TUGASAN/ASSIGNMENT
JANUARY 2022 SEMESTER
SUBJECT CODE
: MPS302
SUBJECT TITLE
: PUBLIC SECTOR ACCOUNTING
LEVEL
: BACHELOR’S LEVEL
STUDENT’S NAME
:
MATRIC NO.
:
PROGRAMME
:
ACADEMIC FACILITATOR
:
LEARNING CENTRE
:
DECLARATION BY STUDENT
I certify that this assignment is my own work and is in my own words. All sources have been acknowledged
and the content has not been previously submitted for assessment to Asia e University or elsewhere. I also
confirm that I have kept a copy of this assignment.
Signed: _____________________________
Question # 01:
a).
Answer:
I.
Define following terms:
 Financial Assets
The majority of assets are classified as physical, financial, or intangible. Real assets are a
tangible asset whose worth is derived from things or attributes such as precious metals like
gold, land, real estate, and agricultural commodities such as cotton, wheat, crops, oil, and
steel, minerals etc. Intangible assets are valued properties that are not visible. Patents,
copyrights, and intellectual property are some of the examples.
Financial assets lie in the middle of the three types of assets. A financial asset is a liquid asset
with a legal right or ownership claim as its source of value. Financial assets include liquid
assets such as cash, market shares, securities, mutual funds, or certificates of deposit, among
many others. Financial assets, unlike land, buildings, commodities, or other tangible physical
assets, may not always have obvious physical value or even a physical state. Rather, it’s
worth is determined by factors like demand and supply in the market where they sell, and
also the potential risk they bear. A contractual right on an underlying asset gives financial
assets their value. The underlying asset might be tangible or intangible. The actual asset
linked with shares of real estate investment trusts is real estate (REITs). REITs are financial
assets that possess a portfolio of investments and are traded publicly.
 Non – Financial Liabilities
An advance payment is cash paid in anticipation of products, operations, or financial assets that
have yet to be provided to the purchaser, or cash which is yet to be gained by the receiver in the
event of transfers, remittances and subsidies, according to the terms of the contract. If an
arrangement incorporates one or more government departments or public institutions, etc or
when installments are paid to employees, an allocation to installments paid is established.
An advance is a payment paid upfront of commodities, services, or financial assets are still to be
acquired, or cash which is yet to be obtained by the receiver in the instance of transfers and
grants, in compliance with the arrangement by which the contract is due.
When the government enters into an agreement with a non-governmental body, a preliminary
payment allocation is established.
The following are some examples:

Divisional revenue owed to the revenue fund;

Yearly installments due to the revenue fund that have not been used; and

Procured funds were demanded from the revenue fund but have not been received yet.
II.
Using Cash Basis IPSAS of Accounting, outline mandatory disclosure requirements for
presentation of financial statements.
The cash basis accounting acknowledges operations and activities only when the business
receives or pays cash (including cash equivalents). one can learn about the sources of cash
income raised during a specific period, the activities over which cash was spent, and the liquidity
ratios at the reporting day by reading income statements produced on the cash basis.
Additional details on liabilities, such as payables and debts, as well as some non-cash holdings,
including invoices, investments, and capital, plant, and equipment, may be found in financial
statements.
Mandatory requirements for presenting in financial statements for a reporting period are:
 Overall cash receipts of the organization, with a sub-classification of total receipts using a
classification basis relevant to the institution's functions.
 Total cash disbursements of the organization, with a sub-classification of total cash
transactions using a classification basic framework suitable to the institution's
transactions.

Expenditures on the basis of a categorization system that is relevant to the institution's
activities.

The institution's opening and closing cash position.
b).
Answer:
Medium Term Expenditure Framework (MTEF)
The document estimates expenditures in a variety of areas, including as education, medical,
agricultural development, fuel, subsidies, and pensions, among others. While preparing this
pronouncement, data such as expense obligations comprised of various different ministries on
salaries and benefits, major initiatives, funding for the establishment of capital assets, national
defense outlay, interest expenses and important subsidization, and other state commitments are
taken into account. The income and capital expenditure obligations are stated individually.
