The financial statements of the A-sector of central government are prepared in accordance with the International Public Sector Accounting Standards (IPSAS).

The accounts are prepared on an accrual basis. This means that revenue and expenses are recognized when they arise, rather than when cash is received or paid.

This approach provides a clearer picture of the government's financial position, including its assets, liabilities, receivables, obligations, and overall costs.

A budget authorisation is Parliament’s approval to use public funds for specific projects during the financial year.

A budget authorisation sets the maximum amount that may be used for a particular policy area, programme, institution or project.

A government institution may not make payments unless it has a budget authorisation for the expenditure.

Appropriations for institutions and projects are published in a separate appendix to the Budget Bill and with the Budget Act after it has been approved. The information is available on the website of the Ministry of Finance and Economic Affairs.

Government entities operate within the spending authorities approved by Parliament through the national budget.

Under the Public Finance Act, government entities must record their annual operating plans in the government's financial and human resources system. Expenditure that exceeds approved spending authority at year-end affects the entity's spending authority for the following year.

A typical accounting process for a government entity is as follows:

The Financial Statements of the Central Government cover all government activities and are divided into the A, B and C sectors.

The Financial Statements of the Central Government must be published within six months of the end of the financial year.

They include information on:

• Government revenue and expenditure

• Comparisons with the budget and approved spending authorities

• Assets and liabilities

• Consolidated information on government entities

At the same time, Fjársýslan publishes the annual financial statements of individual government entities.

While Fjársýslan oversees consistency in accounting and financial reporting for entities in the A1 and A2 sectors, responsibility for operations, internal control, and financial management remains with the head of the entity or its governing board, as applicable.

Government accounting forms the basis for oversight of how public funds are used.

Parliament, ministries, the National Audit Office, the media, and the public rely on this information to monitor government spending. The National Audit Office audits both the Financial Statements of the Central Government and the annual financial statements of government entities.

Information from the government's accounting systems is also published through the Financial Statements of the Central Government and other public reporting tools.

As a rule, the organisation covers the cost of domestic travel undertaken on its behalf. This includes fares, accommodation and meals.

Payment of domestic travel expenses

The organisation pays travel expenses directly whenever possible

If an employee pays travel expenses themselves, the cost will be reimbursed upon submission of valid invoices or receipts

Reimbursement is subject to the organisation’s rules and procedures

Daily allowances

Daily allowances are generally not paid for domestic travel where the actual travel costs can be paid or reimbursed against invoices.

Please note: The information on this page is provided for guidance only. If there is any discrepancy between the information published here and the information on the Ministry of Finance and Economic Affairs website, the information on the Ministry's website shall prevail.

Submit a Travel Expense Claim

You can be reimbursed for expenses incurred during business travel on behalf of the Icelandic government by submitting a travel expense claim through your organisation's system, such as Orri.

When are you entitled to reimbursement?

You may submit a travel expense claim if:

• the travel was undertaken on behalf of your employer,

• the trip was approved in advance,

• the expenses were work-related.

Which expenses can be reimbursed?

You may be reimbursed for:

• airfare and other transportation fares,

• accommodation,

• local transportation, such as taxis or public transport,

• parking fees and road tolls,

• other necessary travel expenses.

Receipts are usually required for reimbursement.

Daily Allowance

You may be entitled to a daily allowance to cover meals and incidental expenses.

• The amount depends on the destination and the duration of the trip.

• Meals included as part of the travel arrangements, such as hotel breakfast, are normally deducted from the daily allowance in accordance with applicable rules.

Good to know

• Submit your claim as soon as possible after the trip.

• Make sure all information is accurate.

• Follow your organisation's travel expense policies and procedures.

Applicable rules

Travel expense reimbursement is governed by:

• government travel expense regulations,

• applicable collective agreements,

• your organisation's internal procedures.

