Budget vs. Accounting — How to Reconcile

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

The heart of the issue is that the budget system and accounting system use different recognition bases, as follows:

• Budget uses Cash Basis — Recognizes expenses when cash is actually paid, regardless of whether goods or services have been received
• Accounting uses Accrual Basis — Recognizes expenses when the transaction occurs or an obligation arises, regardless of whether payment has been made

A clear example: Suppose an organization orders goods worth 1,000,000 Baht, receives them in December, but pays in January of the following year.

• Budget perspective (Cash Basis): Records the expense in January because that is when the actual payment was made
• Accounting perspective (Accrual Basis): Records the expense in December because that is when goods were received and the liability was incurred

As you can see, the same transaction is recorded in different months and different fiscal years, causing the figures in both reports to disagree.

Problems That Arise When Using Different Bases

When the budget and accounting systems use different bases, organizations encounter several problems:

• Expense figures don't match — Budget expenses for the same month differ from accounting expenses, making performance comparison difficult
• Conflicting reports — Budget reports may show remaining funds while accounting reports show outstanding payable liabilities
• Cross-year cutoff issues — Transactions occurring at fiscal year-end but paid early in the new year make annual closing complex
• Executive confusion — When viewing reports from different angles, mismatched figures make decision-making difficult and may lead to planning errors

How to Reconcile Budget and Accounting

The basic principle of budget-to-accounting reconciliation is to take cash basis expenses and adjust them with difference items to arrive at accrual basis expenses, using the formula:

Accrual Basis Expenses = Cash Basis Expenses ± Adjustment Items

Key adjustment items to consider:

• (+) Accrued Expenses at Period-End — Items incurred but not yet paid at period-end
• (-) Accrued Expenses at Period-Start — Prior period accruals paid in the current period
• (+) Prepaid Expenses at Period-Start — Items paid in the prior period but recognized as expenses in the current period
• (-) Prepaid Expenses at Period-End — Items paid in the current period but not yet recognized as expenses until the next period

Reconciliation Table Example:

Item	Amount (Baht)
Cash Basis Expenses (Budget)	5,000,000
(+) Accrued Expenses at Period-End	800,000
(-) Accrued Expenses at Period-Start	(500,000)
(+) Prepaid Expenses at Period-Start	200,000
(-) Prepaid Expenses at Period-End	(300,000)
Accrual Basis Expenses (Accounting)	5,200,000

How Saeree ERP Manages Budget and Accounting

Saeree ERP is designed to support both bases in a single system, making reconciliation easy and automatic:

Dual Basis System: Record Once, Automatically Separated

When users record a transaction just once, the system automatically separates the recognition into cash basis (for budgeting) and accrual basis (for accounting) without duplicate entry, reducing workload and the chance of errors.

Automatic Reconciliation Reports

The system can instantly generate reconciliation reports between budget and accounting, clearly displaying every adjustment item. Users no longer need to perform manual reconciliation on Excel.

Real-Time Budget Control

Automatic alerts when budget limits are nearly depleted or exceeded. Multiple warning levels can be configured, such as warning at 80% usage and blocking at 100%, helping prevent overspending.

Multi-Dimensional Budget Support

Saeree ERP supports multi-dimensional budgeting including funding source, work plan, output, activity, and expenditure — fully meeting the budget structure requirements of government agencies and state enterprises.

Cross-Fiscal-Year Budget Cutoff Support

For transactions occurring in one fiscal year but paid in the next, the system automatically handles cutoff and carry-forward, with clear cross-year transaction reporting.

Reconciling budget and accounting is not difficult when you have a system designed to support both bases from the start.

— Saeree ERP Team

Conclusion

It is normal for budget report figures and accounting report figures to differ because the two systems use different recognition bases. What matters is having a clear reconciliation process that can explain every difference and ensure both sets of figures align once adjustments are applied.

Saeree ERP automates this reconciliation process with its Dual Basis system that records once and separates for both bases, along with instant reconciliation reports — significantly reducing the workload for both accounting and budget teams.

If you are interested in using Saeree ERP for efficient budget and accounting management, you can contact our team for more details