The Public Accounting System in Romania

Transcription

1 THE PUBLIC ALIMONIES ACCOUNTING SYSTEM IN ROMANIA FROM CASH TO THE ACCRUAL ACCOUNTING Ph.D Lecturer Cenar Iuliana, 1 Decembrie 1918 University of Alba Iulia, România It is known that the fundamental object of the accounting is the one to reflect the real financial position, of the financial performance and of the cash flows. The paper THE PUBLIC ALIMONIES ACCOUNTING SYSTEM IN ROMANIA FROM CASH TO THE ACCRUAL ACCOUNTING is proposing to point out the measure in which the changes produced at the level of the public system alimonies from Romania once with the time passed from the accounting based on cash to the engagements accounting in the public system, contributes to the achievement of this. Also the paper tries to realize a position of the public system of alimonies on the scale of the possible correlations between the cash budget, the engagements accounting and the cash accounting/ engagements and to express a point of view in which they are and which they should be seen the notions known syntagms such as: the engagement, eligible passives on long term, the obligations recognition, the connection of the expenses to the incomes. In the informational society in which the high qualitative level is accentuated for the accounting information given to the users, the improving of the transparency accounting operational accounts in the public sector be compensated the perception of the public sector as a mechanism which controls the decisions taken by the responsible factors in such a way that those should maximize the interest and the confidence of the general public. It seems that the fight for the perfection of the accounting system is not closed. The public system of alimonies represents a field of the social life present in the each life of a person as well as in the active life and in the period in which certain social contingents (the illness, the oldness, the sustainer decease) make impossible the gain of the existential resources through work. The force of survival and the vitality of any system depend in a big way by a series of factors between which we find: - the capacity to identify the dysfunctions that exists at the level of the systems sub ensembles and through reporting it to the macroeconomic and social context in which is functioning; - the possibility to get out the deficiencies that generates perturbations in the system work;

2 - the structural adaptation to the requests that are growing in the environment, where the competitiveness and the social progress are necessary and where the insurance of a decent life including the person that does not have the capacity to work anymore, are so much an exigency of the social, that so much of the economic order. The accounting is the main instrument used to respond to the action of different factors of perturbation. Through the power of information of this is created a superior fundament for the modeling of the actions ways that make possible the settlement of an equilibrated report between the intersystem components and dismissing of the information requests that came from the external environment. It is known that at the level of the public institutions a significant part of the accounting is build around the budget. It becomes in this way necessary to the analyze of the informational power of the accounting by correlation with budgetary information. The communication in a financial accounting language is a necessity for the survival and viability of any activity field, and the frequent succession of the accounting transformations and of the opinion on the budget, and also to the special development of those in the last time bring in first plan of the accounting scene the double relations between the accounting cash/engagements and the budget cash/engagements. In nowadays society the public accounting and the finances interfere more visible and have yet many parts to explore, challenging the two fields to elaborate new theoretical substantiations and new perspectives. In this context we consider that by the investigation of the relation characteristics mentioned earlier it can be identified the manner through which the accounting can reflect the real image of the public system of alimonies in Romania. The standards which regulate the financial-accounting field [Law nr. 82/1991; Law nr. 500/2002) statues the obligation of the entities which administer the public pension system to organize and manage the income and expenditures accounting of the state social assurance budget, the general accounting as well as the accounting for the approved program costs analysis for the obtaining of information regarding the receipt income and paid expenditure, the evolution of the patrimonial financial statement, of patrimonial surplus /deficit, as well as to the opportunity of funding programs. On this basis, the legal framework is made for the complementation of cash accounting with accrual accounting, which supposes the precession of the monetary fluxes by the preliminary finding of patrimonial assets and liabilities. The new face of the accounting is imposed by the socioeconomic conjuncture and present politics. We can consider those legislative intentions to be tried to understand the public sector of as a mechanism which discipline the decision taking by the responsible factors, so all of these to determine the interest maximization and the general public trust.

