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In the focus
Monetary Fund has prepared a manual, whereas GFS-1986 is cash-based. To put it
known as GFS-2001 (recently revised into simply, GFS-1986 records only the cash-flows,
GFS-2014) that prescribes the methodology i.e. only the receipt of money or payments
for compilation of the accounts in the area made. If in a certain period (a quarter or a
of public finances. year) no payment is made, then the budget
will record nothing. Opposite to this, GFS-
According to this methodology, public 2001 presents all the economic events and
finances should be recorded in accordance all the operations and transactions of the
with the good old principles of double state (revenues, expenditures and changes
accounting that is being implemented in in the assets and liabilities) that took place
the private sector for centuries. As it is in a certain period, regardless of the fact
known, double accounting requires that whether they are paid or not. If we go back to
every transaction is recorded in at least two the aforementioned example, in which the
accounts. It is also known that accounting state built a museum for 30 million euros
is being kept on an accrual basis, i.e. all but has not paid the construction works,
economic events are registered at the time with the GFS-2001 approach this amount
they took place regardless of whether and will be recorded in the state accounts, but
when a payment will take place. Contrary not when implementing GFS-1986 approach,
to this, there is an older and wrong cash- because there has been no payment. As
based accounting system that shows only one may notice, unlike GFS-1986, GFS-2001
those events that cause certain payment, shows not only the paid works, but also all
i.e. economic events are being registered the due unpaid liabilities. Therefore, in case
at the time the payment is done. Of there are due unpaid liabilities GFS-1986
course, the difference between these two leads to presenting lower budget deficit and
systems of recording is huge. For example, lower public debt.
a municipality or government may build
a bridge, street, museum, etc., but the There are also other important
construction works may be paid after one or differences between the old (GFS-1986)
two years. and the new (GFS-2001) methodology for
recording public finances. According to
The fundamental problem with the GFS-2001, the state should prepare (and
Macedonian public finances rests in the fact make them publicly available) four financial
that they are not presented in accordance reports, of which only one is made on cash-
with the international standards provided basis. For example, same as with the private
in GFS-2001, but the Macedonian Budget firms, the state also has an obligation to
is compiled in accordance with a much prepare a Balance Sheet.
older methodology known as GFS-1986. As
mentioned above, the key difference rests How do “Macedonian matters” look
in the approach: GFS-2001 is accrual-based, like? In Macedonia, apart from the Central
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