Question Tag: Public Sector

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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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  • 6 Marks

PSAF – Nov 2018 – L2 – Q1c – The context of public financial management

Explain four reasons why the differences between public and private sector objectives are important.

One main difference between public sector and private sector entities is that their objectives are different. The objective of a public sector entity is to deliver public goods and services to all citizens in order to maximize their welfare. However, the principal objective of a private sector entity is to make a profit on the goods and services they produce and sell in the market.

Required:
Explain FOUR (4) reasons why these differences are important.

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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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  • 3 Marks

PSAF – Nov 2018 – L2 – Q1a – The context of public financial management

Identify primary users of GPFRs and their information needs in public sector financial reporting.

a) According to the Conceptual Framework for General Purpose Financial Reporting (GPFR) for Public Sector Entities issued by IPSASB, GPFR of public sector entities are developed primarily to respond to the information needs of the primary users who do not possess the authority to require a public sector entity to disclose the information they need for accountability and decision-making purposes. It adds that the objectives of financial reporting are therefore determined by reference to the users of GPFRs, and their information needs.

Required:
i) In relation to the Conceptual Framework, which category of users is regarded as primary users of the GPFRs of public sector entities? (2 marks)

ii) When preparing financial reports for the Consolidated Fund of Government, identify THREE (3) primary users and their information needs you would endeavour to meet. (3 marks)

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  • 6 Marks

May 2019 – L2 – Q1b – General purpose financial reporting framework

Explain the objectives of financial reporting in public sector organizations.

One objective of Public Sector Accounting is accountability. Accountability requires that government justifies how public resources are raised and utilized by means of Financial Reporting. Financial Reporting helps to improve the performance of, and trust in, the public sector.

Required:
Explain FOUR (4) other objectives of Financial Reporting in public sector organizations.
(6 marks)

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  • 20 Marks

PSAF – Apr 2022 – L2 – Q2a – Preparation and presentation of financial statements for central government

Prepare the financial statements for a public transport corporation in compliance with IPSAS and relevant legislations.

Citizen Transport Corporation (CTC) is a Public Transportation company in Ghana, which seeks to provide reliable and affordable means of transport for commuters within villages, towns, and cities as well as provide intercity movement and transport consultancy services.

The following financial information relates to CTC, as at 31 December, 2020:

Additional information:

  1. CTC uses an accrual accounting basis in the preparation of its Financial Statements in line with the Public Financial Management Act, 2016 (Act 921), Public Financial Management Regulation 2019 L.I 2378, and the International Public Sector Accounting Standards (IPSAS).
  2. The loan in the trial balance represents funds advanced by the Government from the Consolidated Fund to CTC to procure a fleet of buses in 2010. The repayment of the Loan was scheduled to end in 2015. However, due to liquidity challenges facing the corporation, the Loan is still outstanding. On the basis of this, the Minister of Finance after assessing the liquidity profile of CTC, made a specific provision for Bad Debt on Loans Receivable by waiving 50% of the loan outstanding. This was made in line with Section 53 of the Public Financial Management Act 2016, (Act 921).
  3. Provision is to be made for Interest on the remaining Loan.
  4. Salaries and other emoluments outstanding during the year amounted to GH¢12,500,000 while that of use of goods and services other than workshop and seminars amounted to GH¢15,750,000.
  5. Inventories included in use of goods and services available at the end of the year were as follows:
Spare Parts GH¢’ 000
Historical Cost 900,000
Replacement Cost 802,000
Net Realisable Value 995,000
  1. In 2019, CTC bought a Machinery amounting to GH¢30,000,000. This amount was wrongly recognized in the 2019 Financial Statement as an expense instead of an Asset. However, this Machine is still in use.
  2. CTC uses a straight-line basis in depreciating their Capital Assets. Assets and their useful life details are provided below:
Assets Useful Life
Plant and Machinery 15 years
Motor Vehicle 20 years
Building 30 years
Software 10 years
  1. CTC plans to change its accounting policy in the recognition, measurement, presentation, or disclosure of inventory in the financial statements. This will be done in line with IPSAS 3: Accounting policies, Changes in Estimate, and Errors.

Required:
In compliance with IPSAS and relevant legislations, prepare for CTC:

a) Statement of Financial Performance for the year ended 31 December 2020. (9 marks)

b) Statement of Financial Position as at 31 December 2020. (7 marks)

c) Explain TWO (2) Guiding Principles for formulating accounting policy. (2 marks)

d) Explain TWO (2) Conditions that mandate a change in accounting policy. (2 marks)

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  • 4 Marks

PSAF – May 2018 – L2 – Q1a – The context of public financial management

Identify four stakeholders of public sector financial statements and describe their information needs.

Financial reporting is very important to the media because it assists them in making analysis. It also helps them to know how government financial information impacts on all aspects of the economy as well as for advocacy where the need arises.

Required:
Identify FOUR other stakeholders who use public sector financial statements and their information needs.

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  • 10 Marks

PSAF – Apr 2022 – L2 – Q1a – The context of public financial management

Discuss reasons for the non-implementation of a full accrual public sector accounting system by many countries.

Accrual basis of Accounting has been recommended as the best approach to ensure accountability and transparency in the management of public funds. Despite its favorable advantages, many countries are yet to implement a full accrual public sector accounting system.

Required:
Discuss FOUR (4) reasons why many countries have not been able to implement a full accrual public sector accounting system. (10 marks)

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  • 20 Marks

IMAC – JULY 2023 – L1 – Q3 – Standard Costing and Variance Analysis

Discuss differences between private and public sector entities and calculate standard costing variances for materials, labour, and overheads.

a) Public Sector in Ghana includes the Metropolitan, Municipal and District Assemblies
(MMDA’s) and the Ministries, Departments and Agencies (MDA’s). The private sector
dominates in terms of numbers and are significantly different in operations from the public
sector.
Required:
In reference to the above statement, explain FOUR (4) key differences between a private
sector entity and a public sector entity. (10 marks)
b) Konka Ltd produces a product – “the telescope”.
Actual results for the period were:
Production: 430 units made
Materials: 1,075 kg were used.
1,200 kg of materials were purchased at a cost of GH¢17,700
Direct labour: 1,700 hours were worked at a cost of GH¢14,637
Variable production overheads expenditure: GH¢3,870.

The standard cost card for the product is as follows:
GH¢
Direct material 2 kg x GH¢15 30
Direct labour 4hrs x GH¢8.50 34
Variable overhead 4hrs x GH¢2.00 8
The cost card is based on production and sales of 450 units in each period.
The company values its inventories at standard cost.
Required:
Calculate the following variances for Konka Ltd:
i) Material price variance
ii) Material usage variance
iii) Labour rate variance
iv) Labour efficiency variance
v) Variable overhead expenditure variance
(10 marks)

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