Subject (SQ): PUBLIC SECTOR ACCOUNTING AND FINANCE

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PSAF – L2 – Q12.3 – International public sector accounting standards

Prepare consolidated financial statements and notes for National Health Services and its hospitals for 2023 per IPSAS.

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

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Tags: Consolidation, Control, Financial Performance, Financial Position, Financial Statements, Ghana Health Service, IPSAS 35, Public Sector
Level: Level 2

Topic: International Public Sector Accounting Standards

PSAF – L2 – Q12.2 – International public sector accounting standards

Assess if a local authority can apply IPSAS 35 to consolidate a housing association's activities.

Question

(a) A local authority has a policy that, where it holds land that is surplus to its requirements, consideration should be given to making the land available for affordable housing. The local authority establishes terms and conditions to ensure that the housing provided remains affordable and available to meet local housing needs. In accordance with this policy, the local authority sold part of a site to a housing association for GH₵10 million to provide 20 affordable homes. The remainder of the site was sold at open market value to a private developer. The contract between the authority and the housing association specifies what the land can be used for, the quality of housing developments, ongoing reporting and performance management requirements, the process for return of unused land, and dispute resolution. The land must be used in a manner consistent with the local authority’s policy for affordable housing. The agreement also has requirements regarding the housing association’s quality assurance and financial management processes. The housing association must demonstrate that it has the capacity and authority to undertake the development. It must also demonstrate the added value that can be achieved by joining the local authority’s resources with that of the housing association to address a need within a particular client group in a sustainable way. The Board of the housing association is appointed by the members of the housing association. The local authority does not have a representative on the Board.

Required:
Assess whether the local authority could apply IPSAS 35 Consolidated Financial Statement to the activities of the Housing Association.

(b) A national museum is governed by a board of trustees who are chosen by the government department responsible for funding the museum. The trustees have freedom to make decisions about the operation of the museum. The department has the power to appoint the majority of the museum’s trustees.

Required:
Discuss whether the government department has the power over the activities of the museum. (c)

In a recent workshop, a senior fellow of a civil society organisation asserts that the efforts of the Financial Controller to prepare consolidated financial statements of the authority is an exercise in futility. It further noted that the exercise is a waste of public resources.

Required:
Discuss the merit and demerit of the view of the Senior Fellow in light of IPSAS 35.

Answer

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Tags: Accountability, Consolidation, Control, Financial Reporting, Governance, Housing Association, IPSAS 35, Public Sector
Level: Level 2

Topic: International Public Sector Accounting Standards

PSAF – L2 – Q12.1 – International public sector accounting standards

Assess if Zamunda government controls Zamunda Transport Agency per IPSAS 35.

Question

Zamunda Transport Agency
(a) (i) A government has established a Zamunda Transport Agency. The Zamunda Transport Agency has assumed many responsibilities previously held by the government. The agency is responsible for the regional transportation network in the metro and regional areas of the jurisdiction, including public transport and major roads and bridges. The agency receives approximately 2/3rds of its funding for operations from a share of the government’s fuel taxes and general tax revenues. The remainder of the revenue for operations comes from non-government sources such as fares, advertising, and property development. The government contributes toward rapid transit projects. The agency has raised capital through significant borrowings that are guaranteed by the government. The agency is allowed to operate autonomously; however, the agency’s mandate is established by legislation, and the government sets the regional transportation vision. The government has the power to appoint and remove a majority of the members of the board of directors of the Zamunda Transport Agency. The government has never exercised this power. The agency’s board of directors is responsible for hiring, compensating, and monitoring the performance of the management and for providing oversight of the agency’s strategic planning, finances, major capital projects, and operations. The government has the power to veto operating and capital budgets, including fares and capital financing plans.

Required:
In line with IPSAS 35 Consolidated Financial Statements, assess whether the government has control over the Zamunda Transport Agency. (ii)Discuss the procedures you will follow in preparation of the financial statements, given that control has been established in question (a). (b)

Zamunda Transport Agency

(b) Explain the following terms used in the IPSAS:

(i) Equity method of accounting;

(ii) Joint arrangement;

(iii) Economic entity view of financial reporting; and

(iv) Associate.