"Additional funds for financial asset construction" and its projected are also included in revenue
spending.
The purpose of the MTEF is to make it easier to integrate FRBM announcements with the
Current Fiscal. This presentation is made in the assembly after the presentation of the Budget.
The following are the main components of the MTEF:


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The government's pledge to invest capital on important reforms such as new projects,
new service devices, and new schemes and programs.
Obvious future liabilities in the manner of annual installments spread out over a number
of years.
Grants for the creation of financial assets are broken down in detail.
Main characteristics of MTEF:
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It should be realistic within macro-economic framework.
It should be comprehensive covering all expenditures and revenues.
It is a continuing program and hence should be updated frequently when required,
The decisions should be made after a broad inter-sectoral participation.
Accountability and obligations should be clearly defined
It should help in increasing resource awareness and encourage more output or outcomeoriented strategies.
It should improve the predictability of resource flow.
Budget Call Circular
A Budget Call Circular is an instrument that requests that Ministries, Additional Divisions, and
other task execution Agencies of Government to submit income and expenditure assessments in
a given format for the next financial year; and provides comprehensive regulations and
instructions on how to prepare the forecasts and expenditure in a manner sustained with the
medium-term formative priorities set out in the Medium-Term Expenditure Framework.
It is issued and prepared annually to guide the preparation of annual budget. departments begin
drafting their Yearly Action Plans, which detail their primary goals and actions for the upcoming
financial year in march. In May, all division get the budget call circular along with the
accompanying formats and worksheets that is required to submit their budget documents. it
is official call to begin generating budget proposals.
The budget circular is created by each division and ministry and submitted to Government for
approval it is a small integrated part of budget preparation process. A budget is government's
financial strategy for the future; a statement of the government 's presented expenses, revenues,
lending, and other financial transactions, planned annually , It is presented to parliament, who
approves the budget, Whereas MTEF is a multiyear financial program created by federal
ministry of finance.
Budgeting Methods Government Use in Annual Budgeting
Budgeting is the practice of assigning scarce resources to an organization's prioritized objectives.
The budget, in most circumstances, reflects the legal authorization to distribute funds for a
government entity. Implementation of a budget in the public sector indicates that the central
committee and executives have taken a series of decisions that result in a government's finances
being aligned with the institution's demands.
Over the past few decades Government uses different approaches for budgeting based on need of
system and the decision to implement various policies to adapt. It reflects the complexity and
growth of Government’s operations.
To have a better understanding following are described different types of budgeting methods.
(1) Traditional or Line-Item Budgeting:
(2) Performance Budgeting:
Performance budgeting approaches have a distinct focus. Budgeted expenses are calculated by
multiplying the regular input costs by the number of units of an operation to be supplied within
that period of time. The aggregate of all uniform expenses compounded by the number of units
planned to be given is an organization's overall budget. Although this rigid approach may be
appropriate for particular types of procedures, many organizations require a more dynamic
approach to performance. Cost may, for example, be determined only by the operations or
service standards to be delivered, as well as a comparison of planned and historical spending
levels.
Question #2:
a).
Answer:
The balanced scorecard (BSC) is a strategic planning performance measure that is used to assess
and enhance several organizations’ internal operations and the public outcomes that flow from
them. Balanced scorecards are widely used in the many public organizations to measure and
offer feedback to enterprises. Leaders and administrators must obtain and understand data in
order to provide quantifiable outcomes. This insight may be used by organization professionals
to improve decisions for the future of the firms.
It is a strategic planning model that businesses use to prioritize their commodities, initiatives, and
operations, convey about their aims or objectives, and schedule their daily operations.
Organizations may use the scorecard to track and assess the performance of their strategy and
determine whether its accomplished. BSCs were initially designed for profit driven businesses,
but they have since been modified for use by nonprofits and government entities.
Learning and growth, company procedures, consumers, and finances are all measured using the
balanced scorecard. BSCs let businesses to consolidate data into a comprehensive report,
providing insight into value and performance in relation to economic performance, and assisting
in the improvement of efficiency.
