Theory question 103
Public Sector AccountingMr Obi, the former accountant in XYZ Ltd a private company is now the treasurer of PQ Local Government District Assembly. State five differences between the financial statement he was preparing in his previous organization and the one he would prepare in his present organization.
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Any five:
- Purpose: private company reports profit/loss; local government reports how public funds were raised and spent (accountability, surplus/deficit).
- Statements: trading, profit and loss account and balance sheet vs statement of revenue and expenditure, statement of assets and liabilities, cash flow and budget statements.
- Basis: accrual basis vs mainly cash (or modified cash) basis.
- Sources of income: sales vs taxes, rates, grants, statutory allocations, fines and fees.
- Regulation: Companies Act and accounting standards vs constitution, Financial Regulations, Finance/Appropriation laws, IPSAS.
- Users: shareholders, creditors vs legislature/council, the public and government.
- Capital: share capital and reserves vs consolidated/general fund; no dividends.
- Budget comparison is central in government statements; capital expenditure is often written off in the year.
Compare purpose, statements, basis, income sources, regulation and users.