Question Tag: Public Financial Management

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  • 20 Marks

PSAF – Mar 2025 – L2 – Q3- Public sector fiscal planning and budgeting

Examine implications of Ghana's 2025-2028 fiscal policy proposals per PFM Act 2016.

a) The Government has unveiled its transformative agenda, driven by its fiscal strategy, covering the period 2025 -2028. In the Agenda 2028 document released by the government, the following strategies were outlined:

  1. Taxes on individual income (referred to as pay-as-you-earn) will be suspended until 2029.
  2. Development will be driven by debt, with the government leveraging its goodwill to borrow from development partners and investors to fund its development programmers and projects. By the end of 2024, the debt-to-GDP ratio was projected to reach 80%.
  3. There will be significant government expenditure aimed at boosting development and enhancing citizens’ living conditions. Data from 2024 indicate that the fiscal balance relative to GDP stands at 17%.
  4. All forms of extravagance and wastefulness within the public sector will be eradicated to ensure efficiency, effectiveness, and value for money across all government operations.
    The statement also noted that the government reserves the right to suspend the fiscal rules and targets as and when necessary.

Required:
i) Examine the implications of the government’s policy propositions (1 to 4) in relation to the principles of formulating and implementing fiscal policy objectives outlined in the Public Financial Management Act 2016, (Act 921).

ii) Discuss the steps and events that will necessitate a cabinet approval for a suspension of the fiscal rules and targets under the Public Financial Management Act 2016, (Act 921).

b) The Public Expenditure and Financial Accountability (PEFA) Framework is designed to evaluate the public financial management performance of public institutions. However, some critics, including the Director of Finance of your entity, argue that PEFA represents a form of neo-colonialism repackaged for Africa, and therefore, African countries should resist its assessment.

Required:
i) Explain to the Director of Finance FOUR reasons your country’s PFM system should be subjected to PEFA assessment.

ii) Discuss FOUR limitations of the PEFA framework used to assess PFM systems.

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  • 20 Marks

FM – Mar2025 – L2 – Q5 – Working Capital Management

Compute Gagba LTD's working capital requirement after a 15% sales increase using provided financial and operational data.

a) Gagba LTD, a manufacturing company, is planning to expand its operations to meet increasing demand for its products. As part of this expansion, the company needs to determine its working capital requirements to ensure smooth operations and avoid liquidity issues. The company has provided the following financial and operational data for the year ended 31 December 2023:

  1. Sales Data:
  • Annual Sales: GH₵18,000,000
  1. Cost Data:
  • Cost of goods sold (COGS): 70% of sales
  • Inventory turnover ratio: 8 times per annum
  • Accounts receivable turnover ratio: 6 times per annum
  • Accounts payable turnover ratio: 4 times per annum
  1. Operation Data:
  • Average inventory: GH₵1,500,000
  • Average Accounts receivable: GH₵2,000,000
  • Average accounts payable: GH₵1,200,000
  1. Additional Information:
  • Desired Cash balance: GH₵500,000
  • Projected Increase in Sales due to expansion: 15%
  • Cost of capital: 12% per annum Required: Compute the working capital requirement for Gagba LTD after the planned expansion. (10 marks)

b) The Ministry of Health in Ghana is conducting a review of its procurement practices and the overall performance of its Public Financial Management (PFM) system. The review aims to enhance value for money in public spending while adhering to the principles outlined by the Public Expenditure and Financial Accountability (PEFA) framework. You are provided with the following data for the fiscal year 2023:

    1. Budgeted Public Expenditure: GH₵50 billion
    2. Actual Public Expenditure: GH₵52 billion
    3. Total Procurement Expenditure: GH₵25 billion
    4. Value of Contracts Awarded through Competitive Tendering: GH₵15 billion (60 contracts)
    5. Value of Contracts Awarded through Restricted Tendering: GH₵5 billion (20 contracts)
    6. Value of Contracts Awarded through Single-Source Procurement: GH₵5 billion (20 contracts)
    7. Number of Procurement Violations Detected: 15 (with a total value of GH₵300 million)
    8. Disposal of Stores and Equipment: GH₵100 million Required: i) Analyse the variance in the public expenditure and its implications for the PFM system in Ghana. (3 marks) ii) Discuss which procurement method appears to provide the best value for money with suitable computations. (7 marks)

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  • 4 Marks

PSAF – Nov 2024 – L2 – Q5c – Functions of the State Interests and Governance Authority

Explains four functions of the State Interests and Governance Authority (SIGA) in overseeing state entities.

