At an international accounting workshop in India, both the host country and South Africa announced their plans to move to accrual accounting systems.

Following the lead taken from one of the country's largest companies, outsourcer India Inc., a representative from India's central government said that the government is planning to move over to a new and efficient accounting system and asked its states to follow suit, as part of fiscal reforms and improving quality of public expenditure.

India's finance minister, Palaniappan Chidambaram, told attendees at the workshop that the country's corporate sector has used the accrual-based accounting system for many years and that his government is determined to switch over to the new system. The finance minister said that the change would follow a recommendation from the country's finance commission to switch over from a "cash-based" accounting system (recognizing only cash receipts and expenditures) to a system where line items such as pension costs, revenue receivables, arrears, depreciation and replacement costs are recognized.

Separately, South Africa announced that it will spend $1 billion over five years on a program designed to make its information technology infrastructure compatible with the accrual system. Speaking at the same workshop, a consultant from the National Treasury of South Africa, Mohamed Cassim, said that workforce training and software and hardware upgrades will require the resources.

In a reversal of India's situation, Cassim said that local governments and many public entities have already gone to accrual accounting, though the main government in South Africa uses the cash-based system. A larger next step in the transition will be creating a system for the submission of regular financial statements. The three-day workshop on accounting systems was organized by India's Controller General of Accounts and the World Bank.

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