Topic: Financial Statements Discussion and Analysis

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PSAF – Mar 2025 – L2 – Q4 – Financial statements discussion and analysis

Prepare a paper evaluating Borga and Obi Manso’s 2023 financial performance using specified metrics.

Question

Below are IPSAS-compliant financial statements of two developing countries, Borga and Obi Manso for the year ended 31 December 2023 expressed in the local currency of Ghana and published by an international public financial management organization domiciled in Accra, Ghana.

Statement of Financial Performance for the Year ended 31 December 2024

	Borga	Obi Manso
	GH¢ million	GH¢ million
Revenue
Tax Revenue	302,400	317,300
Non Tax Revenue	50,400	76,000
Grants and Donations	10,440	5,985
	363,240	399,285
Expenditure
Employee compensation	190,512	161,880
Goods and Services	41,208	50,350
Consumption of Fixed Assets	4,680	8,550
Interest	77,880	76,000
Social Benefits	8,160	17,100
Subsidies	–	4,275
Other Expenses	4,800	9,880
	327,240	328,035
Surplus	36,000	71,250

Statement of Financial Position as at 31 December 2024

	Borga	Obi Manso
	GH¢ million	GH¢ million
Assets
Non-Current Assets
Property, Plant and Equipment	96,000	180,500
Equity Investments	42,000	33,250
Loans Receivables	4,800	2,850
	142,800	216,600
Current Assets
Loan Receivables	33,600	37,050
Inventory	4,800	11,400
Cash and Cash Equivalent	57,600	30,400
	96,000	78,850
Total Assets	238,800	295,450
Funds and Liabilities
Current Liabilities
Payables	36,000	40,850
Deposits and Trust Monies	58,800	57,000
	94,800	97,850
Non-Current Liabilities
Domestic Debt	24,000	38,000
External Debt	50,400	85,500
	74,400	123,500
	169,200	221,350
Accumulated Funds	69,600	74,100
Funds and Liabilities	238,800	295,450

Required: a) Prepare a paper for presentation at an upcoming PFM forum to evaluate the performance of the two countries using the following metrics: i) Revenue to Total Assets ii) Current Ratio iii) Debt to Owners Fund iv) Accumulated Fund to Total Assets v) Common Size analyses of Tax Revenue, Compensation of Employees and Surplus

b) Using the metrics above, interpret the performance of the two countries under efficiency, short-term liquidity and long-term liquidity/stability of the countries with a metric each.

Answer

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Level: Level 2

Topic: Financial Statements Discussion and Analysis
Series: MARCH 2025

PSAF – Nov 2024 – L2 – Q4b – Public Expenditure and Financial Accountability

Explanation of the Public Expenditure and Financial Accountability framework and its application.

Question

Based on your results in (a), write a report to the newly appointed board analyzing and indicating whether their performance is better in comparison with the old board.

Answer

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Tags: Accountability, Budgeting, Compliance, Financial Reporting, Public Expenditure
Level: Level 2

Topic: Financial Statements Discussion and Analysis
Series: Nov 2024

PSAF – Nov 2024 – L2 – Q4a – Financial Ratio Analysis

Compute financial ratios for Ghana Wind Farms LTD to analyze performance trends.

Question

Ghana Wind Farms LTD, a State-Owned Enterprise (SOE), has appointed a new Board of Directors in January 2023. The new Board, after settling for a year, is interested in assessing their performance for the year 2023 against the performance of the previous Board in the year 2022 through ratio analysis. Below is the financial statement of Ghana Wind Farms LTD for the two years.

Ghana Wind Farms LTD

Statement of Profit or Loss for the Year Ended 31 December 2023

	2023 (GH¢)	2022 (GH¢)
Revenue	9,860,000	6,218,000
Direct Cost	(5,905,000)	(5,822,000)
Gross Profit	3,955,000	396,000
Distribution Costs	(297,000)	(264,000)
Administrative Expenses	(505,000)	(455,000)
Other Income	236,000	13,000
Other Gains	–	1,482,000
Operating Profit	3,389,000	1,172,000
Finance Cost	(1,000,000)	(334,000)
Profit Before Tax Expense	2,389,000	838,000
Tax Expense	(500,000)	(144,000)
Profit After Tax	1,889,000	694,000