3 In a traditional way, the public accounting was identified with the budgetary accounting because it was not taken into the calculus those nonbudgetary transactions. More it was applied the base method on the cash, this meaning that the transactions were registered as the received or paid cash. It is obvious that in nowadays the public accounting is conceived as a training process and as an information presentation, those must shown the true value and the real one of the enterprise stocks, of the financial situations, of the patrimonial results, a strict analyze orientated to the budget and being visible unsatisfactory. The base of the compromise between an accounting which indicates the way in which the social insurances authorities of the alimonies are implemented the annual budgets ad the possibility to report in any moment the sums of money expended and the ones collected from the contributions, becomes more and more unstable. The main cause is the debt fact in report with the tax payer in the counter trade of which waits (beyond the income of the decent replacement), clearness, real information s, complete financial accounts and intelligible. Lately one can talk about the harmonization, conformity and accounting convergence. At international level there are preoccupations of public accounting reforming which are focused especially on the changing from the cash based system to the accrual based accounting system, the information accuracy delivered to the users, etc. Also, there are preoccupations regarding the perspective budget changing, which maintains its position of an axes round about the accounting 8. More and more frequently there is spread the idea that through the accrual budgetaccounting it could be obtained the successful solution for the generally public sector performances improvement, implicitly of the pensions system. Cash or accrual accounting is considered two extremes of the accounting and of the financial references, between which can exist numerous combinations. So in 2002, Matheson A. remarks the fact that the engagements extension in the budgetary field is controversial because later to be expressed the opinion 9 according to which the future belongs to the disconnection of the budget from the public accounting, or that it is feasible to be reported in the engagements accounting terms, and the budget to be made based on cash 10. In the opinion of Schick A. the engagements Budgetary changes the budget from the money flows to the incomes obtained and the debts involved. This fact will line up the budget and the financial reference, because the same will be established having the same accounting base. It is about the one of the possible combinations between the budget cash/engagements and the accounting 8 A. Schick, Performance Budgeting and Accrual Budgeting: Decision Rules or Analytic Tools?, Senior Budget Officials, Annual Meeting, Istanbul, Turkey, M.I. Bolos, The budget and the accounting of the local communities, between the present situation and the possibility of modernization, Economica Publishing House, Bucuresti, A. Schick, 2007.

4 cash/engagements, because it is considered like in the budgetary case based on the engagements that the accounting principles will become decision rules in the budget. A rule of decision is that information which dictates the way in which are taken the decisions, being types of decision. We keep for the present context that the budget refers to the provision of the financial resources for different alternative uses while the financial accounting references describe retrospective, the results of the financial transaction organization in terms of financial positions and performance. C. Reichard and H. Bals 11 relives the possibility of integration of the accounting system and of the budget one based on the engagements. So mush the accounting system and the budgetary one must be based on a engagements vase, named also transitory records, mining the present consume and the future one by the resources production. For the modernization of the accounting in the public system of alimonies are necessary some specifications detailed of the accounting needs, which can be obtained through the stocktaking of the users requests, the establishment of the accounting rules and of the real application mode etc. Also is useful a multi-annual dimension for the financial reference of the alimonies programs, made on a compliment for the annual dimension given to the budgetary accounts. Or to say it with Klaus Lüder: No resource accounting without resource budgeting 12. Another international level outlined tendency regards the generational accounting which proposes 13, among other things, the identification of the responsibilities of the actual pensions system against the future generations, the major sacrifices quantification from the future generations for the proposed scopes achievement, the identification of alternative solutions which could produce a generational balance on the same level maintaining of the actual system responsibilities background, the learning of the way in which the attempt of balance maintaining will affect the future generations. At the stated level the accounting of the public alimonies system in Romania is an accounting of engagements. In a certain way what does this mean? a. the month registration of the payment obligation based on the order register (this has benefits under the form of alimonies given to each pensioner 11 C. Reichard, H. Bals, Resource-based Accounting and Output-Budgeting as Common Patterns of Public Sector Financial Management Reforms, International Public Sector Management Symposium, University of Mannheim, K. Lüder, Developments in Public Sector Accounting, Speyer Arbeitshefte 125, Speyer G. Abio, Berenguer E., Is the deficit under control? A generational accounting perspective on fiscal policy and labour market in Spain, Investigaciones Economicas, vol. XXVII (2), 2003.

