public sector accounting

516 Pages·2017·2.81 MB·English

ATSWA

ACCOUNTING TECHNICIANS SCHEME WEST AFRICA

STUDY TEXT

PUBLIC SECTOR ACCOUNTING

PUBLICATION OF ASSOCIATION OF ACCOUNTANCY BODIES IN WEST AFRICA (ABWA)
ASSOCIATION OF ACCOUNTANCY BODIES IN WEST AFIRCA (ABWA)
ACCOUNTING TECHNICIANS SCHEME
WEST AFRICA (ATSWA)

STUDY TEXT FOR

PUBLIC SECTOR ACCOUNTING

THIRD EDITION

Copyright (c) 2009 by Association of Accountancy Bodies in West Africa (ABWA). All rights
reserved. No part of this publication may be reproduced or distributed in any form or by any means, or
stored in a database or retrieval system, without the prior written consent of the copyright owner.
Including, but not limited to, in any network or other electronic storage or transmission, or broadcast
for distance learning.

Published by
ABWA PUBLISHERS

DISCLAIMER

This book is published by ABWA; however, the views are entirely those of the writers.

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PREFACE
INTRODUCTION
The Council of the Association of Accountancy Bodies in West Africa (ABWA) recognised the
difficulty of students when preparing for the Accounting Technicians Scheme West Africa
examinations. One of the major difficulties has been the non-availability of study materials purposely
written for the scheme. Consequently, students relied on text books written in economic and socio-
cultural environments quite different from the West African environment.

AIM OF THE STUDY TEXT
In view of the above, the quest for good study materials for the subjects of the examinations and the
commitment of the ABWA Council to bridge the gap in technical accounting training in West Africa
led to the production of this Study Text.
The Study Text assumes a minimum prior knowledge and every chapter reappraises basic methods and
ideas in line with the syllabus.

READERSHIP
The Study Text is primarily intended to provide comprehensive study materials for students preparing
to write the ATSWA examinations.
Other beneficiaries of the Study Text include candidates of other Professional Institutes, students of
Universities and Polytechnics pursuing undergraduate and post graduate studies in Accounting,
advanced degrees in Accounting as well as Professional Accountants who may use the Study Text as
reference material.

APPROACH
The Study Text has been designed for independent study by students and as such concepts have been
developed methodically or as a text to be used in conjunction with tuition at schools and colleges. The
Study Text can be effectively used as a course text and for revision. It is recommended that readers
have their own copies.

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FORWARD

The ABWA Council, in order to actualize its desire and ensure the success of students at the
examinations of the Accounting Technicians Scheme West Africa (ATSWA), put in place a
Harmonisation Committee, to among other things, facilitate the production of Study Texts for students.
Hitherto, the major obstacle faced by students was the dearth of study texts which they needed to
prepare for the examinations.

The Committee took up the challenge and commenced the task in earnest. To start off the process, the
existing syllabus in use by some member Institutes were harmonized and reviewed. Renowned
professionals in private and public sectors, the academia, as well as eminent scholars who had
previously written books on the relevant subjects and distinguished themselves in the profession, were
commissioned to produce Study Texts for the twelve subjects of the examination.

A minimum of two Writers and a Reviewer were tasked with the preparation of Study Text for each
subject. Their output was subjected to a comprehensive review by experienced imprimaturs. The
Study Texts cover the following subjects:
PART I
1 Basic Accounting Processes and Systems
2 Economics
3 Business Law
4 Communication Skills
PART II
1 Principles and Practice of Financial Accounting
2 Public Sector Accounting
3 Quantitative Analysis
4 Information Technology
PART III
1 Principles of Auditing
2 Cost Accounting
3 Preparation of Tax Computation and Returns
4 Management
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Although, these Study Texts have been specially designed to assist candidates preparing for the
technicians examinations of ABWA, they should be used in conjunction with other materials listed in
the bibliography and recommended text.

PRESIDENT, ABWA

STRUCTURE OF THE STUDY TEXT

The layout of the chapters has been standardized so as to present information in a simple form that is
easy to assimilate.
The Study Text is organised into chapters. Each chapter deals with a particular area of the subject,
starting with learning objective and a summary of sections contained therein.
The introduction also gives specific guidance to the reader based on the contents of the current
syllabus and the current trends in examinations. The main body of the chapter is subdivided into
sections to make for easy and coherent reading. However, in some chapters, the emphasis is on the
principles or applications while others emphasise method and procedures.
At the end of each chapter is found the following:
• Summary
• Points to note (these are used for purposes of emphasis or clarification);
• Examination type questions; and
• Suggested answers.

HOW TO USE THE STUDY TEXT

Students are advised to read the Study Text, attempt the questions before checking the suggested
answers.

