EXAMINATION NO.

______________________

2016 EXAMINATIONS

PROFESSIONAL LEVEL
PAPER B5: PUBLIC SECTOR ACCOUNTING & FINANCE

WEDNESDAY 7 DECEMBER 2016 TIME ALLOWED : 3 HOURS

9.00 AM – 12.00 NOON

INSTRUCTIONS

1. You are allowed 15 minutes reading time before the examination begins during which you
should read the question paper and, if you wish, make annotations on the question paper.
However, you are not allowed, under any circumstances, to open the answer book and
start writing or use your calculator during this reading time.

2. Number of questions on paper – 5.

3. All questions to be answered.

4. Each question carries 20 marks.

5. Begin each answer on a fresh page.

6. DO NOT OPEN THIS PAPER UNTIL YOU ARE INSTRUCTED BY THE

INVIGILATOR.

This question paper contains 5 pages

This question paper must not be removed from the examination hall.
 ANSWER ALL QUESTIONS

1. A public sector entity intends to prepare a statement of comparison of budget and actual
amounts for the year ended 31 December 2015. The entity prepares the budget and
financial statements on the same basis.

The following budget information has been provided:

Original budget Adjustments Final budget

2015 2015 2015
K’000 K’000 K’000
Revenue
Property taxes 2,969,889 0 2,969,889
Public contributions and donations 45,000 -11,000 34,000
Fines, penalties and levies 912,150 -7,025 905,125
Licences and permits 15,100 15,100
Government grants and subsidies 2,157,450 2,157,450
Rendering of services 1,764,300 -623,400 1,140,900
Sale of goods 5,111,955 5,111,955
Finance income 208,400 208,400
Gains on disposal, rental income and agency 381,523 381,523
fees
Total income 13,565,767 -641,425 12,924,342

Expenses
Compensation of employees 6,156,950 6,156,950
Goods and services 4,092,334 -928,136 3,164,198
Finance cost 400,000 -16,752 383,248
Rent paid 17,000 -5,106 11,894
Taxation paid 1,050 1,250 2,300
Other payments 1,770,996 1,770,996
Grants and subsidies 51,751 51,751
Total expenditure 12,490,081 -948,744 11,541,337
Surplus for the period 1,075,686 307,319 1,383,005

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The following information relates to actual results for the period:

2015
K’000
Revenue
Property taxes 2,693,949
Public contributions and donations 31,831
Fines, penalties and levies 890,835
Licenses and permits 20,736
Government grants and subsidies 2,157,454
Rendering of services 721,199
Sale of goods 4,628,596
Finance income 227,092
Gains on disposals, rental income and agency fees 157,641
Total income 11,529,333
Expenses
Compensation of employees 5,457,164
Goods and services 2,967,449
Finance cost 331,697
Rent paid 11,895
Taxation paid 2,332
Other payments 78,147
Grants and subsidies 51,751
Total expenditure 8,900,435
Surplus for the period 2,628,898

Required :

Prepare a statement of comparison of budget and actual amounts for the year ended 31
December 2015 in accordance with IPSAS 24 Presentation of Budget Information in
Financial Statements.
20 Marks

Continued/……

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2. Explain the responsibilities of the following players in financial management according to
the Public Sector Financial Management Act (2003) and the associated Treasury
Instructions:

(a) Minister of Finance 5 Marks

(b) Secretary to Treasury 5 Marks
(c) Other Ministers 5 Marks
(d) Controlling Officers 5 Marks
(TOTAL : 20 MARKS)

3. (a) A City Assembly has budgeted to purchase fire brigade trucks.

Required:

State the steps which the Assembly should follow in purchasing the trucks.
10 Marks

(b) Explain the benefits of Public Private Partnerships (PPP) to public sector organisations.
10 Marks
(TOTAL: 20 MARKS)

4. Revenue collection is an important aspect of public financial management. This is due to the
fact that the revenue collected finances government activities.

Required:

(a) Mention any five sources of government revenue.

You should also state whether the sources are revenue from exchange or non-
exchange transactions in line with IPSAS 9 Revenue From Exchange Transactions
and IPSAS 23 Revenue From Non-Exchange Transactions. 10 Marks

(b) Explain any five responsibilities which have been placed on revenue collectors in the
public sector. 10 Marks
(TOTAL: 20 MARKS)

Continued/……

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5. An accounts assistant of a government body has prepared a list of balances as at
31 December 2015:

K’000
Property tax 3,765,313
Public contributions and donations 50,928
Fines, penalties and levies 1,425,336
Transfer from the Government 3,006,268
Proceeds from sale of machinery 360,000
Rendering of services 1,794,610
Sale of water and electricity 7,895,410
Rental revenue from facilities 231,789
Other income 265,210
Finance income from investments 271,360
Employee costs 560,000
Remuneration of councilors 80,000
Repairs and maintenance 1,760,000
Grants and subsidies 280,000
Bulk purchase of water and electricity 4,560,000
Other expenses 2,460,000
Finance costs 168,160

The following information is also available:

(1) The agency classifies its receipts into taxation, external assistance, other grants and
aid, other borrowings, capital receipts , trading activities and other receipts.

(2) The agency’s expenses are categorised into operations, transfers, capital expenditure,
loan and interest payments and other payments.

(3) The agency’s cash balance on 1 January 2015 was K4,105,480.

(4) The agency applies cash basis accounting in line with Government requirements.

Required :

(a) Explain the difference between a cash basis of accounting and accruals basis of
accounting. 5 Marks

(b) Prepare a statement of cash receipts and payments for the agency for the year ended
31 December 2015. 15 Marks
(TOTAL: 20 MARKS)

END

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