The government is to introduce accrual accounting in all its departments, enabling it to get a clear and accurate snapshot of public finances.

An €11 million contract has been awarded to Grant Thornton that will start an 18-month pilot project with a number of departments.

The aim is to roll out the system across all departments within 30 months.

Finance Minister Edward Scicluna described this as a "red letter day" for the ministry.

"I recall past finance ministers such as John Dalli and Tonio Fenech harping on the importance of accrual accounting and after many years it is now becoming a reality," Prof. Scicluna said.

The new system will provide standardised reporting of public finance data.

Accrual based accounting records all expenditure the minute it is committed, giving a clearer picture of the state of public finances at all times.

Under the current cash flow system, expenditure is only recorded when payment is issued.

In the past, this system allowed finance ministers to postpone certain payments so as not to negatively impact the annual deficit.

Under accrual-based reporting, dabbling with figures cannot happen.