2.5 PUBLIC SECTOR ACCOUNTING
ICAG PROFESSIONAL EXAMSFINAL MOCK EXAMS- MAY 2017
COURSE / 2.5 PUBLIC SECTOR ACCOUNTINGTIME / 3 HOURS
Instructions: Attempt all questions. Show all workings in the answer booklet provided.
Cheating in the exams is unethical, and will be least tolerated
QUESTION ONE
a. A loss may be defined as the deprivation of the Government of Ghana of the rightful use of public and trust monies, public property, stores or any other financial and physical assets.
Required
State four (4) duties of a head of an MDA with regard to a loss of government stores (4 Marks)
b. Discuss what is meant by Joint Acquisition of Stores in Public Sector Store Management.
(2Marks)
c. A head of department is accountable for the government stores from the time of acquisition to the time of no further use or value to the government (S35 of FAA)
Required:
Outline three conditions under which accountability of government stores is discharged by the head of department ( 3 Marks)
d. The doctrine of Due process is an assurance that there is compliance with the budgetary, procuring and payment guidelines by all parties to government contracts
i. What is meant by Due Process in Public Procurement? (2Marks)
ii. Explain the benefits of adhering to due process in Public Procurement (4 Marks)
e. State and explain three conditions under which Two – stage tendering procurement method may be used by Public Sector Entities ( 3 Marks)
f. Explain the term “ Tender Security” ( 2 Marks)
Question Two
a. The Auditor-General of Ghana is established by Article 187 (1) of 1992 Constitution whose office shall be a public office and shall be responsible only to the parliament of Ghana. The operations of the Auditor –General of Ghana is however outlined in the Audit Service Act, 2000 (Act 584)
Required
i. State five (5) issues stated in the Audit Service Act, 2000 (Act 584) that the Auditor –General should consider when expressing his opinion on public accounts. (5 Marks)
ii. Outline three means as outlined in the Audit Service Act, 2000 (Act 584) by which the independence of the Auditor- General is ensured in performing his functions (3 Marks)
iii. State three (3) responsibilities of Audit Report Implementation Committee of public sector organization (3marks)
b. A Government Entity can only commence a PPP project after the PPP Approval Committee’s formal approval. State five (5) conditions under which PPP project may require Parliamentary approval before being implemented. ( 5 Marks)
c. Explain the following models of PPP arrangements
i. Turnkey contracts
ii. Concessions (4 Marks)
Question Three
a. Public Accounts Committee (PAC) of Parliament is accountability institution of parliament established in accordance with Article 103 of the 1992 Constitution of Ghana.
i. Briefly explain three (3) roles of Public Account Committee (3 Marks)
ii. State two powers of Public Account Committee. (2 Marks)
b. Distinguish between Cash limit and drawing limit as mechanism for controlling public expenditure. (2 Marks)
c. What is ‘virement’ under public sector expenditure? Under what conditions and within what constraints is virement allowed. (3 Marks)
d. On receipt of the estimate from MDAs’, the Minister of finance shall cause to be conducted budget hearing to review strategic plans and estimate of the MDAs’ concern.
i. Briefly explain Budget Hearing. (2 Marks)
ii. Distinguish between Budget hearing and Policy Hearing. (2 Marks)
iii. State five (5) principles that Minister of Finance apply during the budget hearing (5 Marks)
e. The Revenue Collection Agencies of the government of Ghana have failed to meet their revenue collection targets over the years, leading to government of Ghana deficit financing. Mention four (4) causes of such failures encountered by the Revenue Collecting Agencies (2 Marks)
f. What is statutory expenditure and give two examples (2 Marks)
Question Four
a. i. State four ways by which Local Governments are financed. (2 Marks)
ii. Mention four areas of expenditure which proceeds from Common Funds can finance (2 Marks)
b. i. Mention and explain the three (4) sources of finance for funding the Ghana Education Trust Funds. (2 Marks)
ii. Identify four (4) expenditure items that are lawful to be charged on GET Funds. (2 Marks)
c. “Public debt at a given point in time is the sum of past deficits and surplus”.