5 identified after the number of the retirement decision and the typological enframe of those) according to the accounting formula Expenses with the alimonies = Pensioners retirement pay debt b. the payment of the retirement pay from the budgetary finance Pensioners retirement pay debt = Finance from the budget of the social state insurances c. the finding of the debts and the recognition of the incomes from the contributions Debts of the social state insurances budget = Incomes from the contributions d. the encash of the budgetary debts: Available of the social insurances budget = Debts of the social state insurances budget Apparent are related the attributes of the engagements accounting. Which is the reality? - the recognition of the obligations to the pensioners is not translated in relevance less than in the engagements accounting. The temporal superpose of two events (the recognition of the expenses and the payment of those) it is far from the engagements accounting, representing also the reflection of the transition based on cash, but through the appeal to the accounts through which is reflected the payment obligation; - the expenses regarding the past obligation are recognized in present aspect which infringes to the legal request of the registration of those in the period in which is made the reference. The alimonies expenses, according to the engagements accounting must be recognized in the moment of employment, so in the one of the creation of the payment obligation, those are registered for an obligation that already exists, which is not reflected in the initial patrimonial situation; - it is found the leak of information s regarding the long term debts, which generates the negative effects on the possibility to honor in future the engagements of the ex tax payers and the corrective measures taken in time. Also, the financial sustainers (the tax payers) does not dispose of informational elements for the anticipation of the future effort dimensions necessary to maintain the public regime

6 on the head above the water, vital, because the minimum level of subsidence must remain the public authorities resort; - the contain of the principle connection of the incomes expenses (recognized explicitly by the Romanian accounting norms, but operable in the practical activity) is deformed because the correspondences are established between the expenses related to the actual pensioners and the incomes come from the active participants on the labor market. Is seems that the struggle for the accounting system improvement is not finished yet 14, that the public sector, after it acquired in the acceptance of the accrual based accounting model, have to defeat also the struggle of the accrual perception in its real sense, so the users information to be the right one. The accrual is the promise, the pledge to realize something (DEX). The engagement describes 15 the concept known as the accounting exercise, which assumes that an income/expense is not registered (recognized) in the same time with the inflow/outflow of cash. Therefore, it becomes more and more obvious the paradox of the presence and explication of the notion at conceptual level and of its un-transposes in the accounting practice. But the accrual notion has many times vague contents, but, we think, not impossible to operate. From this observation starting form a possible part of the engagements accounting in the public alimonies system there must be taking into account the next aspects: - the accounting record of the payment obligation existent in reality, which to report to the active generation; - the remake of the polices that must be paid the actual pensioners; - the synchronization and the expenses relation of the social insurances with the incomes and reported to the initial moment of the engagement; - the influence consideration of identification of the alimonies after making the payment minimum stage; - the identification moment of the retirement with the general separation point, the handing over of the relay racer from the payers generation to the one of the pensioners; - the diminution of the expenses and of the obligations anticipated in the unrealized hypothesis of the conditions for the alimony receive. We consider that the to put a theory in practice of the real meaning given to by the theory to the budget notions and to the engagements accounting can adjust the last one to maintain the quality of real informational source, right, complete and with a predictable role. 14 M.I. Bolos, The budget and the accounting of the local communities, between the present situation and the possibility of modernization, Economica Publishing House, Bucuresti,

7 We consider that the aspects to which we refer previous have received the making of some conclusions and of some action directions for the alimonies system, including the sustenance for the accounting in order to make it real, so: - the existence of an inferior amount of the contribution in report with the providing (sub finance the alimonies); - the recognition of an obligation and of an explicit engagement with a contributive share to the future flows prediction of payments; - the necessity to equalize the retirement age for the women and men in order to equalize the contributive report; - the sub making of the redistributive composition with a speculative regime of contributions. This can bring the person in the fact to finance himself its own retirement, in the same time with the state support to accomplish the redistributive works. The effective writing of the previous idea is possible, because the payment of the contribution involves the lend of the own account, in the same time with the used of a part of the enchased sums by the Government in order to cover the redistributive benefits; So a real accounting of engagements offers the relevant information s for the decisions orientated to efficiency. The setting up in the same equation of the accrual budget and accrual accounting will not automate define a new paradigm, but could bring new theoretical and methodological contributions for the analysis of the rapports between accounting and reality, and, why not, between these and the individual to whom it could significantly contribute. The accounting disposes of the capacity of informational caption and spreading, it permits the temporal obstacles compression and the reflection upon some possible future scenery 16. One can say that the decisions create the resources, but on the basis of the decisions is information, and the accounting represents their provided privileged source. In order to generate the performance in the work of the public service named insurances of accounting alimonies, must detach from the inherent troubles that he develops and to prove the most frequent exponent of the real image of the reality. An accounting system can be programmed and developed by skillful technicians, but will not have success without a long and intense communication effort, more and more communication 17. Conclusions The accounting reform within the public pension system is complex and difficult, it is not made from a pencil s trace, but represents a long process whose 16 I. Cenar, The Insurance Accounting of the Alimonies System of Romania, Casa Cărţii de Stiinţă Publishing House, Cluj Napoca, M. Schreyer, Accrual accounting in the public sector - progress and achievements, European Commission, Brussels, Charlemagne Building, 2004.