Ghana Wind Farms LTD

Statement of Financial Position as at 31 December 2023

	2023 (GH¢)	2022 (GH¢)
ASSETS
Non-Current Assets
Property, Plant & Equipment	17,000,000	15,000,000
Investment	5,000	2,000
Advances & Loans	–	30,000
Total Non-Current Assets	17,005,000	15,032,000
Current Assets
Inventories	687,000	546,000
Trade and Other Receivables	2,829,000	1,978,000
Prepayments	87,000	42,000
Cash and Cash Equivalents	383,000	434,000
Total Current Assets	3,986,000	3,000,000
TOTAL ASSETS	20,991,000	18,032,000
EQUITY & LIABILITIES
Equity
Government Equity	8,000	8,000
Other Government Equity	613,000	306,000
Capital Surplus	8,471,000	7,599,000
Income Surplus	(1,434,000)	478,000
Total Equity	7,970,000	8,697,000
Non-Current Liabilities
Deferred Credit	6,692,000	670,000
Deferred Tax Liabilities	2,498,000	2,572,000
Borrowings (Due After One Year)	1,297,000	950,000
Total Non-Current Liabilities	10,487,000	4,192,000
Current Liabilities
Bank Overdraft	166,000	180,000
Provision for Company Tax	109,000	109,000
Trade and Other Payables	1,820,000	4,516,000
Borrowings (Due Within One Year)	439,000	338,000
Total Current Liabilities	2,534,000	5,143,000
Total Liabilities	13,021,000	9,335,000
TOTAL EQUITY AND LIABILITIES	20,991,000	18,032,000

Required:

a) Compute the following ratios:

i) Current Ratio
ii) Quick Ratio
iii) Inventory Turnover (Days)
iv) Trade Receivable Collection Period (Days)
v) Trade Payables Period (Days)
vi) Working Capital Cycle
vii) Interest Cover Ratio
viii) Total Debt – Total Asset Ratio

Answer

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Tags: Efficiency, Financial Performance, Liquidity, Ratio Analysis, Solvency
Level: Level 2

Topic: Financial Statements Discussion and Analysis
Series: Nov 2024

PSAF – May 2021 – L2 – Q3b – Financial statements discussion and analysis

Compute key financial ratios for two countries and analyze their financial performance and position.

Question

Country X and Country Y are Sub-Saharan African Countries that attained independence around the same period. Presented below are the financial statements of the two countries.

Statement of Financial Performance for the year ended 31 December 2020:

Item Description	Country X (GH¢ million)	Country Y (GH¢ million)
Revenues
Domestic tax	39,675	25,500
International trade tax	27,300	31,995
Non-tax revenue	11,250	19,200
Grants	1,950	1,650
Total revenue	80,175	78,345
Expenditure
Compensation for employees	44,700	30,450
Use of goods and services	15,450	21,000
Consumption of fixed capital	360	420
Exchange difference	1,485	900
Interest	29,490	15,690
Subsidies	765	180
Other expenses	2,400	2,145
Total Expenditure	94,650	70,785
Net Operating Result	(14,475)	7,560

Other Information:

Item Description	Country X	Country Y
Population	30,000,000	22,500,000
Gross Domestic Product (GDP)	GH¢ 217,500,000,000	GH¢ 165,000,000,000

Statement of Financial Position as at 31 December 2020:

Item Description	Country X (GH¢ million)	Country Y (GH¢ million)
Non-Current Assets
Property, plant, and equipment	3,675	33,600
Equity investment	12,000	8,250
Total Non-Current Assets	15,675	41,850
Current Assets
Receivables	10,050	12,600
Cash and cash equivalent	7,050	27,000
Total Current Assets	17,100	39,600
Total Assets	32,775	81,450
Funds and Liabilities
Accumulated Fund	(120,300)	7,200
Current Liabilities
Payables	9,300	6,150
Trust monies	2,100	1,350
Domestic debt	24,000	6,750
Total Current Liabilities	35,400	14,250
Non-Current Liabilities
Domestic debt	54,000	27,000
External debt	63,675	33,000
Total Non-Current Liabilities	117,675	60,000
Total Fund and Liabilities	32,775	81,450

Required:
i) From the information provided, compute for the two countries respectively:

