CHAPTER 10 ACCOUNTING PRACTICES AND DEVELOPMENT IN PUBLIC SECTOR OCT 10 APR 10 OCT 09 OCT 08 APR 08 OCT 07 APR 07 Q6 Q3b,

Q5 Q6 Q4a&b, Q6 Q4 Q5 Q5

OCT 10

Q6. (a)
recognition

of revenue and expenses in the accounting period in which they are earned or incurred respectively rather than when cash is paid or received. expenses are recognized and recorded in the period they are incurred rather than paid

Q6.(b) uses of different differentiation methods would lead to a different amount of differentiation expense charged The cost of switching to an accrual accounting system will be high because incurs more admin and accounting costs Can lead to certain kind of manipulations, at the end of fiscal year
The

period of rising prices, the relevance of accrual concept is rather limited. Therefore, the income statement becomes less acceptable as a measure of performance Higher costs for maintaining sundry debtors and creditors accounts
During

Q6 (c) any statutory body which has no computerized accounting system in their organisation must acquire and start using SAGA package any statutory body already has computerized their accounting system, but unable to customize existing system must also change to SAGA package

any statutory body has computerized accounting system with ability to customize existing system are required to make changes to meet requirements of gov strd accounting system. They are still required to include in future plan for migration to SAGA package

APR 10

Q. 3(b) 2 Components of Standards Accounting System for Government Agencies (SAGA) software package. 1.Operational accounting system (OAS) Ensures no unnecessary duplication of transaction. This is because any transactions that are not important should not include in the system. Accurate data at the point of entry which means that OAS is responsible to ensure all the information must be correct and no miscalculate happen. Multilevel security complete audit trail is to ensure that all data and information are in good condition and safe from anything that could be happen.

2. Information accounting system (IAS) Complements the statistical and strategic capabilities of the OAS Inter operable with external system Assists management in monitoring organizational objectives Supports strategic decision-making and planning.

Q.5(a). 2 objectives of e-SPKB

i.

i.

To cater the need for financial control as well as financial information required by the apprentice projects under the Electronic Government (EG) application. Assists in the budget control process, monitoring responsibility centre expenditure and accelerates preparation of financial documents. With e-SPKB interfacing with GFMAS, all expenses payment process can be expedited.

Q5.(b) 5 advantages of SPEKS

Ensures

the financial statement is prepared accurately on time. Ensures the usage of standard format for all the state government Ensures more effective control and coordination. Ensures faster search of information Ensures the usage of one system in all the state.

Q5.(c) 3 reasons for the development of (IPSAS) improve public sector financial management, and to provide advice on financial reporting, accounting and auditing issues in the public sector Improve both the quality and comparability of financial information reported by public sector entities. Thus, this will enhance accountability and transparency of the financial reports prepared by government agencies Set out recognition, measurement, presentation and disclosure requirements dealing with transactions and events in general purpose financial statements of public sector entities.
To

OCT 09

Q6 (a) Objective of IPSASB

To

serve the public interest by developing high quality public sector financial reporting standards and by facilitating the convergence international and nation standard.

Issuing IPSASB Promoting their acceptance and the international convergence to these standard Publishing other document which provide guidance

ELECTRONIC G.

MULTIPURPOSE CARD

SMART SCHOOLS

TELEHEALTH

R&D CLUSTER

make available the facilities for the maintenance of a complete and timely set of account. To enable daily closing of account To provide avenue to further enhance acc and financial mgt To prepare pre-audit financial reports as per the agreed timelined
To

 Fully

integrated application modules Ensures no unnecessary duplication of transaction. Accurate data at the point of entry Own fiscal period for each module Multi-level security complete audit trail.

