- 20 Marks
Question
The following Trial Balance was extracted from the records of the Department of Social Integration, a central government department, for the year ended 31 December 2023.
Additional Information:
- The Department prepares its financial statements in compliance with the International Public Sector Accounting Standards, the Public Financial Management Act 2016, Act 921, and the Chart of Accounts of the Government of Ghana.
- Included in printing materials and stationery is a closing inventory valued at cost of GH¢380,000. The estimated net realizable value and replacement cost of the inventory are GH¢320,000 and GH¢330,000 respectively. The printing is not for commercial purposes.
- In June 2023, the government conducted a massive recruitment into the civil services, of which 20 employees were posted to the Department. However, they have not been paid salaries for the period. The amount owed to these employees is GH¢2,500,000 and this should be reflected in the financial statement of the period.
- The Department currently pays rent for two of its Regional Offices, and at the end of the year rent of GH¢200,000 was outstanding. Further, the Department also rented part of its premises at the Headquarters. At the end of the financial year, an amount of GH¢150,000 was received to cover 2024 rent. Meanwhile, GH¢20,000 rent has not been received from tenants for the year 2023. These transactions have not been accounted for.
- Depreciation of fixed assets is charged on a straight-line basis as follows:
| Assets | Estimated useful life (in years) |
|---|---|
| Motor vehicle | 5 years |
| Furniture | 4 years |
| Computers | 3 years |
| Premises | 20 years |
- It was revealed that computer accessories costing GH¢340,000 acquired in 2022 were accounted for as goods and services. However, the Auditor for the 2023 financial year recommended that the transaction should be accounted for as a non-current asset. The recommendation is yet to be implemented.
- The budget extract of the Department for 2023 is as follows:
| Item | GH¢’000 |
|---|---|
| Approved budget allocation | 20,000 |
| Internally generated fund | 3,000 |
| Donor support | 1,000 |
| Compensation for employees | 10,000 |
| Use of Goods and Services | 6,000 |
| Other expenses | 5,500 |
Required: Prepare in compliance with the International Public Sector Accounting Standards, the Public Financial Management Act 2016, and the Chart of Accounts of Ghana: a) A Statement of Financial Performance for the year ended 31 December 2023.
b) A Statement of Financial Position as at 31 December 2023.
c) A Separate Statement of Budget Information in comparison with the Actuals for the year ended 31 December 2023.
Answer
a) Statement of Financial Performance for the year ended 31 December 2023:
| Revenue | GH¢’000 |
|---|---|
| Receipts from Government | 17,100 |
| Internally generated fund | 1,720 |
| Donation | 1,200 |
| Total Revenue | 20,020 |
| Expenses | |
| Compensation for employees | 12,520 |
| Goods and Services | 5,110 |
| Consumption of fixed capital | 38,100 |
| Other expenses | 5,000 |
| Total Expenses | 60,730 |
| Net Deficit | (40,710) |
b) Statement of Financial Position as at 31 December 2023:
| Non-current Assets | GH¢’000 |
|---|---|
| Property, Plant, and Equipment | 155,527 |
| Current Assets | |
| Inventory | 330 |
| Receivable | 3,020 |
| Fixed Deposit | 1,000 |
| Cash and Cash equivalent | 10,000 |
| Total Current Assets | 14,350 |
| Total Assets | 169,877 |
| Liabilities and Fund | |
| Payable | 9,100 |
| Tender Security | 900 |
