What is modified accrual in SAP PSM - Public Sector Management?

SAP Term: modified accrual

• Component: PSM

• Component Name: Public Sector Management

• Description: The modified accrual basis of accounting requires that only financial transactions that are short-term in nature be reported. Examples of modified accrual transactions that are different than full accrual transactions include the following: Long-term assets are shown as capital expenses when incurred. Long-term assets are reported in a different account group, with no depreciation reported. Long-term debt issued is shown as another financial resource, with premium or discount reported as current financial resources. Long-term liabilities are reported in a separate account group, with no premium or discount reported. Investments are not adjusted to reflect market value. Non-current revenues and expenses are not included in the calculation of net income and are not carried forward into the fund balance.

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• Key Concepts: 
  Modified accrual is an accounting method used in the public sector to record and report financial transactions. It is based on the accrual basis of accounting, but with some modifications to better reflect the nature of government operations. In modified accrual, revenues are recognized when they become available and measurable, and expenditures are recognized when liabilities are incurred. 
  
  How to use it: 
  In SAP Public Sector Management (PSM), modified accrual is used to record and report financial transactions. The system allows users to enter transactions into the system and generate reports that reflect the modified accrual method. The system also provides tools for analyzing financial data and making decisions based on the data. 
  
  Tips & Tricks: 
  When using modified accrual in SAP PSM, it is important to ensure that all transactions are entered accurately and completely. This will ensure that the reports generated by the system are accurate and reliable. Additionally, it is important to review the reports regularly to ensure that all transactions have been recorded correctly. 
  
  Related Information: 
  For more information on modified accrual in SAP PSM, please refer to the official SAP documentation. Additionally, there are many online resources available that provide detailed information on how to use modified accrual in SAP PSM.