- 10 Marks
Question
You are the Head of Finance of Public Sector Reform Secretariat, Office of the President. You have received the following e-mail from the Chief Executive Officer.
Email:
“Dear Head of Finance,
I have been invited by the Office of Head of Civil Service to attend a seminar on the theme ‘Fundamentals of Public Financial Reporting’. Among the topics listed for discussion are the following:
- Qualitative Characteristics of Financial Information.
- The Bases of Measurement of Public Sector Assets.
- The Statutory Roles of Internal Auditors of Public Sector Entities.
I am aware of your expertise in public financial management and will greatly appreciate it if you could prepare some briefing notes for me to bridge my knowledge gap prior to the conference.”
Required:
As Head of Finance and a recipient of the e-mail, provide your response in a memo to the Chief Executive Officer.
Answer
Memo to the Chief Executive Officer
To: Chief Executive Officer, Public Sector Reform Secretariat
From: Head of Finance
Subject: Briefing Notes on Fundamentals of Public Financial Reporting
Date: [Insert Date]
1. Qualitative Characteristics of Financial Information
Fundamental qualitative characteristics distinguish useful financial reporting information from information that is not useful or misleading:
- Relevance
- Faithful representation
Enhancing qualitative characteristics distinguish more useful information from less useful information:
- Comparability
- Verifiability
- Timeliness
- Understandability
Constraints on Information Included in General Purpose Financial Reports:
- Materiality
- Cost-Benefit
- Balance Between the Qualitative Characteristics
(3 marks)
2. The Bases of Measurement of Public Sector Assets
- Historical Cost
- Current Value
- Market Value
- Replacement cost
- Net realizable value (NRV)/Net selling price
- Value in use
(3 marks)
3. The Statutory Role of Internal Auditors of Public Sector Entities
- Appraise and report on the soundness and application of the system of controls operating in the covered entity.
- Evaluate the effectiveness of the risk management and governance process of a covered entity and contribute to the improvement of that risk management and governance process.
- Provide assurance on the efficiency, effectiveness, and economy in the administration of the programs and operations of a covered entity.
- Evaluate compliance of a covered entity with enactments, policies, standards, systems, and procedures.
(4 marks)
Conclusion: The above briefing notes summarize the fundamental aspects of public financial reporting that you may find useful for your upcoming seminar. Please feel free to reach out for any further clarifications.
Signed,
Head of Finance
- Topic: General purpose financial reporting framework
- Series: JULY 2023
- Uploader: Theophilus