The Nine Hundred and Ninetieth Act of the Parliament of the Republic of Ghana entitled the State Interests and Governance Authority Act, 2019 was established to oversee and administer state interests in state-owned enterprises, joint venture companies, and other state entities and to provide for related matters.

Required:

Explain FOUR functions of the State Interests and Governance Authority (SIGA).

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  • 4 Marks

PSAF – Nov 2024 – L2 – Q5a – Public Financial Management Regulations

Explains the provisions in PFM Regulation 2019 for a Principal Spending Officer in the payment process and differentiates between misapplication and misappropriation of funds.

a) The Public Financial Management Regulation makes the Principal Spending Officer (PSO) personally responsible for all payments of the covered entity. To mitigate possible risk exposure of the PSO during the payment process, the regulations provide guidance to assist approving authorities before signing off any payment.

In recent times, the Auditor-General has faulted PSOs for infractions such as misapplication of funds, misappropriation of funds, and partially accounted payments among others. Similar observations were cited in the 2023 Management Letter of Nipa Ye Municipal Assembly.

Required:

i) With reference to the PFM Regulation 2019, LI 2378, explain the provisions available to the PSO in the payment process before approval.

ii) Distinguish between misapplication of funds and misappropriation of funds as used by the Auditor-General with an example each.

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  • 10 Marks

PSAF – Nov 2024 – L2 – Q3a – Public Financial Management Cycle

Explaining objectives and improvements in public financial management systems.

As part of efforts to improve public financial management, the government has engaged experts to evaluate the entire public financial management cycle. The review report indicates that every component of the cycle is malfunctioning and emphasizes the need for a stronger commitment to building a robust system to achieve the desired outcomes.

Required:

i) Explain THREE key objectives of an orderly and open public financial management system.

ii) Recommend TWO ways of enhancing each stage of the public financial management cycle towards the attainment of desired outcomes.

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  • 5 Marks

FM – Nov 2024 – L2 – Q4b – Procurement and Tendering Procedures

Discuss circumstances under which single-source procurement is appropriate and functions of the Entity Tender Committee.

The Farms and Gardens Authority (FGA), a public entity, wants to buy 100 computers and 20 printers for its administrative offices. The Chief Executive Officer (CEO) is considering using the single-source procurement method to procure the computers and printers while pushing back on the recommendations of the Entity Tender Committee.

Required:

i) State TWO circumstances under which single-source procurement would be appropriate for the goods the FGA wants to procure.

ii) Advise the CEO on TWO functions the Entity Tender Committee is expected to perform in the FGA’s procurements.

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  • 5 Marks

ICMA – Nov 2024 – L1 – Q5b – Budgeting Models and Systems

Explain the benefits of GIFMIS to the government of Ghana.

Efforts to improve Public Financial Management (PFM) Systems in Ghana led to the Ghana Integrated Financial Management Information System (GIFMIS), which is an adaptation of the Integrated Financial Management Information System (IFMIS). The rationale of GIFMIS is to establish an integrated ICT-based PFM system in Ghana at national, regional, and district levels.

Required:

State FOUR benefits of GIFMIS to the government of Ghana.

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  • 10 Marks

PSA&F – Nov 2019 – L2 – Q6a – Government Revenue

Explains three ways to authorize payments from the Consolidated Revenue Fund (CRF) and discusses two statutory payments permitted by law to be charged directly to the CRF.

The objective of public financial management is to safeguard public funds from mismanagement. One way to achieve this is by ensuring that payments from the Consolidated Revenue Fund (CRF) are properly authorized.

Required:

  • Identify and explain THREE ways to authorize payments from the CRF.
  • Discuss TWO statutory payments that can be charged directly to the CRF.

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  • 10 Marks

PSAF – Nov 2020 – L2 – Q6a – Public Sector Reforms

Identify five objectives each of GIFMIS and IPPIS under Nigeria's Public Financial Management reforms.

In July 2003, the Federal Government commenced the implementation of deliberate policies, programmes, and projects aimed at strengthening the economy, governance, and fighting corruption. This led to the first Economic Reform and Governance Project (ERGP) initiative, approved in December 2004, in line with FGN’s goal to strengthen governance, accountability, reduce corruption, and deliver services more effectively. This brought about reforms in the public sector of the economy. The Government Integrated Financial Management Information System (GIFMIS) and Integrated Personnel and Payroll Information System (IPPIS) are parts of the Public Financial Management (PFM) reforms approved in 2004.