Please note: The information on this page is provided for guidance only. If there is any discrepancy between the information published here and the information on the Ministry of Finance and Economic Affairs website, the information on the Ministry's website shall prevail.

What happens next?

Once your claim has been submitted:

• it is reviewed by your manager or finance department,

• it is approved if all information is complete and accurate,

• reimbursement is paid in accordance with your organisation's procedures.

A grant is financial support for a project or a specific purpose.

Individuals, businesses, voluntary organisations and institutions can receive grants. Grants do not usually have to be repaid if the grant provider’s conditions are met.

What can you get a grant for?

Grants are awarded for a wide range of projects.

Examples include:

• education and research grants for study, research and scientific projects,

• innovation grants for businesses and entrepreneurs,

• cultural grants for the arts, book publishing and cultural events,

• environmental and climate grants for projects addressing environmental and climate issues.

How do you apply for a grant?

The application process varies depending on the grant.

You will usually need to:

If your application is approved, the grant will be paid in accordance with the grant provider’s decision and the applicable terms and conditions.

Do you need to submit a report?

You will usually need to explain how the grant was used.

This may involve submitting a report on the project’s progress and how the funds were spent.

Where can you find information about grants?

Government grants and funds

The Government of Iceland website provides information on funds and grants administered by ministries. Government of Iceland | Grants and funds

You can find information on:

• grants,

• application deadlines,

• grant conditions,

• grant awards.

Grants and opportunities at Rannís

The Rannís website provides information on public funds and grant programmes.

You can find information on:

• applications,

• grant awards,

• grant recipients,

• funded projects.

Other grant-related matters

• Fitness and commuting allowances are processed through payroll.

• Grants and contributions to staff associations are recorded under account code 51970 with posting code 1.

Policy areas and policy categories are used to classify government activities and budget appropriations. 

Policy Areas 

There are 35 policy areas, based on the United Nations' international classification standard for government expenditure. Each policy area covers related functions and activities within a specific area of government administration. 

Policy Categories 

Policy categories are subdivisions of policy areas. They group together related government functions that share common objectives or characteristics. 

Policy Areas and Fiscal Planning 

The Fiscal Plan sets out projected government appropriations for the next five years, organised by policy area. The annual Budget Bill must align with the objectives set out in the Fiscal Plan. 

Parliament authorises expenditure through the Budget Act and supplementary budgets. These appropriations are allocated across policy areas. Detailed breakdowns by ministry, policy category and budget item are published in supporting budget documents. 

Relationship to Government Entities and Budget Items 

A government entity or budget item may contain more than one budget activity. In such cases, the activities may be assigned to different policy areas and policy categories. 

The Financial Management Authority's dashboards provide managers and directors of government institutions with an overview of operations and performance in one place.The dashboards include information on:

• finance and budgeting

• human resources and payroll

• procurement and contracts

• collections and key operational metrics

Data is presented in a clear and accessible format to support analysis, monitoring and decision-making.

Accessing the Dashboards

The Financial Management Authority's dashboards are available in Power BI to users with the appropriate access permissions.

Open a dashboard in Power BI

Once installed, the app is automatically added to your list of apps.

Within each app, you can access the dashboards and data available to you based on your role and permissions in Orri.

Use dashboards in Microsoft Teams

The dashboards can also be accessed through Microsoft Teams.

Need assistance?

If you need help with access or using the dashboards, contact the Financial Management Authority's specialists.Contact the Financial Management Authority

Spending Authority

Authorization granted by Parliament to incur expenditure through the national budget.

Internal Control

Procedures and controls designed to ensure the proper management of public funds and the reliability of financial information.

Accrual Basis

A method of accounting in which revenue and expenses are recognized when they occur, regardless of when payment is made.

Government Entity

An institution, project, fund, or other unit that forms part of central government.

Financial Statements of the Central Government

The consolidated financial report on central government finances for a completed financial year.

Annual Financial Statements of a Government Entity

The financial statements prepared by an individual government entity.