The modified cash basis accounting currently practiced by the Malaysian Government is expected to switch to full

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Question:

The modified cash basis accounting currently practiced by the Malaysian Government is expected to switch to full accrual basis accounting starting in 2018. This transition to the accrual basis will increase the government's credibility because the public in particular and all stakeholders in general will be more confident in the government's ability and accountability government in managing the country's finances.

Required:

a) Discuss the advantages of accrual-based financial reporting compared to cash-based financial reporting so as to increase the confidence of the public and other stakeholders in the country's financial management.

b) The Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities issued by The International Federation of Accountants (IFAC) discusses the users of General Purpose Financial Reports (General Purpose Financial Reports) based on accruals and the information they want. Taking TWO (2) examples of financial report users as discussed in the framework, discuss the information they need for accountability and decision-making purposes.

c) The transition to accrual basis accounting presents challenges including accounting for assets and liabilities. Taking ONE (1) example of an asset and ONE (1) example of a government liability, discuss the challenge.