Required:
Identify five objectives each of Government Integrated Financial Management Information System (GIFMIS) and Integrated Personnel and Payroll Information System (IPPIS). (10 Marks)

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  • 4 Marks

PSAF – Nov 2016 – L2 – Q3d – Public sector fiscal planning and budgeting.

Explain four methods used by the government to ensure compliance with budgetary control regulations.

The budgetary control function ensures effective control over government units in public spending and accountability for all funds, property, and other assets for which each department or agency is responsible.
Required:
Explain FOUR methods used by the government to ensure that government entities comply with budgetary control regulations. (4 marks)

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  • 20 Marks

PSAF – March 2024 – L2 – Q3 – PEFA Framework and Budget Performance Report

Discuss the benefits of the PEFA framework, sources of information for PEFA assessment, and the preparation and interpretation of a budget performance report.

a) The Public Financial Management Regulation, LI 2378 defines Public Financial Management (PFM) as laws, rules, systems, and processes used by the Government to mobilize revenue, allocate public funds, undertake public spending, account for funds, and audit results. In 2001, a group of development partners initiated the Public Expenditure and Financial Accountability (PEFA) framework to assess the status of public financial management at central and local government levels. Since then, Ghana has subjected itself to periodic assessments in an attempt to improve the country’s PFM system.

Required:
i) Discuss FOUR (4) benefits the use of the PEFA framework can bring to a country. (6 marks)
ii) Explain FOUR (4) sources of information for PEFA assessment. (4 marks)

 

b) Budget Performance Report is one of the major accountability provisions under the Public Financial Management laws. Regulation 215(2) of the Public Financial Management Regulation, 2019, LI 2378 provides that each Principal Account Holder shall not later than 31 March of the ensuing year submit an annual budget performance report to parliament. The following is an extract from the GIFMIS platform representing Government of Ghana funding for the Ministry of Sanitation for the year 2023.

Budget Item Annual Appropriation (GH¢’000) YTD Warrant (GH¢’000) YTD Payments (GH¢’000)
Compensation of Employees 25,500 18,280 17,450
Goods and Services 5,000 3,450 3,400
Capital Expenditure 8,780 1,220 550
Total 39,280 22,950 21,400

Required:
i) Explain the meaning of Annual Appropriation and YTD Warrant to the Principal Account Holder of the ministry. (2 marks)
ii) Enumerate TWO (2) issues that should be specified in the Annual Budget Performance Report to be submitted by the Principal Account Holder according to the Regulations 215 of LI 2378. (2 marks)
iii) Prepare a Statement of Budget Performance Report for the year 2023 showing the budget-warrant outturns and warrant utilization rates. (3 marks)
iv) Interpret the budget performance statement in (iii) above to facilitate the Minister’s upcoming meeting with the select committee of parliament as required under the law. (3 marks)

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  • 6 Marks

PSAF – Dec 2023 – L2 – Q5b – Public sector fiscal planning and budgeting

Explain expenditure in advance of appropriation, mid-year review, and commitment in the context of public financial management in Ghana.

Explain the following processes or practices in public financial management in Ghana:

i) Expenditure in advance of appropriation
ii) Mid-year review
iii) Commitment

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  • 10 Marks

PSAF – Dec 2023 – L2 – Q5a – Public sector fiscal planning and budgeting

Discuss ways Parliament can enhance public financial management in Ghana.

Parliament has a constitutional mandate to scrutinize government spending. This oversight function is vested in the legislature as a fundamental principle of the separation of powers. There is, however, the need to improve the capacity of Parliament, especially the committees given the authority to keep the executive in check and to spend within the budget.

Required:
Discuss FOUR (4) ways by which Parliament can enhance public financial management in Ghana, bearing in mind relevant legislations. (10 marks)

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  • 20 Marks

PSAF – March 2024 – L2 – Q1 – Accrual Basis Challenges and Measurement Objectives

Discuss the challenges in adopting accrual basis accounting and the objectives and bases of measurement in public sector financial reporting.

a) Changing from cash accounting to accrual accounting is necessary to improve financial reporting and transparency in the public sector. However, it is not going to be without systemic and structural challenges.