Its purpose is to assess an organization's intellectual capital, which includes qualifications, skills,
expertise, and any other personal information that provides it a foothold in the market. The BSC
is used to collect crucial information from these four major activities of an organization,
including as goals, metrics, strategies, and milestones. Companies can quickly identify obstacles
to company success and define strategic improvements that will be examined by succeeding
scorecards.
FOUR PERSPECTIVES OF THE BALANCED SCORECARD
i.
The Financial Perspective:
ii.
The Customer Perspective
The customer perspective examines the way the organization provides benefit to its customers
and assesses customers' satisfaction with the organization’s brand. Customer fulfillment is a
marker of a business's performance. The way a business handles its consumers has a direct
impact on the financial performance.
The reputation of the organization in comparison to its rivals is taken into account by the
balanced scorecard. It allows the company to venture outside of its safety zone and see itself
through the mind of consumer rather than only from the inside. Optimizing quality of product,
improving the consumer experience, and revising the costs of a company's key services are some
of the techniques that a firm may use to enhance its popularity amongst buyers.
iii.
The Internal Business Processes Perspective:
The core operations of a company define how it functions. A balanced scorecard places the
metrics and aims which can assist the firm function more efficiently into context. In addition, the
scorecard aids in evaluating the brand and determining if they meet client expectations. finding
the best in the brand is the important aspect of this approach.
Recognizing the excellence within aids the organization in developing marketing strategies and
pursuing breakthroughs that contributes to the emergence of new and improved ways to fulfill
customer needs.
iv.
The Learning and Growth perspective:
The analysis of training and intellectual resources is used to examine learning and growth. It
looks for how well knowledge and information is acquired and how professionals use that insight
to turn it into a competitive edge in the business.
b).
Answer:
Legal Requirements And Components Of Financial Reporting
Financial statements are documents that detail a company's financial position. The balance sheet,
income or profit and loss statements, and cash flow statement are examples of conventional
reports. They are one of the most important elements of business statistics, as well as the primary
means of conveying financial data about an organization to third - party. Financial statements, in
a formal sense, are a summary of an entity's financial condition at a certain point in time.
Financial reporting, as per the Financial Accounting Standards Board, comprises of financial
statements as well as additional methods of disseminating financial details about an organization
to public. Financial statements give information that may be used to make future financing
choices, as well as evaluate cash flow possibilities. They give data on an organization's
resources, entitlements to all those assets, and capacity adjustments. Financial reporting, as per
the Financial Accounting Standards Board, comprises of financial statements as well
as additional methods of disseminating financial details about an organisation to public.
Financial statements give information that may be used to make future financing choices, as well
as evaluate cash flow possibilities. They give data on an organization's resources, entitlements to
all those assets, and capacity adjustments.
Financial reporting is an expansive concept that incorporates financial statements, supplements
to accounting records, and auxiliary disclosures, as well as additional knowledge (such as price
fluctuations) and other accounting methods (such as management meetings, assessments and
communication with stakeholders). Financial reporting is just one piece of information that
individuals making financial choices regarding businesses require.
Following are some of the most common elements of financial reporting:
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The balance sheet, profit and loss report, statement of cash flow, and net change in
stockholder's equity are the financial statements.
The financial statement notes
Yearly and quarterly reports are available
Business Portfolio
Discussions & Evaluation by Administration
Following are some requirements of financial reporting:
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Accurate reporting, ongoing concerns, accrual accounting, transparency and aggregate,
and no reversing are all requirements for financial statements.
Financial statements are required to be presented at least once a year, and they must be
coherent and also include statistical evidence from the prior year.
Financial statements must meet specific formatting criteria, such as a segmented assets
and liabilities (balance sheet) and minimal content on the front as well as in the
annotations.
IFRS and US GAAP are used by a large number of publicly traded organizations
throughout the world.
In several circumstances, a user of financial statements will be unable to make important
modifications to create comparable results across organizations that use IFRS.
c).
