Topic: International public sector accounting standards

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PSAF – Nov 2024 – L2 – Q2b – Related Party Transactions and Disclosures

Explains related party transactions and their implications under IPSAS 20.

Question

You are the Director of Finance at the Ghana Water Development Authority, an entity under the Ministry of Forestry and Water. The Authority has a five-member Board chaired by the daughter of the Sector Minister. The Chief Executive Officer of the Authority has just been appointed by Government for an initial term of four years.

The Chairperson of the board runs boutique services. The Authority buys a lot of presents from this boutique whenever they are confronted with the need to give out presents to any high-profile person. The Chairperson has made a request to the Authority to finance her boutique services with an amount of GH¢546,000 to enable her business to pay some urgent bills. No terms or conditions were provided in the request. Such an assistance from a financial institution would attract the current prevailing bank interest on loans at a rate of 35% per annum. Recently, another member of the Board contracted a loan from the Bank for her child’s university entrance fees at that rate.

Management of the Authority indicated that the amount was not significant to the Authority and has been approved by the Head of the entity and the Chief Director. The approved document has been handed over to you for payment. Considering the PFM Laws and IPSAS, you engaged the Chief Director about the request, but you were directed to go ahead and pay and use the appropriate accounting treatment in such circumstances. You accordingly raised the necessary documentation and effected the payment.

Required:

In relation to IPSAS 20: Related Party Disclosures:

i) Explain the implications of this transaction on the Authority and state how you would account for this transaction in the financial statements of the entity.

ii) State SIX situations where related party transactions may lead to disclosures by a reporting entity.

iii) Explain TWO reasons for disclosing related party transactions/relations.

Answer

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Tags: Conflict of Interest, Financial Disclosure, Governance, IPSAS 20, Related Party Transactions, Transparency
Level: Level 2

Topic: International public sector accounting standards
Series: Nov 2024

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

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

Question

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

Answer

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Tags: Depreciation, Financial Statements, Fixed Assets, IPSAS, Public Sector, Valuation
Level: Level 2

PSAF – May 2021 – L2 – Q2b – International Public Sector Accounting Standards (IPSAS)

Explain differences between accrual and cash accounting, justify IPSAS adoption, and describe commitment accounting benefits.

Question

You have received an official memo from your Permanent Secretary, which reads:

Director of Account and Finance: Hope you are doing well. We have just closed from a workshop organised by the Ministry of Finance on public finance management not long ago, and the discussion was all about the adoption of IPSAS accrual accounting in the public sector. It was emphasised that migration from IPSAS Cash Basis to IPSAS Accrual Basis is necessary to improve financial reporting and transparency in the public sector. You know I have little knowledge in accounting, so I was completely lost in the discussions and I wished you had attended the workshop with me.

Another issue discussed was commitment accounting. We were made to understand that commitment accounting strengthens public finance management and therefore all Ministries, Departments and Agencies (MDAs) must ensure that every expenditure is committed in accordance with the appropriation prior to spending.

Please could you help me with some information on these issues?

Required:
Explain to the Permanent Secretary:
i. THREE differences between accrual accounting and cash accounting. (3 Marks)
ii. THREE justifications for adopting IPSAS accrual accounting in the public sector. (3 Marks)
iii. The term “commitment accounting” and illustrate THREE ways it could strengthen public financial management. (4 Marks)

Answer

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Tags: Accrual Basis, Cash Basis, Financial Transparency, IPSAS, Public Finance Management
Level: Level 2

Topic: International public sector accounting standards
Series: MAY 2021

PSAF – Nov 2015 – L2 – Q1 – International Public Sector Accounting Standards (IPSAS)

Evaluate financial treatment for leased machinery, borrowing costs, and investment properties in a public sector agency's financial statements.

Question

Top-Hill State Investment Agency, a government business entity, provided the following transactions for the financial year ended December 31, 2014:

a. On January 1, 2014, the company acquired machinery on lease with a fair value of ₦500,000 and a residual value of NIL at the end of its economic life of five years. The lease payment of ₦139,778 was made first on January 1, 2014, with payments due on the first day of each financial year. The implicit interest rate was set at 8%.

b. Top-Hill State Investment Agency incurred borrowing costs of ₦5 million for the financial year ended December 31, 2014, with ₦1.2 million specifically related to constructing a qualifying asset. The Agency’s policy is to capitalize borrowing costs in line with IPSAS 5 on “Borrowing Costs.”

c. The Agency applies the cost model to its investment properties. At the end of the 2013 financial year, the investment properties carried a value of ₦4.5 million. The Agency depreciates these properties using a 25% reducing balance. The fair value as of December 31, 2014, was ₦4.2 million.

