithuania, the Government of the Republic of Lithuania, municipalities, the Ministry of Social Security and Labour, the Ministry of Health, the Statistics Department under the Government of the Republic of Lithuania, international institutions, and the public; users of financial accounting information and financial statements of the medium and the lowest levels of the public sector are appropriation managers, municipal administrations, the Ministry of Finance and other institutions which will have to prepare consolidated financial statements of their institutions, also heads of budgetary institutions and the public.

II. OVERVIEW OF THE CURRENT STATE OF AFFAIRS

5. The current system of accounting and financial reporting of the public sector in Lithuania is not uniform. It is maintained as follows:

5.1. public and private limited liability companies and public institutions in which the State and/or municipality have a significant influence in decision-making, and State and municipal enterprises keep their financial accounts on the accrual basis;

5.2. budgetary institutions use modified cash-basis financial accounting;

5.3. state social insurance funds and other monetary funds of the State (except the State Social Insurance Fund) keep their financial accounts on the cash basis;

5.4. accounting of the State Social Insurance Fund is maintained on the accrual basis, but financial statements are drawn up in accordance with International Financial Reporting Standards adopted by the International Accounting Standards Board;

5.5. the Bank of Lithuania keeps its accounts on the accrual basis and draws up its financial statements in accordance with recommendations issued by the European Central Bank to central banks that are members of the European System of Central Banks;

5.6. accounting concerning the implementation of the State and municipalities budgets is maintained on the cash basis.

6. Weaknesses of the current public sector accounting and financial reporting system (do not apply to public and private limited liability companies and public institutions in which the State and/or municipality have a significant influence in decision-making, State and municipal enterprises, the Bank of Lithuania and the State Social Insurance Fund):

6.1. differentiated regulation of the procedure applicable to accounting and financial reporting of budgetary institutions, municipalities, European Union structural funds and monetary funds; the procedure does not fully satisfy the needs of the users of accounting information and financial statements or does not meet the requirements of International Accounting Standards; the regulation lacks clarity or is insufficient;

6.2. certain assets are not recorded in accounts and are thus not reflected in financial statements;

6.3. the value of assets shown in accounting and financial statements does not always correspond to the real value of the assets;

6.4. certain liabilities are not recorded in accounts and are thus not reflected in financial statements;

6.5. not all assets and liabilities are correctly classified into fixed and current or long-term and short-term;

6.6. different software is used for accounting and financial reporting; for this reason, the incorporation of financial statements drawn up by using a different software, into consolidated financial statements of a different level requires more manual work and consequently increases the risk of errors. This results in a poorer quality of information generated.

7. Due to the weaknesses of the system of accounting and financial reporting of the public sector identified in paragraph 6 of this Conceptual Framework, accounting information and financial statements lose their value to the users because:

7.1. there is a risk that decisions will be taken by using information that is neither complete nor objective;

7.2. one of the key goals of financial statements, i.e. to give true and truthful information about assets, liabilities, net assets (assets remaining after all liabilities have been met), income and expenditure, is not achieved;

7.3. application of different accounting principles makes it impossible to draw up consolidated financial statements of the public sector.

8. Weaknesses of the system of accounting and financial reporting of the public sector are also mentioned in the Opinion of the National Audit Office (NAO) on the Republic of Lithuania State Budget Implementation Statement of 2003, also in the NAO’s Opinion on the Statement on State-Owned Assets of 2003, and the NAO’s Opinion on the Statement on National Debt of 2003.

9. Article 3(5) of the Law of the Republic of Lithuania on Financial Accounting (Valstybės žinios (Official Gazette) No 99-3515, 2001) establishes that budgetary institutions shall handle accounting by following the Accounting Standards for Budgetary Institutions to be approved by the Ministry of Finance. Accounting Standards for Budgetary Institutions are to be developed in accordance with International Public Sector Accounting Standards or other methodologies (guidelines, studies) developed by the Public Sector Committee of the International Federation of Accountants. The development of the Accounting Standards for Budgetary Institutions would not solve the current problems in accounting and financial reporting of budgetary institutions, municipalities, or monetary funds of the State. For this reason, also with the view to eliminating the weaknesses described in paragraph 6 of this Conceptual Framework, the reform of the system of accounting and financial reporting of the public sector (hereinafter referred to as the reform) has been proposed.

