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Revenues and Expenses Following the Principles of Cash Flow (for Legal Persons Governed by Public Law)

Revenue and Expenses Following the Principles of Cash Flow (for Legal Persons Governed by Public Law)

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Persons liable for drawing up of the annual report, who are considered to be specific users of the unified chart of accounts are all indirect spending agencies of the budget. Except for National Health Insurance Institute and National Pension Funds as well as public trust funds established by the municipalities or the state or any other persons, governed by the public law that do not have the status of the direct spending agencies of the budget.

  • Specific spending agencies of the unified chart of accounts  are legal persons governed by the public law as laid down in the Accountancy Act paragraph 4 Article 15. Hence we deal with the indirect spending agencies of the budget except for public trust funds, ZZZS (National Health Insurance Institute) and SPIZ (National Pension Funds) as well as legal persons governed by public law, which are not included amid the direct and indirect spending agencies of the budget of the state or municipalities.
  • Other agencies of the unified chart of accounts are spending agencies of the complete chart of accounts except for legal persons governed by the public law as laid down in the Accountancy Act paragraph 4 Article 15. They are also enumerated in the Order on classifying and measuring revenues and expenses of legal persons governed by public law paragraph 10 Article 16 (Official Gazzette of the RS 54/02). These are all direct spending agencies of the budget as well as public trust funds, ZZZS (National Health Insurance Institute) and SPIZ (National Pension Funds).

In order to compose the statement on records of the Rules on Drawing up Annual Reports for the Budget, Budget Spending Units and other Entities of Public Law Article 21 to Article 25 of the Annex 3/A of the Rules cited (Revenues and expenses following the principles of cash flow), the specified users of the unified chart of accounts in their accounting ledgers have to classify the data on revenues and expenses on the basis of the cash flow at least in that way as they are defined in the form cited.

According to the Order on classifying and measuring revenues and expenses of legal persons governed by the public law (Official Gazzette of the RS 54/02) Article 3, the principle of cash flow is used in making a statement of records and not the principle on the business event occurrence, as cited here:

"Article 3

Revenues and expenses are recognized following the principles of cash flow. According to this principle revenues or expenses are acknowledged when the following conditions are met:

  • the business event resulting in the revenue records or expenses has occurred as well as
  • the money or the equivalent was invoiced or paid

It is deemed that the condition for recognizing of revenues and expenses defined in the second indent of the preceding paragraph is met also if the claims or rather liabilities regarding revenues or expenses are settled in an alternative way and cash flow has not occured.

Notwithstanding the provision in the first indent of the first paragraph of this article, for the amount of the invoiced or rather paid advance payments, regarding revenues or expenses, as well as revenues or expenses are recognized when the amounts are invoiced or paid.

The amounts of revenues and expenses considered are from the time when the business event occurs, which is the basis for its establishement, to the moment when the conditions of the first paragraph of this Article required for their recognition are met, shown as a special accrual position."

By the procedure for record account transfer used for cash flow assessement we post revenues to accounts for recording revenue as well. Expenditures are posted to accounts for recording expenditure.

Required procedures description:

Business Event Content - example Accounting - Example Procedure Usage - General
rent receipt - billed expense occurrence

 D462

K220 regular input of the invoice received and regular posting of invoice received
payment of paybles to supplier

 D220

K110 regular reconciling of bank statements for inflows and outflows 
posting expenditure to accounts for recording

 D402600

K499 the transfer procedure to accounts for recording  (seeTransfer to Accounts for Recording).

year-end

 D499

K402600 for class 4 closing we use the adjusted precedure
000001.gif A special procedure was created to support posting of paid revenue and expenses with the specified budget users - see Transfer to Accounts for Recording.

 



 

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