Grant to Total Revenue ratio
Wage Bill to Tax Revenue ratio
Interest to Revenue ratio
Debt to GDP ratio
Capital expenditure per Capita
Wages bill to Total Expenditure ratio (6 marks)

ii) Based on the result in question i), write a report discussing and analyzing the financial performance and financial position of the two countries. Include in your report the limitations of the analysis of the two countries. (4 marks)

Answer

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Tags: Financial Performance, Public Sector Accounting, Ratio Analysis
Level: Level 2

Topic: Financial Statements Discussion and Analysis
Series: MAY 2021

PSAF – July 2023 – L2 – Q3b – Financial statements discussion and analysis

Compute financial ratios and analyze the financial performance and position of Ghana's Consolidated Fund for 2022 and 2021.

Question

The Financial Statements of the Consolidated Fund of Ghana for the year ended 31 December 2022 and 2021 are presented below:

Consolidated Fund of Ghana – Statement of Financial Performance for the year ended 31 December

Additional Information:

The Statistical and economic data for the two years are as follows:
- 2022: Population: 30.8 million, Gross Domestic Product (GH¢): 768,000,000,000
- 2021: Population: 29.5 million, Gross Domestic Product (GH¢): 552,500,000,000
Capital Assets acquired in 2022 and 2021 amounted to GH¢255,200,000,000 and GH¢141,600,000,000 respectively.

Required:

i) Compute the following accounting ratios for the two respective years (2022 and 2021):

Debt to Gross Domestic Product
Capital Spending as a percentage of Gross Domestic Product
Wage Bill as a percentage of Total Tax Revenue
Debt per Capita
(4 marks)

ii) Based on the result in question i) above, write a report discussing and analyzing the Financial Performance and Financial Position of the nation.
(6 marks)

Answer

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Tags: Debt Management, Financial Performance, Financial Ratios, GDP, Public Sector
Level: Level 2

Topic: Financial Statements Discussion and Analysis
Series: JULY 2023

PSAF – Nov 2020 – L2 – Q3 – Public expenditure and financial accountability framework | Financial statements discussion and analysis

Explain the PEFA framework, compute financial ratios for two countries, and analyze their financial performance and position.

Question

a) Public financial management is critical for the successful implementation of government policies and developmental goals. Public financial management is a linchpin that ties together available resources, delivery of services, and achievement of government policy objectives. The need to assess the extent to which public financial management systems operate led to the development of the Public Expenditure and Financial Accountability (PEFA) framework by a coalition of seven international development partners. Since 2001, the PEFA framework has received recognition across the world.

Required:

i) Explain the purpose of the PEFA framework. (3 marks)
ii) Explain the key pillars of an open and orderly public financial management system under the PEFA framework. (7 marks)

b) Country A and Country B are Sub-Saharan African Countries that attained independence around the same period. Presented below are the financial statements of the two countries:

Statement of Financial Performance for the year ended December 31, 2018

Description	Country A (GH¢ million)	Country B (GH¢ million)
Domestic Tax	26,450	17,000
International trade tax	18,200	21,330
Non-tax revenue	7,500	12,800
Grants	1,300	1,100
Total revenue	53,450	52,230
Compensation for employees	29,800	20,300
Use of goods and services	10,300	14,000
Consumption of fixed capital	240	280
Exchange difference	990	600
Interest	19,660	10,460
Subsidies	510	120
Other expenses	1,600	1,430
Total Expenditure	63,100	47,190
Net Operation Result	(9,650)	5,040

Statement of Financial Position as at 31 December 2018

Description	Country A (GH¢ million)	Country B (GH¢ million)
Non-Current Assets
Property, plant and equipment	2,450	22,400
Equity investment	8,000	5,500
Total Non-Current Assets	10,450	27,900
Current Assets
Receivables	6,700	8,400
Cash and cash equivalent	4,700	18,000
Total Current Assets	11,400	26,400
Total Assets	21,850	54,300

Description	Country A (GH¢ million)	Country B (GH¢ million)
Funds and Liabilities
Accumulated Fund	(80,200)	4,800
Current Liabilities
Payables	6,200	4,100
Trust monies	1,400	900
Domestic debt	16,000	4,500
Total Current Liabilities	23,600	9,500
Non-current Liabilities
Domestic debt	36,000	18,000
External debt	42,450	22,000
Total Non-current Liabilities	78,450	40,000
Total Funds and Liabilities	21,850	54,300