Required:

Explain how the newly leased machinery should be treated in the Financial Statements (Extracts) of the Agency.
State the amount to be taken to the Statement of Financial Performance (Extracts) and the Statement of Financial Position (Extracts) for the year ended December 31, 2014. (20 Marks)
Explain how the ₦5 million borrowing costs should be treated in the financial statements (Extracts) and state the amount to be recorded in the Statement of Financial Performance (Extracts) and the Statement of Financial Position (Extracts) for the year ended December 31, 2014. (4 Marks)
Identify and explain the accounting entries required as of December 31, 2014, to account for the Investment Properties. Show workings. (6 Marks)

Answer

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Tags: Borrowing Costs, Capitalization, Investment properties, IPSAS Compliance, Leased Machinery
Level: Level 2

Topic: International public sector accounting standards
Series: NOV 2015

PSAF – May 2024 – L2 – SB – Q2 – International Public Sector Accounting Standards (IPSAS)

Disclosures and interpretation of financial statements for public sector investments.

Question

a. IPSAS 36 – Investments in Associates and Joint Ventures is a replacement of IPSAS 7 on Accounting for Investments in Associates.

You are required to:

Identify and briefly explain FOUR disclosures that should be made in the accounts on investments in associates. (8 Marks)

b. Interpretation of public sector financial statements is necessary in order to take decisive action in the public sector activities.

You are required to:

Identify and briefly explain THREE ways through which comparison of figures in respect of two or more years can be derived. (12 Marks)

Answer

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Tags: Financial Reporting, Investments, IPSAS
Level: Level 2

Topic: International public sector accounting standards
Series: MAY 2024

PSAF – Nov 2016 – L2 – Q2b – International Public Sector Accounting Standards (IPSAS)

This question discusses the benefits of adopting IPSAS in public sector accounting, focusing on transparency, accountability, and credibility improvements.

Question

Enumerate any FOUR benefits in the adoption of Public Sector Accounting Standards (IPSAS).

Answer

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Tags: Accrual Accounting, Financial Reporting, IPSAS, Public Sector Reforms
Level: Level 2

Topic: International public sector accounting standards
Series: NOV 2016

PSAF – Nov 2016 – L2 – Q2a – International Public Sector Accounting Standards (IPSAS)

This question outlines the benefits of migrating from IPSAS-CASH to IPSAS-ACCRUAL basis for public sector accounting.

Question

In an effort to promote accountability and transparency in governance, the
administration has adopted and implemented the International Public Sector
Accounting Standards (IPSAS) from January 2014. The governments (Federal, State,
Local) and other public institutions adopted IPSAS in the reporting and presentation
of financial statements to improve the quality and comparability of financial
information, and to be in conformity with other advanced nations of the world. IPSASCASH is already adopted in the budgeting, accounting and presentation of financial
statements, while IPSAS-ACCRUAL takes effect from January 2016.
You are required to:

Identify any SIX benefits of migration from IPSAS-CASH basis to IPSAS ACCRUAL basis.

Answer

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Tags: Accrual Accounting, Cash Basis, Financial Reporting, IPSAS, Public Sector Reforms
Level: Level 2

Topic: International public sector accounting standards
Series: NOV 2016

PSAF – Nov 2020 – L2 – Q1 – International Public Sector Accounting Standards (IPSAS)

Discuss IPSAS transition exemptions and prepare financial statements for Oranta State Government using IPSAS accrual.

Question

IPSAS 33, gives a transition relief (exemption) of up to three years within which to develop models for transiting to IPSAS accrual. However, the government of Nigeria adopted accrual IPSAS on revenue from exchange transactions effective January 1, 2016.

Oranta State Government mandated the Accountant-General of the State to implement the IPSAS accrual in the preparation of their financial statements with effect from January 2018 which was complied with accordingly.

