FACULTY OF namibia UniVERSITY OF SCIEnCE AnD TECHnOLOGY SCIENCES MANAGEMENT DEPARTMENT OF MANAGEMENT QUALIFICATION: BACHELOR OF PUBLIC MANAGEMENT QUALIFICATION CODE: 24BPMA LEVEL: 7 COURSE CODE: PSA712S COURSE NAME: PUBLIC SECTOR ACCOUNTING SESSION: JANUARY 2017 PAPER: THEORY & PRACTICAL DURATION: 3 HOURS MARKS: 100 SECOND OPPORTUNITY EXAMINATION PAPER EXAMINER(S) MRS. MICHELLE DAUSAS MODERATOR: MR. BINIAM MEBRAHTU GHIRMATSION INSTRUCTIONS 1. Answer ALL the questions. 2. Write clearly and neatly. 3. Number the answers clearly. PERMISSIBLE MATERIALS 1. Examination paper. 2. Examination script. THIS QUESTION PAPER CONSISTS OF 3 PAGES (Including this front page) 1
Question 1 {18 Marks) There are three bases under which the financial statements of a public sector enterprise are compiled. a) Name and define each of these bases. b) Name 2 advantages of each of these bases. c) Name 2 disadvantages of each of these bases. (6 Marks) {6 Marks) {6 Marks) Question 2 (26 Marks) A Vote book is a memorandum accounts book used for monitoring Government expenditure and ensuring that there is no extra-budgetary spending. It is the duty of every officer controlling expenditure to keep a vote book. The following balances were extracted from the Vote Ledger of Ministry of Finance State Treasury in March 2016: Vote Item Amount N$ 211 Contribution from Consolidated Revenue Fund 1500 000 212 External grant 1800 000 213 Internal loan 1100 000 214 External loan 3 300 000 220 Rural development 700 000 225 Mining and Quarrying 250 000 231 Air transport 175 000 233 Education 423 000 234 Health Care 305 000 239 Environment and tourism 1700 000 240 Housing 900 000 245 Defence 1170 000 246 General administration 381000 In addition, the following pieces of information were derived from the approved Capital Budget of the State: Vote N$ Vote N$ 211 5 000 000 220 300 000 212 3 100 000 225 350 000 213 1600 000 231 160 000 214 1200 000 233 315 000 234 464 000 239 45 000 240 150 000 245 700 000 246 450 000 The funds are assumed to flow evenly during the period. 2
Required a) Give five (5) reasons for keeping a Vote Book. b) Name five (5) functions/duties of an Accounting Officer. {5 Marks) {5 Marks) c) Prepare the Development Fund Statement of Accounts for the period ended March 31, 2016. {16 Marks) Question 3 {15 Marks) a) What are the principal sources of revenue for the Republic of Namibia? List 5 sources of revenue and give 2 examples for each. Question 4 {20 Marks) The following were discovered by the Accounting Officer ofthe Ministry of Works, Transport and Communication, while cross-checking the books of accounts, on 31 December 2015. 1. On 31 March 2015, a double payment of N$95,000 was made to ABC Constructions (Pty) Ltd, a contractor, for services rendered in the maintenance of Government Buildings. 2. An amount of N$90,000 was fraudulently withdrawn from the State Emergency Relief Fund in October 2015. 3. The sum of N$900,000 initially charged to Motor Vehicle Advances Account had been abandoned. 4. The sum of N$2,950,000 for revenue which should have been collected by the Government was abandoned. 5. An overpayment of N$12,000 made in 2015 was charged to the Consolidated Revenue Fund. Required: Prepare CORRECTING journal entries to reflect the above transactions. Narratives are required. Question 5 {15 Marks) Government financial reporting helps satisfy the information needs of a variety of users. State the principal users of government financial reports and their needs. Question 6 {6 Marks) Identify reasons as to why Public-Private Partnerships PPPs appear to be particularly well-suited to providing economics infrastructure. END OF QUESTION PAPER 3
FACULTY OF namibia UniVERSITY OF SCIEnCE AnD TECHnOLOGY MANAGEMENT SCIENCES DEPARTMENT OF MANAGEMENT QUALIFICATION: BACHELOR OF PUBLIC MANAGEMENT QUALIFICATION CODE: 24BPMA LEVEL: 7 COURSE CODE: PSA712S COURSE NAME: PUBLIC SECTOR ACCOUNTING SESSION: JANUARY 2017 PAPER: THEORY & PRACTICAL DURATION: 3 HOURS MARKS: 100 EXAMINER(S) SECOND OPPORTUNITY MEMORANDUM PAPER MRS. MICHELLE DAUSAS MODERATOR: MR. BINIAM MEBRAHTU GHIRMATSION INSTRUCTIONS 1. Answer ALL the questions. 2. Write clearly and neatly. 3. Number the answers clearly. 1. Examination paper. 2. Examination script. PERMISSIBLE MATERIALS THIS QUESTION PAPER CONSISTS OF 6 PAGES (Including this front page)