Required
i. Explain the above statement and state whether or not you agree with it (3 Marks)
ii. Comment on “ public debt is necessary evil” (3 Marks)
d. Explain the following terms as used in public debt management
i. Debt assumption
ii. Debt for - equity-swap (4 Marks)
e. Explain Environmental Accounting (2 Marks)
Question 5
Western North Regional Hospital is a medical facility financed mainly by the Central Government through appropriation from the Consolidated Fund. The hospital is also permitted to retain internally generated funds to support its expenditure. Occasionally, it also benefits from donor support.
In line with the provisions of the Financial Administration Act and the Financial Administration Regulation, the facility submits a set of annual financial statements to the sector Minister, the Controller and Accountant General and the Auditor General.
The trial balance of the facility as at 31 December 2015 is as follows:
GHS’000 GHS’000
Appropriations from the Consolidated Fund 60,000
Internally generated Funds 12,000
Salaries and Wages 40,000
Inventory of drugs and pharmaceutical products
1 January 2015 800
Purchases of drugs and other pharmaceutical products 15,000
Supplies of services 3,000
Training and conferences 500
Travelling, transport, cleaning, etc 600
Electricity and Water 5,000
Land 10,000
Buildings [net book value] 33,000
Investment Property 7,000
Purchased Equipment [net book values] 8,000
Depreciation 1,600
Payables 2,000
Receivables 3,000
Bank 1,400
Cash 100
Interest on bank account balance 700
Rental income 800
Accumulated surplus 49,500
Revaluation reserve 4,000
129,000 129,000
Additional Information relating to the year ended 31 December 2015:
1) The hospital accountant has completed the majority of end of year adjustments, including depreciation and indexation on the assets held at the beginning of the year. Annual depreciation has been charged on assets held at the start of the year and revaluation surplus of GHS2, 500,000 relating to the land was recognized during the year.
2) The inventory of drugs and other pharmaceutical products at the year end, valued at cost, was GHS1, 200,000.
3) The hospital owns an investment property which is held for rental income. The fair value of the property at 31 December 2015 was GHS7, 500,000. The hospital applies fair valuation model in subsequent measurement of Investment property in line with IPSAS 16 ‘Investment Property’
4) The following information has not yet been accounted for in the trial balance:
i) The hospital purchased equipment at a cost of GHS600,000 on 1st October 2015 and a new equipment valuing GHS4,000,000 was donated to the hospital on 1st April 2015. These pieces of equipment were assessed to have useful life of ten years. The two items of equipment were put to use on the respective dates of acquisition but the invoice for the purchased equipment has not yet been approved for payment.
ii) The depreciation included in the trial balance does not include depreciation on new assets purchased and donated within the year.
iii) The hospital has been made aware of a legal claim of GHS200, 000 filed against it by a patient who suffered medical complications as a result of treatment received from the hospital. The legal advisers are uncertain about the outcome. GHS10, 000 has so far been spent by the legal advisers in filing appearance but the hospital has not yet settled the bill with the legal advisors.
iv) The bank balance in the trial balance represents the balance extracted from the hospital’s cash book. A bank statement for December 2015 which was received on 3rd January 2016 indicates that a cheque of GHS20,000 received from a corporate client and lodged on 24th December 2015 has been dishonoured, a cheque of GHS50,000 issued to a service provider on 28th December had not been presented for payment and National Health Insurance Authority had paid GHS1,200,000 directly to the hospital’s bank account in settlement of outstanding claim.
v) The hospital prepares its financial statements using the accrual basis of accounting and adopts the format prescribed by IPSAS 1 ‘Presentation of financial statements’ and adopted by Controller and Accountant General. Expenses are classified using chart of accounts
Required
Use the International Public Sector Accounting Standards (IPSAS) to prepare statement of financial performance for the year ended 31st December, 2015, and statement of financial position for the year ended 31st December, 2015, including notes to the accounts
20 marks
*END OF PAPER*
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