RELATIONSHIP BETWEEN STATE BUDGET LAW AND PUBLIC SECTOR ACCOUNTING: CHALLENGES AND OPTIMAL SOLUTIONS IN THE CURRENT TWO-LEVEL GOVERNMENT MODEL IN VIETNAM

Abstract

This article analyzes the relationship between the State Budget Law (SBL) and Public Sector Accounting (PSA) within Vietnam’s two-tier government model. The biggest challenge is the lack of synchronization between the modified cash basis (of the SBL) and the orientation toward applying accrual accounting (of PSA). This disparity hinders the consolidation of financial statements from the district level up to the provincial level and reduces the ability to assess the effectiveness of State Budget utilization based on allocation objectives.

To optimize the system, the article proposes three core solutions: 1) Harmonizing the legal framework and the transaction coding system to ensure data synchronization. 2) Promoting accrual accounting and management accounting to gain a complete cost picture and support performance-based budgeting. 3) Improving information technology and training human resources to enhance the accuracy and accountability of the entire public financial system. This synchronization is essential for increasing the transparency and efficiency of State Budget management.