- 20 Marks
PSAF – L2 – Q12.3 – International public sector accounting standards
Question
GHANA HEALTH SERVICE
Statements of Financial Performance for the year ended 31st December 2023
| GHS | Kolebu | Saint H | |
|---|---|---|---|
| GHC’000 | GHC’000 | GHC’000 | |
| Revenue | |||
| Tax revenue | 100,000 | ||
| GoG receipt | 2,000 | ||
| Non-exchange revenue | 100,000 | 2,000 | 3,000 |
| Internally generated revenue | 5,000 | 400 | 200 |
| Exchange revenue | 5,000 | 400 | 200 |
| Total revenue | 105,000 | 2,400 | 3,200 |
| Expenses | |||
| Compensation for employees | 40,000 | 600 | 500 |
| Depreciation & amortisation | 500 | 300 | 200 |
| Goods and services | 25,000 | 600 | 400 |
| Finance costs | 1,600 | 500 | 100 |
| Total expenses | 67,100 | 2,000 | 1,200 |
| Surplus for the period | 37,900 | 400 | 2,000 |
Statements of Financial Position for the year ended 31 December 2023
| GHS | Kolebu | Saint H | |
|---|---|---|---|
| GHC’000 | GHC’000 | GHC’000 | |
| Assets: | |||
| Cash & cash equivalent | 25,000 | 800 | 500 |
| Receivable: GHS | 900 | ||
| Receivable: Others | 62,000 | 700 | 400 |
| Inventories | 12,000 | 300 | 200 |
| Current assets | 99,000 | 2,700 | 1,100 |
| Property, plant & equipment | 140,000 | 40,000 | 67,100 |
| Investment- Saint H | 60,000 | ||
| Non-current assets | 200,000 | 40,000 | 67,100 |
| Total Asset | 299,000 | 42,700 | 68,200 |
| Liabilities | |||
| Payable: Kolebu | 900 | ||
| Payable others | 60,000 | 8,000 | 3,000 |
| Current borrowings | 90,000 | 2,000 | |
| Current liabilities | 150,900 | 10,000 | 3,000 |
| Borrowing | 45,000 | 10,000 | 5,000 |
| Non-current liabilities | 45,000 | 10,000 | 5,000 |
| Total liabilities | 195,900 | 20,000 | 8,000 |
| Net asset (liabilities) | 103,100 | 22,700 | 60,200 |
Net Asset/Equity:
| GHS | Kolebu | Saint H | |
|---|---|---|---|
| GHC’000 | GHC’000 | GHC’000 | |
| Contribution from owners | 60,000 | ||
| Accumulated Surplus (deficit) | 103,100 | 22,700 | 200 |
| Total Asset/Equity | 103,100 | 22,700 | 60,200 |
Additional information
(i) The Ghana Health Services (GHS) is a government agency responsible for overseeing the health sector. The Kwadwo Teaching Hospital is funded through government appropriations and internally generated funds approved by Parliament. The GHS appoints most of the hospital’s board members on behalf of the government. All employees at Kwadwo receive their salaries from the Consolidated Fund.
(ii) On July 1, 2023, the GHS established the Blessed Hospital to provide high-quality healthcare services in the country. The GHS has fully funded the hospital’s operations through equity and debt guarantees and has also appointed the hospital’s governing board.
(iii) The appropriations to Kwadwo cover employee compensation and goods and services expenses at a ratio of 60% to 40%, respectively.
(iv) At the end of the reporting period, the GHS owed Kwadwo GHC900,000 for services rendered to its staff. The GHS has committed to paying this amount by the end of the second quarter of the following year.
(v) The separate financial statements of the GHS, Kwadwo, and Blessed Hospital are prepared using the same accounting policies.
Required:
Prepare in accordance with the relevant IPSASs:
(a) A consolidated statement of financial performance for the year ended 31 December 2023.
(b) A consolidated statement of financial position as at 31 December 2023.
(c) Note to the accounts.
Answer
GHANA HEALTH SERVICE
12.3
Statement of consolidated financial performance for the year ended 31st December 2023
| Ghana Health Services | Consolidated | |
|---|---|---|
| GHC’000 | GHC’000 | |
| Revenue | ||
| Tax revenue | 100,000 | 100,000 |
| GoG receipt | ||
| Non-exchange revenue | 100,000 | 100,000 |
| Internally generated revenue (5,000 + 400 + 100) | 5,000 | 5,500 |
| Exchange revenue | 5,000 | 5,500 |
| Total revenue | 105,500 | |
| Expenses | ||
| Compensation for employees (40,000 + 600 + 250 – 1200 – 1800) | 40,000 | 39,050 |
| Depreciation & amortization | 500 | 1,000 |
| Goods and services (25,000 + 600 + 200 – 1200) | 25,000 | 24,600 |
| Finance costs (1,600 + 500 + 50) | 1,600 | 2,150 |
| Total expenses | 67,100 | 66,800 |
| Surplus for the period | 37,900 | 38,700 |
Statement of consolidated financial position as at 31 December 2023
| GHC’000 | |
|---|---|
| Assets | |
| Cash and cash equivalents (25,000 + 800 + 250) | 26,050 |
| Receivables: Others (62,000 + 700 + 200) | 62,900 |
| Inventories (12,000 + 300 + 100) | 12,400 |
| Current assets | 101,350 |
| Property, plant and equipment (140,000 + 40,000 + 33,550) | 213,550 |
| Non-current assets | 213,550 |
| Total assets | 314,900 |
| Liabilities | |
| Payables: Others (60,000 + 8,000 + 1,500) | 69,500 |
| Current borrowings (90,000 + 2,000) | 92,000 |
| Current liabilities | 161,500 |
| Borrowings (45,000 + 10,000 + 2,500) | 57,500 |
| Non-current liabilities | 57,500 |
| Total liabilities | 219,000 |
| Net assets | 95,900 |
| Net assets/equity | |
| Accumulated surplus/deficit | 95,900 |
| Total net assets/equity | 95,900 |
Note to the accounts
- Basis of preparation
The consolidated financial statements have been prepared in accordance with IPSAS 35: Consolidated Financial Statements. The Ghana Health Services (GHS) controls Kwadwo Teaching Hospital and Blessed Hospital, as it appoints the majority of their board members and provides significant funding. - Consolidation adjustments
- Inter-entity transactions, such as the GHC900,000 owed by GHS to Kwadwo, have been eliminated.
- The investment in Blessed Hospital (GHC60,000) has been eliminated against its equity.
- Appropriations to Kwadwo for employee compensation and goods and services (60:40 ratio) have been adjusted, reducing expenses by GHC3,000 (GHC1,800 employee compensation, GHC1,200 goods and services).
- Blessed Hospital, established on July 1, 2023, is consolidated for six months, with revenue and expenses adjusted accordingly (e.g., internally generated revenue GHC100, finance costs GHC50).
- Accounting policies
The financial statements are prepared using uniform accounting policies across GHS, Kwadwo, and Blessed Hospital, ensuring consistency in reporting.
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