In a move that underscores the Kingdom of Saudi Arabia’s commitment to improving the financial and accounting transparency of government entities and achieving the Saudi Vision 2030, the Ministry of Human Resources and Social Development achieved first place and received the Golden Merit Shield in the ministries category of the Accountability Pioneers program launched by the Ministry of Finance in January. This achievement represents a significant milestone in the ministry’s financial and accounting transformation process, reinforcing its commitment to applying the best accounting practices.
The project to transition to accrual accounting in the government sector is one of the key initiatives arising from the National Transformation Program led by the Ministry of Finance. It aligns with the goals of the Saudi Vision 2030, which aims to improve the quality of financial statements and enhance transparency and accountability in government performance.
According to officials, implementing accrual accounting wil
l provide a comprehensive and accurate view of the financial status of government entities by offering complete information on assets, liabilities, revenues, and expenses. This system will contribute to more informed decision-making and improve financial planning and control processes. The Ministry of Human Resources’ leadership in accounting transformation was further demonstrated by winning first place in the Accountability Pioneers program, stressing the ministry’s leadership in applying the best accounting and financial practices in the government sector. The ministry issued its interim financial statements for 2022 based on accrual accounting, which improved the quality of financial accounts and enhanced transparency.
Ministry officials said that this achievement is part of the ministry’s project to transition to accrual accounting within its financial and administrative development program. The ministry serves as a model for other government entities in the Kingdom in applying international accounting
standards and improving financial transparency and accountability.
Key Phases of the Accrual Accounting Transition Project
The transition to accrual accounting in the government sector involves four key phases to ensure the success of this transformation and achieve the envisioned objectives. The first phase involves studying the current situation, assessing the readiness of government entities for the transition, and preparing the basic outputs for the transformation process.
The second phase involves preparing a realistic and executable transition plan that outlines the main milestones of the complete transformation program leading to the issuance of the state’s consolidated financial statements.
The third phase includes implementing the accounting transition plan for each government entity and aligning accounting systems and procedures with the nature of each entity’s work.
The fourth and final phase ensures the readiness of systems and employees to operate according to accrual accounting, leading to
the actual launch of the new accounting system.
Impact of the Transition to Accrual Accounting on Government Performance
Experts say that implementing accrual accounting will bring a qualitative shift in the financial and administrative performance of government entities in the Kingdom. It will provide accurate and comprehensive financial information on assets, liabilities, revenues, and expenses, aiding decision-makers in making more informed decisions and improving financial planning and control processes. This transition will also contribute to developing financial and accounting competencies in government entities through specialized training programs. Consequently, it will enhance the ability of these entities to prepare financial reports with greater accuracy and transparency, improving oversight of financial resources and their optimal use.
Source: Saudi Press Agency