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ACKNOWLEDGMENTS
The ATSWA Harmonisation and Implementation Committee, on the occasion of the publication of the
first edition of the ATSWA Study Texts acknowledges the contributions of the following groups of
people. The ABWA Council, for their inspiration which gave birth to the whole idea of having a West
African Technicians Programme. Their support and encouragement as well as financial support cannot be
overemphasized. We are eternally grateful.
To The Councils of the Institute of Chartered Accountants of Nigeria (ICAN), and the Institute of
Chartered Accountants, Ghana (ICAG), and the Liberia Institute of Certified Public Accountants
(LICPA) for their financial commitment and the release of staff at various points to work on the
programme and for hosting the several meetings of the Committee, we say kudos.
We are grateful to the following copyright holders for permission to use their intellectual properties:
 The Institute of Chartered Accountants of Nigeria (ICAN) for the use of the Institute’s
examination materials;
 International Federation of Accountants (IFAC) for the use of her various publications;
 International Accounting Standards Board (IASB) for the use of International Accounting
Standards and International Financial Reporting Standards;
 Owners of Trademarks and Trade names referred to or mentioned in this Study Text.

We have made every effort to obtain permission for use of intellectual materials in this Study Texts
from the appropriate sources.
We wish to acknowledge the immense contributions of the writers and reviewers of this manual;
Our sincere appreciation also goes to various imprimaturs and workshop facilitators. Without their
input, we would not have had these Study Texts. We salute them.

Chairman
ATSWA Harmonization & Implementation Committee

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A new syllabus for the ATSWA Examinations has been approved by ABWA Council and the various
PAOs. Following the approval of the new syllabus which becomes effective from the September 2017
diet a team was constitutes to undertake a comprehensive review of the Study Texts in line with the
syllabus under the supervision of an editorial board.
The Reviewers and Editorial board members are:

REVIEWERS
This Study text was reviewed by:
- Mr. T.A Osonuga Retired Director of Audit,
Office of Auditor General, Federal Republic of Nigeria

- Mr. Agbeyangi Babatunde

- Mr. Taiwo Rafiu

EDITORIAL BOARD
The editorial Board Members are:

- Deacon Solomon Oluwole Adeleke, FCA Chairman, ATSWA Examinations Committee

- Mr. Rotimi Akanni Omotoso, FCA ICAN, Registrar/Chief Executive
- Mr. John Irabor Evbodaghe, FCA ICAN, Deputy Registrar, Technical Services
- Mr. Ikhiegbia Braimoh Momoh, FCA ICAN, Deputy Director, Examinations
- Mr. John Adeniyi Adeyemo Principal Manager & HOD, ATSWA
Examinations Department

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TABLE OF CONTENTS

CHAPTER ONE
INTRODUCTION TO PUBLIC SECTOR ACCOUNTING
1.0 Learning Objectives.............................................................................................................
1.1 Introduction to Public Sector............................................................ .
1.2 Definition of Terms.............................................................................................................
1.2.1 Definition of Government.........................................................................
1.2.2 Definition of Public Sector………………………………………………….
1.2.3 Public Sector Accounting System and Processes.................................................................
1.3 Nature and Objectives of Public Sector Accounting...........................................................
1.4 Users of Public Sector Accounting Information.................................................................
1.4.1 Internal Users and the purposes for which they use the Accounts.....................................
1.4.2 External Users and the purposes for which they use the Accounts....................................
1.5 Comparisons between Public and Private Sectors..............................................................
1.6 Purpose of Public Sector Accounting.................................................................................
1.7 Summary...............................................................................................................................
1.8 End of Chapter Review Questions......................................................................................

