| China has ceaselessly made systematic reforms towards the goal of establishing a socialist market economy. The reform of financial budget is being perfected progressively. The conversion of governmental function makes good progress. And Chinese government takes precautions against financial risk. On the conditions, existing government accounting in measurement and disclosure appears serious inadaptability. Now government accounting can't reflect the responsibility of government. The information about the performance of government activities can't be disclosed fully in government accounting reports. And accounting information that be offered can't meet the demand of government department and government information users fully. After entering into WTO, China is facing the keen competitions with other countries in the world. We must solve these problems of government accounting as soon as possible. If not, the problems will influence our international competitiveness. So we must reform our government accounting system immediately. This paper analyses the serious problems that Chinese government accounting is facing now. The writer finds that cash basis is the origin of the "recessive debt" which dangerous government seriously. On the cash basis revenues are recognized when cash is received and deposited. Expenses are recorded in the accounting period when bills are paid. So the debt that took place at that time but not been paid at the same time is not recognized as the expenditure and not recorded on accounting report. Then the debt becomes governmental recessive one. At present there are many kinds of recessive debts. For example some recessive debts are caused by the central government long-term treasury bonds or local governments at all levels brings. Others are caused by the shortfall of the National Social Security Fund (NSSF). These recessive debts lead to underestimate expenditures, cause government accounting information distortion, influence government decision and information users' appraisal on the government performance. Recently the phenomenon of "actual deficit, book balance" often takes place in government accounting. After researching, we know this kind of balance is not the true budget balance of government, but the book balance caused by the foundation of cash basis that does not recognize and record those expenditures that should be paid but has not been paid in financial statement. Such balance will influence the authenticity of accounting information seriously, and mislead the arrangement of the budget funds during the year. With the transition of governmental function, government pays close attention to quantity, quality and price of service that is offered for society. Because cash basis neither matches revenue and expenditure nor checks the cost, it can't meet the need of governmental function that takes output and result as orientation.These problems that the government accounting of our country is facing have ever appeared in the history of the western countries. Drive in the reform of management system of financial budget and new public management that taking result as orientation, has raised the tide of government accounting and budget reforming among the western countries. Those countries believe the basic crux that government accounting goes wrong lies in cash basis. The information from cash basis can neither reflect the government financial situation nor meet the demands of new public management system. So they replace cash basis by accrual basis as the foundation of government accounting. New Zealand took the lead in implementing accrual basis so far in an all- round way in governmental accounting since 1992. More than twenty OECD member states such as Australia, Britain, U.S.A, have also carry out accrual basis in government organs of the different levels. The reform practices of these countries prove that accrual basis can solve the limitation of cash basis fundamentally, improve the effective management on resources of the government, and offe...
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