WHAT ARE THE OBJECTIVES OF PUBLIC SECTOR ACCOUNTING
Public sector accounting had many objectives for it establishment, the following are the main objectives of public sector accouting:
1) to provide financial information useful for determining and predicting the flows, balances, and requirements of short-term financial resources of the government;
2) to provide financial information useful for determining and predicting the economic condition of the government unit and changes therein;
|Uses financial reports to develop and maintain a
|management information system, capturing real
|time, the past, present, and emerging development and behavior patterns of various government organizations
|Auditor – General
|whether government accounts have been properly kept and records properly reported on
|Require financial information to be used in salary
|Are there enough money to pay for government
|Suppliers of goods
|Non – Governmental
|Want to know key areas of the state that require
|social or economic intervention.
|The World Bank, I.M.F,
|Wants to know the financial and economic
|Multilateral and Bilateral
|performance of the country was to assist,
|Agencies and Foreign
|where to advise. They want to assess the
|effectiveness of spending on HIPC and Poverty alleviation, the sustainability of fiscal Policies, net debt, net wealth, contingent claims against the government and obligations for government pensions.
|whether government borrowing from the
|commercial banks would affect their business, and whether they can do business with the government?
3) to provide financial information useful for monitoring performance under terms of legal, contractual, and fiduciary requirements;
4) to provide information useful for planning and budgeting and for predicting the impact of the acquisition and allocation of resources on the achievement of operational objectives; and
5) to provide information useful for evaluating managerial and organizational performances.
6) determining the costs of program, functions, and activities in a manner that facilitates analysis and valid comparison, with established criteria among periods and with other sector ministries;
- for evaluating the efficiency and economy of operations of organizational units, programs, activities, and functions
- for evaluating the results of programs, activities, and functions and their effectiveness in achieving their goals and objectives; and
- for evaluating the equity with which the burden of providing resources for government operations is imposed.
The primary objective of accounting and financial reporting in government is to provide useful information for assessing management performance and stewardship.
Assessing this involves determining what an entity has achieved and what it can achieve in the future. In assessing past performance, information must provide indications on:
financial viability (the ability of the entity to provide the same level of resources) ° program activity (the degree of activity under various programs including costs of inputs and value of outputs);
fiscal compliance (whether financial and related laws and regulations were followed.
Another aim of financial statements of public sector bodies is to provide information on which constituents (taxpayers, ratepayers, lenders, donors, etc.) can base a decision to retain or replace decision-makers.
Decision-makers have a corresponding obligation of accountability to publish
financial statements to fulfill the requirements of accountability. They should provide evidence of:
(a) stewardship of financial resources;
(b) faithful compliance with legal requirements and administrative policies;
(c) economy and efficiency of operations; and
(ci) produce results of programs and activities.
Define Accounting in the Public Sector
In light of the nature of public sector accounting, an attempt is made to define the term. Among the things that come to mind are:
- Public Sector Accounting is an information system that measures financial information (transactions) in the public sector for the purposes of planning, appraisal, reporting, evaluation, and management.
- A financial system designed to capture all transactions involving government funds, compare actual and budgeted results, offer timely revenue and spending information to the government, and provide information useful for evaluating the efficiency of government programs.
- The set of processes and procedures required for accounting in order to achieve the desired outcomes of government programs and operations.
- A collection of processes and procedures used by public sector entities to handle their financial affairs.
- Accounting in the public sector is concerned with the recording, managing, analyzing, classifying, summarizing, measuring, and reporting of government financial flows. It entails receiving, storing, and disbursing public and trust funds.
The law requires it. The goal is to show that government resources have been approved and handled appropriately by ensuring that government funds are applied honestly, following right procedures, and staying within budgeted levels and legal restrictions.
What is Accounting in the Public Sector?
Although the last description of public sector accounting looks to be more detailed, all of the definitions sound convincing. The most important things to remember are that public sector accounting is:
A financial information system that is always changing.
It is vast in scope and confined only to the information user’s requirements.
It is built on the foundation of laws, rules, regulations, policies, processes, and methods.
To ensure that the data generated is examined and distributed in a timely manner.
To ensure that the system’s key trademarks are stewardship and public accountability.
The subject of public sector accounting has become an important aspect of accounting studies around the world as a result of several developments in recent decades. To begin with, the size of the government budget and the contribution of public expenditure to GDP, particularly in emerging nations, are tremendous.
Second, an examination of the concept and practices of accounting as they apply to public sector accounting and general commercial accounting reveals that the two accounting systems are only separated by a thin line, primarily in terms of accounting processes and management concepts.
Third, accounting is a highly dynamic information system, with new and developing technologies and information systems heavily influencing its transformation, storage, retrieval, and reporting. These new computerized systems have been designed to work with both conventional commercial accounting firms and government agencies with minimal or no adjustments.
Several ledger systems, payroll systems, and pension administration, for example, have little variation. Fourth, governments all over the world have state-owned firms that are either quasi-commercial or totally commercial.
Accountancy education must consequently be thorough enough that a professional accountant may apply his or her knowledge and skills in a variety of settings, including commercial, quasi-commercial, and governmental entities.
A Short History
Ghana has a lengthy history with public accounting. In the Gold Coast (Constitution) Order in Council of 1954, the first legislative reference to government finances appears to have been made.
However, the reference is indirect, as it is found in Section 68, which mandates that the Auditor-General inspect the “accounts of all departments and offices of government.”
This simply assumed that accounts existed and that no one was required to keep or deliver accounts; in fact, from the foundation of the Gold Coast Government in 1874, accounts of government had been kept and published under the authority of Colonial Regulations. Since 1954, every piece of constitutional legislation has repeated this veiled reference to the government’s books.
However, the first thorough attempt to provide legislative credence to the government’s accounts was not made until 1957, when the country gained independence.
The Public Accounts Ordinance of 1957 was enacted (no.37 of 1957). The Public Accounts (Audit) Rules were issued the same year as this statute, allowing for the creation of rules relating to public accounts. They mostly dealt with accounting audits, but there was a portion that listed the accounts and statements that the Accountant-General would be auditing.
For the creation of rules, the 1957 Ordinance was replaced. The Public Accounts (Railway and Harbours Administration) Rules, 1959, the Public Accounts (Treasury) Rules, 1959, and the Public Accounts (Audit) Rules, 1959, were all issued.
The Treasury Criteria did require the keeping and rendering of accounts, as well as certain rules governing how they should be prepared, such as designating the financial year and ensuring that the statements given to Parliament “only reflect funds paid or received within the period of account.”
Part VI- Public Accounts (Consolidated Fund) of the Financial Administration Decree 1967 (NLCD 165) contains two paragraphs, “Keeping Public Accounts” and “The Public Accounts.”
These paragraphs, which were based in part on the Treasury Restrictions of 1959 Act, 1959 (Act 3), were subsequently repealed by the Audit Service Decree, 1972 (NRCD 49), while some rules remained in effect (for example, the length of the government’s fiscal year).