INSTITUTE OF CHARTERED ACCOUNTANTS, GHANA (ICAG) COLLEGE PUBLIC SECTOR ACCOUNTING AND FINANCE MARCH 2023 DIET - MOCK EXAMINATION QUESTION 1 a, Discuss the difference between cash accounting policies and accrual accounting policies in terms of recognition and or treatment ofthe following in the Financial Statements: Motor vehicle donated to the entity Revenue due but not received by the entity Inventory of supplies at the end of the financial year Goods and services unpaid for during the year v. Service received in kind Deposit for future services to be delivered 6 marks b. Discuss how the following transactions should be recognized and measured in the financial statement under IPSAS 23: Revenue from Non-Exchange Transactions: i, Revenues from tax Debt forgiveness Donation of goods in kind iv. Service in kind 4 marks c. Toassist them in their work, the IPSAS Board developed the Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities (Conceptual Framework). Explain the purpose and status of the Conceptual Framework. 5 marks . Identify and explain the five (5) measurement bases of liabilities as stated in the Conceptual Framework for Public Sector Entities. 5 marks QUESTION 2 Below is the Trial Balance of the Consolidated Fund for the year ended 31 December, 2021. Debit Credit GHe'million GHgmillion Established post salaries 61627 ‘Non-establish post salaries 2,008, Casual labour cost — 234 7 ‘Administration cost 7 3,352, 7 Conferences and seminars 1,255 Foreign travel cost ~~ 745_ 7 Direct taxes 6,941 Indirect taxes 7,16. ‘Non tax revenues 1,156Gans VSS Subsidies for consumption [ Subsidies for production 361 Social benefits 387 Domestic debt interest_— 1,453 | External debt interest _~ 17a Purchase of motor vehicle 247 Purchase of equipment 2 Purchase of ship 367 Construction of infrastructure 560 Equity and security investment _> 560 Loans and advances 7 980 Cash and bank 7 Gold and other reserves: 860 Treasury bills 11,120 Bonds on GSE 13,462 Euro bonds 7AS6 Bilateral and multilateral debt 17422 Trust fund and deposits 2,235 Other expenditures ~~ 910 ‘Accumulated fund 44,758 é E $8.16 (8.266 Additional Information: i) / Itis the policy of Controller and Accountant General to adopt accrual basis of preparing the public accounts of the Consolidated Fund for the first time in compliance with the PFM Act and the International Public Sector Accounting Standards (IPSAS). 7 Consumption of fixed capital charged on cost for the year has been computed as GH¢156, 000,000. Direct tax revenues due to government but were not received at 31* December 2021 amounted to GH¢49, 000,000. iv) An established post salary in arrears as a result of salary increment in the fourth (4) quarter of 2021 was ‘GH¢56,000,000 and goods and services outstanding at the end of the year amounted to GIi¢ 12, 000, 000. v) The grant shown in the trial balance as expenditure represents 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. vi) ./ Public debt interest of GH¢14,000,000 was due to creditors but was not paid as at 31 December 2021. Required: feet ina form suitable for publication and in accordance with the relevant Financial Laws and IPSAS: {) Statement of Financial Performance of the Consolidated Fund for the year ended 31 December 2021. 8 marks ii) Statement of Cash Flows for the year ended 31 December 2021 8 marksiii) Notes to the Accounts 4 marks QUESTION 3 S a. ye PEFA Reports provides an evidence-based assessment of PFM performance based on the indicator and standardized manner, What matters are taken into 6 marks analysis and other crucial information in a concii account in conducting the PEFA study? 9 a Explain the steps involved in the weakest Tink and averaging method of scoring indicators with multiple 4 marks 1 dimensions of PEFA. f 3) /33 Country A and Country B are Sub-Saharan African Countries which 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 Country B ‘Country A GH¢ million i¢ million Revenues Domestic Tax 26,450 17,000 International trade tax 18,200 21,330 Non-tax revenue 7,500 12,800 Grants 1,300 Total revenue 53,450 Expenditure ‘Compensation for employees 29,800 Use of goods and services 10,300 Consumption of fixed capital 240 Exchange difference Interest Subsidies (Other expenses Total Expenditure Net Operation Result Other information: Population 20,000,000 75,000,000 Gross Domestic Product (GH¢) 145,000,000,000 —_[ 110,000,000 ‘Statement of Financial Position as at 31 December 2018Country A Country B GIig million GHi¢ million ‘Non-Current Assets Property, plant and equipment | 2,450 22,400 Equity investment 8,000 5,500 10,450 27,900 Current Assets Receivables 6,700 8,400 Cash and cash equivalent 4,700 18,000 11,400 26,400 Total Assets 21,850 54,300 Funds and Liabil ‘Accumulated Fund (60,200) 4,800 ‘Current Liabilities Payables 6200 4,100 ‘Trust monies 1,400 900 Domestic debt 16,000 4,500 23,600 9,500 ‘Non-current Liabilities Domestic debt 36,000 18,000 Extemal debt 42,450 22,000 78,450 40,000 Total Fund and Lia 21,850 54,300 Required: (i) From the information provided, compute for the two countries respectively: Gi) ‘+ Grant to Revenue ratio ‘© Wage Bill to Tax Revenue ratio ‘¢ Interest to Revenue ratio. © Capital Assets ratio © Debt to GDP ratio ‘© Capital expenditure per Capita 6 marks 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. 4 marksQUESTION 4 Ka. The head of procurement entity may after the expiry of the deadline for the submission of tenders, cancel a procurement proceeding. Under what conditions can the head of a procurement entity cancel @ procurement entity? J-s248~o, 5 marks __P- What isa tender security? State the forms a tender security may take, and the circumstances under which a tender security may be returned. ‘S marks c. Explain FIVE (5) reasons why you would discourage the Government from embarking on Public-Private Partnership ‘S marks 4. PPP is an arrangement between the public and private sector. i, What are the features of PPP Arrangements? 2 marks vi, What are the obiectives of PPP Arrangements? 3 marks QUESTION 5 ‘2, Anorderly and open public financial management system is prerequisite for attaining desirable economic outcomes such as aggregate fiscal discipline, strategic allocation and effective delivery of public services. ‘Thus, every government needs to pay apt attention to its public financial management system. A. Explain the concept of Public Financial Management. 2marks Explain the elements of public financial management process. 3 marks Discuss THREE (3) challenges of the public financial management system inGhana. 3 marks “-b, The Minister of Finance is responsible forthe policy and strategic matters related to the efficient operation ofthe public financial management system of the country subject to policy guidance from Cabinet, State A five (5) specific responsibilities of the ‘Minister as enshrined in the PFM Act. S marks s enshrined in the PFM Act €. A public hospital estimates that obsolesce in inventory is 10% but further information suggest thatthe inventory lost due to obsolesce is higher. In reference to IPSAS 3 accounting Policies, Changes in Accounting Estimates and Errors: c. Explain whether the change in inventory obsolesce constitutes a change in accounting estimates Imark i. Explain THREE (3) examples of estimates required in the preparation and presentation of financial statements. 3 marks Discuss how a change in accounting estimate should be treated in the financial reports. 3 marks