Answer

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Tags: Consolidation, Consolidation Procedures, Financial Statements, IPSAS 35, Public Sector, Transport Agency
Level: Level 2

Topic: International Public Sector Accounting Standards

PSAF – L2 – Q11.4 – Preparation and presentation of financial statements for central government

Prepare the cash flow statement for Zamunda Central Government for 2024 with reconciliation notes.

Question

The Central Government of Zamunda: Cash flows statement for the year ended 31st December 2024

Prepare the cash flow statement for the Central Government of Zamunda for the year ended 31st December 2024, based on the following data:

Cash flows from operating activities	GHC million
Corporate income tax	38,000
Custom and excise duties	43,000
Value added taxes	45,000
Multilateral grants	16,000
Income tax (PAYE)	15,000
Fee and charges for services	10,000
Dividend and other investment income	7,000
Bilateral grants	12,000
Fines, penalties and forfeitures	9,000
Established post salaries	(22,000)
Non-established post salaries	(20,000)
13% SSF contribution for staff	(7,000)
Staff allowances	(8,000)
Administrative cost	(15,000)
Seminar and workshops	(12,000)
Training and capacity building	(6,000)
Foreign travelling cost	(5,000)
Repair and maintenance	(8,000)
Domestic debt interest paid	(12,000)
External debt interest paid	(12,000)
Payments for subsidies on utilities	(12,000)
Payment for subsidies on fuel	(12,000)
Community empowerment program	(12,000)
Support for social protection of aged widows	(12,000)
Statutory transfers	(12,000)
Other expenses	(12,000)

Cash flows from investing activities	GHC million
Recoveries of loans and advances	8,000
Payment for property, plant and equipment during year	(18,000)
Payments for infrastructure during year	(20,000)
Loans and advances granted during the year	(13,000)

Cash flows from financing activities	GHC million
External borrowing during the year	30,000
Domestic borrowing during the year	20,000
Repayment of external borrowing during the year	(10,000)

Additional information for notes:

Surplus of revenue over expenses for the year ending 2024: GHC 23,200 million
Depreciation charged for the year: GHC 3,500 million
Increase in inventories: GHC (1,500) million
Taxes recoverable: GHC (16,200) million
Accrued expenses: GHC 11,000 million

Prepaid rent: GHC (5,000) million

W1 Taxes recoverable	GHC million
Corporate income taxes	3,000
Customs & excise duties	5,000
VAT	6,000
Personal Income Tax	4,000
Total taxes receivable	18,000
Less amount estimated as irrecoverable	1,800
Taxes recoverable	16,200

W2 Accrued expenses	GHC million
Domestic debt interest	3,000
External debt interest	4,000
Accrued salaries	4,000
Total accrued expenses	11,000

W3 Prepaid Rent	GHC million
Prepaid Rent	5,000

Include a reconciliation note for surplus/deficit to cash flows from operating activities.

Answer

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Tags: Cash Flow Statement, Central Government, Financial Statements, Financing Activities, Investing Activities, Operating Activities, Public Sector, Surplus Reconciliation
Level: Level 2

Topic: Preparation and Presentation of Financial Statements for Central Government

PSAF – L2 – Q11.3- Preparation and presentation of financial statements for local government

Prepare the statement of financial performance for Kweku District Assembly for 2024.

Question

(a) Kweku District Assembly: Statement of financial performance for the year ended 31st December 2024

Prepare the statement of financial performance for Kweku District Assembly for the year ended 31st December 2024, based on the following data:

Revenue	GHC’ million
Decentralised transfers	30,091
Internally generated funds	56,639
Grants	21,945

Expenses	GHC’ million
Compensation	23,942
Use of goods and services	24,494
Social benefits	473
Other expenses	6,366
Consumption of fixed capital	15,650

(b)

Kweku District Assembly: Statement of financial position as at 31st December 2024

Prepare the statement of financial position for Kweku District Assembly as at 31st December 2024, based on the following data:

Current assets	GHC’ million
Cash and bank	7,564
15% Fixed deposits	4,550
Advances and loans to staff	9,561
Prepaid rent expenses	450
Property rates receivable	2,250
Closing stock of waste bins	1,500
Closing inventories of consumables and fertilizer	1,000

Non-current assets	GHC’ million
Land	5,000
Buildings	15,750
Market infrastructure	19,600
Furniture, fixtures & fittings	5,500

