Accrual accounting pathway to fiscal transparency in Kenya

In recent times, discussions have been rife in the public sector on the merits of shifting from cash to accrual basis of accounting for purposes of enhancing fiscal reporting. Accrual basis of accounting is an accounting method that requires revenues and expenditures to be recorded in the financial statements when they are earned and incurred respectively, while cash basis of accounting is an accounting method that requires transactions to be recorded only when a cash flow has occurred. The main difference between accrual and cash basis of accounting lies in the timing of when revenue and expenses are recognised.