For the smooth implementation of IPSAS accrual, the State Executive Council approved the following:

(i) Asset valuation committee to be chaired by the Deputy Governor with the Commissioner of Finance, Commissioner of Budget and Planning, Chairman State Internal Revenue Service, Accountant-General of the State, and Head of Service as members while a Director in the Office of the Secretary to the State Government was appointed as the Secretary.
(ii) The Committee was mandated to value all the State assets and liabilities on or before the implementation of IPSAS accrual.
(iii) The Committee was allowed to engage the services of competent valuers for the job.
(iv) The valuation of the assets and liabilities should be on a continuous basis and any value agreed and approved by the State Executive Council should be brought into the books in the year of valuation.
(v) All assets and liabilities incurred after implementation of IPSAS accrual should be recognized in the year they occurred.

The consolidated trial balance for the year ended December 31, 2017, based on IPSAS cash is as follows:

Extracted consolidated cashbook for the year 2018:

The following information is relevant:
(i) The employees‟ salaries and wages bill for the month of December 2018
amounting to N6.5billion was outstanding at the end of the year.
(ii) The following information was extracted from the unit in charge of
accounting for property, plant and equipment (PPE): 100 sets of HP
computers were received from Koko Computers Limited to assist the State
government to eradicate ghost workers from the payroll- the HP series
P1120, 2016 model. Based on this information, a call was made to three of
their computer suppliers to find out the current price of the HP P1120. Two of
the suppliers quoted N450,000 each, while one quoted N500,500 each.
Based on this information, the fair value of the computers, were taken as
N500,000 each.
(iii) The government during the year received an asset valuation report from the
Asset Valuation Committee that was set up to carry out the valuation of the
old assets and liabilities of the State.
(iv) The following values were recommended and approved by the State
Executive Council respectively:

(v) Pension and gratuity of N15 billion was outstanding at the end of the year
(vi) Some of the accounting policies adopted by the government for depreciation
include the following rates;

(vii) During the year, one of the contractors took the State to court for breach of
contract. The case was still in court as at the end of the year and from all
indications, judgment will eventually be in his favour. The legal adviser
estimated the judgment debt to be N50million.
(viii) Value of office consumables based on inventory sheet as at December 31,
2018 was N550million.
(ix) The following expenses were incurred but not settled as at end of the year.

(x) An extract from the foreign loan amortisation schedule indicates that a total
sum of N32billion comprising principal and interest of N2billion was due
and paid during the year. Also domestic loan of N13billion comprising
principal and interest of N1billion was paid during the year. The interest
payable on domestic and external loans at the end of the year amounted to
N3billion and N5 billion respectively.
(xi) The investment of 10% treasury bills for 360 days was due to mature on
January 1, 2018 and reinvested immediately for another term.
(xii) The revolving loan attracts interest of 4% per annum and it is paid along
with the principal.
Required:
a. In line with the provisions of IPSAS 33, explain how the following revenue
from exchange transactions should be recognised:
i. Aid and grants receivable as at December 31, 2015 (2 Marks)

ii. Debt forgiveness approved on or after January 1, 2016 (2 Marks)
iii. Personal income tax on or after January 1, 2016 (2 Marks)
b. Prepare in vertical form:
i. Statement of financial performance for the year December 31, 2018.
(17 Marks)
ii. Statement of financial position for the year December 31, 2018.
(17 Marks)
(Total 40 Marks)

Answer

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Tags: Accrual Basis, Asset Valuation, Government Accounting, IPSAS, Revenue Recognition
Level: Level 2

Topic: International public sector accounting standards
Series: NOV 2020

PSAF – May 2018 – L2 – Q3 – International Public Sector Accounting Standards (IPSAS)

Explains the term "agricultural activity," determination of fair value, and the accounting treatment for biological assets and agricultural produce.

Question

IPSAS 27 deals with the accounting treatment and disclosures in relation to agricultural practice.

Required:

a. Explain the term “agricultural activity.” (5 Marks)

b. Explain how the fair value of a biological asset or agricultural produce is determined. (8 Marks)

c. Identify TWO ways in which an entity should recognize a biological asset or agricultural produce. (3 Marks)

d. Explain the accounting treatment of gains or losses arising from a biological asset or agricultural produce. (4 Marks)

Answer

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Tags: Accounting Treatment, Agricultural Activity, Biological Assets, Fair Value, IPSAS
Level: Level 2

Topic: International public sector accounting standards
Series: MAY 2018

PSAF – Nov 2021 – L2 – Q2b – International Public Sector Accounting Standards (IPSAS)

Outline changes in accounting policies and identify disclosure requirements when applying IPSAS 3.