Required:
i) Explain FIVE (5) challenges involved in adopting Accrual Basis Accounting. (5 marks)
ii) Explain FIVE (5) measures Ghana can put in place to successfully implement Accrual Basis Accounting. (5 marks)

b) Measurement of assets is a very important aspect of financial reporting. Preparers of financial statements should always consider the objective of measurement to ensure that the financial statements provide information that is useful to users for accountability and decision-making purposes.

Required:
i) Explain the objectives of measurement in financial reporting of public sector entities. (4 marks)
ii) Explain FOUR (4) bases of measurement of assets and provide in each situation where it is applied in financial reporting. (6 marks)

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  • 5 Marks

PSAF – Nov 2021 – L2 – Q5b – Public sector fiscal planning and budgeting

Explain the specific responsibilities of the Controller and Accountant General towards covered entities under the Public Financial Management Act 2016 (Act 921).

The Controller and Accountant General is a key public officer responsible for ensuring the custody, safety, and integrity of public funds. In addition, the Controller and Accountant General has a responsibility towards covered entities to ensure effective public financial management across the public sector.

Required:
Explain FIVE (5) specific responsibilities of the Controller and Accountant General towards the covered entities under the Public Financial Management Act 2016 (Act 921).

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  • 4 Marks

PSAF – Nov 2018 – L2 – Q1b -Public sector fiscal planning and budgeting

Explain four objectives of financial reporting in public financial management.

Public sector entities have downplayed the role of quality financial reporting in public financial management. In recent times, the government has been encouraged by its developing partners to ensure effective financial management and reporting in the public sector by investing in people and processes. The developing partners have touted financial reporting as a major solution to public financial management requirements of developing countries.

Required:
Explain FOUR (4) objectives of financial reporting in public financial management.

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  • 10 Marks

PSAF – May 2019 – L2 – Q5a – Public expenditure and financial

Describe the composition of the Audit Committee and explain its role in enhancing public financial governance.

a) In an effort to strengthen public financial accountability, the Public Financial Management (PFM) Act, 2016 (Act 921) has introduced an Audit Committee in the covered entities as part of the public financial governance infrastructure to replace the Audit Report Implementation Committee (ARIC). Many experts hold the view that ARIC did not perform well due to lack of independence and legal framework. To address these lapses, the PFM Act paid attention to the composition of the Audit Committee and empowers the Minister of Finance to issue regulations for the effective functioning of the committee. A good number of Audit Committees have since been inaugurated and operational.

i) Describe the composition of the Audit Committee and explain how the structure of the committee could enhance the effectiveness of public financial governance. (5 marks)

ii) Explain THREE (3) responsibilities of the Audit Committees as enshrined in the PFM Act and the related guidelines issued by the Minister of Finance. (3 marks)

iii) Suggest TWO (2) ways by which the effectiveness of Audit Committee can be enhanced. (2 marks)

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  • 5 Marks

PSAF – May 2020 – L1 – Q5b – The context of public financial management

State and explain the areas where Parliament is expected to provide oversight responsibilities under the Public Financial Management Act 2016 (Act 921).

Parliament of the Republic of Ghana performs several functions such as the enactment of laws, securitization of law, approval of the national budget, among others. However, in reference to section 11(1) of the Public Financial Management Act 2016 (Act 921), Parliament shall also provide oversight responsibilities in several areas. In achieving this, the Speaker of Parliament may assign responsibilities under this to a committee of Parliament or an Office established by Parliament.

Required:
State and explain FIVE (5) areas you expect Parliament of the 4th Republic to provide these oversight responsibilities.
(5 marks)

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  • 10 Marks

PSAF – May 2020 – L1 – Q5a -The context of public financial management

Explain the responsibilities of the Controller and Accountant General and the objectives for adopting GIFMIS.

The Controller and Accountant General, who is appointed by the President in accordance with Article 195 of the constitution and recognized as the Chief Advisor to the Minister of Finance and government in matters relating to accountancy, has urged all Metropolitan, Municipal, and District Assemblies (MMDAs) to strictly comply with a directive to use the Ghana Integrated Financial Management Information Systems (GIFMIS) platform for all government businesses. In effect, the budgeted funds for these MMDAs would be blocked or not released to any State Agency that refuses to enroll and go live on the GIFMIS Platform.

Required:
i) Explain FIVE (5) other responsibilities of the Controller and Accountant General in accordance with section 8(4) of the Public Financial Management Act, 2016 (PFMA) Act 921.
(5 marks)

ii) Identify FIVE (5) objectives for the adoption of GIFMIS.
(5 marks)

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