III. EXPERIENCE OF FOREIGN COUNTRIES

10. Many Member States of the European Union have already reformed or are still reforming their systems of accounting and financial reporting of the public sector, by shifting, in the public sector, from cash-basis accounting to accrual accounting. Accrual accounting has an advantage over the cash-basis accounting as it provides users with more complete information.

11. In the past few decades, more and more states have been shifting from cash-basis to accrual accounting and financial reporting (United Kingdom, Ireland, France, Sweden, Finland, Iceland, Canada, Australia, New Zealand, USA, etc.). Every state had a different system of financial management and public administration, with historically different regulation of accounting and budgeting; therefore, each of them followed different paths in reforming their accounting systems.

12. Some states (such as Australia, New Zealand and USA) have shifted to the accrual basis not only in the field of accounting and financial reporting but also in the field of budgeting.

13. Many states, which use accrual accounting, draw up consolidated financial statements for the central government (which exclude financial statements of local government).

IV. THE GOAL AND OBJECTIVES OF THE REFORM

14. The goal of the reform is to create legal, administrative and financial conditions for the entire public sector to shift to accrual accounting. Accrual accounting would improve management and use of public resources and provide more complete and more objective information to the users, thus ensuring reasonability and quality of economic decisions and contributing to a more efficient implementation of financial control at all management levels.

15. To achieve this goal, the following key objectives will have to be implemented:

15.1. to regulate the keeping of accounting and the drawing-up and submission of financial statements and consolidated financial statements on the accrual basis;

15.2. to improve qualifications of the compilers and users of financial statements so that they are able to handle accounting on the accrual basis;

15.3. to harmonise the principles of handling accounting and drawing up financial statements and management reports;

15.4. to optimise the processes and systems of compilation, processing and submission of information.

V. IMPLEMENTING MEASURES FOR THE REFORM AND THEIR IMPLEMENTATION

16. The reform should be implemented in several stages. The first stage (2005-2008) would cover the development of the key implementing measures for the reform shown in the plan appended to this Conceptual Framework in the Annex.

17. Implementing measures for the reform fall into the following two main categories:

17.1. development of legal acts necessary to regulate the handling of accounting and the drawing up of financial statements of the public sector on the accrual basis;

17.2. optimisation of information technologies.

18. Once the first stage is completed, the results of implementation of the implementing measures of the first stage will have to be analysed and implementing measures for the second stage (2009-2010) developed.

VI. ADVANTAGES OF THE SHIFT TO THE ACCRUAL ACCOUNTING

19. Financial statements drawn up on the accrual basis shall cover income, expenditure, assets, liabilities and net assets. Financial statements drawn up on the accrual basis and in accordance with International Public Sector Accounting Standards should consist of a statement of financial position or a balance-sheet, statement of financial performance, statement of changes in equity or net assets, cash flow statement and explanatory notes to the financial statements.

20. Financial statements drawn up on the accrual basis have the following advantages:

20.1. They give a real and true picture of the current financial position, performance and cash flows for a certain period. A full reflection of assets and liabilities makes it possible to estimate how much funds will be needed in future periods to sustain the useful characteristics of assets and to discharge commitments;

20.2. They show the sources of financing (own resources or borrowed funds) of the government sector activities;

20.3. They give complete and objective information that helps to assess not only the ability of budgetary institutions to control expenditure but also their performance and cost-effectiveness;

20.4. They contribute to a more rational planning which enables to estimate how many actual liabilities requiring additional financial resources will have to be met in the future or how much available financial resources will have to be redistributed;