Question

IPSAS 3 – Accounting Policies, Changes in Accounting Estimates, and Errors outlines criteria for selecting and changing accounting policies among other purposes.

Required:

Outline what constitutes changes in accounting policies under the standard.
Identify THREE disclosure requirements under the following headings:
- When the initial application of IPSAS 3 is made and has effects on prior, current, or future periods.
- When voluntary changes in accounting policy are made and have effects on current, prior, or future periods.

Answer

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Tags: Accounting Policies, Accounting Standards, Disclosure Requirements, IPSAS 3
Level: Level 2

Topic: International public sector accounting standards
Series: NOV 2021

PSAF – Nov 2021 – L2 – Q2a – International Public Sector Accounting Standards (IPSAS)

Identify the components and types of borrowing costs eligible for capitalisation under IPSAS 5.

Question

IPSAS 5 – Borrowing Cost prescribes the accounting treatment for borrowing costs for general use.

Required:

Identify FOUR components and TWO types of borrowing costs that are eligible for capitalisation by the standard.

Answer

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Tags: Borrowing Costs, Capitalisation, Finance, IPSAS
Level: Level 2

Topic: International public sector accounting standards
Series: NOV 2021

PSAF – Nov 2018 – L2 – Q2 – International Public Sector Accounting Standards (IPSAS)

Discuss reasons for holding investment properties and IPSAS 16 measurement methods, providing examples of investment and non-investment properties.

Question

In line with the Government’s efforts at promoting accountability and transparency, the Federal Government of Nigeria has adopted and is implementing the International Public Sector Accounting Standards (IPSAS). The IPSAS 16 specifically deals with Investment Property which could be land, building, or both. A public sector entity may be established to manage such property portfolios on a commercial basis. An example of such an entity could be a University or Local Government.

Required:
a. Discuss two reasons for holding investment property and the two methods of measurement as contained in IPSAS 16.
(8 Marks)
b. Illustrate with four examples each of investment property and non-investment property.
(12 Marks)

Answer

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Tags: Investment Property, IPSAS 16, property management, Public Sector Accounting
Level: Level 2

Topic: International public sector accounting standards
Series: NOV 2018

PSAF – Mar/July 2020 – L2 – Q2 – IPSAS 3 Changes and Expenditure Assignment Challenges

Explanation of changes in accounting policies and challenges in expenditure assignment according to IPSAS 3.

Question

IPSAS 3 – Accounting policies, changes in accounting estimates and errors, outlines criteria for selecting and changing accounting policies among other purposes.

a. Explain what constitutes changes in accounting policies under the standard.
(4 Marks)

b. Outline THREE disclosure requirements in the standard:

(i) When initial application of IPSAS 3 is made and has effects on current, prior, or future period.
(ii) When voluntary changes in accounting policy are made and have effects on current, prior, or future period.
(6 Marks)

c. Expenditure assignment refers to division or sharing of expenditure, regulatory, and tax functions or responsibilities among multi-levels of governments in a federation. Identify and explain FIVE challenges prevalent on expenditure assignment.
(10 Marks)

Answer

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Tags: Accounting Changes, Accounting Policies, Expenditure assignment, IPSAS 3
Level: Level 2

Topic: International public sector accounting standards
Series: MAR/JULY 2020

PSAF – Mar/Jul 2020 – L2 – Q1a – Accounting for Government Assets and Liabilities

Prepare a non-current assets schedule for a university and identify features of a finance lease in compliance with IPSAS.

Question

In the year 2000, Amotekun State of Nigeria established two State Universities University of Education (ASUE), to cater for the indigenes of the state. The following information relates to each of the universities:
a. The Bursar of Amotekun State University, Oke-Mosan, delegated the preparation of Non-current assets schedule to be included in the final accounts of the University for the year ended December 31, 2018, to one of the Deputy Bursars in the Bursary Department.
In the discharge of the assignment, the Deputy Bursar reviewed the following documents:

International Public Sector Accounting Standards (IPSAS).
Previous year’s financial report.

He was able to obtain the following information:

(i)

Non-current assets register.
Valuation reports, etc.