Required:

a) From the information provided, compute for the two countries respectively:
i) Grant to Revenue ratio
ii) Wage Bill to Tax Revenue ratio
iii) Interest to Revenue ratio
iv) Capital Assets ratio
v) Debt to GDP ratio
vi) Capital expenditure per Capita
(4 marks)

b) Based on the result in question (a), write a report discussing and analyzing the financial performance and financial position of the two countries. Include in your report the limitations of the analysis of the two countries. (6 marks)

Answer

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Tags: Financial Analysis, Financial Ratios, PEFA, Public Financial Management, Public Sector Accounting
Level: Level 2

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.

Question

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.

Answer

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Tags: Accountability, Decision Making, Financial Reporting, Public Sector, Users of financial statements
Level: Level 2

Topic: Financial Statements Discussion and Analysis
Series: NOV 2023

PSAF – Mar 2023 – L2 – Q3b – Financial statements discussion and analysis

Computes and discusses financial ratios to evaluate the performance of a Municipal Assembly over two years.

Question

The Financial Information below relates to Agogo Municipal Assembly.

Agogo Municipal Assembly
Statement of Financial Performance for the year ended 31 December

Additional Information:

The Statistical and economic data of the two years for the Municipal is as follows:

Description	2022	2021
Population	180,000	175,000

Decentralised Transfer includes Common Fund from the Central Government of the respective years. Common Fund constitutes 60% of the Decentralised Transfer for 2022 and 50% of the Decentralised Transfer for 2021.

Required:
i) From the information provided, compute for the respective years:

Common Fund per Capita
IGF per Capita
Compensation of Employees to Total Revenue
Interest to IGF Ratio
(4 marks)

ii) Based on the results computed in i) above, discuss the performance of the Municipal Assembly.
(6 marks)

Answer

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Tags: Financial Performance, Financial Ratios, Municipal Assembly, Public Sector Analysis, Ratio Computation
Level: Level 2

Topic: Financial Statements Discussion and Analysis
Series: MAR 2023

PSAF – March 2024 – L2 – Q5c – Financial Statements Discussion and Analysis

Discuss two pervasive constraints on the information included in financial statements in public sector reporting.

Question

In an ideal world, every financial information should be captured in the financial statements to ensure completeness. However, in practice, there exist certain constraints on information included in the general-purpose financial reports.

Required:
Discuss TWO (2) pervasive constraints on the information included in the financial statements.

Answer

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Tags: Cost-Benefit, Financial Statements, Information Constraints, Materiality, Public Sector Reporting
Level: Level 2

Topic: Financial Statements Discussion and Analysis
Series: MAR 2024

PSAF – Dec 2023 – L2 – Q3b – Financial Statements Discussion and Analysis

Prepare a Common Size Statement of Financial Position and analyze the financial position based on the Recommended Practice Guide 2.

Question

Presented below is the Statement of Financial Position of the Consolidated Fund of Ghana as at the year ended 31 December 2021 and 2020.

Consolidated Fund of Ghana
Statement of Financial Position as at 31 December

Required:
i) Prepare a Common Size Statement of Financial Position for the year ended 31 December 2021 and 2020. (6 marks)
ii) Based on the Common Size Statement of Financial Position prepared in (i) above, write a report analyzing the financial position in line with the Recommended Practice Guide 2, Financial Statement Discussion and Analysis. (4 marks)

Answer

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Tags: Common Size Statement, Financial Analysis, Financial Position, Public Sector
Level: Level 2

Topic: Financial Statements Discussion and Analysis
Series: DEC 2023

PSAF – Mar 2025 – L2 – Q4 – Financial statements discussion and analysis

Prepare a paper evaluating Borga and Obi Manso’s 2023 financial performance using specified metrics.

