THE INSTITUTE OF FINANCE MANAGEMENT (IFM)

PUBLIC SECTOR REPORTING (ACU07423)

TUTORIAL QUESTIONS IPSAS 1
QUESTION 1
Stated below are the balances extracted from the books of a government department for the
year ended 30th June, 2022.

Account TZS.(000)
Taxes 1,285,000
Receivables 40,000
Fees, fines, licenses and penalties 52,000
Other revenues 75,000
Finance costs 26,000
Supplies and consumables 85,000
Impairment of property, plant and equipment 23,000
Wages 500,000
Grants and other transfer payments 60,000
Other expenses 35,000
Transfers from other government entities 125,000
Revenue from exchange transactions 30,000
Cash and cash equivalents 127,500
Investments (short term) 22,500
Inventories 37,500
Prepayments 23,500
Intangible assets 95,000
Land and buildings 522,000
Payable (short term) 710,000
Other non-financial assets 7,600,000
Investments (long term) 85,000
Receivables (medium term) 425,500
Short-term borrowings 350,000
Provisions (current) 22,500
Superannuation 52,500
Payables (medium term) 120,000
Borrowings (long term) 332,500
Provisions (long term) 41,000
Employee Benefits (medium term) 75,000
Current portion of borrowings 27,500
Employee Benefits (short term) 37,000
Capital contributed by other government entities 97,000
Reserves 425,000
Depreciation and amortization 33,000

REQUIRED:
Use the International Public Sector Accounting Standards (IPSAS) to prepare
i. The Statement of Financial Performance for the year ended 30th June, 2022
ii. The Statement of Financial Position as at 30th June 2022.
QUESTION 2
a) Explain any five (5) benefits of adopting the International Public Sector Accounting
Standards (IPSAS) in the presentation and preparation of financial statements.

b) A Public Sector entity that applies IPSAS is currently faced with a particular financial
transaction for which no IPSAS exist for dealing with the issue. The management is
undecided on the choice of accounting policy to apply.

REQUIRED:
Discuss how the matter can be dealt with by management of the entity.

QUESTION 3
IPSAS 1 is drawn primary from IAS 1 (2003) and includes amendments made to IAS 1 as part
of the Improvement to IFRs issued in May 2008 and April 2009 respectively. At the time of
issuing this standard (IPSAS 1), the IPSASB has not considered the applicability of IFRS 5,
Non-current Assets Held for Sale and Discontinued Operations, to public sector entities;
therefore IPSAS 1 does not reflect amendments made to IAS 1consequent upon the issuing of
IFRS 5.
REQUIRED:
Explain the main differences between IPSAS 1 and IAS 1

QUESTION 4
You are the Director of Finance of DAWASA among of the responsibilities that you hold is in
respect of preparing and presentation of financial statements at the end of each reporting period
which is 30th June each year. Your subordinates have prepared and presented to you the
Authority’s trial balance for the year ended 30th June 2023 so that you can proceed finalizing
the exercise of preparing and presenting annual financial statements for the year.
DAWAS Trial balance for the year ended 30th June 2023

Debit Credit
(TZS 000) (TZS 000)
Taxpayers fund 1,904,300
Accumulated surplus 165,000
Cash and cash equivalent 855,414
Property, Plant and Equipment at cost (excluding land) 1,716,900
Accumulated depreciation at 1 July 2022 90,580
Land revalued amount 200,000
Computer software at cost 965,700
Accumulated amortization at 1 July 2022 32,800
Receivables from exchange transactions 232,300
Receivables from non-exchange transactions 199,270
Trade and other payables from exchange transactions 79,410
Provisions 88,920
Deferred revenue 163,400
Payments received in advance 141,840
Long term borrowings 223,400
Collection cost 40,053
General expenses 139,060
Employees cost 78,930
 Purchases of office consumables 23,420
Inventory of office consumables at 1 July 2022 9,380
Government subvention 85,900
Transfer from other government -gifts services -in-kind 44,650
Sale of water 1,578,100
Fines and penalties received during the year 163,100
Water purification and sewage treatment cost 267,580
Electricity 33,393
4,761,400 4,761,400