20.5. They also help to assess the efficiency of management of the working capital.

VII. DIFFICULTIES RELATED TO THE SHIFT TO THE ACCRUAL ACCOUNTING

21. The shift to the accrual basis in handling accounting and drawing up financial statements is associated with the following difficulties:

21.1. the cost of development, implementation and maintenance of the system will increase because of the need to:

21.1.1. identify and evaluate the existing assets that are not reflected in the accounts;

21.1.2. formulate an accounting policy and develop procedures for the handling of accounting and drawing up and submitting financial statements;

21.1.3. redesign the existing or purchase new accounting software;

21.1.4. improve qualifications of not only compilers but also users of financial statements;

21.2. the shift to the accrual basis accounting and financial reporting will be a gradual process; therefore, for a certain transitional period information will be compiled by following different accounting principles and consequently financial statements of different periods will not be comparable;

21.3. there will be higher qualification requirements for accountants and thus a higher need for training;

21.4. the transitional period will be rather long;

21.5. duplication or transformation of the accounting system which is used to monitor budget implementation will be inevitable. In the transitional period, double accounting will be inevitable (i.e. consolidated financial statements of the public sector will be drawn up on the accrual basis, whereas budget implementation will be reported on the cash basis). In the future, consideration could be given to shifting to the accrual accounting both in budget formation and in reporting its implementation. It is also necessary to develop a system, common to all levels of usage of accounting information, of reporting and processing and submission of information and to establish a procedure for organising the drawing up of consolidated financial statements of the public sector.

VIII. REFLECTION OF FIXED TANGIBLE ASSETS AND LIABILITIES IN THE ACCOUNTING AND FINANCIAL STATEMENTS

22. Accounting of fixed tangible assets is one of the most important concerns. One of the objectives of the reform is to achieve that all fixed assets are shown in the statement of financial position (balance-sheet) of the entity which possess, uses or manages the assets by the right of ownership or trust.

23. For accounting purposes, Public Sector Accounting and Financial Reporting Standards could give a list of the main categories of fixed tangible assets such as land and water bodies, infrastructure, buildings, structures, plant and machinery, other fixed tangible assets, construction in progress, pre-payments for fixed tangible assets, and valuables.

24. One of the major problems in the current practice of accounting of fixed tangible assets lies in the fact that certain fixed tangible assets (e.g. certain roads, land, forest areas, etc.) are not reflected in the accounts and financial statements or are reflected incorrectly. Some fixed tangible assets are shown at the indexed value, others at cost; however, International Public Sector Accounting Standards allow the disclosure of fixed tangible assets either at cost or at a revalued value. International Public Sector Accounting Standards require to conduct revaluations periodically. Indexation is not allowed since it does not reveal the real value of the specific asset.

25. To ensure that financial statements give a real and true picture of the financial position, all assets of the public sector must be recorded in accounts. To achieve this, public registers are necessary for all groups of assets, for the storage of all information about individual assets such as the unit of measure and the quantity, the acquisition (production) price if determinable, the revalued value if the asset was revalued, depreciation rate if the asset is depreciable, acquisition and disposition dates, the place of presence or usage, the composition of the asset, and other information. Before all assets can be recorded in public registers, it is necessary to conduct a quantitative and qualitative stocktaking. It is planned to create a search engine for public assets to help find information stored in the public registers of assets.