Question

Statement of Financial Performance for the Year ended 31 December 2024

	Borga	Obi Manso
	GH¢ million	GH¢ million
Revenue
Tax Revenue	302,400	317,300
Non Tax Revenue	50,400	76,000
Grants and Donations	10,440	5,985
	363,240	399,285
Expenditure
Employee compensation	190,512	161,880
Goods and Services	41,208	50,350
Consumption of Fixed Assets	4,680	8,550
Interest	77,880	76,000
Social Benefits	8,160	17,100
Subsidies	–	4,275
Other Expenses	4,800	9,880
	327,240	328,035
Surplus	36,000	71,250

Statement of Financial Position as at 31 December 2024

	Borga	Obi Manso
	GH¢ million	GH¢ million
Assets
Non-Current Assets
Property, Plant and Equipment	96,000	180,500
Equity Investments	42,000	33,250
Loans Receivables	4,800	2,850
	142,800	216,600
Current Assets
Loan Receivables	33,600	37,050
Inventory	4,800	11,400
Cash and Cash Equivalent	57,600	30,400
	96,000	78,850
Total Assets	238,800	295,450
Funds and Liabilities
Current Liabilities
Payables	36,000	40,850
Deposits and Trust Monies	58,800	57,000
	94,800	97,850
Non-Current Liabilities
Domestic Debt	24,000	38,000
External Debt	50,400	85,500
	74,400	123,500
	169,200	221,350
Accumulated Funds	69,600	74,100
Funds and Liabilities	238,800	295,450

b) Using the metrics above, interpret the performance of the two countries under efficiency, short-term liquidity and long-term liquidity/stability of the countries with a metric each.

Answer

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Level: Level 2

Topic: Financial Statements Discussion and Analysis
Series: MARCH 2025

PSAF – Nov 2024 – L2 – Q4b – Public Expenditure and Financial Accountability

Explanation of the Public Expenditure and Financial Accountability framework and its application.

Question

Based on your results in (a), write a report to the newly appointed board analyzing and indicating whether their performance is better in comparison with the old board.

Answer

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Tags: Accountability, Budgeting, Compliance, Financial Reporting, Public Expenditure
Level: Level 2

Topic: Financial Statements Discussion and Analysis
Series: Nov 2024

PSAF – Nov 2024 – L2 – Q4a – Financial Ratio Analysis

Compute financial ratios for Ghana Wind Farms LTD to analyze performance trends.

Question

Ghana Wind Farms LTD

Statement of Profit or Loss for the Year Ended 31 December 2023

	2023 (GH¢)	2022 (GH¢)
Revenue	9,860,000	6,218,000
Direct Cost	(5,905,000)	(5,822,000)
Gross Profit	3,955,000	396,000
Distribution Costs	(297,000)	(264,000)
Administrative Expenses	(505,000)	(455,000)
Other Income	236,000	13,000
Other Gains	–	1,482,000
Operating Profit	3,389,000	1,172,000
Finance Cost	(1,000,000)	(334,000)
Profit Before Tax Expense	2,389,000	838,000
Tax Expense	(500,000)	(144,000)
Profit After Tax	1,889,000	694,000

Ghana Wind Farms LTD

Statement of Financial Position as at 31 December 2023

	2023 (GH¢)	2022 (GH¢)
ASSETS
Non-Current Assets
Property, Plant & Equipment	17,000,000	15,000,000
Investment	5,000	2,000
Advances & Loans	–	30,000
Total Non-Current Assets	17,005,000	15,032,000
Current Assets
Inventories	687,000	546,000
Trade and Other Receivables	2,829,000	1,978,000
Prepayments	87,000	42,000
Cash and Cash Equivalents	383,000	434,000
Total Current Assets	3,986,000	3,000,000
TOTAL ASSETS	20,991,000	18,032,000
EQUITY & LIABILITIES
Equity
Government Equity	8,000	8,000
Other Government Equity	613,000	306,000
Capital Surplus	8,471,000	7,599,000
Income Surplus	(1,434,000)	478,000
Total Equity	7,970,000	8,697,000
Non-Current Liabilities
Deferred Credit	6,692,000	670,000
Deferred Tax Liabilities	2,498,000	2,572,000
Borrowings (Due After One Year)	1,297,000	950,000
Total Non-Current Liabilities	10,487,000	4,192,000
Current Liabilities
Bank Overdraft	166,000	180,000
Provision for Company Tax	109,000	109,000
Trade and Other Payables	1,820,000	4,516,000
Borrowings (Due Within One Year)	439,000	338,000
Total Current Liabilities	2,534,000	5,143,000
Total Liabilities	13,021,000	9,335,000
TOTAL EQUITY AND LIABILITIES	20,991,000	18,032,000

Required:

a) Compute the following ratios:

Answer

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Tags: Efficiency, Financial Performance, Liquidity, Ratio Analysis, Solvency
Level: Level 2

Topic: Financial Statements Discussion and Analysis
Series: Nov 2024

PSAF – May 2021 – L2 – Q3b – Financial statements discussion and analysis

Compute key financial ratios for two countries and analyze their financial performance and position.

