The various financial reforms have been executed since the 1980s in order to enhance the transparency and accountability of governmental operations. Transition to the accrual basis in government accounting (one of these financial management reforms) changes the relationship of budgeting and accounting as well as the functioning of governmental accounting itself.
Under the current government accounting in Korea which adopts the single entry book-keeping, assets and liabilities of governmental unit are not fully recognized and performance valuation information for governmental activity is not disclosed. Besides the current budgetary accounting of local governments has several limits and constraints in explaining comprehensively the financial position and operational performance because budget classification codes are not based on the characteristics of governmental transactions.
That is the reason why the local governmental accounting system should be converted from the single entry book-keeping system to the double entry book-keeping system. In addition, the local governmental accounting system ought to be improved to enhance efficiency, public accountability and clarity of local governmental activity.
This study gropes for the linkage of budgeting and accounting by combining budget information with settlement of account, and suggests a method for operation of information system congruent with the accrual and double-entry accounting.
When element and change management, performance management, incident management, security management, backup management, user management, and information & communication division management as specified in this study are efficiently performed, the accrual and double-entry accounting system can be successfully operated in local governments.