ACCA Members: Africa Conference PUBLIC SECTOR FINANCE - - PowerPoint PPT Presentation
ACCA Members: Africa Conference PUBLIC SECTOR FINANCE Internationally recognised Public Sector Accounting Standards are taking the market by storm with military precision-Zimbabwe military intervention type, by 2020 Th The f future o of P
PUBLIC SECTOR FINANCE Internationally recognised Public Sector Accounting Standards are taking the market by storm with military precision-Zimbabwe military intervention type, by 2020
Dr R Muza 143 Chiremba Rd
Director CCG Systems & Senior Partner Ralph Bomment Greenacre & Reynolds Registered Public Auditors (Zimbabwe) Phone +263-4-571988 Mobile +263-775837757 He is a Fellow of ACCA (FCCA) Chartered Public Finance Accountant (CPFA); member of CIPFA (UK)
– CA(L); AZiCA; Chartered Public Accountant CPA (Canada) – FCCA; CPA; RPA(Z) Registered Public Auditor (Zimbabwe) Ø Founding Partner Grant Thornton (Zimbabwe) Ø Trained at Price Waterhouse –PwC in Zimbabwe v Versatile in South Africa Local Authorities GRAP and IPSAS Standards v Implemented IPSAS and Accrual Accounting at City of Harare 2012 to 2014 v Implemented IPSAS and Accrual accounting at Chirundu Local Board 2016 to 2017. v Presenter in Public Finance Management Act and in practical Migration to full
charges What will change?
do not change skills sets
Armstrong and colleague
resurrect and see what technology is doing today
Are you maintaining relevance beyond 2020?
corruption in payment cycle
statements
downstairs
What is this hell, that I hear IMF says our accounts are misleading
Sir, you know we do not record transactions once our budget line item is exhausted and we cannot virement, per our accounting manual. Correct, so, what is the problem with that? IMF must stop this discrimination against African countries? What does ACCA say? The ACCA qualified audit partner said all obligations must be recorded and included in our financial statements so that we are not hiding anything? He said that is what IPSAS say.
MINISTER
MODIFIED CASH BASIS Implies that estimates of obligations are brought to book at year end If your Public sector is unable to settle its obligations as they fall due don’t waste time and money trying modified cash basis FULL ACCRUAL Public sector in Africa does not have money to clear their obligations as they fall due. Accordingly, go for full accrual accounting. Under Full accrual it is like how you are maintaining the books of accounts for private sector. Introduce: creditors, provisions, debtors, fixed assets into your financial reporting. Under the current practice fixed assets were expensed in public sector thereby producing misleading financial statements. In short, you should begin to produce a balance sheet /statement of financial position for your public sector entity. Your budget will also have to take into account accrual issues into account. Brettonwoods institutions have been sceptical about misleading financial statements from many countries-lack of transparency. What is lack of transparency?
WHA WHAT T AFRIC ICA UNION ION CLAIM IMS WE WERE THE THE IM IMPACTS OF OF IP IPSAS
Nature Current year Prior year Assertions addressed Migration to IPSAS Procedures Revenue from exchange transactions Refer to note # Refer to note # Service charges xx xx Interest received from customers late payments xx xx Rental income xx xx Other income xx xx Interest received xx xx Total revenue from exchange transactions xx xx Revenue from non-exchange transactions Property rates xx xx Any other taxes and fines xx xx Transfer revenues Government grants and subsidies xx xx TOTAL REVENUES xx xx
STRUCTURE OF STATEMENT OF FINANCIAL POSITION UNDER AN IPSAS FRAMEWORK Revenue (Local Authority)
