Financial Reporting in The Public Sector in The Republic of Bulgaria under The Conditions of European Harmonization and Global Legitimacy of IPSAS

Abstract

The progress made in the development of accounting theory, as well as the accumulated experience of EU Member States, illustrate the growing advantages of public sector accounting systems based on the accrual principle over cash-based accounting. The adoption and application of accrual-based accounting standards and in accordance with the requirements of the IPSAS poses important questions for accounting harmonization within the Union. The various existing practices in the public sector are considered when choosing an accounting model. A challenge to the European harmonization of accounting systems in the public sector is also the differences between the national modified-cash based accounting systems and the adopted methodological principles of the European System of National and Regional Accounts 2010. The purpose of this article is to enrich and further develop in a theoretical aspect the European debate on the key issues in the public sector, analyzing the modern trends and challenges facing financial reporting in Bulgaria - as a member state of the EU, in conditions of accounting harmonization and growing legitimacy of the IPSAS in a global aspect. The major research method used in the study is the theoretical review of the European and national legislation and the practice in the field of public sector financial reporting. The Conceptual Framework is the starting point of reference for creating a system of pan-European harmonized standards for the public sector in full compliance with accrual-based accounting principles.