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In the last decade many countries implemented reforms in public sector accounting i.e. many countries went through process of transition from cash accounting basis to accrual basis. The reason for implementation of accrual accounting basis is fact that just financial statements prepared on accrual basis are important for efficient decision making because provide relevant, comprehensive, reliable, comparable and transparent information on public finance. The mentioned posed an incentive for researching the situation in countries of South-Eastern Europe during their period of transitioning to liberal democracy. This paper focuses on a selected number of SEE countries (Albania, Bosnia and Herzegovina as two entities, Bulgaria, Croatia, Montenegro, North Macedonia, Romania, Serbia and Slovenia), characterized by different accounting and reporting systems and different approaches, as well as the dynamics and results from reforms in accounting and financial reporting. Of the selected countries, four are EU member states while another five are currently negotiating accession. EU Member States should use a common approach to accounting and financial reporting, whereas countries currently negotiating accession do not have that obligation. However, the incentive is to utilize the best EU practices to fulfil criteria set for EU membership and further development of public sector accounting in these countries should be viewed in the context of existing membership or preparation for the EU membership, based on Council Directive 2011/85/EU of 8 November 2011 on requirements for budgetary frameworks of the Member States and ongoing harmonization of public sector accounting in EU Member States. Therefore, the purpose of this paper is to present research on accounting and financial reporting in the selected SEE countries as well as the potential implementation of IPSAS/EPSAS in the future. Public sector accounting in selected countries has been investigated researching legal and institutional framework. The system of financial reporting and the level of its standardization have been studied as well as public availability and transparency of reporting. In investigating the existence of accounting reforms, the authors of this paper wanted to highlight if existing reforms are directed to applying the accrual basis or IPSAS/EPSAS implementation. The presented research results show that all countries have a prescribed budget and accounting framework, unified budget classification and chart of accounts. The present level of implementing the accrual basis in all selected countries is relatively low. Budget processes predominantly adopt the cash or modified cash basis, whereas financial reporting uses modified forms of cash basis or modified forms of accrual basis. Although there are incentives in the selected countries for future use of the accrual basis as well as implementing IPSAS/EPSAS, many activities should be carried out prior to any practical implementation of the accrual basis. [ABSTRACT FROM AUTHOR]