2.1 Accounting and financial management

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Traditional accounting conventions previously used in government were based on cash and commitment accounting and did not yield all the information needed for asset management purposes.

Accrual accounting, coupled with improved financial management information systems, can provide the comprehensive and timely information that is necessary. These approaches require the maintenance of complete and accurate asset registers, and regular revaluations and appraisals of asset holdings. The true cost of owning and operating assets can then be readily determined.

Financial accounting is not an end in itself, and the managers of assets will require other information to gauge some aspects of asset performance such as functionality and utilisation. There is a close correspondence between financial management and other records associated with asset performance, and managers need to have a good understanding of the fundamental financial management and accounting concepts that apply.