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Accrual Accounting - a UAE programme that ensures Federal accounting effectiveness

The Federal Government Programme to adopt accrual accounting improves financial planning effectiveness and ensures the implementation of the UAE Federal accounting according to the best international practices

The Ministry of Finance (MoF) has launched a comprehensive and integrated programme aimed at moving the Federal Government away from the use of an accounting framework based on a modified cash basis, and onto an accrual accounting framework. This new approach represents a milestone in the history of the UAE Federal Government, as it enables MoF to achieve its strategic objectives, particularly the optimisation of financial planning and the implementation of the Federal Budget in accordance with the best international practices.

This strategic programme is part of MoF’s directives to manage and develop the financial resources of the Federal Government efficiently and innovatively, in accordance with the world’s best practices. This will make MoF one of the leading ministries regionally and globally in the management of public financial affairs, and in compliance with International Monetary Fund (IMF) requirements and international competitiveness standards.

Conversion project at the Ministry of Finance

MoF has set the federal standards on the accrual basis of accounting, which were approved by the UAE Cabinet by virtue of Resolution No (2/2) of 2017. As a first step, the public financial management sector launched a pilot project for the accrual basis of accounting on the activities of MoF. After evaluating the results, the programme is currently being applied in all ministries and federal entities.

The accrual basis accounting programme is based on Article (29) of Federal Decree Law No 8 of 2011, which states that: “All revenues and expenses resulting from actions taken during the fiscal year shall be recorded in the accounts of the fiscal year, based on the accrual of right or debt and regardless of the date when the revenue is actually collected or the expenses paid. This shall be applied in a phased manner, in accordance with the instructions issued by the minister,” which indicates the gradual transition to the implementation of the accrual basis of accounting.


Benefits of accrual basis of accounting​

The implementation of the accrual basis of accounting system offers many advantages, the most important of which are:

  • Performance

    Improving government performance assessment in terms of achievements and the cost and effectiveness and of the services provided.

  • Rationalisation

    Providing a clearer understanding of the government success in managing its resources and rationalising its expenditures.

  • Analysis

    Providing a picture of financial statements for a number of years, allowing comparison and analysis processes over the years.

  • Resources

    Providing a better, more effective comparison among the different resource usage options.

  • Cash flow

    Assisting in assessing the performance of Federal Government ministries and entities in terms of their financial position and cash flows.

  • Cost

    Determining the total cost of government services and facilitating the comparison process with the cost of the private and voluntary sectors services.

  • Accuracy

    Enhancing the capacity of providinmog more accurate and integrated accounting records.


Stages of the federal government transition programme on the accrual basis of accounting

Based on Cabinet Resolution No (35/3/6) of 2013 on the transition of the federal government from the cash basis of accounting to the accrual basis of accounting, the Ministry of Finance has sought to implement the federal government transition programme on the accrual basis of accounting which consists of three phases, the first of which began in 2015, with the final phase expected to be complete by 2020, when the programme will be officially launched.



Legislative phase 2015

Studying the current legislation, fees and laws and their suitability to the accrual basis of accounting, identifying the gaps and re-issuing the laws and regulations according to the best international practices and in accordance with the accrual basis. The most important outputs of the legislative phase that were approved by the Cabinet by Resolution No (2/2) of 2017 on 5/2/2017 are:

  • UAE Accounting Standards Guide on Accrual Basis.
  • Accounting Policies and Procedures Manual on Accrual Basis.



Executive phase 2017+

The implementation phase of sub-projects such as the preparation of the fixed assets record, evaluation and training of federal staff, the transition of income, obligations and expenses balances and the preparation of financial statements among others.



Launch phase by the end of 2020

Activation of the accrual basis of accounting within the Federal Government and provision of the necessary support for all ministries and federal entities.


Transforming the Federal Government with the accrual basis of accounting

The implementation of the Federal Government transition project on the accrual basis of accounting is based on the following three axes


Project Management

The management of the project is considered one of the most important pillars of its success. A detailed work plan has been developed to manage the pilot transition, which clarifies the transformation activities, tasks and duties of the team, determines the responsibilities and ensures the follow-up of the transition by the competent entities.

Implementation of accounting standards and follow-up

The proper application of accounting standards and financial procedures, which primarily replicate international public sector accounting standards, is of paramount importance as the success of project implementation is measured. The ongoing review of updated standards positions MoF at the forefront of technical developments in this field.

Theoretical and practical training

Continuous training and knowledge transfer during the change phase is the essential foundation to ensuring the performance development of employees. A comprehensive awareness-raising and training programme will be implemented for all employees concerned with the transition of the Federal Government to the accrual basis of accounting, with a view to achieving a smooth and successful transition for federal entities.

Current work process in the application of accounting standards project and the
policies and procedures manual on the accrual basis in MoF

  • Preparing and adopting the manual related to inventory checking and assessing fixed assets in federal entities.

  • Inventory checking of fixed assets in accordance with the approved model stipulated in the manual.

  • Preparing the fixed assets register based on inventory and data, and the calculation of consumption expenditure.

  • Understanding and collecting appropriate information for revenue items transition.

  • Understanding and collecting appropriate information for the expense items transition.

  • Calculating the ministry's commitment in respect of end of service benefits.

  • Reviewing the unified structure of Federal Government accounts.

  • Preparing financial statements and final accounts according to the accrual basis.

  • Preparing a detailed work plan for the transition of ministries and federal entities to the accrual basis of accounting.


The following is expected to be completed in the coming period



Start applying accounting standards, policies and procedures on the accrual basis in the federal government.


Prepare a detailed work plan for other federal entities.


Prepare the financial system to serve the transition on accrual basis so as to be able to record all transactions, balances and closures.

The UAE - the first Arab country to apply the accrual accounting principle

The accrual basis of accounting will be implemented by the end of 2020 in accordance with the approved transition plan. This will make the UAE the first Arab
country to apply the accrual accounting principle. The accrual basis of accounting is a tangible indicator of the UAE government’s position as one of the
world's leading governments in applying the best management methodologies and public accounting standards.

The accrual basis of accounting principle is implemented in the following countries