26. If the principles of accounting for fixed tangible assets are to be brought in line with International Public Sector Accounting Standards, fixed tangible assets must be recorded at the acquisition (production) value or at the revalued value. Periodic revaluation of assets would imply higher costs of valuation; therefore, given that the value of assets of certain groups seldom changes and that assets of certain groups depreciate rather quickly, the revaluation of all assets would not be a cost-effective solution. However, such groups of assets as buildings and structures should be subject to periodic revaluation, for instance every five years, given that the useful life of such assets is quite long and that the value of such assets is sensitive to developments in the market and that the goal is to ensure that financial statements reflect the real status of state and municipal assets managed by certain legal persons and the public sector. Where the acquisition (production) cost of the asset is not determinable, for the first time such asset must be recorded in the accounts at the value determined by an independent valuator; further, for accounting purposes, this value would be considered the acquisition (production) cost of the asset and later be revalued if the asset belongs to the group of fixed tangible assets subject to revaluation. It would be incorrect to show all assets at the acquisition (production) value, also known as the historic cost, as in this case the real value of state-owned or municipal assets would be distorted and the use, for making decisions related to the possession, use and management of assets, of incorrect value would, above all, make the management of assets more difficult. The Government of the Republic of Lithuania will examine and approve a list of groups of state-owned and municipal fixed assets subject to periodic revaluation, to be proposed by the Public Sector Accounting and Financial Reporting Standards Committee (hereinafter referred to as the Standards Committee) of the Ministry of Finance.

27. Financial statements, namely the balance-sheet, of the public sector entities should reflect all debts and liabilities, including provisions and contingent liabilities, and consolidated financial reporting of the public sector must reflect the total public debt, contingent assets and contingent liabilities.

IX. THE DRAWING-UP OF CONSOLIDATED FINANCIAL STATEMENTS

28. Consolidated financial statements of the public sector will consist of the following statements prescribed by International Public Sector Accounting Standards:

28.1. a statement of the financial position (balance-sheet): a financial statement showing the total consolidated assets, equity and liabilities of the State as of the last day of the accounting period;

28.2. a statement of performance: a consolidated financial statement of the public sector showing all income earned, expenditure incurred and results achieved in the public sector over the accounting period;

28.3. a statement of changes in equity/net assets: a financial statement giving information about changes in equity/net assets over the accounting period;

28.4. a cash flow statement: a financial statement showing receipts and disbursements of cash and cash equivalents in the public sector over the accounting period. This statement, if appropriately regulated, could coincide with a statement of budget implementation;

28.5. an explanatory note: an integral part of financial statements with information about the principles applied in relation to important items of financial statements and with additional important, reliable and objective information not given in the above-mentioned financial statements.

29. Possible stages and their effect on consolidated financial statements of the public sector:

29.1. a transitional stage: once the development of Public Sector Accounting and Financial Reporting Standards (hereinafter referred to as the PSAFR standards) is started, the public sector will start drawing up pilot consolidated financial statements of individual appropriation managers and consolidated financial statements of the State and municipalities; the consolidation will only combine financial statements of budgetary institutions and monetary funds of the State, excluding the State Social Insurance Fund;

29.2. the second stage of consolidation: once all PSAFR standards come into effect and are implemented, the public sector will start drawing up consolidated financial statements of appropriation managers and consolidated financial statements of the State and municipalities; the consolidation will combine financial statements of budgetary institutions, monetary funds of the State, excluding the State Social Insurance Fund, state and municipal enterprises and public institutions in which the State and/or municipality have a significant influence in decision-making;

29.3. the final stage of consolidation: the consolidation of financial statements of the entire public sector covering budgetary institutions, monetary funds of the State, state and municipal enterprises and public institutions in which the State and/or municipality have a significant influence in decision-making. Such consolidated financial statements of the public sector would reflect all assets owned by the State and municipalities, public sector liabilities, net assets, performance and cash flows over the accounting period.

X. ORGANISATION OF THE REFORM

30. To coordinate the reform, a Commission for the Coordination and Monitoring of the Public Sector Accounting and Financial Reporting System Reform will be formed; the Commission shall be responsible for strategic management and overall monitoring of the reform.

31. To organise the implementation of individual implementing measures and to monitor the results, relevant working groups will be formed, with representatives of competent authorities, professional organisations and the academia.

