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Exam (elaborations)

Public Sector Accounting questions with actual answers.

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  • Course
  • Governmental Accounting
  • Institution
  • Governmental Accounting

Public Sector Accounting questions with actual answers.

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  • September 12, 2024
  • 14
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • Governmental Accounting
  • Governmental Accounting
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Professorkaylee
Public Sector Accounting questions with
actual answers.
What is the public sector? ANS --consists of organizations where control lies in the hands of the public,
as opposed

to private owners, and whose objectives involve the provision of services where

profit is not a primary objective.



- "the term public sector refers to national governments, regional governments, local governments and
related

governmental entities



IPSASB ANS -Excludes charities although the increasing use of social enterprises in the provision

of public services blurs the distinction1 and many entities that have charitable

status are consolidated in to WGA.



Traditional financial accounting approaches in the public sector ANS -Fund accounting/ cameral
accounting (continental Europe)

- Cash accounting



Fund accounting ANS -self balancing set of accounts segregated for carrying on certain

activities or attaining certain objectives



Cash accounting ANS -Recognises only cash inflows and outflows. This approach was traditionally

used by sovereign governments and is still commonly used internationally.



For Central Government departments prior to

Resource Accounting in late the 1990s.

, Advantages of cash accounting ANS -Simple, cheap, objective

Useful for control and monitoring of public finance

e.g. parliamentary vote on expenditure, fiscal factors, public sector debt



Disadvantages of cash accounting ANS -No measure of worth of organization or income e.g. asset sales

No measure of 'true' cost of operating for the period.



The Regulatory Framework of Public Sector Accounting (UK) ANS -Encompasses laws, accounting
standards

and the conceptual framework, (known as generally accepted accounting practice or

GAAP)



Accounting for public bodies is often prescribed in law ANS -



UK Accounting Standards Board (now a committee of the Financial Reporting Council) ANS -The ASB
initially had little direct role in public sector accounting. It clearly stated its role

was for profit-orientated bodies when established in 1990, but in 2007 reinterpreted its

conceptual framework, the Statement of Principles, for public benefit entities



Financial Reporting Advisory Board (FRAB) UK ANS -The Financial Reporting Advisory Board's role is to
promote the highest possible standards

in financial reporting by Government and to help to ensure that any adaptations of, or

'departures' from, GAAP are justified and properly explained.



The Board was established in

1996 to act as an independent review in the process of setting accounting standards for

government during the reform of central government accounting (development of

resource accounting -see later).

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