Answer:
The public sector is a pillar of the economy that includes all layers of government as well as state
businesses. It excludes private businesses, non-profit organizations, and families.
The basic definition of the public sector involves state-owned or administered rather than just
functioning, and so encompasses activities such as exercising public authority or enforcing
public policies.
The state sector of a country is the segment of the business that provides infrastructure, public
transit, public education, medical services, and law enforcement and military agencies, among
other things.
Whereas the public sector differs from country to country comply with the laws that controls
state-owned enterprises, it typically aims at delivering services that impact the entire population
rather than simply those that employ it.
1. State-owned property:
The ownership of the business must be appointed by the government. It might be in the form of
federal, political, or municipal nationalization, or it might be in the form of any state inducement
owning a public company.
2. Control of the Government:
The government oversees both the administration and operation of public enterprises. The
government is directly responsible for managing the enterprise's operations employing different
methods and exercising influence upon it through a diversity of sources and approaches.
3. Accountable to the public:
Since they are supported with taxpayer resources, government agencies owe citizens
responsibility. The parliament and its commissions, ministries, auditing authorities, and other
expert organizations all contribute to this accountability.
4. Independence:
Under some circumstances, public organizations operate with full autonomy. They are not
hindered in their daily operations or control.
5. The scope of coverage:
All regions and operations are covered by the state owned enterprise. There isn't a single domain
of business that isn't touched by public-sector operations.
Question # 03:
(1) Answer:
Integrated Payroll System:
A software system that integrates finance and Accounting functions for optimal efficiency is
known as an integrated HR payroll system. Traditional disoriented spreadsheets and disparate
Operational processes by combining all of the workforce organizational processes into one
system, and assist the workforce from hiring to retiring.
Salary and compensation account up a significant portion of most companies' expenditures, even
small firms. The amount spent on compensation and perks might fluctuate significantly based on
a number of uncontrolled events such as unanticipated defections or the unexpected need for
extra hours. Payroll automating is incorporated into the institution's enterprise resource planning
(ERP), which gives a comprehensive view of the company's or community's resources. It can
also handle customer connections, invoicing & accounting, productivity, and human resources,
in conjunction to payroll.
Features of an Integrated Payroll System:
o Payroll management is the process of calculating salaries based on predetermined criteria
and timelines.
o Leaves management– determines compensation based on allowed absence while also
keeping track of attendance.
o Expense management is the process of calculating compensation according to loans,
receivables, rebates, and other factors.
o Management of rewards and incentives — for all of the extra rewards that workers
receive.
o Pre- and post-income tax refunds, such as TDS, are handled by Income Tax and
Withholdings.
o Regulatory Compliance refers to tax write offs that are made in accordance with
provincial or national regulations.
o Records, payroll reports, and forms– generates payroll-related reports, employee pay
slips, and legal frameworks such as Form-16, Form 12BA, and Form 12C, among others.
o All personnel information and paperwork are kept in one place.
o Announcements and Alerts– provide employees real-time and planned messaging via
SMS, panel updates, and other means.
o Mobility– For improved accessibility, current payroll software includes a mobile
application for its customers.
o ESS– are designed to provide quick access to all payroll-related details for each
employee's performance.
o Employees are organized by pay grade in order to facilitate payroll processing by
distinguishing employees based on their pay grades and job function.
o Enables a variety of payment mechanisms– the application should be developed to
accommodate a range of payment methods, including direct deposit, check, and cash.
(2) Answer:
Users of Public Sector Financial Information:
The systematic approach of documenting, disseminating, summarizing, evaluating, and
comprehending the financial accounts and data of the government in aggregates and depth is
known as public sector financial reporting. It is responsible for the reception, holding,
distribution, and management of public monies entrusted to it." (Adams, R. A., 2004). The
government's primary goal is to provide critical services to its residents, not to earn a profit.
Following are the principal consumers of public sector financial reporting.
o The legislative branch of government
o The general public
o Lenders and benefactors
o Administration in the government service
o Auditors and the Controller and Accountant General (CAG)
o
Governmental bodies
The fundamental purpose of financial reporting by public sector organizations is to facilitate
users of GPFRs with facts about the institution that is valuable for scrutiny and decision-making.
