In modified cash basis accounting, transactions and other events are recognized on a cash basis during the year, and accounts payable and receivable are only recognized at the end of the year.
In contrast, cash basis accounting has caused distortions in government revenues because it does not enable a full view of volume for the year.
Whoever warned against counting chickens before they've hatched was clearly a proponent of cash basis accounting.
There's nothing wrong with using cash basis accounting so long as it reasonably and accurately represents the true financial accounting and position of the organization," said Andrew Lang, national director of nonprofit services for BDO Seidman, an accounting and management firm based in Chicago.
The Government now proposes to phase out
cash basis accounting in 1999/2000 - a year later than originally announced - and has extended the three-year "catch up" period to ten years.
Justification for adopting
cash basis accounting for OPEB was based on assumptions that the number of retirees covered was relatively small, the costs were insignificant and the continuation of benefits was discretionary.
Finances appear to be well-maintained, although analyses and comparisons are somewhat limited given the use of cash basis accounting.
The use of cash basis accounting, which is allowable under state law and typical for many districts in Illinois, limits transparency of the district's current financial position.
While the module reviewed here will only handle
cash basis accounting, integrating additional modules for Accounts Receivable, Accounts Payable, and Payroll is easily done.
As such, we will restate our historical revenues, earnings and balance sheets to reflect
cash basis accounting.
Financial Management: New features allow users to quickly respond to organizational changes, streamline balancing and reconciliation with enhanced reporting capabilities, simplify management of fixed assets, and leverage enhancements to the
cash basis accounting functionality.