(i) It is the policy of the University to charge a full year’s depreciation on assets irrespective of the month of purchase or revaluation during the year, while no depreciation is charged on assets disposed of during the year.

(ii) Equipment on lease is depreciated equally over the period of the lease.

(iii) Land and buildings were professionally revalued during the year by Parisco & Associates, a firm of Chartered Surveyors and Valuers, and approved by the State Ministry of Works and Housing. The valuation, which was based on the open market value, produced a revaluation surplus of N150,000,000 over the carrying amount as at January 1, 2018.

(iv) The University purchased plant and machinery which was imported from the United Kingdom at a cost of N430,500,000. Installation and transportation costs to the University amounted to N20,500,000.

(v) The Deputy Bursar that prepared the non-current assets schedule last year classified some of the computer equipment purchased on May 15, 2017, costing N26,000,000 as office equipment. A reclassification is required in the current year.

(vi) Office furniture and fittings costing N12,250,000 were disposed of during the year for N11,500,000, which resulted in a profit of N750,000.

(vii) The University entered into an equipment lease agreement with Ode Finance Limited; the terms and conditions of the finance lease are as follows:
Principal sum: N45,000,000
Lease period: 5 years
Lease rentals: N10,000,000 p.a.
(viii) During the year, the University acquired a fleet of vehicles at the cost of N50,000,000. The State Government financed this acquisition.

Required: i. In accordance with IPSAS 13, identify FIVE features of a finance lease. (5 Marks) ii. Prepare the non-current assets schedule of Amotekun State University suitable for publication. (15 Marks)

Answer

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Tags: Asset Register Question, Depreciation, Finance leases, IPSAS, Non-current assets schedule, Revaluation
Level: Level 2

PSAF – Nov 2016 – L2 – Q1a – Preparation and presentation of financial statements for central government

Prepare the Statement of Financial Performance and the Statement of Financial Position for the Consolidated Fund as of 31 December 2014 under accrual basis, in compliance with IPSAS.

Question

Below is the Trial Balance of the Consolidated Fund for the year ended 31 December 2014.

Additional Information:
i) It is the policy of Controller and Accountant General to adopt the accrual basis of preparing the public accounts of the Consolidated Fund for the first time in compliance with the Financial Administration Regulation 2004 and the International Public Sector Accounting Standards (IPSAS). The effective date is 31 December 2014.
ii) The current Chart of Accounts based on the GFS 2001 is used in the classification of revenues and expenditures.
iii) Consumption of fixed capital charged on cost for the year has been computed as GH¢156,000,000.
iv) Direct tax revenues due to government but were not received at 31 December 2014 amounted to GH¢49,000,000.
v) An established post salary in arrears as a result of salary increment in the fourth quarter of 2014 was GH¢56,000,000 and goods and services outstanding at the end of the year amounted to GH¢12,000,000.
vi) The grant shown in the trial balance as expenditure represents a statutory transfer to the District Assembly Common Fund (DACF). Any arrears in the DACF should be treated as payable. The current rate of transfer is 7.5% on the amount received.
vii) Public debt interest of GH¢14,000,000 was due to creditors but was not paid as at 31 December 2014.

Required:
a) Prepare in a form suitable for publication and in accordance with the relevant Financial Laws and IPSAS:
i) Statement of Financial Performance of the Consolidated Fund for the year ended 31 December 2014.
ii) Statement of Financial Position of the Consolidated Fund as at 31 December 2014.
(Show all workings clearly)

b) Disclose any TWO significant accounting policies as part of the notes to your accounts, as much as the information provided will permit.

Answer

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Tags: Accounting Policies, Accrual Basis, Consolidated Fund, Financial Performance, Financial Position, Ghana, IPSAS, Public Sector Accounting, Trial Balance
Level: Level 2

PSAF – Nov 2016 – L2 – Q1b – International Public Sector Accounting Standard

Identify and disclose two significant accounting policies for the Consolidated Fund using the accrual basis for the first time.

Question

Disclose any TWO significant accounting policies as part of the notes to your accounts, as much as the information provided will permit.

