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  • 7 Marks

PSAF – Nov 2024 – L2 – Q2a – Valuation of Legacy Fixed Assets

Valuation and accounting treatment of legacy fixed assets in compliance with IPSAS.

The Ministry of Indigenous Enterprises has been charged to collect legacy fixed assets data and value them in accordance with International Public Sector Accounting Standards (IPSAS). The Fixed Assets Coordinating Unit (FACU) of the Ministry has collected for valuation the following data for your action:

The Ministry owns a four (4) storey Office Administration block. The average cost per floor is GH¢4,741,256.25. The building was constructed on a land size of 20 plots of land owned by the Ministry. Currently, a plot of land in that area costs GH¢2,500,000. The FACU has measured the sizes of the building as follows:

  • Length: 87.5 meters
  • Width: 42.65 meters
  • Reference Price per Square Meter: GH¢4,432

However, a professional body, the Institute of Architects and Engineers, has given the reference price for the cost of such an office building at an estimated price of GH¢87,965,025. The building has not seen any further facelift ever since. However, a fence wall with a gate to enforce security and secure the land has just been completed in the current year at a cost of GH¢8,970,000 with a lifespan of 50 years.

The year of construction of the office building could not be determined, yet an old watchman who had been there for ages remembers that the building was constructed some 42 years ago, a time when his seventh child was born. It is the decision of the Government of Ghana on the adoption of IPSAS not to take advantage of the three-year exemption period but to account for legacy fixed assets by taking 60% of the reference cost of the legacy assets as the deemed cost, with a reduced lifespan of 30 years.

Required:

i) Calculate the cost of the land and buildings with structures to be brought into the books on the adoption of IPSAS and determine the depreciation chargeable in the first year in respect of these assets.                                                                                              ii) Show the extract of Statement of Financial Position of the Ministry of Indigenous
Enterprises as at that date

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  • 15 Marks

MA – Nov 2024 – L2 – Q4a – Cost-Benefit Analysis (CBA) for Public Sector Investment

Evaluation of a healthcare capital investment project using cost-benefit analysis.

The Faith Specialist Hospital (FSH) is a special government health facility under the Ghana Health Service (GHS) that provides specialized medical scans for complex health conditions. Management of FSH is planning to install an ultra-modern imaging machine that will improve the quality and accuracy of scans. The new installation will require an additional capital investment of GH¢420,000. The GHS policy on capital projects is that all new projects should achieve an internal rate of return of at least 30%.

Forecast demand for the services of this new machine over its five-year useful life are as follows:

Year Number of Scans
1 1,250
2 2,700
3 3,500
4 1,400
5 675

Projected charge per scan: GH¢650
Variable costs per scan:

  • Consumables: GH¢330
  • Labour and overheads: GH¢176

Operating fixed costs per year: GH¢264,000 (includes depreciation on a straight-line basis)

Apart from the financial forecasts above, it is also envisaged that the project will produce non-financial benefits in several forms. Although it is hard to place a precise value on this, expert opinion suggests that this could approximate GH¢70,000 per annum.

Required:

i) Using cost-benefit analysis (CBA) computations, evaluate if the project should be undertaken.

ii) Enumerate TWO limitations of evaluating projects in the public sector.

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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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  • 6 Marks

ICMA – Nov 2024 – L1 – Q3a – Value for Money (VFM)

Explains the components of Value for Money (VFM) in the public sector.

Value for Money (VFM)
Value for Money (VFM) is an objective that can be applied to any organization whose main objective is non-financial but has restrictions on the amount of finance available for spending, which the public sector is no exception.

Required:
Explain the components of VFM.

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  • 5 Marks

ICMA – Nov 2024 – L1 – Q2c – Government Budgeting Challenges

Identifies and explains the challenges or limitations in government budgeting.

Challenges in Government Budgeting
Budgeting in the public sector relates to a process of translating government plans and policies into financial terms by systemically relating cost to attaining the objectives of government plans and policies. As important as this process is, there are some challenges and limitations associated with government budgeting.

Required:
State FOUR challenges (limitations) of government budgeting.

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  • 1 Marks

AAA – Nov 2013 – L3 – AII – Q18 – Public Sector Audits

Identify the body responsible for reviewing the Auditor General's report for the Federation.

The report of the Auditor General for the Federation is reviewed by…………which has the power to invite any person indicted for public hearing.

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  • 1 Marks

AAA – Nov 2013 – L3 – AII – Q6 – Public Sector Audits

Explores the alternate terminology for balance sheets of parastatals.

 The balance sheet of parastatals is also referred to as a statement of………….and…………….

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  • 1 Marks

AAA – Nov 2012 – L3 – AII – Q8 – Public Sector Audits

Identifies the type of monthly accounts submitted to the Accountant-General by a Self-Accounting Unit.

