Budget vs. Accounting — How to Reconcile

Cash Basis vs. Accrual Basis — What Is the Difference?

The heart of the problem is that the budget system and the accounting system use different recognition bases.

• Budgeting uses the cash basis — expenditure is recognised when cash is actually paid out, regardless of whether the goods or services have already been received.
• Accounting uses the accrual basis — transactions are recognised when they occur or when an obligation arises, regardless of whether payment has been made.

Thailand's Public Sector Accounting Standard No. 1, Presentation of Financial Statements (developed in line with IPSAS 1) defines the accrual basis explicitly as the basis of accounting under which transactions and events are recognised when they occur, not when cash or cash equivalents are received or paid. The items recognised under this basis are assets, liabilities, net assets/equity, revenue and expenses.

This difference is not merely theoretical — it reaches all the way down to daily operations:

Dimension	Budget system (cash basis)	Accounting system (accrual basis)
When the number moves	When cash leaves the organisation	On goods receipt / when the obligation arises
Question it answers	How much has been disbursed, how much budget remains	What expenses and liabilities belong to this period
Time frame	Fiscal year (1 Oct – 30 Sep in Thailand)	Accounting period / reporting period
Source document	Disbursement request, payment voucher	Goods receipt note, AP invoice
Primary report users	Executives, parent agency, Bureau of the Budget	Auditors, State Audit Office, financial reporting team
Year-end obligation	File the carry-over request in time	Accrue every outstanding expense in full

A concrete example: suppose an organisation orders goods worth THB 1,000,000, accepts delivery in September, but pays in October.

• Budget side (cash basis): the expenditure is recorded in October, the month cash was actually paid — which already falls in the next fiscal year.
• Accounting side (accrual basis): the expense is recorded in September, the month the goods were received and the liability arose.

The same transaction, the same set of documents, but landing in different months and different fiscal years. That THB 1,000,000 gap will appear in both reports — and both figures are correct.

Thailand's Fiscal Year Widens the Gap

The Thai public sector fiscal year runs from 1 October to 30 September, which does not align with the calendar year. As a result, every year-end transition leaves a stack of documents "received this year, paid next year", and the volume peaks in August and September.

The governing rule is the Ministry of Finance Regulation on Withdrawal of Funds from the Treasury, Receipt, Payment, Custody of Funds and Remittance to the Treasury, B.E. 2562 (2019), which sets out the carry-over conditions as follows:

• Clause 105 — a state agency that has entered into an obligation before the end of the fiscal year, for an amount of THB 100,000 or more (or as prescribed by the Ministry of Finance), and cannot draw the funds to settle that obligation before the fiscal year ends, may request to carry the funds over for no more than six months into the following fiscal year. If disbursement is still required after that, the agency must reach an agreement with the Ministry of Finance to extend by no more than a further six months.
• Clause 106 — the carry-over request must be filed before the end of the fiscal year, following the procedure prescribed by the Ministry of Finance.

Five States of Budget Money — Where Most Confusion Starts

When someone says "there is still budget left", the right follow-up question is left in what sense? A single appropriation travels through several states before cash actually leaves the organisation, and each state affects the accounting side differently. This is the number one reason the two reports appear to contradict each other.

State	Occurs when	Budget side	Accounting side
Reserved	Approved, no action taken yet	Amount set aside, not yet drawn	Nothing recorded yet
Committed	Purchase order issued / contract signed	Amount tied to a counterparty	No expense recognised yet (goods not received)
Accrued / payable	Goods received and invoice submitted	Not drawn down until cash is paid	Expense and liability recognised ← the gap appears here
Paid	Cash paid to the creditor	Drawn down in full	Liability cleared, cash/bank decreases
Available	—	Balance after deducting all states above	No direct accounting meaning

Problems That Arise When Using Different Bases

When the budget and accounting systems use different bases with no clear bridge between them, these symptoms follow:

• Expense figures do not match — budget expenditure for a given month differs from accounting expenses, making month-on-month performance comparison impossible.
• Reports contradict each other in the same meeting — the budget team reports remaining appropriation while the accounting team reports a large accrued liability already waiting. Both are right, but the executive walks away with two different conclusions.
• Poor spending decisions — seeing an "available" figure and approving a new project, when that amount is in fact committed to a contract whose goods have not yet been received.
• Fiscal year cutoff problems — year-end transactions paid early in the new year make annual closing complex and slow.
• Audit observations on the financial statements — incomplete accruals understate both expenses and liabilities for the period, which auditors detect without much difficulty.
• Everything piles up at closing — without monthly reconciliation, differences accumulate all year and get chased down at once, a classic cause of missing the financial close deadline.

How to Reconcile Budget and Accounting

Reconciliation rests on one principle: take cash-basis expenditure and adjust it with the differing items to arrive at accrual-basis expenses, using the formula:

Accrual-basis expenses = Cash-basis expenditure ± Adjusting items

The main adjusting items, with the documents that substantiate each figure:

• (+) Accrued expenses at period end — received but unpaid at the close of the period · substantiated by goods receipt notes and AP invoices with no payment voucher yet
• (−) Accrued expenses at period start — prior-period accruals settled in the current period · substantiated by the opening accounts payable register
• (+) Prepaid expenses at period start — paid in a prior period but recognised as expense in the current one · substantiated by the prepaid amortisation schedule
• (−) Prepaid expenses at period end — paid this period but not recognised as expense until the next · substantiated by service and insurance contracts spanning periods
• (−) Unsettled cash advances — the budget has been drawn in full but actual expenses are not yet known · substantiated by the advance receivable register

Sample reconciliation table (illustrative figures, shown to demonstrate the method):

Item	Amount (THB)	Where the figure comes from
Cash-basis expenditure (budget)	5,000,000	Disbursement performance report
(+) Accrued expenses at period end	800,000	Goods receipts not yet paid
(−) Accrued expenses at period start	(500,000)	Opening AP register
(+) Prepaid expenses at period start	200,000	Prepaid amortisation schedule
(−) Prepaid expenses at period end	(300,000)	Contracts spanning periods
Accrual-basis expenses (accounting)	5,200,000	Statement of financial performance

The goal of this table is not to make the two sides "equal", but to make that THB 200,000 difference explainable line by line and traceable back to source documents. Any line that cannot be explained is precisely the item to chase down before closing the period.

A Reconciliation Calendar — What to Do and When

Organisations that reconcile smoothly are not more talented than the rest; they simply do it more often. Chasing twelve months of differences at year-end is always the most expensive approach. The schedule below works in practice for government agencies and state enterprises.

Frequency	What to do	What it catches
Weekly	Review goods receipts not yet turned into AP invoices	Expenses about to fall out of the period
Monthly	Prepare the cash-to-accrual reconciliation table	Unexplained differences, while documents are still findable
Monthly	Reconcile the remaining balance across all five states	Commitments that have been open abnormally long
Quarterly	Review unsettled cash advances	Budget already drawn with actual expenses still unknown
Jul–Sep	Close out commitments and prepare carry-over requests	Items that will miss disbursement — must be known before 30 Sep
Fiscal year end	Record all accruals in full and close every module period	Understated expenses and liabilities

Four Reasons Reconciliation Never Quite Balances

On the ground, unexplained differences usually trace back to the same handful of causes.

• 1. Reconciling in Excel, outside the system — files get copied into many generations, formulas are edited without anyone noticing, and there is no way to trace a figure back to a specific document. This is the same failure pattern seen when Excel becomes the organisation's core system.
• 2. The chart of accounts is not linked to the budget structure — when account codes and budget codes are not designed to map to each other from the start, reconciliation becomes a manual code-translation exercise every month. See more on setting up a chart of accounts for easy closing.
• 3. Goods receipt documents enter the system later than reality — the goods have arrived at the warehouse but the receipt note is still in a folder, so accruals are incomplete. This junction is the core of recording accounting entries from goods receipt.
• 4. Cash advances left unsettled — the budget is drawn in full on the day the advance agreement is signed, but actual expenses are only known once the advance is settled. The longer it sits, the wider the gap grows.