8 projection needs fine accords until it have to function performing, but to be declared partisan of the progress, you have to accept its constraints. The analysis of the reforming process belonging to the normalization organism together with its practical transpose at the level of the public alimonies accounting system in Romania could be synthesize as: the lamentation in compromise short term solutions, the existence of some cash accounting reminiscence (as regards the pension payments), the a-temporality between income and expenditure, the impossibility of knowing through the accounting of the real situation of the public pension system / the technical solutions does not stipulate the taking of the existent pension fund obligation, thus the patrimonial result is over-estimated. On the other side of this fact the accounting of ht public system of alimonies must be appreciated as a real instrument of management and for an efficient budgetary, based on engagements. Also is retold the necessity to create the possibility to interpret in a real way the information s given by the accounting through financial situations to the different users categories in which are found the future pensioners, amounted to the financiers of the public system of alimonies. Normal, behind the missing issues, there are also benefit successions, among which we highlight the most important one: after many more minor attempts of re-launching of budgetary accounting, it represents a far-reaching movement for getting rid of the public accounting by the past difficult inheritance 18. The provision of the demographic evolutions, of future deficits of the pension budgets will have a major role in the founding of an accounting model in accordance with the public pension system, but 19 the human mind have to device with discernment the one which is essential by the one which is accidentally, the one which is durable by the one which is ephemera, building future possible alternatives. The capitalization at a higher level of the information generated by the two knowledge fields based on the competence-information relation, being in a privileged position and concomitantly responsible for the obtaining and using of public finance resources becomes necessary. It is essential that those who handle the accounting instruments to be aware of their managing power and concomitantly dispose to capitalize efficiently the information offered by the one of the most ingenious creations of the human spirit. 18 I. Cenar, The insurance accounting of the alimonies system of Romania, Casa Cărţii de Ştiinţă Publishing House, Cluj Napoca, G. Alecu, The actual stage of the public accounting on the transition way to the engagements accounting (obligations and right accrual), The periodical of public and accounting finances, nr. 7-8/2005.

9 References: Abio G., Berenguer E., Is the deficit under control? A generational accounting perspective on fiscal policy and labour market in Spain, Investigaciones Economicas, vol. XXVII (2), Alecu G., The actual stage of the public accounting on the transition way to the engagements accounting (obligations and right accrual), The periodical of public and accounting finances, nr. 7-8/2005. Bergmann A., Accrual Budgeting Lessons learned from the harmonised accounting model (HAM) in the light of IPSAS, EGPA 2004 Annual Conference, Ljubljana, Slovenia, Bolos I.M., The budget and the accounting of the local communities, between the present situation and the possibility of modernization, Economica Publishing House, Bucuresti, Cenar I., The Public Institutions Accounting, Casa Cărţii de Ştiinţă Publishing House, Cluj-Napoca, Cenar I., The Insurance Accounting of the Alimonies System of Romania, Casa Cartii de Stiinta Publishing House, Cluj-Napoca, Lüder K., Developments in Public Sector Accounting, Speyer Arbeitshefte 125, Speyer Reichard C., Bals H., Resource-based Accounting and Output-Budgeting as Common Patterns of Public Sector Financial Management Reforms, paper for International Public Sector Management Symposium, University of Mannheim, Schreyer M., Accrual accounting in the public sector-progress and achievements, European Commission, Brussels, Charlemagne Building, Schick A., Performance Budgeting and Accrual Budgeting: Decision Rules or Analytic Tools?, Senior Budget Officials, Annual Meeting, Istanbul, Turkey, The accounting law nr. 82/1991, republished, Official Monitor nr. 48 from The public finances law nr. 500 /2002, Official Monitor nr. 597 from The order of the Public finances Ministry 1917 from for the approval of the Methodological norms regarding the organization and the management of the accounting of the public institutions patrimony, of the accounts plan for the public institutions and the monograph regarding the registration in accounting of the main operations, Official Monitor nr bis from