| Rent advanced | 150 |
| Total Liabilities | 10,150 |
| Accumulated Fund | 159,727 |
| Total Liabilities and Fund | 169,877 |
c) Statement of Budget Information in Comparison with the Actuals for the year ended 31 December 2023:
| Item | Budget | Actual | Variance | Variance % |
|---|---|---|---|---|
| Revenues | ||||
| Receipts from Government | 20,000 | 17,100 | 2,900 | 86 |
| Internally Generated Fund | 3,000 | 1,720 | 1,280 | 57 |
| Donation | 1,000 | 1,200 | (-200) | 120 |
| Total Revenues | 24,000 | 20,020 | 3,980 | 83 |
| Expenses | ||||
| Compensation of employees | 10,000 | 12,520 | (-2,520) | 125 |
| Goods and Services | 6,000 | 5,110 | 890 | 85 |
| Other expenses | 5,500 | 5,000 | 500 | 91 |
| Total Expenses | 21,500 | 22,630 | (-1,130) | 105 |
| Surplus/Deficit | 2,500 | (-2,610) | 5,110 | (-104) |
Workings:
- Receipts from Government:
- Compensation for employees = GH¢7,000,000
- Use of goods and services = GH¢5,600,000
- Capital expenditures = GH¢4,500,000
- Total Receipts from Government = GH¢17,100,000
- Compensation for Employees:
- Established post salaries = GH¢4,000,000
- Salaries outstanding = GH¢2,500,000
- Non-established post salaries = GH¢1,500,000
- Car maintenance allowance = GH¢800,000
- Travel allowance = GH¢1,100,000
- Cost of living allowance = GH¢1,800,000
- Pensions and gratuity = GH¢400,000
- SSF contribution = GH¢120,000
- Rounding = GH¢100,000
- Utility allowance = GH¢200,000
- Total Compensation for Employees = GH¢12,520,000
- Goods and Services:
- Travel and transport = GH¢560,000
- Repairs and maintenance = GH¢340,000
- Training, seminars, and conferences = GH¢660,000
- Local consultancy = GH¢890,000
- General cleaning = GH¢125,000
- Printing materials:
- Opening inventory = GH¢860,000
- Purchases = GH¢800,000
- Closing inventory = (GH¢330,000)
- Total Printing materials = GH¢1,330,000
- Utilities = GH¢650,000
- Rent = GH¢300,000
- Rent accrued = GH¢200,000
- Bank charges = GH¢10,000
- Special audit fees = GH¢45,000
- Total Goods and Services = GH¢5,110,000
- Internally Generated Fund:
- Trial balance = GH¢1,850,000
- Receivable = GH¢20,000
- Advance = (GH¢150,000)
- Total Internally Generated Fund = GH¢1,720,000
- Receivables:
- Per Trial Balance = GH¢3,000,000
- Rent Receivable = GH¢20,000
- Total Receivables = GH¢3,020,000
- Payables:
- Per Trial Balance = GH¢6,400,000
- Salaries accrued = GH¢2,500,000
- Rent payable = GH¢200,000
- Total Payables = GH¢9,100,000
Non-current Asset Schedule:
| Assets | Motor Vehicle | Furniture | Computers | Premises | Total |
|---|---|---|---|---|---|
| Cost | |||||
| Balance b/d | 84,000 | 42,000 | 14,000 | 120,400 | 260,400 |
| Adjustment | 0 | 0 | 340 | 0 | 340 |
| Total Cost | 84,000 | 42,000 | 14,340 | 120,400 | 260,740 |
| Depreciation | |||||
| Balance b/d | 25,000 | 16,000 | 4,000 | 22,000 | 67,000 |
| Adjustment | 0 | 0 | 113 | 0 | 113 |
| Charge for the year | 16,800 | 10,500 | 4,780 | 6,020 | 38,100 |
| Total Depreciation | 41,800 | 26,500 | 8,893 | 28,020 | 105,213 |
| Carrying Amount | 42,200 | 15,500 | 5,447 | 92,380 | 155,527 |
Statement of Changes in Net Assets for the year ended 31 December 2023:
| Item | GH¢’000 |
|---|---|
| Accumulated fund balance as at 31 Dec 2022 | 200,210 |
| Prior year adjustment | 227 |
| Adjusted Accumulated Fund Balance | 200,437 |
| Deficit for the year | (40,710) |
| Accumulated Fund Balance as at 31 Dec 2023 | 159,727 |
- Tags: Budget Information, Financial Statements, IPSAS, Public Sector Accounting, Trial Balance
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