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Budgeting for federal insurance and retirement programmes: Cash or Accrual

Author

Listed:
  • Megan Carroll
  • David Torregrosa
  • Sebastien Gay
  • Wendy Kiska
  • Robert Sunshine

Abstract

Federal retirement programmes and some federal insurance programmes have long-term effects on the budget. But the federal budget process typically uses cash-based accounting measures that cover a 10-year period, which may be too short to accurately report those programmes’ net budgetary effects over the long term. In contrast, using accrual accounting for such programmes would accelerate the recognition of long-term costs and would display the expected costs of new commitments when they were incurred and thus were most controllable. However, such estimates are less transparent and verifiable than cash-based estimates, involve more uncertainty, and can complicate budget reporting.

Suggested Citation

  • Megan Carroll & David Torregrosa & Sebastien Gay & Wendy Kiska & Robert Sunshine, 2020. "Budgeting for federal insurance and retirement programmes: Cash or Accrual," OECD Journal on Budgeting, OECD Publishing, vol. 20(2).
    • Handle: RePEc:oec:govkaa:60e41bf0
    DOI: 10.1787/60e41bf0-en
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    More about this item

    Keywords

    accrual budgeting; federal budgeting; federal insurance; federal retirement;
    All these keywords.

    JEL classification:

    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

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