Different accounting systems used, says Najib

NST Online

KUALA LUMPUR: The government does not understand that there is a difference between the accounting systems used by the public and private sectors.

Datuk Seri Najib Razak said the claim by Finance Minister Lim Guan Eng that the former administration had recorded RM14.56 billion in unrefunded taxes as revenue, ultimately resulting in a shortfall in money for the Tax Refunds Trust Fund, had caused confusion.

The former prime minister said Lim did not understand that the public sector utilises the modified cash accounting and not the accruals accounting standard used by the private sector.

“It looks like our finance minister does not understand that the government uses the modified cash accounting method and not the accruals accounting standard practised by the private sector,” he said in a Facebook posting.

Together with the posting was a English newspaper clipping, dated Aug 31, headlined “RM14.56 bilion in unrefunded taxes falsely stated as revenue”.

In his posting, Najib said under the government’s administration, for cash accounting standards, all financial transactions were calculated and recorded when there was an entry or withdrawal of cash for the financial period under review.

“Under this standard, assets are not capitalised and liabilities are not reported in the financial statements.

“This is why Lim had come to a wrongful conclusion that Barisan Nasional had misreported the tax, which had yet to be returned as an income and accused the party of falsifying the accounts,” said Najib.

He stressed that confusion over the decimal point and the misunderstanding between the accounting systems, as well as the accruals accounting standard, was an easy mistake, commonly made by anyone.

Najib added that under the civil service transformation initiative during his administration, the government had been moving towards an accruals accounting standard. © New Straits Times Press (M) Bhd