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Public Sector Accounting questions with actual answers.
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Public Sector Accounting questions with actual answers.
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Public Sector Accounting questions withactual answers.
What is the public sector? ANS --consists of organizations where control lies in the hands of the public,
as opposed
to private owners, and whose objectives involve the provision of services where
profit is not a primary objective.
- "the term public sector refers to national governments, regional governments, local governments and
related
governmental entities
IPSASB ANS -Excludes charities although the increasing use of social enterprises in the provision
of public services blurs the distinction1 and many entities that have charitable
status are consolidated in to WGA.
Traditional financial accounting approaches in the public sector ANS -Fund accounting/ cameral
accounting (continental Europe)
- Cash accounting
Fund accounting ANS -self balancing set of accounts segregated for carrying on certain
activities or attaining certain objectives
Cash accounting ANS -Recognises only cash inflows and outflows. This approach was traditionally
used by sovereign governments and is still commonly used internationally.
For Central Government departments prior to
Resource Accounting in late the 1990s.
, Advantages of cash accounting ANS -Simple, cheap, objective
Useful for control and monitoring of public finance
e.g. parliamentary vote on expenditure, fiscal factors, public sector debt
Disadvantages of cash accounting ANS -No measure of worth of organization or income e.g. asset sales
No measure of 'true' cost of operating for the period.
The Regulatory Framework of Public Sector Accounting (UK) ANS -Encompasses laws, accounting
standards
and the conceptual framework, (known as generally accepted accounting practice or
GAAP)
Accounting for public bodies is often prescribed in law ANS -
UK Accounting Standards Board (now a committee of the Financial Reporting Council) ANS -The ASB
initially had little direct role in public sector accounting. It clearly stated its role
was for profit-orientated bodies when established in 1990, but in 2007 reinterpreted its
conceptual framework, the Statement of Principles, for public benefit entities
Financial Reporting Advisory Board (FRAB) UK ANS -The Financial Reporting Advisory Board's role is to
promote the highest possible standards
in financial reporting by Government and to help to ensure that any adaptations of, or
'departures' from, GAAP are justified and properly explained.
The Board was established in
1996 to act as an independent review in the process of setting accounting standards for
government during the reform of central government accounting (development of
resource accounting -see later).
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