FR - Accounting for Public Sector

Question 1

What is the Public Sector defined

Answer 1

It can be the government, government component, government organization and partnership through the Public Sector Accounting Board (PSAB)

• Public Sector statement and recommended practice (SORP)
• Financial statement discussion and analysis
• Public performance reporting
• Assessment of tangible capital asset
• Indicators of financial condition

Question 2

What are the different organization types

Answer 2

1. Government - provide services through various organization such as ministries, department, crown corporation, agencies commission and board
2. Government organization - is an organization controlled by government that is separate entity with the power to contract in its own name and that can be sued or be sued
3. Government business enterprises - are legal entities separate from the government with the power to contract in their own name that can sued or be used.
   Delegate financial and operational authority and sell goods and services to entities
4. Government NPO - entities with no transferable ownership interest and are operated exclusively for social, educational, professional, regilious, health or charities

Question 3

What should the public sector present their financial statement following

Answer 3

With PSA Handbook

Government business enterprises must present their F/S in accordance with Part I of Handbook (IFRS)

Question 4

Provide 4 assessment that can be used for government financial report

Answer 4

• Sources and types of government revenue
• Allocation and use of economic resources
• Cost of goods and services provided in accounting period
• Government financial position

Question 5

Provide 3 objective and limitation of public sector accounting

Answer 5

Objective
- Provide a full account of the nature and extent of the financial affairs and resources controlled by the government
- Describes the government’s financial position at the end of the accounting period. How the government will finance activities
- Demonstrate the accountability of the government for the resource, obligation, and financial affairs by evaluating the financial result in accounting period

Limitation
- Government financial condition is a board, complex concept with both short and long term implication, and describes a government financial health in the context of overall economic environment
- THe change in the government financial position for the period include measures that are not capture in the financial statement
- Financial statement cannot be expected to fulfill the needs of all the user served

Question 6

Provides the 3 major reporting issues

Answer 6

Government transfer - Government transfer of money or asset from one government to another. REcorded as expense for government transferring the cash or asset and revenue for government receiving

Unrecognized asset - Government frequently has assets that cannot be recognized in its financial statement because the value cannot be ascertained

Encumbrance accounting - Budgeting is an integral part of the process of financial planning for government. Allow for careful tracking, government often use encumbrance accounting to help control spending based on budgeting