Answer

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Tags: Accounting Policies, Accrual Basis, Financial Administration Regulation, IPSAS, Public Accounts
Level: Level 2

Topic: International public sector accounting standards
Series: NOV 2016

PSAF – May 2021 – L2 – Q1b – International public sector accounting standards

Explain the objectives of measurement in financial reporting under IPSAS and describe four measurement bases for assets in line with the IPSAS Conceptual Framework.

Question

Implementation of the International Public Sector Accounting Standards (IPSAS) is a priority of Government in 2021, and the Controller and Accountant General is doing everything possible to ensure effective implementation. One major concern of the implementors is the measurement of public assets, as these assets are numerous, varied, and acquired in different ways. Nevertheless, assets need to be measured and recognised in accordance with IPSAS.

Required:
i) Explain the objectives of Measurement in Financial Reporting under IPSAS. (4 marks)
ii) Explain FOUR (4) Measurement Bases for assets in line with the Conceptual Framework of General Purpose Financial Report. (6 marks)

Answer

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Tags: Financial Reporting, IPSAS, Measurement, Public Sector Accounting
Level: Level 2

Topic: International public sector accounting standards
Series: MAY 2021

PSAF – July 2023 – L2 – Q4b – International public sector accounting standards

Discuss the recognition of service concession assets under IPSAS 32 and determine whether a hostel facility qualifies as a service concession asset.

Question

A public university has engaged a private estate developer to construct a hostel for its candidates under a Build-Operate-Transfer arrangement over 25 years. Under the arrangement, the university reserves the right to fully control services the operator offers and any significant residual interest. The hostel can only be used to provide accommodation for candidates of the university. The university prepares its financial statements in compliance with the International Public Sector Accounting Standards (IPSAS). The Director of Finance is uncertain whether the hostel facility is a service concession asset or not.

Required:

i) In reference to the above, explain the term “service concession asset” under IPSAS 32: Service Concession Arrangement: Grantor. (1 mark)

ii) Discuss TWO (2) conditions necessary for the recognition of a service concession asset, and indicate whether the hostel facility qualifies for recognition under IPSAS 32. (6 marks)

iii) Outline THREE (3) disclosures that the grantor should make in the notes to the financial statements in respect of concession assets. (3 marks)

Answer

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Tags: Financial Reporting, Grantor, IPSAS 32, Public Sector, Service Concession
Level: Level 2

Topic: International public sector accounting standards
Series: JULY 2023

PSAF – Nov 2020 – L2 – Q4 – Public Procurement | International public sector accounting standards

Explain principles of public procurement and risks associated with procurement in Ghana's public sector. Discuss service concession arrangements under IPSAS 32.

Question

a) Using public money to procure goods, works, and services to provide public services is a frequent but complicated decision of the Head of Procurement entities. It is required that such decisions should go through due process to attain value for money for the public. The Public Procurement laws are embodiments of core principles that govern the entire process. Procurement entities are therefore entreated to promote and secure these core principles in the conduct of public procurements. Non-compliance with these principles embedded in the law increases the risk associated with public procurement.

Required:

i) Explain SIX (6) general principles of public procurement that an officer in charge of procurement of goods, services, and works should consider in line with the Public Procurement Act 2016 (Amendment) Act 914. (6 marks)

ii) Discuss FOUR (4) risks associated with public procurement in the Ghanaian Public Sector. (4 marks)

b) IPSAS 32: Service Concession Arrangements: Grantor establishes the accounting and reporting requirements for the grantor in a service concession arrangement. In these kinds of arrangements, the grantor is a public sector entity. Service Concession arrangements in the public sector are characterized by binding arrangements that involve private sector participation in the development, financing, operation, and/or maintenance of assets used to provide public services. IPSAS 32’s intention is to create symmetry with IFRIC 12: Service Concession Arrangements on relevant accounting issues (that is, liabilities, revenue, and expenses) from the grantor’s point of view.

Required:
i) State and Explain TWO (2) conditions under which a grantor can recognize a Service Concession Asset. (4 marks)

ii) Explain any THREE (3) pieces of information that the grantor shall present and disclose in its Financial Statements. (6 marks)

Answer

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Tags: IPSAS, procurement risks, Public Procurement, Public Sector Accounting, service concession arrangements
Level: Level 2

Topic: International public sector accounting standards, Public Procurement
Series: NOV 2020

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.

Question

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)

Answer

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Tags: Asset Measurement, Financial Reporting, IPSAS, Public Sector
Level: Level 2