Additional notes to the above trial balance:

1. Inventory of office consumables as at 30th June 2023 amounted at TZS.11,700,000
2. The DAWASA management estimated the depreciation and amortization of the non-
current assets as follows:
Asset Depreciation Rate
Property, Plant and Equipment 25%
Computer software 20%
REQUIRED:
Prepare DAWASA’s
i. Statement of Financial Performance for the year ended 30th June 2023
ii. Statement of Financial Position as at 30th June 2023

QUESTION 5

You are a graduate accountant working at one of the regulatory authorities operating under the
Ministry of Land, Housing and Human Settlement Development in Tanzania, whereby the
main source of revenue for your entity is regulatory fees charged to building contractors in the
country. You have been applying International Financial Reporting Standards (IFRSs) over
years, however, from the operations you believe that the Authority falls under the Government
Business Enterprise (GBE). In early June 2023, you attended a meeting of all reporting entities
under the government. You heard the Accountant General emphasizing that all reporting
entities under the government with exceptional of commercial entities were required to apply
IPSASs accrual with effect from the accounting period ending ended 30th June 2022.

REQUIRED:
Prepare a presentation to be submitted to the Audit Committee informing them the need to
migrate to IPSASs accrual, your presentation should include: three justifications for adopting
IPSASs accrual accounting in the public sector.

QUESTION 6
The City Council Revenue for the year 2023 was;
taxes TZS.30 million; fees, fines, penalties, and licenses TZS.20 million, revenue from
exchange transaction TZS.6 million, transfers from the central government TZS.45 million and
other revenues TZS.5 million.
In the year 2022, the revenue was;
taxes TZS.28 million; fees, fines and penalties TZS.21 million; Revenue from exchange
transactions TZS.5 million, transfers from the central government TZS.25 million and other
revenues was TZS.8 million.
Expenses in year 2023 were as follows:
Wages, salaries, and employee benefits TZS.28 million; supplies and consumables used
TZS.15 million; depreciation and amortization expense TZS.6 million other expenses TZS.6
million; finance costs TZS.2 million.
Information for 2022 was:
Wages, salaries and employee benefits TZS.27 million; supplies and consumables used TZS.18
million; depreciation and amortization expense TZS.6 million, other expenses TZS.8 million;
finance costs TZS.3 million.

REQUIRED:
Prepare a statement of financial performance of city council for the year ended 2023.

QUESTION 7
A conceptual framework in the context of financial reporting is a statement of generally
accepted reporting principles, which provides the part of reference for financial reporting. The
International Public Sector Accounting Standards Board (IPSASB) has developed a conceptual
framework for General Purpose Financial Reports (GPFR) of entities in the public sector. The
conceptual framework has a number of advantages in the preparation of GPFR as well as
developers of IPSAS.
REQUIRED:
Briefly explain five (5) main advantages of a conceptual framework

QUESTION 8
In the financial year ended 31st June 2023, Iramba Municipality raised TZS.2,500,000 in local
rates and taxes, and received TZS.3,000,000 from central government. The council also raised
in TZS.500,000 in other miscellaneous Revenue from exchange transactions amounted to
TZS.1,250,000, fines TZS.120,000, fees TZS.240,000 and licenses TZS.250,000. The council
incurred TZS.1,100,000 on social housing, TZS.950,000 on adult social care, TZS.600,000 on
public order and safety, TZS.300,000 on culture and environment and TZS.250,000 on health.
After an assessment of the carrying value of Property, Plant and Equipment, an impairment
provision of property was estimated at TZS.130,000. The total wages and salaries paid was
TZS.1,900,000, Finance costs were TZS.250,000 and its share of expenses related to an
Associate amounted to TZS.300,000 and miscellaneous expenses were TZS.100,000

REQUIRED:
Prepare a statement of financial performance using function of expense method in line with
IPSAS 1.