The monthly accounts submitted to the Accountant-General of the Federation by a Self-Accounting Unit are referred to as ……………………

 

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  • 1 Marks

AAA – Nov 2012 – L3 – SA – Q5 – Public Sector Audits

Key inclusions in the final report of a Board of Inquiry for public sector investigations.

Regarding investigation in the public sector, the final report of the Board of Inquiry shall include:

A. The number of memoranda received from the public
B. A statement of the exact amount of loss that has been incurred
C. Certification from the Due Process office
D. Report of the Auditor-General for the Federation
E. External Auditors’ opinion statement on the loss that occurred

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  • 15 Marks

CSME – May 2017 – L2 – SC – Q7 – Corporate Governance

Explain the Nolan principles guiding public life and discuss standards for ethical conduct in the public sector.

Nolan Committee on standards in public life was set up to report on standards of behaviour amongst politicians, civil servants and public bodies. Provide an analysis of Nolan‟s‟ SEVEN Principles of Public Life. (15 Marks)

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  • 5 Marks

PSAF – Nov 2023 – L2 – Q5c – Financial statements discussion and analysis

Explain the objectives of financial reporting in the public sector and its usefulness to primary users.

Financial reporting is not an end in itself but a means to an end. The end game of financial reporting is to provide value to the user of the information. In the local government, financial reporting must deliver the expected value to the users.
i) Explain the objective of financial reporting in the public sector.
ii) Explain the usefulness of financial statements of a Metropolitan Assembly to three of its primary users of the information.

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  • 10 Marks

PSAF – Nov 2023 – L2 – Q1b -General purpose financial reporting framework

Analyze the impact of specific financial reporting scenarios on qualitative characteristics of financial statements.

The following revelations were made about the financial reporting process of a covered entity:

i) The users of the financial statements of the entity is less interested in the financial information because it does not provide information that enables the users to either confirm their expectation or make predictions.

ii) Equipment purchased during the year was recognized as an expense in the statement of financial performance, even though the entity applies the accrual principles.

iii) A revenue transaction of a significant value was completely omitted from the financial statement of the entity unintentionally.

iv) The financial statements showed the budget amounts alongside the actual amounts of the year in the Statement of Financial Performance.

v) The Accountant confirmed that some records relating to expenses were done based on WhatsApp messages (online texting app) from the Principal Spending Officer.

Required: Explain how each of the transactions (i) to (v) would affect a specific qualitative characteristic of the financial statements of the entity. (10 marks)

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  • 2 Marks

PSAF – Nov 2019 – L2 – Q5d – Public sector fiscal planning and budgeting

Explanation of the difference between planning and budgeting in the public sector.

Explain the difference between planning and budgeting in the public sector. (2 marks)

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  • 6 Marks

PSAF – Nov 2019 – L2 – Q2b -General purpose financial reporting framework

Discuss the guiding principles for formulating accounting policies, conditions for changes, and treatment of changes under IPSAS 3.

b) With reference to IPSAS 3: Accounting Policies, Changes in Estimates and Errors:

i) Explain the guiding principles for formulating accounting policy. (2 marks)

ii) The conditions that mandate a change in accounting policy. (2 marks)

iii) The treatment of changes in accounting policy required by IPSAS 3. (2 marks)

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  • 14 Marks

PSAF- Nov 2019 – L2 – Q2a -Preparation and presentation of financial statements for covered entities

Prepare the Statement of Financial Performance and Statement of Financial Position for Bunsu Education College as of 31/12/2018.

a) The following Trial Balance relates to Bunsu Education College, a public tertiary educational institution in Ghana, as at 31/12/2018.

DR (GH¢’000) CR (GH¢’000)
Fees Income 4,575,622
Establish Post 5,312,430
Allowance 856,670
Consultancy Fees 655,600
Legal Cost 25,059
 1,540,000
Consultancy Cost 565,500
Non-Establish Post 1,253,600
Seminars cost 500,000
Sponsorship 8,100 9,066,828
Receivables 468,050
Payables 182,840
20% loan 8,600
Books and Research Allowance 150,765
Plant and Machinery 3,000,000 250,000
Motor Vehicle 2,505,000 352,000
Building 12,300,000 756,000
Software 995,500 150,000
Other Incomes 211,430
Project Work Supervisory Allowance 48,500
Cash and Bank 294,233
Training and Workshop cost 104,000
Bad debt provision (student fees) 4,940
Work In Progress 8,251,735
Other Expenses 71,000
Withholding Tax 90,500
Accumulated Fund 11,205,270
Utilities Bills 560,053
Proceeds from Sale of Admission Forms 9,196,270
Superannuation 278,500
End of Service Benefits 298,040
Stationery Stock 399,165
38,245,900 38,245,900

