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PAR812S-PUBLIC SECTOR FINANCIAL ACCOUNTING AND REPORTING-2ND OPP-JAN 2025 |
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n Am I BI A u n IVER s I TY
OF SCIEnCE Ano TECHnOLOGY
FACULTY OF COMMERCE, HUMAN SCIENCES AND EDUCATION
DEPARTMENT OF ACCOUNTING, ECONOMICS AND FINANCE
QUALIFICATION: BACHELOR OF ACCOUNTING HONORS
QUALIFICATION CODE: 08BOAH LEVEL: 8
COURSE CODE: PAR812S
COURSE NAME: PUBLIC SECTOR FINANCIAL
ACCOUNTING AND REPORTING
DATE: January 2025
DURATION: 3 HOURS
PAPER:THEORYAND CALCULATIONS
MARKS: 100
2nd OPPORTUNITY EXAMINATION
EXAMINER(S) Dr. S. Dzomira
MODERATOR: Mr. Mutonga Samuel Mukelebai
INSTRUCTIONS
1. Capture your full name, student number and assessment number on the first page
2. Answer ALL the questions and manage your time properly.
3. Number each page correctly
4. Write clearly and neatly.
5. Do not write in pencil and do not use tip-ex, as this will not be marked.
6. The names of people and businesses used throughout this assessment do not reflect
the reality and may be purely coincidental.
7. Use a non-programmable calculator
8. SHOW ALL WORKINGS!
THIS QUESTION PAPER CONSISTS OF 4 PAGES (excluding this front page)
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Question 1 (60 marks)
The following Trial Balance was extracted from the records of Department of Social
Integration, a central government department, for the year ended 31 December 2023.
N$'000
N$'000
Debit
Credit
Established post salaries (iii)
4,000
Non-established post salaries
1,500
Car maintenance allowance
800
Travel allowance
1,100
Travel and transport
560
Repairs and maintenance
340
Training, Seminar and Conferences
660
Local Consultancy
890
General cleaning
125
Printing materials and Stationery (ii)
800
Utilities
650
Utility allowance
200
Cost of living allowance
1,800
Pension and Gratuity
400
SSF Contribution (13%)
120
Rounding
100
Rent (iv)
300
1,850
Bank charges
10
Special audit fees
45
Motor Vehicles (Cost and Depreciation) (v)
84,000
25,000
Furniture (Cost and Depreciation) (v)
42,000
16,000
Computers (Cost and Depreciation) (v & vi)
14,000
4,000
Premises (Cost and Depreciation) (v)
120,400
22,000
Receivables
3,000
Inventory
860
Fixed deposit
1,000
Payables
6,400
Cash and Cash equivalent
10,000
Donor support
1,200
Tender Security
900
Accumulated Fund
200,210
Compensation for employees
7,000
Use of Goods and Services (vi)
5,600
Capital expenditure
4,500
Other expenses
5,000
294,660
294,660
Additional Information:
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1. The Department prepares its financial statements in compliance with the International
Public Sector Accounting Standards.
ii. Included in printing materials and stationery is a closing inventory valued at cost of
$380,000. The estimated net realisable value and replacement cost of the inventory are
$320,000 and $330,000 respectively. The printing is not for commercial purpose.
iii. In June 2023, the government conducted a massive recruitment into the civil services,
of which 20 employees were posted to the Department. However, they have not been
paid salaries for the period. The amount owed to these employees is $2,500,000 and
this should be reflected in the financial statement of the period.
iv. The Department currently pays rent for two of its Regional Offices and at the end of
the year rent of $200,000 was outstanding. Further, the Department also rented part of
its premises at the Headquaiters. At the end of the financial year, an amount of $150,000
was received to cover 2024 rent. Meanwhile, $20,000 rent has not been received from
tenants for the year 2023. These transactions have not been accounted for.
v. Consumption (Depreciation) of fixed assets is charged on straight-line basis as follows:
Assets
Estimated useful life (in years)
Motor vehicle
5
Furniture
4
Computers
3
Premises
20
v1. It was revealed that, computer accessories costing $340,000 acquired in 2022 was
accounted for as goods and services. However, the Auditor for the 2023 financial year
recommended that the transaction should be accounted for as non-current asset. The
recommendation is yet to be implemented.
vii. The budget extract of the Department for 2023 is as follows:
$'000
Approved budget allocation
20,000
Internally generated fund
3,000
Donor support
1,000
Compensation for employees
10,000
Use of Goods and Services
6,000
Other expenses
5,500
Required:
Prepare in compliance with the International Public Sector Accounting Standards:
a) A Statement of Financial Performance for the year ended 31 December, 2023. (25 marks)
b) A Statement of Financial Position as at 31 December, 2023. (20 marks)
c) A Separate Statement of Budget Information in comparison with the Actuals for the year
ended 31 December, 2023. (15 marks)
Question 2 (20 marks)
The Department of Education, a central government department, prepares its financial
statements in accordance with the Cash Basis IPSAS. Its records of cash receipts and payments
for the year ended 31 December 2023 are summarised as follows:
Receipts
N$'000
Payments
N$'000
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Funding allocations
46,392
Wages, salaries and
employee benefits
46,760
Proceeds from borrowing
8,392
Supplies and
consumables
1,829
Receipts from trading activities 2, l 00
Rent
568
Proceeds from disposal
of property, plant and equipment 587
Purchase of property,
plant and equipment
7,800
Interest received
14
Repayment of borrowings
39
Interest payments
67
Total receipts
57,485
Total payments
57,063
Additional information:
• The cash balance at the start of the year was N$65,000.
• Several of the department's directors share their time 50:50 with the Department of
Welfare. Their salaries, which total N$1.5m, are paid directly to the directors by the
Department of Welfare. The two depaitments are in the same overall reporting entity.
The cash records were reconciled to the bank statement as at 31 December 2023 and the
following issues were discovered:
1) An interest payment of N$35,000 was deducted by the bank from the government's bank
account on 30 December 2023. This has not yet been accounted for in the department's cash
records.
2) A bank transfer of N$58,000 was received into the department's bank statement on 29
December in relation to trading activities, but has not yet been accounted for in the
department's cash records.
3) N$300,000 of the total amount shown as proceeds from disposal of property, plant and
equipment was not in fact received during the year. The purchaser of the equipment was sent
an invoice for N$300,000 on 31 December 2023, which was then paid on 18 January 2024
Requirement
Prepare the department's statement of cash receipts and payments for the year-ended 31
December 2023. Note that prior year comparatives are not required. (20 marks)
Question 3 (20 marks)
a) Changing from cash accounting to accrual accounting is necessary to improve financial
reporting and transparency in the public sector. However, it is not going to be without systemic
and structural challenges.
Required:
In relation to the above statement:
i) Explain FIVE (5) challenges involved in adopting Accrual Basis Accounting. (5 marks)
ii) Explain FIVE (5) measures Namibia can put in place to successfully implement Accrual
Basis Accounting. (5 marks)
b) Measurement of assets is a very important aspect of financial reporting. Preparers of
financial statements should always consider the objective of measurement to ensure that the
financial statements provide information that is useful to users for accountability and decision-
making purposes.
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.,,
Required:
i) Explain the objectives of measurement in financial reporting of public sector entities.
(4 marks)
ii) Explain FOUR (4) bases of measurement of assets and provide in each situation where it
is applied in financial repo11ing. (6 marks)
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