How Saeree ERP Manages Budget and Accounting

The idea behind the Budget module (BG) in Saeree ERP is to make budget and accounting run off the same set of documents, instead of two systems that have to be compared after the fact.

Commit the appropriation at the source, not at period close

BG-01 sets the annual budget plan broken down by programme, output, activity and expenditure category. The system checks the available appropriation automatically on every disbursement request and raises an alert when the budget is nearly exhausted or exceeded — preventing budget overruns at the point where they can still be corrected, rather than after the money is gone.

Multiple funding sources in one system

Public sector agencies typically run several funding sources at once — appropriated budget, own revenue and subsidies. The system supports planning and tracking separately by funding source, and on the accounting side it produces a trial balance by funding source and a statement of financial performance by funding source/budget. That makes it possible to reconcile one funding source at a time instead of seeing only a single combined total.

Transfers and reservations, with an audit trail

BG-02 handles budget transfers and revisions between programmes and activities, recording the history every time. BG-03 reserves appropriation in advance. Together they ensure that the "available" figure an executive sees is a figure that has already had reserved amounts deducted from it.

One document trail, both bases covered

The document flow is designed so that the recognition moments for both sides occur naturally in sequence — goods receipt at IM-01 feeds the AP invoice at AP-01, which posts accounting entries automatically and links to the budget system, and payment then follows at FI-03. The result is that the accrued expense appears in the books on the goods receipt date without the accounting team re-keying anything, while the budget is drawn down when cash actually leaves.

Cash advances you can actually track

LN-01 creates the advance agreement from the approval document and draws the budget in full. When the advance is settled at LN-02 and the supporting vouchers are received at FI-01, the system clears the advance receivable and posts the actual expenses, backed by an advance receivable register that can be reviewed each quarter.

Conclusion

A gap between the budget report and the accounting report is normal and correct, because the two systems recognise transactions on different bases for different purposes. What separates organisations that control their numbers from organisations that chase them is therefore not an attempt to make both sides equal, but the ability to explain every baht of the difference and trace every line back to a source document.

Signs the process is healthy	Signs it needs urgent review
Reconciled every month, with a named owner	Reconciled once a year at closing
Reserved / committed / accrued reported separately	Reports show only "spent" and "remaining"
Every difference points back to a document number	There is an "other differences" line nobody can explain
Carry-over amounts are known by August	Missed disbursements are discovered after 30 September
Budget and accounting teams read the same data	Each team keeps its own Excel file

"The goal of reconciliation is not to make two numbers equal. It is to make sure every baht of the difference has a name, a document, and someone who can explain it."

- Sureeraya Limpaibul, Managing Director, Grand Linux Solution Co., Ltd.

If your organisation is struggling with budget and accounting reports that do not agree, and you want a process that stays traceable end to end, contact our team for a consultation and a walkthrough of how the system works in practice.

References

1. The Comptroller General's Department. "Thai Public Sector Accounting Standard No. 1: Presentation of Financial Statements" (developed in line with IPSAS 1). https://www.cgd.go.th
2. Ministry of Finance Regulation on Withdrawal of Funds from the Treasury, Receipt, Payment, Custody of Funds and Remittance to the Treasury, B.E. 2562 (2019), Clauses 105–106 on carrying funds over to the following fiscal year. Government Gazette, Vol. 136, Special Part 120 Ngor, 13 May 2019.
3. Ministry of Finance Regulation on Withdrawal of Funds from the Treasury (No. 2), B.E. 2563 (2020). Government Gazette, Vol. 137, Special Part 272 Ngor, 18 November 2020.
4. Budgetary Procedures Act, B.E. 2561 (2018). Government Gazette, Vol. 135, Part 92 Kor, 11 November 2018. https://www.bb.go.th
5. State Fiscal and Financial Discipline Act, B.E. 2561 (2018).