Governmental Accounting Policies and Practices of Thailand

Edit Governmental Accounting Procedures and Policies of Thailand History and Background Formal Governmental accounting in Thailand was established by King Chulalongkorn in 1879, it was not however, until Thailand became a constitutional monarchy in 1932 that we begin to see their current accounting policies to take shape. Powers of Delegation In Thailand all accounting and auditing procedures and policies fall under the jurisdiction of the executive branch, in particular the National Assembly and most importantly the Comptroller Generals Office. National Assembly The National Assembly of Thailand is derived from the English Parliament and performs essentially the same functions. For the purpose of this document however the only function that will be discussed is their role in the budgetary process. Comptroller Generals Department The Comptroller Generals Department plays the central role in all governmental accounting in Thailand. They are responsible for the oversight of: 1) Governmental accounting procedures 2) Budgetary administration 3) Internal auditing 4) Financial policy formulation

Source: Governmental accounting and auditing practices in Thailand (1999) Again since this paper focuses on the Governmental accounting aspect, the internal auditing and financial policy formulation functions of the Comptroller Generals Office will not be discussed, it his however important to note that the Comptroller Generals office takes on the roles of both the (US) General Accounting Office and the (US) Treasury Department. Essentially Thailand duplicated the (US) Treasury Department and the (US) GAO and placed their duties and responsibilities under one organizational name.

Governmental Accounting Procedures Reporting Entity and Administration Thailand has a centralized Government containing two administrative levels, Central and Local. They use only the Central, national, form of government in their accounting and reporting system because, unlike the U.S., Thailand does not have any states, therefore there is no need for state level accounting practices. Revenues and Dispersements Revenues, income taxes and other government cash inflows are collected by the local administrations. All revenues collected by the local administrations are then transferred to one of the 76 provincial treasuries, which in turn hand the collections over to the Comptroller Generals Office.

Dispersments are handled in a more complicated manner. All agencies must have their budgets approved by the National Assembly by the beginning of the fiscal year, October 1, in order to receive any cash dispersement's. To receive money agency's must first advise their parent administration, Comptroller Generals office is Central and provincial Treasury if local, of any expenditure. These expenditures are cross checked by the parent administration against existing documentation and the current approved budget. After these checks have been completed the funds are transferred to the government agency for dispersement. Recording Transactions Thailand uses the Cash based accounting system. Under this system cash receipts and dispersments are recorded in the fiscal year in which they occur. These entries are then manually entered into registers and ledgers. The Thailand government uses budgeting accounting for control, have a national chart of accounts and utilize a single national general fund. Agencies may have additional accounts if established by law. The manual process of these accounting procedures makes for a painstaking slow accounting process; however, by law funds must be spent in the approved year with no carryover of the remaining funds. In light of this regulations were put in place to allow agencies two years to pay off expenditures from an approved funds, however since Thailand uses the cash based system this creates a serious accounting issue. Couple this with the fact that fixed assets and long-term liabilities do not appear in separate funds. Depreciation is not recognized. Cash dispersement to acquire fixed assets or to pay liabilities and interest appear as expenditures in the general fund. Expenditures are not assigned to their particular program or project they are instead recorded in total for the state by the Comptroller Generals office and monies borrowed to subsidize budget deficits are recognized as revenue, make it almost impossible for one to acquire an accurate understanding of cash flows for the current year or any one particular project. Reporting The Comptroller Generals office prepares the national accounting statements, included in which are: 1) Statement of Receipts and Payments 2) Statement of Financial Status 3) Currency Reserve Account 4) Notes on Financial Statement

Source: Governmental accounting and auditing in Thailand (1999)

Budgeting In years past Thailand has used the line item budgeting system, however in the early 1990's they switched over to PPBS. PPBS, Planning- Programming- Budgeting -System, requires the Government, specifically the National Assembly, to: 1) Identify Major Goals 2) Program Objectives 3) Analyze existing and proposed programs costs and benefits 4) Analyze ability to contribute to the achievement of these goals This system also requires an in depth analysis of measurements of productivity and effectiveness. PPBS in Thailand, however, is very limited at best due to their centralized accounting practices, recall that all

projects are recorded in total for the state, so analyzing the effectiveness of an existing program and its cash flows is not a feasible procedure.

References Henry, Laurie J. and Panu Attavitkamtorn,. "Governmental accounting and auditing in Thailand: an overview and some suggestions for improvement ." The International Journal of Accounting 34.3 (1999): 439-454. Blndal, Jn R. and Sang-In Kim. "Budgeting in Thailand." OECD Journal of Budgeting 5.1 (2006): 7-36.