Question

Country X and Country Y are Sub-Saharan African Countries that attained independence around the same period. Presented below are the financial statements of the two countries.

Statement of Financial Performance for the year ended 31 December 2020:

Item Description	Country X (GH¢ million)	Country Y (GH¢ million)
Revenues
Domestic tax	39,675	25,500
International trade tax	27,300	31,995
Non-tax revenue	11,250	19,200
Grants	1,950	1,650
Total revenue	80,175	78,345
Expenditure
Compensation for employees	44,700	30,450
Use of goods and services	15,450	21,000
Consumption of fixed capital	360	420
Exchange difference	1,485	900
Interest	29,490	15,690
Subsidies	765	180
Other expenses	2,400	2,145
Total Expenditure	94,650	70,785
Net Operating Result	(14,475)	7,560

Other Information:

Item Description	Country X	Country Y
Population	30,000,000	22,500,000
Gross Domestic Product (GDP)	GH¢ 217,500,000,000	GH¢ 165,000,000,000

Statement of Financial Position as at 31 December 2020:

Item Description	Country X (GH¢ million)	Country Y (GH¢ million)
Non-Current Assets
Property, plant, and equipment	3,675	33,600
Equity investment	12,000	8,250
Total Non-Current Assets	15,675	41,850
Current Assets
Receivables	10,050	12,600
Cash and cash equivalent	7,050	27,000
Total Current Assets	17,100	39,600
Total Assets	32,775	81,450
Funds and Liabilities
Accumulated Fund	(120,300)	7,200
Current Liabilities
Payables	9,300	6,150
Trust monies	2,100	1,350
Domestic debt	24,000	6,750
Total Current Liabilities	35,400	14,250
Non-Current Liabilities
Domestic debt	54,000	27,000
External debt	63,675	33,000
Total Non-Current Liabilities	117,675	60,000
Total Fund and Liabilities	32,775	81,450

Required:
i) From the information provided, compute for the two countries respectively:

Grant to Total Revenue ratio
Wage Bill to Tax Revenue ratio
Interest to Revenue ratio
Debt to GDP ratio
Capital expenditure per Capita
Wages bill to Total Expenditure ratio (6 marks)

Answer

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Tags: Financial Performance, Public Sector Accounting, Ratio Analysis
Level: Level 2

Topic: Financial Statements Discussion and Analysis
Series: MAY 2021

PSAF – July 2023 – L2 – Q3b – Financial statements discussion and analysis

Compute financial ratios and analyze the financial performance and position of Ghana's Consolidated Fund for 2022 and 2021.

Question

The Financial Statements of the Consolidated Fund of Ghana for the year ended 31 December 2022 and 2021 are presented below:

Consolidated Fund of Ghana – Statement of Financial Performance for the year ended 31 December

Additional Information:

The Statistical and economic data for the two years are as follows:
- 2022: Population: 30.8 million, Gross Domestic Product (GH¢): 768,000,000,000
- 2021: Population: 29.5 million, Gross Domestic Product (GH¢): 552,500,000,000
Capital Assets acquired in 2022 and 2021 amounted to GH¢255,200,000,000 and GH¢141,600,000,000 respectively.

Required:

i) Compute the following accounting ratios for the two respective years (2022 and 2021):

Debt to Gross Domestic Product
Capital Spending as a percentage of Gross Domestic Product
Wage Bill as a percentage of Total Tax Revenue
Debt per Capita
(4 marks)

ii) Based on the result in question i) above, write a report discussing and analyzing the Financial Performance and Financial Position of the nation.
(6 marks)

Answer

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Tags: Debt Management, Financial Performance, Financial Ratios, GDP, Public Sector
Level: Level 2

Topic: Financial Statements Discussion and Analysis
Series: JULY 2023

PSAF – Nov 2020 – L2 – Q3 – Public expenditure and financial accountability framework | Financial statements discussion and analysis

Explain the PEFA framework, compute financial ratios for two countries, and analyze their financial performance and position.

