The Government Accountability Office has released a report on the possibility of using accrual budgeting instead of cash budgeting to bring more attention to the nation's long-term fiscal challenges.

The GAO concluded that the current cash- and obligation-based budget in the U.S. provides equal or better control than full accrual budgeting. But the GAO recommended that the U.S. should consider expanding the use of accrual measurement in the budget to certain areas where it would enhance up-front control, especially federal employee pensions, and retiree health, insurance and environmental liabilities.

For these programs, accrual measurement would move budgetary recognition earlier to when benefits are earned or the insured event occurs.

The report noted, "The federal government's financial condition and fiscal outlook have deteriorated dramatically since 2000," when the GAO first studied the possibility of doing accrual budgeting. At that time, several other countries had moved to such a system, including Australia, Canada, Iceland, the Netherlands, New Zealand and the United Kingdom.

However, the GAO noted that these countries had adopted accrual budgeting mainly to increase transparency and improve governmental performance, rather than to increase awareness of long-term fiscal challenges.

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