Current liabilities	GHC’ million
Payables	13,745
Contract retention	5,520
Accruals	4,400

Non-current liabilities	GHC’ million
Deferred grants	810

Accumulated fund	GHC’ million
Accumulated fund	48,250

(c)

Kweku District Assembly: Statement of changes in net assets for the year ended 31st December 2024

Prepare the statement of changes in net assets for Kweku District Assembly for the year ended 31st December 2024, based on the following data:

Accumulated Fund	GHC’ million
Balance b/f	10,500
Surplus	37,750

Answer

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Tags: Accumulated fund, Financial Statements, Local Government, Statement of Changes in Net Assets, Surplus
Level: Level 2

Topic: Preparation and Presentation of Financial Statements for Central Government

PSA – L2 – Q11.2 – Preparation and Presentation of Financial Statements for Central Government

Prepare 2024 cash flow statement for Central Government of Salima with notes.

Question

Prepare the Central Government of Salima: Cash flows statement for the year ended 31st December 2024.

Answer

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Topic: Preparation and Presentation of Financial Statements for Central Government

PSAF – L2 – Q11.1- Preparation and Presentation of Financial Statements for Central Government

Prepare 2023 financial performance statement for Republic of Zamara Consolidated Fund.

Question

(a) Prepare the Republic of Zamara Consolidated Fund Account: Statement of financial performance for the year ended 31st December 2023.

(b) Prepare the Republic of Zamara Consolidated Fund Account: Statement of financial position as at 31st December 2023.

(d) Prepare the Kwevadum District Assembly: Statement of financial position as at 31st December 2024.

(e)Prepare the Kwevadum District Assembly: Statement of changes in net assets for the year ended 31st December 2024.

Answer

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Tags: Central Government, Consolidated Fund, Expenses, Financial Statements, IPSAS, Non-Tax Revenue, Public Sector Accounting, Revenue, Statement of Financial Performance, Surplus
Level: Level 2

Topic: Preparation and Presentation of Financial Statements for Central Government

PSAF- L2 – Q10.4 – International Public Sector Accounting Standards

Determine recoverable amount of three intangible assets for Nandom Technical University.

Question

The following information relates to three intangible assets in respect of Nandom Technical University.

	Brands (GHC)	Software (GHC)	Trade Marks (GHC)
Carrying amount	200,000	300,000	240,000
Net realisable value	220,000	250,000	200,000
Value in use	240,000	260,000	180,000

Required:
(a) What is the recoverable amount of each asset?

(b) Calculate the impairment provision for each of the assets.

Answer

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Tags: Accounting Standards, Asset Valuation, Financial Reporting, Impairment, Impairment Loss, Intangible assets, IPSAS, Non-current Assets, Public Sector Accounting, Recoverable Amount
Level: Level 2

Topic: International Public Sector Accounting Standards

PSAF – L2 – Q10.3 – International public sector accounting standards

Account for the treatment of a property reclassified as investment property in 2024 financial statements of the National Retirement Oversight Agency.

Question

The National Retirement Oversight Agency acquired a property on 1 January 2021 at a cost of GHc40,000,000 and immediately occupied it as office premise. On acquisition, it was estimated to have a useful life of 50 years. Subsequent to its acquisition, the asset was measured at depreciated cost until 1 October 2024 when management decided to use the building mainly for rentals. Following this decision, the property was fair valued at GHc38,000,000. The National Retirement Oversight Agency adopted the fair value model for subsequent measurement. At 31 December 2024, it was fair valued at GHc39,000,000.

Required:

Account for the treatment of this property in the 2024 financial statements of The National Retirement Oversight Agency.

Answer

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Tags: Depreciation, Fair value gain, Fair value model, Financial Statements, Investment property, IPSAS 16, IPSAS 17, Non-current Assets, Property reclassification, Public Sector Accounting
Level: Level 2

Topic: International Public Sector Accounting Standards

PSAF – L2 – Q10.2 – International public sector accounting standards

Prepare financial statement extracts for a new technology acquisition by the Office of Business Registry for 2023 and 2024, considering delayed deployment.