Question

Required:

i) Explain the purpose of the PEFA framework. (3 marks)
ii) Explain the key pillars of an open and orderly public financial management system under the PEFA framework. (7 marks)

b) Country A and Country B are Sub-Saharan African Countries that attained independence around the same period. Presented below are the financial statements of the two countries:

Statement of Financial Performance for the year ended December 31, 2018

Description	Country A (GH¢ million)	Country B (GH¢ million)
Domestic Tax	26,450	17,000
International trade tax	18,200	21,330
Non-tax revenue	7,500	12,800
Grants	1,300	1,100
Total revenue	53,450	52,230
Compensation for employees	29,800	20,300
Use of goods and services	10,300	14,000
Consumption of fixed capital	240	280
Exchange difference	990	600
Interest	19,660	10,460
Subsidies	510	120
Other expenses	1,600	1,430
Total Expenditure	63,100	47,190
Net Operation Result	(9,650)	5,040

Statement of Financial Position as at 31 December 2018

Description	Country A (GH¢ million)	Country B (GH¢ million)
Non-Current Assets
Property, plant and equipment	2,450	22,400
Equity investment	8,000	5,500
Total Non-Current Assets	10,450	27,900
Current Assets
Receivables	6,700	8,400
Cash and cash equivalent	4,700	18,000
Total Current Assets	11,400	26,400
Total Assets	21,850	54,300

Description	Country A (GH¢ million)	Country B (GH¢ million)
Funds and Liabilities
Accumulated Fund	(80,200)	4,800
Current Liabilities
Payables	6,200	4,100
Trust monies	1,400	900
Domestic debt	16,000	4,500
Total Current Liabilities	23,600	9,500
Non-current Liabilities
Domestic debt	36,000	18,000
External debt	42,450	22,000
Total Non-current Liabilities	78,450	40,000
Total Funds and Liabilities	21,850	54,300

Required:

Answer

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Tags: Financial Analysis, Financial Ratios, PEFA, Public Financial Management, Public Sector Accounting
Level: Level 2

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.

Question

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Tags: Accountability, Decision Making, Financial Reporting, Public Sector, Users of financial statements
Level: Level 2

Topic: Financial Statements Discussion and Analysis
Series: NOV 2023

PSAF – Mar 2023 – L2 – Q3b – Financial statements discussion and analysis

Computes and discusses financial ratios to evaluate the performance of a Municipal Assembly over two years.

Question

The Financial Information below relates to Agogo Municipal Assembly.

Agogo Municipal Assembly
Statement of Financial Performance for the year ended 31 December

Additional Information:

The Statistical and economic data of the two years for the Municipal is as follows:

Description	2022	2021
Population	180,000	175,000

Decentralised Transfer includes Common Fund from the Central Government of the respective years. Common Fund constitutes 60% of the Decentralised Transfer for 2022 and 50% of the Decentralised Transfer for 2021.

Required:
i) From the information provided, compute for the respective years:

Common Fund per Capita
IGF per Capita
Compensation of Employees to Total Revenue
Interest to IGF Ratio
(4 marks)

ii) Based on the results computed in i) above, discuss the performance of the Municipal Assembly.
(6 marks)

Answer

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Tags: Financial Performance, Financial Ratios, Municipal Assembly, Public Sector Analysis, Ratio Computation
Level: Level 2

Topic: Financial Statements Discussion and Analysis
Series: MAR 2023

PSAF – March 2024 – L2 – Q5c – Financial Statements Discussion and Analysis

Discuss two pervasive constraints on the information included in financial statements in public sector reporting.

Question

Required:
Discuss TWO (2) pervasive constraints on the information included in the financial statements.

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Tags: Cost-Benefit, Financial Statements, Information Constraints, Materiality, Public Sector Reporting
Level: Level 2

Topic: Financial Statements Discussion and Analysis
Series: MAR 2024

PSAF – Dec 2023 – L2 – Q3b – Financial Statements Discussion and Analysis

Prepare a Common Size Statement of Financial Position and analyze the financial position based on the Recommended Practice Guide 2.

Question

Presented below is the Statement of Financial Position of the Consolidated Fund of Ghana as at the year ended 31 December 2021 and 2020.

Answer

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Tags: Common Size Statement, Financial Analysis, Financial Position, Public Sector
Level: Level 2