32. The implementation of certain implementing measures will be outsourced from external providers of services. With the outsourcing, measures will be implemented faster and more effectively; moreover, economic entities specialising in the field have good knowledge of international standards and foreign practices and a strong technical base, which will ensure a better quality of services. The following tasks (but not limited to) will be outsourced from external providers of services:

32.1. the drafting of PSAFR standards;

32.2. the drafting, in accordance with the requirements of PSAFR standards and the structure of financial reporting, of a standard General Chart of Accounts;

32.3. the drafting, in accordance with the requirements of PSAFR standards and the structure of financial reporting, of individual sample financial accounting manuals (hereinafter referred to as accounting manuals) for the following entities of the public sector: budgetary institutions, municipalities, monetary funds and the State Treasury; also a consolidation manual, the General Chart of Accounts user guidelines and guidelines for the completion of the forms of financial reporting;

32.4. the preparation of training materials for training the staff of budgetary institutions to apply PSAF standards, the arrangement of seminars for trainers who will train to apply PSAFR standards and for a group of selected representatives of the public sector;

32.5. the diagnostic stocktaking/survey of information technologies and software used for handling accounting in the public sector;

32.6. the drafting of a plan for optimisation of information technologies and software used for handling accounting.

33. Draft PSAFR standards will be examined by the Standards Committee and submitted to the Ministry of Finance for approval. The Standards Committee will be responsible for the preparation and explanation of PSAFR standards. The Standards Committee will be formed of representatives of state institutions, professionals (i.e. accountants), experts, and the academia.

34. PSAFR standards will be imperative for state and municipal budgetary institutions in the drawing-up of their financial statements and consolidated financial statements of the State and municipalities. The shift to PSAFR standards in the above-mentioned public sector entities will be a gradual process and will depend on possibilities that will, in turn, depend of the degree of legal regulation of accounting and financial reporting that will exist at the time of approval of the PSAFR standard concerned.

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Annex to

the Conceptual Framework of the Public Sector Accounting and Financial Reporting System Reform