Additional Information: i) The college has adopted the accrual basis International Public Sector Accounting Standards (IPSAS) as the basis for the preparation of its financial statements. ii) Stationery stock as at 31/12/2018 was GH¢200,500,000 but had a Net Realisable Value of GH¢155,254,000. iii) Social benefits of GH¢1,720,000 yet to be paid during the year were included in the Work In Progress value. Consultancy cost amounting to GH¢234,500,000 was incurred but not yet paid. iv) Books and Research Allowance was received from Government during the period amounting to GH¢337,530,000 for disbursement to qualified Lecturers and Administrative staff. v) Provision is to be made for interest on loans. vi) 60% of the receivables represent an amount of students’ fees outstanding as at 31/12/2017. Provision for doubtful debt is estimated to be 5% of outstanding school fees. vii) The university uses a straight-line basis of depreciation for Capital Assets. Capital Assets and their useful lives are detailed out below:

Assets Useful Life
Plant and Machinery 8 years
Motor Vehicle 5 years
Building 50 years
Software 7 years

Required: i) Prepare a Statement of Financial Performance for Bunsu Educational College for the year ended 31/12/2018. (8 marks)

ii) Prepare a Statement of Financial Position as at 31/12/2018. (6 marks)

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  • 10 Marks

PSAF – Nov 2019 – L2 – Q1c – International public sector accounting standards

Discuss the objective of measurement for asset recognition and suggest appropriate measurement bases for specific assets.

Measurement of assets for recognition in the financial statements is a critical consideration in financial reporting and has been problematic in the public sector given the nature of assets involved. A public sector organization is currently in transition from cash basis accounting to accrual basis accounting which requires measurement and recognition of all assets in the general-purpose financial reports. Of much concern to the entity is how to select the appropriate measurement basis for the assets of the entity listed below to ensure that the objectives of financial reporting are achieved:

  • Human resource software developed by the entity
  • Stock of books in the library
  • Vehicles donated to the entity

You have been consulted on the issues raised above to help the entity choose appropriate measurement for the recognition of the above-listed assets.

Required:
In line with the Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities issued by International Public Sector Accounting Standards Board (IPSASB):

i) Discuss the objective for the measurement of assets in financial statements that should guide the choice of measurement bases for asset recognition. (4 marks)

ii) Suggest an appropriate measurement basis for each of the assets indicated above, and discuss how your selected measurement basis meets the objectives of measurement in each case. (6 marks)

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  • 6 Marks

PSAF – Nov 2019 – L2 – Q1b – International public sector accounting standards

Formulate accounting policies for land, building, and inventory for public sector entities.

Formulate accounting policies on the following items relating to the financial statement of public sector entities:

i) Land and Building
ii) Inventories

(6 marks)

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  • 4 Marks

PSAF – Nov 2019 – L2 – Q1a – General purpose financial reporting framework

Explain the importance and content of notes to the financial statements for a public sector entity.

An Accounting Trainee has been given an assignment to prepare a complete set of financial statements of a public sector entity from data set provided by the Director of Finance. The Trainee prepared the financial statements to the admiration of the Director, except that no notes to the financial statements were provided. The Director made him aware that the notes to the financial statements are an essential component of the financial statements whether applying the cash basis of accounting or accrual basis of accounting as it enhances the usefulness of the financial reports to users. The Trainee has been directed to you to educate him further on the relevance of notes to the financial statements.

Required:
Write out your explanatory notes to the Trainee, the usefulness of notes to the financial statements, and the information that should be included in the notes to the financial statements of a public sector entity. (4 marks)

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  • 10 Marks

PSAF – July 2023 – L2 – Q1a – Accounting policies for cash and accrual-based accounting systems

Discuss the conditions for transitioning from cash basis to accrual basis accounting in a public sector entity.

A public sector entity is transitioning from cash basis of accounting to accrual basis of accounting for the 2022 financial year. You are a member of the transitional committee set up to ensure smooth change over.

Required: Discuss FIVE (5) conditions for seamless transition from cash basis of accounting to accrual basis of accounting.

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  • 8 Marks

PSAF – Nov 2017 – L2 – Q3b – Public Sector Fiscal Planning and Budgeting

Describes revenue management and control measures to prevent revenue losses in public sector organizations.

Revenue management is a challenge in many public organizations, including the Damsa District Assembly in which you are currently engaged as Finance Officer responsible for revenue management and control. There are rampant revenue losses resulting from delayed or unbanked collection, failure to assess and collect revenue, inappropriate use of value books, and poor record keeping, among others. Consequently, your Assembly has persistently failed to meet its revenue budget over the years and the Ministry of Local Government has recently cautioned the District Chief Executive (DCE) and tasked him to improve the revenue performance of the Assembly or face dismissal.

In a meeting with the DCE, he put it bluntly: “the Revenue Officer should do something about this immediately else I will fire him before I am fired. My head and your head are on the chopping board; you know it”.

Required:

As the Finance Officer responsible for revenue, describe FOUR revenue management and control measures you would put in place for the Assembly to remedy revenue losses pointed out in the case.

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