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A Comprehensive Review of the Financial Reporting System of Higher Education and a Recommendation

Mihály Ormos

Associate Professor, Budapest University of Technology and Economics

Attila Veress
Assistant Professor, Budapest Business School

Published in: Public Finance Quarterly 2012/2 (p. 234-255.)


Summary: The predominantly cash-based accounting and reporting procedures used in higher education institutions in Hungary significantly diverge from the procedures applicable to businesses. On the other hand, in Anglo-Saxon countries and the majority of EU Member States both of these sectors use accrual-based accounting. Using the survey conducted among the financial managers and students in higher education institutions this study seeks to answer the question as to who the real addressees of domestic higher institution reporting are and what their information needs are. This study will prove that accrual-based accounting would better serve the information needs of those concerned. We have worked out a new model, which will allow us to generate a report like the profit and loss statement used in the private sector, through the application of a set of adjustments – determined by us – to the predominantly cash-based accounting records used in higher education institutions.

Keywords: institutions of higher education, public sector, accounting, accrual-based accounting, cash-based accounting

Journal of Economic Literature (JEL) kód: H83


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