These are the authorities that need public sector institutions to submit GPFRs for the purposes of
monitoring and decision-making. Users of GPFRs are described as service receivers, resource
providers, and policymakers having a political interest in specific services. The government's
inbound revenue and outbound expenditures may be measured using public sector financial
reporting. Budgeting, planning, and forecasting can all be done with it. Whereas most public
organizations are not in the business of earning profit, it is nonetheless crucial to evaluate how
they are performing economically. Government financial reporting is the public sector. Since
they're not for profit enterprises, their accounting differs from that of profit-maximizing
businesses.
The following are the five goals of public sector financial statements:
1. Verify the legitimacy of transactions and its adherence to existing rules, policies, and
legislation.
Budgeting Acts and Economic Regulations should be followed when disbursing funds in the
public sector. To minimize the conduct of acts of misappropriation, all transactions should have
proper approvals.
2. Evidence of productive Leadership.
Being able to compensate for funds offered in an open and attentive manner is what guardianship
entails. In the collecting and disposition of state money, public sector providers are required to
exercise thorough research and a degree of integrity.
3. Providing assistance, planning and maintaining control
The future is filled with risks and uncertainty. Having a strategy in place protects an organization
from going in the wrong way. Arrangements serve as the focal point for the actions that are being
undertaken. Unseen variables are factored into strategies to prevent or at least mitigate company
collapse. The mandate of leadership should be followed by public sector institutions.
4. Maintaining objectivity and timeliness in reporting
Users of public sector financial information are keen to bridge that gap in their understanding of
what the nation's leadership is doing. They place a high emphasis on timely and reliable statistics
when evaluating government performance.
5. Analyzing the expenditures and profits that will be acquired
It is difficult to assess potential costs in financial perspective in the public sector in all aspects.
The Cost-Benefit Analysis evaluates the socioeconomic gains (benefits) and drawbacks or
inconveniences (costs) of different courses of action in order to guarantee that users' welfare is
well-served.
b)
Answer:
Governing bodies must respond to a variety of people and organizations, including elected
politicians, other government units, investors, creditors, and citizens interested in monitoring
their actions. Collecting and evaluating data is a part of all sorts of monitoring, and this oversight
duty is frequently carried out using data from government reports. The annual financial report,
which provides the financial status, operating performance, and cash flows for a certain
accounting period, is one of the most essential kinds of communication. To promote uniformity
and comparability for users, all governments, including school districts, compile their annual
financial reports in conformity with standards defined by standard-setting agencies.
Financial reporting must be both relevant and credible for reasonably knowledgeable consumers
for governments to accomplish the goal of accountability.
Financial statements must meet a wide range of demands and purposes, such as short-term
financial situation and viability, budget and regulatory compliance, and long-term concerns like
capital planning and maintenance. There are also disparities in the quantity of detail required by
different users.
The two tiers of financial reporting are meant to complement one other.
o Deliver more relevant data to encourage state and municipal authorities to be more
accountable.
o Improve the usability and comprehensibility of yearly financial reports for consumers so
that they may make better informed economic, societal, and policy choices.
The financial reporting of a government institution should be designed and administered on a
capital basis in order to assure effective resource segmentation and traceability. Each fund is a
distinctive fiscal institution that was created to carry out specified activities and goals in
compliance with legislation, laws, regulations, and limits, or for particular purpose.
A fund is defined as a budgetary and financial entity with a self-balancing set of accounts
recording cash and other financial resources, along with all related liabilities and residual
equities or balances, and changes therein, that is segregated for the purpose of carrying on
specific activities or achieving certain objectives in accordance with special regulations,
restrictions, or limitations, as defined in GASB Codification Section 1300.
Three types of funding are:
 The majority of governmental operations are accounted for by governmental funding.
Except for those provided under proprietary funds, the purchase, employment, and
settlement of the government's disposable financial resources and accompanying current
liabilities are reported through general fund (general, special revenue, capital projects,
debt service, and permanent funds).