CHAPTER TWO
CONSTITUTIONAL AND REGULATORY FRAMEWORK
OF PUBLIC SECTOR ACCOUNTING
2.0 Learning Objectives...........................................................................................................
2.1 Introduction.......................................................................................................................
2.2 Constitutional and Legal Provisions in Ghana...........................................
2.2.1 1992 Constitutional Provisions of Ghana
2.2.2 Ghana’s Financial Administration Act No 654 of 2003 .............................. ........
2.2.3 1999 Constitutional Provisions of Federal Republic of Nigeria..................................
2.2.4 Finance (Control and Management) Act of 1958, CAP 144, 1999....................................
2.2.5 Audit Ordinance of 1956 or Act of 1956..................................................................
2.2.6 Appropriation Acts................................................................
2.2.7 Financial Regulations..(2009 Edition)...................................................................................
2.2.8 Fiscal Responsibility Act, 2007.......................................................................................
2.2.9 Public Procurement Act, 2007.........................................................................................
2.2.10 Public Procurement Act, 2007............................................................................................
2.2.11 Other Laws and Regulations............................................................................................
2.3 Bases of Accounting.........................................................................................................
2.3.1 Cash Basis.........................................................................................................................
2.3.2 Accrual Basis....................................................................................................................
2.3.3 Modified Accrual Basis....................................................................................................
2.3.4 Modified Cash Basis........................................................................................................
2.3.5 Commitment Basis...........................................................................................................
2.3.6 Advantages of Financial Regulations/Accounting Manual........................................
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2.3.7 Disadvantages of Financial Regulations/Accounting Manual..................................
2.4 Summary and Conclusion................................................................................................
2.5 End of Chapter Review Questions..................................................................................
CHAPTER THREE
FINANCIAL RESPONSIBILITIES OF FINANCE OFFICERS OF GOVERNMENT
3.0 Learning Objectives........................................................................................................
3.1 Introduction....................................................................................................................
3.2 Accounting Officer.........................................................................................................
3.2.1 Functions of an Accounting Officer................................................................................
3.3 Accountant-General of the Federation............................................................................
3.3.1 Powers of the Accountant-General of the Federation
3.3.2 Functions of the Accountant-General of the Federation.................................................
3.4 Auditor-General for the Federation..........................................................................................
3.4.1 Functions of the Accountant-General of the Federation
3.4.2 Independence of the Auditor-General for the Federation...............................................
3.4.3 Removal of the Auditor-General for the Federation.......................................................
3.5 Auditor-General for State Government...........................................................................
3.5.1 Appointment of Auditor-General for State Government................................................
3.5.2 Functions and Responsibilities of Auditor-General for State Government....................
3.6 Office of the Auditor-General for Local Government....................................................
3.6.1 Legal Framework of the Office of Auditor-General for Local Government..................
3.6.2 Statutory Functions of the Auditor-General for Local Government...............................
3.7 The Sub-Accounting Officer..........................................................................................
3.7.1 Functions of Sub-Accounting Officer.............................................................................
3.8 The Sub-Treasurer of the Federation..............................................................................
3.8.1 Functions of the Sub-Treasurer of the Federation..........................................................
3.9 The Revenue Collector....................................................................................................
3.9.1 Functions of the Revenue Collector................................................................................
3.10 The Federal Pay Officer..................................................................................................
3.11 The Director of Budget...................................................................................................
3.11.1 Functions of the Director of Budget..............................................................................
3.12 The Minister of Finance..................................................................................................
3.12.1 Appointment of the Minister of Finance.........................................................................
3.12.2 The Functions of the Minister of Finance.......................................................................
3.13 Summary........................................................................................................................
3.14 End of Chapter Review Questions.................................................................................

CHAPTER FOUR
SOURCES OF GOVERNMENT REVENUE
4.0 Learning Objectives.......................................................................................................
4.1 Introduction....................................................................................................................
4.2 Government Revenue and Sources..........................................................
4.3 Revenue Collecting Agencies in Nigeria..............................................................................
4.3.1 Nigerian National Petroleum Corporation.(NNPC)........................................................
4.3.2 Federal Inland Revenue Service (FIRS).............................................................
4.3.3 State Boards of Internal Revenue (SBIR)
4.3.4 Department of Petroleum Resources (DPR)
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4.3.5 Nigeria Custom Service
4.3.5.1 Core Functions
4.3.5.2 Other Functions
4.4 Sources and Classification of Government Revenue in Nigeria
4.4.1 Federation Account Revenue Heads
4.4.2 Federation Account Allocation Committee
4.4.3 Sources of Revenue payable to the Federation Account
4.5 Federal Government Account or Consolidated Revenue Fund
4.5.1 Analysis of the Various Sources of Revenue payable into Consolidated Revenue Fund
4.5.2 Charges to the Consolidated Revenue Fund
4.6 Value Added Tax ( VAT)
4.7 State Joint Local Government Account Allocation Committee (SJLGAAC)
4.7.1 Compositions
4.8 Development Fund
4.8. Charges from Development Fund
4.9 Contingency Fund
4.9.1 Charges on Contingency Fund
4.10 Sources of State and Local Government Finance( Ghana)
4.10.1 State/Central Government
4.10.2 Public Money
4.1 Local Government/District Assembly Revenue(Ghana)
4.11.1 Central Government Revenue
4.12 Locally Generated Revenue (Ghana)
4. Loans and Grants (Ghana)
4.13.1 Loans
4.1 Grants
4.14 Other Public Money (Ghana)
4.14.1 Trust Money
4.15 Revenue Estimation (Ghana)
4.16 Federal/Unitary Government Account
4.17 Public Accounts (Ghana)
4.18 Departmental Accounts (Ghana)
4.18.1 Other Government Accounts
4.19 The Fund System of Accounting Ghana)..................................................................
4.19.1 Definition of Fund...........................................................................................................
4.19.2 Types of Fund.(Ghana).......................................................................
4.19.3 Advantages of Fund Accounting.....................................................................................
4.19.4 Disadvantages of Fund...................................................................................................
4.19.5 Entries of Fund Accounting............................................................................................
4.20 Funding Principles in Nigeria
4.20.1 Classification of Fund
4.20.2 Types of Fund
4.21 Revenue Control
4.22 Summary and Conclusion................................................................................................
4.23 End of Chapter Review Questions..................................................................................

CHAPTER FIVE
GOVERNMENT EXPENDITURE
5.0 Learning Objectives........................................................................................................
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