Nature Current year Prior year Assertions addressed Migration to IPSAS Procedures Expenses Refer to note # Refer to note # Administration xx xx Audit fees xx xx Bulk purchases xx xx Contracted services xx xx Debt impairment xx xx Depreciation and amortisation xx xx General expenses xx xx Finance costs xx xx Impairment loss xx xx Personnel costs xx xx Remuneration of councillors xx xx Repairs and maintenance xx xx Total costs xx xx Operating surplus Loss on disposal of assets xx xx Fair value adjustments xx xx Surplus for the year xx xx
STRUCTURE OF STATEMENT OF FINANCIAL POSITION UNDER AN IPSAS FRAMEWORK Expenditure (Local Authority)
SAMPLE STATEMENT OF FINANCIAL POSITION DEC 20X2 (Assets side for purposes of slide size)
20X2 20X1 ASSETS Current assets Cash and cash equivalents X X Receivables X X Inventories X X Prepayments X X Other current assets X X X X Non current assets Receivables-long term portion X X Investments in associates X X Other financial assets X X Infrastructure, plant and equipment X X Land and buildings X X Intangible assets X X Other non-financial assets X X X X Total assets X X
STATEMENT OF FINANCIAL POSITION (Cont)
20X2 20X1
LIABILITIES Current liabilities Payables
X X
Short term borrowings
X X
Current portion of long term borrowings
X X
Short term provisions
X X
Employee benefits
X X X X
Non current liabilities Payables
X X
Long term borrowings
X X
Long term provisions
X X
Employee benefits
X X X X
Total liabilities
X X
Net assets
X X
NET ASSETS /EQUITY Capital contributed by Other government entities
X X
Reserves
X X
Accumulated surplus/(deficit)
X X
STATEMENT OF FINANCIAL PERFORMANCE –CENTRAL GOVERNMENT 20X2 20X1 Revenue Taxes X X Fees, penalties and licences X X Transfers from other Government entities X X Other revenue X X Total revenue X X Expenses General public services X X Defence X X Public order and safety X X Education X X Health X X Social protection X X Housing and community amenities X X Recreational, cultural. And religion X X Other expenses X X Finance costs X X Total expenses X X Share of surplus of associates (if any) X X Surplus /(deficit) for the period X X
SAMPLE CENTRAL GOVERNMENT- STATEMENT OF CHANGES IN NET ASSETS/EQUITY FOR YEAR ENDED 31 DEC 20X1 Contributed capital Other reserves Translation reserve Accumulated surplus reserve/(reserve) Total Non controlling interest Total net assets/equity Balance at December 31 20x0 X X (X) X X X X Changes in accounting policy X X X X X Restated balance X X (X) X X X X Changes in net assets/equity for 20x1 Gain on property revaluation X X X X Loss on revaluation of investments (X) (X) (X) (X) Exchange differences on translating foreign currencies (X) (X) (X) (X) Net revenues recognised directly in net assets/equity X X X X X X X Surplus for the period X X X X Total recognised revenue and expense for the period X (X) X X X
COMPARISON OF BUDGET TO ACTUAL PERFORMANCE STATEMENT: IPSAS 24
BUDGETE D AMOUNT S ACTUAL AMOUNTS Difference Original final On comparable basis Final budget vs actual Explain RECEIPTS Taxation X X X X Y Aid agreements X X X X Y International agencies X X X X Y Other grants and aid X X X X Y Proceeds from borrowing X X X X Y Proceeds-disposal of plant and equipment X X X X YY Trading activities X X X X Y Other receipts X X X X Y Total receipts XXX XXX XXXX XXX YY PAYMENTS Health X X X X Y Education X X X X Y Public order /safety X X X X Y Social protection X X X X Y Defence X X X X Y Housing and community amenities X X X X Y Recreational, cultural and religion X X X X Y Economic affairs X X X X Y Other X X X X Y Total payments XXX X XX XX YY NET RECEIPTS/PAYMENTS XX XXX XXXXX XXX YY
CLASSIFICATION OF EXPENSES (NATURE/ FUNCTION)
IF YOU CLASSIFY BY FUNCTION, THERE MAY BE ADDITIONAL INFORMATION THAT MAY BE DISCLOSED ABOUT THE NATURE OF EXPENSES INCLUDING DEPRECIATION, ARMOTISATION, EMPLOYEE BENEFITS AND FINANCE COSTS.
PU PUBLIC SECTOR FINANCE E MANAGEM GEMEN ENT T / IPS PSAS IMPL PLEM EMEN ENTATI TION OUR REF
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