Question 1 a) i) The Cash basis./ It is the basis of accounting under which revenue is recorded only when cash is received, and expenditure recognised only when cash is paid, irrespective of the fact that transactions may have occurred in the previous accounting period../ ii) The Accrual basis./ Under this basis, revenue is recorded when earned and expenditure acknowledged as liabilities when known or benefits received, notwithstanding the fact that receipts or payments of cash have taken place wholly or partly in other accounting periods../ iii) The commitment basis./ It is a basis that records anticipated expenditure evidence by a contract or a purchase order../ b) Advantages of Cash Basis of Accounting {Max 6 marks -1 mark for basis and 1 mark for explanation) It is simple to understand./ It eliminates the existence of debtors or creditors./ It permits easy identification of those who authorise payments and collect revenue./ It allows for comparison between the amount provided in the budget and that actually spent./ It saves time and is easy to operate./ It permits the delegation of work in certain circumstances./ The cost of fixed assets is written of in the year of purchase, resulting in fewer accounting entries. {Max 2 marks) Advantages of Accrual Basis of Accounting It takes a realistic view of financial transactions./ It reveals an accurate picture of the state of financial affairs at the end ofthe period./ It could be used both economic and investment decision making as all parameters for performance appraisal are available./ It aligns with the matching concept./ It makes allowance for the depreciation in the value of the assets used to generate the revenue of the enterprise../ {Max 2 marks) Advantages of Accrual Basis of Accounting A special payment tabulation is available when required./ Adjustments occurring when actual expenditure has been obtained does not affect the final accounts./ It is an aid to financial control. A commitment is regarded as a charge which has been made on a budget provision../ It takes a realistic view of financial transactions./ It reveals an accurate picture ofthe state of financial affairs at the end ofthe period./ It could be used both economic and investment decision making as all parameters for performance appraisal are avai lable./ It aligns with the matching concept./ It makes allowance for the depreciation in the value of the assets used to generate the revenue of the enterprise../ (Max 2 marks) 2
c) Disadvantages of Cash Basis of Accounting It takes a realistic view of financial transactions as only the settlement of liabilities is recognised.v"' It does not provide for depreciation since assets are written off in the year of purchase v"' It does not convey an accurate picture of the financial affairs at the end of the year. v"' The cash basis cannot be used for economic decisions as it tends to hide information. v"' It does not accord with the 'matching concept'. v"' (Max 2 marks) Disadvantages of Accrual Basis of Accounting It is difficult to understand, especially by non-accountants v"' It does not permit easy delegation of work in certain circumstances. v"' Disadvantages of Accrual Basis of Accounting (Max 2 marks) The system involves extra work. Actual figures have to be substituted with commitment provisions to finally determine the running balances under the sub-heads of expenditure. v"' Over expenditure is more under this basis in the expectation that Government may finally release funds to settle the legal obligations. v"' At year end, all commitments that are subject to unfulfilled order sill have to be written back to reflect the extract picture of the transactions which took place during the year. v"' Balances which ought to have elapsed in the Vote Book at the end of the year may be spent by issuing local purchase orders to exhaust the votes. v"' (Max 2 marks) Question 2 {26 Marks) a) Reasons for keeping a Vote Book are: i) For effective monitoring of government expenditure. v"' ii) To show uncommitted balance at a glance. v"' iii) To highlight Government creditors and liabilities. v"' iv) To ensure that funds are available in the appropriate Heads and Sub-heads to meet payments due. v"' v) To ensure that there is no extra budgetary-spending. v"' (Max 5 marks) b) The functions of an Accounting Officer include the following To establish and manage an effective, efficiently run and result-oriented Internal Control Department in his Ministry. v"' To ensure that proper books of accounts and system as specified by the Minister of Finance are kept. v"' To ensure that all revenue accruable to his Ministry are collected and accounted for as and when due. v"' To ensure that there is provision for effective security system over all government funds..;' To install adequate preventive measures against frauds and misappropriation of funds. v"' To ensure that only trustworthy, dedicated and reputable officers are entrusted with government funds. v"' To ensure that all payments are backed up with proper authority and that only services and goods provided are paid for. v"' To make available all the cash, stamps, bank statements etc. in his custody when such is requested for by the Accountant-General of, or Auditor-General for, the Government. v"' To ensure that financial statements statutorily required are prepared without delay. v"' (Max 5 marks) 3
