The financial Statements of the European Union

The introduction of accrual based accounting in the public sectors of many jurisdictions throughout the world is a central component of a wide raft of public sector management reforms, whose aim is to enhance efficiency, effectiveness and accountability. The typical measure provided by public sector accounting is the comparison between what a public sector entity said it would spent and what it actually spent. This information is useful, but it says nothing about the quality and quantity of services provided. Consequently, there is a need for additional performance measures as well as a move from stewardship towards accountability (i.e. public sector accounting has to move from cash to accrual). We hypothesize: – the dominance of accrual accounting, supported by cash-based budgetary accounting; – the importance of international harmonization of accounting standards. The paper investigates the integration between cash-based budgetary accounting and accrual accounting and the role of accounting standards, in particular within public sector organizations whose activity largely consist of transferring financial resources, collected especially by taxes, to other organizations which produce services. We adopt a case-study research method investigating the financial statements of the European Union, as a relevant case of adopting an accrual accounting approach.