This paper discusses the specific features and perspectives of Croatian governmental accounting and budgetary system reform in the light of international public sector accounting harmonisation processes. The motivation for this paper emerges from international trends of encouraging accruals in governmental accounting and budgeting, dilemmas regarding IPSAS appliance and their further development, the idea of introducing harmonized accounting standards for the public sector in the EU - EPSAS, Croatia’s accession to the EU, and major challenges regarding the adoption and appliance of EU regulations into Croatian legal and economic system. The purpose of this paper is to reflect on recent governmental accounting and budgeting developments and to specify eligible tendencies for further public sector financial management and governmental accounting and budgetary system reform in Croatia. The paper indicates that Croatian governmental accounting system has gone through intense development process of implementing modified accruals as a gradual transition from cash basis to full accruals appliance as the ultimate goal of the governmental accounting reform. Further public sector accounting system development in Croatia is driven by the fact that Croatian Budget Act spells out and fosters future accruals and IPSAS appliance in Croatian governmental accounting system and by the contexts of Croatia’s entry into the EU, having in mind the EU strategy with respect to IPSAS as a ‘suitable starting point’ for future EPSAS and the necessity for harmonised public sector budgeting and accounting systems in the EU.