c) Development funds statement of accounts for the pe riod ended March 31, 2012 Vote Item Estimates Actual 211 Contribution from CRF 5,000,000 1,500,000 v'v' 212 External grant 3,100,000 1,800,000 v' v' 213 Internal loans 1,600,000 1,100,000 v' v' 214 External I oans 1,200,000 3,300,000 v' v' 10,900,000 7,700,000 v' v' 220 Rural development 300,000 700,000 v' v' 225 Mining and quarrying 350,000 2,500, 000 v' v' 231 Air transport 160,000 175,000 v' v' 233 Education 315,000 423,000 v' v' 234 Health care 464,000 305,000 v' v' 239 Environment 45,000 1, 700, 000 v' v' 240 Housing 150,000 900, 000 v' v' 245 Defence 700,000 1,170,000 v'v' 246 General administration 450,000 381,000 v' v' 2,934,000 8,254,000 v' v' Surplus I (Deficit) 7,966,000-554,000 v' v' {Max 16 marks - J1 mark for each entry on estimate and actual) Question 3 a) i) ii) iii) iv) v) {15 Marks) Direct Taxes./ {e.g. income tax, companies & close corporations tax and PAVE) Indirect Taxes./ {e.g. Value Added Tax) Mining, Rental income and Royalties./ {for either 1 of these options) - {e.g. selling of exploration and mining rights, rental of government property and royalties paid by mining companies) Excise duties, import duties, export duties and levies./ {for either 1 of these options) - {e.g. excise duty for products {such as beer), import VAT and environmental levies Fees, fines and licences./ {for either 1 of these options) - (fines for violation of laws and regulations such as traffic fines, registration fees for legal documents such as birth certificates etc. and licence fees such as liquor licences). {Max 15 marks- 1 mark listing the source, 1 mark for each of the 2 examples provided} 4
Question 4 Date Details Debit Credit 1 Dec 2015 Cash Account./' 95,000 ABC Constructions (Pty) Ltd./' 95,000 Being refund of overpayment made on 31 March 2015./' {1 mark for each correct account and 1 mark for narration) 2 Dec 2015 Cash Account./' 90,000 State Emergency Relief Fund./' 90,000 Amount fraudulently withdrawn from the Fund./' {1 mark for each correct account and 1 mark for narration) ~ } (1/2 mark for each amount) ~ } {1/2 mark for each amount) 3 Dec 2015 Bad debt Account./' 900,000 Motor Vehicle Advanced Account./' 900,000 Being the abandonment of the amount charged to the Mota Vehicle Advanced Account./' {1 mark for each correct account and 1 mark for narration) ~ } {1/2 mark for each amount) 4 Dec 2015 Bad debt Account./' 2,950,000 Revenue Receivable Account./' 2,950,000 Being revenue receivable, now abandoned./' (1 mark for each correct account and 1 mark for narration) ~ } (1/2 mark for each amount) 5 Dec 2015 Cash Account./' 12,000 Consolidated revenue Account./' 12000 Being overpayment recovered../' {1 mark for each correct account and 1 mark for narration) ~ } (1/2 mark for each amount) Question 5 {21 Marks) a) Legislation and other Government Bodies-/" Legislative and governing bodies grant authority to government and other units to administer public financial affairs and resource and subsequently hold them accountable. They are primary users of financial reports. They look at financial reports to help them assess the government's stewardship to resources, compliance with legislation and other authorities, state of finance and performance. -1' -1' b) The Public -1' Legislatures and governing bodies of units are accountable to the public who provide and revenue and resources necessary for government operations. The members of public receive government services and are beneficial owners of the public money and property. Such members ofthe public are tax payers and recipients of goods and services provided by the government. They seek information on how well the government had managed the national financial affairs and resources, and on the overall economic impact of the government activities. -1' -1' c) Investors and Creditors-/" Investors in government securities and enterprises and other creditors provide financial resources to governments. Governments are interested in providing investors and creditors with information which are useful in evaluating the efficiency and effectiveness of government agencies. -1' -1' 5
. ( d) Economic and Financial Analysts../ Economic and financial analysts, including the financial media review, and disseminate information to others such as legislators and the public. They use the information provided to analyse and evaluate financial and economic issues.../../ e) Internal Managers, Policy Makers and Administrators../ They us the information provided for control purposes, decision making, the assessment, allocation and use of resources.../../ Question 6 {6 Marks) PPPs appear to be particularly well-suited to providing economics infrastructure. This is primarily for three reasons. First, sound projects that address clear bottleneck in roads, railways, port, power, and other infrastructure are likely to have economic rates of return and therefore to be attractive to the private sector.../../ Secondly, in economic infrastructure projects, the private sector can be made responsible not only for constructing the infrastructure asset but also for providing the principal service that relates to it, allowing them to tailor asset design specifically to this purpose.../../ Thirdly, to the extent that these services are supplied directly to final users, charging is both feasible and, from an efficiency standpoint, desirable.../../ {Max 6 marks) 6