OCT 08

Q.4(a)
1. a) b) c)

d)

e)

f)

Traditionally used Cash Accounting More appropriate for public sector Compliance with rules & regulation No public money will be spent in ways & amounts that were not specified in the annual government budgets Record cash receipts, payments & balance at the time exchanged Shows sources of cash receipts & allocation of cash expenditure Provide comparison between actual & budgeted expenditure

2. Accrual Accounting a) Explain recognition of revenue & expenses incurred rather than when cash is paid or received in the accounting period b) Make distinction between receipt of cash, right to receive, payment of cash & legal obligation to pay cash c) But it does not require the movement of cash accounting recognition

Basis of accounting Point of recognition

CASH BASIS

MODIFIED CASH BASIS

ACCRUAL BASIS

MODIFIED ACCRUAL BASIS

Revenue

When cash is received

When cash is received

When revenue is earned

When measureable & available

Expenditure

When cash is paid

When expenditure is incurred

When expenses is incurred

When expenditure is incurred

Q 4 (b)

Lead to manipulation in the fiscal year

Lead to a different amount of depreciation expenses charged for a particular accounting

Disadvantages of Accrual Accounting

Different types & nature of government asset will contributed to a large amount of cost allocated

The concept is more limited

The cost of switching is high

APR 08

Q4.(a) Objectives: i. Integrate all AGD accounting systems in order to provide accurate, quality and timely accounting data and information for effective and efficient decision making among government manager ii. Enhancing financial transparency and accountability in public sector iii. Assisting Federal Government in decision making process

Q4 (c)
Account

Payable Consolidated financial management reports required by users are generated under this module Account Receivable Allow users to control aspects of the payment process including the selection of invoices to be paid, the production of computer printed cheques and payment vouchers Assets Management Allow users to control their budget allocation for not spending over the budget Investment Allow users to account for all stocks held by the agency and to keep track of their movement

OCT 07

Q 5 (a)

To improve public sector financial management To provide advice on financial reporting, accounting and auditing issues in the public sector To improve the quality and comparability of financial information reported by public sector entities

set out recognition, measurement, presentation and disclosure requirements dealing with transactions and events in general purpose financial statements of public sector entities. IPSAS also are being prepared for application by entities adopting the accrual basis of accounting and for application by entities adopting the cash basis of accounting.
To

Q5 (b) (i) GFMAS Able to interface with other external systems Flexible for cash and accrual accounting To complete budget records Give real time data Increase security Online single point entry Data Mart

(ii)

eSPKB Updates of vote books and reconciliation of accounts can be done electronically including for bulk payment expanses and remuneration Allocation warrant, payment voucher, collection statements and journal vouchers are sent to the accountancy offices online Payment can be made via cheque or Electronic Fund Transfer (EFT) All schedule, option, daily and monthly reports can now be printed whenever required

Q5(c) Electronic government (e-govt) is a multimedia networked paperless administration linking government agencies within Putrajaya with government centre around the country to facilitate a collaborative government environment and efficient service to businesses and citizens.

Objective of e-govt: To provide seamless services and information To improve both how the government operates internally as well as how it delivers services to people of Malaysia To improve the convenience, accessibility and quality of interactions with citizens and business To improve information flows and processes within the government to improve the speed and quality of policy development coordination and enforcement

APR 07

Q5 (a) The differences between modified cash basis, accrual basis, and modified accrual basis.
Basis of Cash basis accounting Point of recognition

Modified cash basis

Modified Accrual basis

Accrual basis

Revenue

When cash is received When cash is paid

When cash is When received measurable and available When expenditure is incurred When expenditure is incurred

When revenue is earned When expense is incurred

Expenditure

Q5(b) The challenges in implementing accrual accounting in the Federal Government

1)

2)

3)

4)

Implementing accrual accounting have involved much additional works. It required the development of new skills by departmental finance officers. There is time factors and lack of skilled personnel to handle the conversation to use accruals accounting in the public sector There is resistance to change.

Q5(C) There are 3 accounting system application in Malaysian public sector organization which are:
Government Financial Management Accounting System (GFMAS) Standardized Computerized Accounting System for State Government (SPEKS) Standard Accounting System for Government Agencies (SAGA)

The objective of GMAS

To

integrate all Accountant general Director (AGD) accounting systems in order to provide accurate, quality and timely accounting data and information for effective and efficient decision-making amongst government managers.

The objective of SPEKS increase productivity and efficiency in Financial Management. To prepare accurate Financial Statement on time. To improve States financial administration. To provide Financial Information Source Centre. To prepare the state government for the Electronic Government era.
To

The objective of SAGA make available the facilities for the maintenance of a complete and timely set of account. To enable daily closing of account To provide avenue to further enhance accounting and financial management To prepare pre-audit financial reports as per the agreed timeline.
To