Question

The Office of Business Registry has successfully acquired a new technology that will transform the landscape of business registration in the Republic of Zamara and make the Republic of Zamara a preferred destination for business.

The cost of the technology is GHc375 million. Professional advisers charged GHc5 million for providing advice in the acquisition of the technology which was estimated to have a useful life of 20 years effective from 1 January 2023.

Delay for the construction of the supporting infrastructure meant that the new technology could not be deployed until 1 January 2024.

Required:

Show extracts of the financial statements of the Office of Business Registry for the years ending 31st December 2023 and 2024.

Answer

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Tags: Amortization, Capitalization, Depreciation, Financial Statements, Intangible assets, IPSAS, Non-current Assets, Public Sector Accounting, Statement of Financial Position, Technology acquisition
Level: Level 2

Topic: International Public Sector Accounting Standards

Subject (SQ): PUBLIC SECTOR ACCOUNTING AND FINANCE

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PSAF – L2 – Q12.3 – International public sector accounting standards

Prepare consolidated financial statements and notes for National Health Services and its hospitals for 2023 per IPSAS.

PSAF – L2 – Q12.2 – International public sector accounting standards

Assess if a local authority can apply IPSAS 35 to consolidate a housing association's activities.

PSAF – L2 – Q12.1 – International public sector accounting standards

Assess if Zamunda government controls Zamunda Transport Agency per IPSAS 35.

PSAF – L2 – Q11.4 – Preparation and presentation of financial statements for central government

Prepare the cash flow statement for Zamunda Central Government for 2024 with reconciliation notes.

PSAF – L2 – Q11.3- Preparation and presentation of financial statements for local government

Prepare the statement of financial performance for Kweku District Assembly for 2024.

PSA – L2 – Q11.2 – Preparation and Presentation of Financial Statements for Central Government

Prepare 2024 cash flow statement for Central Government of Salima with notes.

PSAF – L2 – Q11.1- Preparation and Presentation of Financial Statements for Central Government

Prepare 2023 financial performance statement for Republic of Zamara Consolidated Fund.

PSAF- L2 – Q10.4 – International Public Sector Accounting Standards

Determine recoverable amount of three intangible assets for Nandom Technical University.

PSAF – L2 – Q10.3 – International public sector accounting standards

Account for the treatment of a property reclassified as investment property in 2024 financial statements of the National Retirement Oversight Agency.

PSAF – L2 – Q10.2 – International public sector accounting standards

Prepare financial statement extracts for a new technology acquisition by the Office of Business Registry for 2023 and 2024, considering delayed deployment.

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Subject (SQ): PUBLIC SECTOR ACCOUNTING AND FINANCE

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PSAF – L2 – Q12.3 – International public sector accounting standards

Prepare consolidated financial statements and notes for National Health Services and its hospitals for 2023 per IPSAS.

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PSAF – L2 – Q12.2 – International public sector accounting standards

Assess if a local authority can apply IPSAS 35 to consolidate a housing association's activities.

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PSAF – L2 – Q12.1 – International public sector accounting standards

Assess if Zamunda government controls Zamunda Transport Agency per IPSAS 35.

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PSAF – L2 – Q11.4 – Preparation and presentation of financial statements for central government

Prepare the cash flow statement for Zamunda Central Government for 2024 with reconciliation notes.

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PSAF – L2 – Q11.3- Preparation and presentation of financial statements for local government

Prepare the statement of financial performance for Kweku District Assembly for 2024.

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PSA – L2 – Q11.2 – Preparation and Presentation of Financial Statements for Central Government

Prepare 2024 cash flow statement for Central Government of Salima with notes.

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PSAF – L2 – Q11.1- Preparation and Presentation of Financial Statements for Central Government

Prepare 2023 financial performance statement for Republic of Zamara Consolidated Fund.

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PSAF- L2 – Q10.4 – International Public Sector Accounting Standards

Determine recoverable amount of three intangible assets for Nandom Technical University.

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PSAF – L2 – Q10.3 – International public sector accounting standards

Account for the treatment of a property reclassified as investment property in 2024 financial statements of the National Retirement Oversight Agency.

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PSAF – L2 – Q10.2 – International public sector accounting standards

Prepare financial statement extracts for a new technology acquisition by the Office of Business Registry for 2023 and 2024, considering delayed deployment.

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