The current cash-based accounting system in Hungary has limitations in accurately assessing financial situations and costs. Transitioning to accrual-based accounting is recommended by the European Commission and OECD for increased transparency, accountability, and better financial planning. Accrual-based accounting records economic transactions as they occur, addressing asset wear and tear, improving resource allocation, and providing real-time financial information. Implementing new legislation for public sector financial management can lead to long-term good governance and efficient public functions. By changing financial management culture, deficits and national debt can be reduced.