THE PLAN OF MEASURES IMPLEMENTING THE PUBLIC SECTOR ACCOUNTING AND FINANCIAL REPORTING SYSTEM REFORM

Measure	Responsible institution	Period of implementation	Notes
1. The drafting and approval of Public Sector Accounting and Financial Reporting Standards of the Republic of Lithuania (hereinafter referred to as PSAFR standards)	Ministry of Finance	2005-2008	24 to 30 standards should be developed in all, or 6 to 8 standards a year
2. The drafting of a standard General Chart of Accounts in accordance with the requirements of PSAFR standards and the structure of financial reporting	Ministry of Finance	2005	The Chart of Accounts should not only enable the drawing-up of financial statements of individual appropriation managers but should also allow for the drawing-up of consolidated financial statements for the whole public sector and for the consolidation of data to be used for financial statements and statements of budget implementation. The same Chart of Accounts should be suitable both for financial statements and for statements of budget implementation
3. The drafting of the Republic of Lithuania Public Sector Reporting Law	Ministry of Finance	2006	The Republic of Lithuania Public Sector Reporting Law should establish the structure of statements of the public sector, lay down the requirements for the drawing-up of statements, establish the structure of financial statements and budget implementation statements and define the responsibility for the drawing-up and presentation of financial statements
4. The drafting of amendments to the following legal acts to bring them in line with the provisions of PSAFR standards:	Ministry of Finance	2006-2007
4.1. The Republic of Lithuania Accounting Law	Accounting standards applicable to budgetary institutions and referred to in the Republic of Lithuania Accounting Law shall be replaced with the public sector accounting and financial reporting standards and the Law shall be brought in line with the Republic of Lithuania Public Sector Reporting Law
4.2. Resolution No 1429 of the Government of the Republic of Lithuania of 10 September 2002 On the Approval of the Procedure for Property Accounting for the Drawing-up of a Statement of State-Owned or Municipal Property	Pursuant to Resolution No 1429 of 10 September 2002 of the Government of the Republic of Lithuania, property which has been transferred to the state enterprise State Property Fund shall be recorded in off-balance-sheets of the State Property Fund and the institutions which have transferred this property shall write it off their accounts. If follows that the property dos not appear in financial statements of any legal person, which is in conflict with the accrual basis.
4.3. other legal acts (to allow for the application of the accrual basis)
5. The development of the Consolidation Manual	Ministry of Finance	2007	The Consolidation Manual shall describe the scheme of consolidation of the public sector (including the scheme of flows of accounting information and reporting covering the sources of information, explaining interrelations in the compilation and transfer of information among different levels of accounting), consolidation principles and consolidation procedures for public sector entities on each level of consolidation
„6. The drafting of the following documents in accordance with the requirements of PSAFR standards and the structure of financial reporting:
6.1. a sample Accounting Manual for Budgetary Institutions	Ministry of Finance	2007	The Accounting Manual shall describe the principles of accounting policy and the principles of accounting applicable to individual items of financial statements, recommendations for recording transactions and economic events in the accounts, and a set of financial statements
6.2. a sample Accounting Manual for Municipalities	Ministry of Finance	2007	The Accounting Manual shall describe the principles of accounting policy and the principles of accounting applicable to individual items of financial statements, recommendations for recording transactions and economic events in the accounts, and a set of financial statements
6.3. a sample Accounting Manual for Monetary Funds of the State	Ministry of Finance	2007	The Accounting Manual shall describe the principles of accounting policy and the principles of accounting applicable to individual items of financial statements, recommendations for recording transactions and economic events in the accounts, and a set of financial statements
6.4. a sample Accounting Manual for the State Social Insurance Fund	Ministry of Finance, State Social Insurance Fund Board under the Ministry of Social Security and Labour	2007	The Accounting Manual shall describe the principles of accounting policy and the principles of accounting applicable to individual items of financial statements, recommendations for recording transactions and economic events in the accounts, and a set of financial statements
6.5. a sample Accounting Manual for the Compulsory Health Insurance Fund	Ministry of Finance, State Patients’ Fund under the Ministry of Health	2007	The Accounting Manual shall describe the principles of accounting policy and the principles of accounting applicable to individual items of financial statements, recommendations for recording transactions and economic events in the accounts, and a set of financial statements
6.6. a sample Accounting Manual for the State Treasury	Ministry of Finance	2007	The Accounting Manual shall describe the principles of accounting policy and the principles of accounting applicable to individual items of financial statements, recommendations for recording transactions and economic events in the accounts, and a set of financial statements
6.7. the General Chart of Accounts User Guidelines	Ministry of Finance	2006	The General Chart of Accounts User Guidelines shall describe each account and present a scheme showing which accounts shall be maintained by individual public sector entities, also give instructions related to the shift from the current Chart of Accounts to the General Chart of Accounts
6.8. Guidelines for the Completion of the Forms of Financial Statements	Ministry of Finance	2007	The Guidelines for the Completion of Forms of Financial Statements shall describe each item of financial statements and specify what accounts they cover
7. The preparation of training materials for training the staff of budgetary institutions to apply PSAFR standards	Ministry of Finance	2005-2008
8. The arrangement of seminars for trainers who will train to apply PSAFR standards and for accountants of public sector entities	Ministry of Finance	2005-2008
9. The diagnostic stocktaking/survey of information technologies and software used for handling accounting in state and municipal budgetary institutions	Ministry of Finance	2006-2007	This measure is necessary with the view to optimising the processes and systems of compilation and processing of information. Given the volume and the complexity of effort needed, the measure will call for large expenditure
10. The drafting of a plan for optimisation of information technologies and software used for handling accounting in the public sector and the submission of the plan to the Commission for the Coordination and Monitoring of the Public Sector Accounting and Financial Reporting System Reform	Ministry of Finance	2007

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