 Proprietary funds are utilized to compensate for growing government organizations’
activities that are comparable to those found in the private sector. All resources,
liabilities, retained earnings, revenues, costs, and transfers linked to the government's
commercial and quasi-business operations, as well as changes in net assets or cost
recovery, are accounted for using proprietary funds (enterprise and internal service
funds). The measuring focus is on assessing operational income, financial condition, and
cash flows. International public sector accounting procedures for proprietary funds are
comparable to those that apply to enterprises in the private sector.
 Fiduciary funds are used to manage assets held by the government in its position as a
fiduciary or as an agent for public, private organizations, and other governmental bodies.
Pensions (and other employee benefit) provident fund, investment trust funds, personal
trust funds, and agency funds are all included in the fiduciary fund category.
Question # 04:
a).
Answer:
 Case-base Accounting:
Only after payments are received revenue is reflected on the income statement. When cash is
given out, expenditures are merely documented. Small companies and individuals typically
utilize cash as a payment option.
 Accrual Accounting:
As revenue is generated, it is recorded. Before any money crosses hands, revenue is usually
documented. The accrual approach, unlike the cash method, records income when a commodity
is supplied to a client with the intention of payment later. Expenses for products and services are
documented despite the fact that no money has been paid out for them yet.
Income and expenditures are recognized and reported as they occur under accrual accounting,
but cash basis accounting does not capture these line items until cash is exchanged.
When cash moves into or out of a firm, cash accounting is used to represent the events on the
financial statements. Despite of when money is exchanged, accrual accounting acknowledges
income when it is received and costs when they are incurred.
Disadvantages of Cash base Accounting:

Cash accounting is good at tracking cash flow but not so good at matching revenues to
money set aside for costs. Simple cash accounts do not provide an accurate picture of a
FUNCTIONS OF INTERNAL AND EXTERNAL AUDIT IN PUBLIC SECTOR
External auditing is an important aspect of the process of public money accountability. It
contributes significantly to the management of public resources and the corporate control of
government services. External auditors in the government sector provide an objective opinion on
financial report by government entities and may evaluate and report on elements of the schemes
implemented by state agencies to ensure the right behavior of about their financial dealings and
to oversee their performance and resource use. External audit in the public sector is distinguished
by three specific characteristics due to the special accountabilities associated to public money
and the conduct of public business:


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Auditors are chosen independently of the organizations being audited.
The focus of auditor’ work is broadened to embrace not just the financial statements, but
also elements of governance practices and measures to assure the economical, sustainable
and utilization of assets.
Auditors may communicate portions of their research to the public and other relevant
stakeholders.
Internal audit is often found in extremely big organizations in the private sector, public sector, or
"third sector" such as charities and NGOs, while many small businesses may opt to develop one
as well. There is no explicit legal necessity for an organization to establish an internal audit
department. The situation is different in the public sector, where many organizations are
compelled by law to establish an internal audit department.
o Internal auditors work for the organization, whereas external auditors work for a thirdparty firm.
o External auditors are appointed by a shareholder vote, whereas internal auditors are hired
by the company.
o Internal auditors are not required to be CPAs, but external auditors must be directed by a
CPA.
o Internal auditors are accountable to management, but external auditors are accountable to
investors.
o External auditors must utilize certain formats for their audit views and management
letters, however internal auditors can deliver their conclusions in any report style.
o Management consults internal audit reports, whereas stakeholders such as investors,
creditors, and lenders consult external audit reports.
o Management consults internal audit reports, whereas stakeholders such as investors,
creditors, and lenders consult external audit reports.
o Internal auditors can provide staff guidance and other advisory services, but external
auditors are restricted from too assisting an audit client.
o Internal auditors will look into problems including firm business procedures and risks,
while external auditors will look into financial records and render a judgment on the
statement of financial position.
o Internal audits take place across the year, whereas external auditors do a single audit
every year. External auditors will analyze a client's financial statements three times a year
if the company is publicly traded.
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