ACC418 Public Sector Accounting and Finance COURSE DEVELOPMENT ACC 418 PUBLIC SECTOR ACCOUNTING AND FINANCE COURSE GUIDE Course Developer/ Unit Writer ICAN Study pack Adapted by: Mr. E. U. Abianga NOUN, Course Editor: Dr. I.D. Idrisu NOUN Programme Leader: Dr. I.D. Idrisu NOUN Course Coordinator: Mr. E. U. Abianga NOUN CONTENT 1.0 INTRODUCTION ACC 418- Public Sector Accounting and Finance is designed to give you self instruction to you as you study Bachelor of Science (B. Sc) in Accounting. It is adapted from the Institute of Chartered Accountants of Nigeria study materials to prepare you for your B. Sc Accounting examination of School of Management Sciences of the National Open University of Nigeria . 2.0 COURSE AIM The aim of this course is to explain broadly public sector accounting and finance approaches and developments. 3.0 COURSE OBJECTIVES By the end of this course, you should be able to:  Understand the legal frameworks and the financial authorities used in the Public Sector.  Describe the accounting concepts, Fund accounting, Concepts and various Professional pronouncements on Government Accounting  Identify the various revenue inflows to the federated account and consolidated revenue fund, their differing characteristics and interaction with each other.  Evaluate the Financial Management Cycle in Federal, State and Local Governments and explain the main public expenditure votes- Personnel Emolument, Overheads and Capital Votes and the rules guiding disbursement.  Prepare Financial Statements for Parastatals based on enabling laws setting each up and explain the procedure of accounting for the fund allocated to each of them.  Analyze economic environment in respect of sources of revenue and capital receipts, debt management strategies and project appraisal in relation to medium term expenditure framework. COURSE CONTENT Constitutional and regulatory framework of public sector accounting, Government Accounting concepts and pronouncements, Sources of government revenue, Financial management cycle in federal, state and local government, Accounting for public sector organizations, authorities, parastatals, boards, corporations, agencies and tertiary educational institutions, public finance 4.0 WORKING THROUGH THIS COURSE This course, ACC418 Public Sector Accounting and Finance expects you to do a lot of reading and practicing, in order to cover the materials in the course material. This means that you should devote much time to this course by reading through this material and getting more information from numerous texts and journals. These abound in every library and from the internet. The course material has been made easy to read and user-friendly. You will need to work in groups with other students in order to discuss, compare notes and thoughts as well as to exchange and share ideas. Below are the lists of all the components of the course: 5.0 COURSE MATERIALS The National Open University of Nigeria will provide you with the following items:  Course Guide  Study Units- Course material  TMA Assignments In addition, at the end of every unit, is a list of texts for your references and for further reading. It is not compulsory for you to read all of them. They are only essential supplements to this course material. 6.0 STUDY UNITS The study units in this course are as follows: MODULE I: INTRODUCTION TO PUBLIC SECTOR ACCOUNTING AND FINANCE Unit 1: Introduction to Public Sector Accounting and Finance Unit 2: Powers and functions of Finance officers Unit 3: Sources of Government Revenue Unit 4: Authorization of Government Expenditure Unit 5: Expenditure Control MODULE II: CASH OFFICE, TREASURY AND STORES Unit 1: Preparation of Vouchers Unit 2: Functions of the Cash office Unit 3: Preparation of monthly Transcripts of a self accounting unit Unit 4: Treasury final accounts Unit 5: Stores and store accounting MODULE III: GOVERNMENT ACCOUNTING Unit 1: Accounting requirements for Local Government Unit 2: Budgeting and Budgetary controls Unit 3: Government construction contracts and procurement Unit 4: Auditing of Government Accounts and audit alarm committee Unit 5: Government Advances MODULE IV: PENSION, GRATUITY, INVESTMENT APPRAISAL & ACCOUNT INTERPRETATION Unit 1: Pension and Gratuity Unit 2: Treasury internal control questionnaires Unit 3: Professional pronouncements on Government accounting Unit 4: Investment appraisal in the Public Sector Unit 5: Interpretation of Accounts, cash flow and value-added statement MODULE V: PUBLIC FINANCE AND PUBLIC ENTERPRISE ACCOUNTING Unit 1: Parastatal and public enterprise accounting Unit 2: Public Finance Unit 3: Public debt and its management in Nigeria Unit 4: Ethical issues in Public Sector accounting and finance Unit 5: Towards national fiscal responsibility Module 1: Unit 1- deals with the general introductory aspects of Public Sector Accounting and Finance, its objectives as well as the various users of Public Sector Accounting and Finance information. The chapter also deals with the constitutional and regulatory framework under which Public Sector Accounting and Finance operates and the various concepts and principles which are applicable to it. Unit 2- discusses various powers and functions of Finance Officers comprehensively. Particular reference is made to the office of Accountant- General of the Federation as the custodian of the Federal Government’s finances. This unit contains a detailed list and definitions of terms commonly used in Public Sector Accounting and Finance. Unit 3- deals with the various sources of revenue to the Federation and the Federal Government. It also discusses the operation of the Federation Account, the consolidated Revenue Fund (and charges thereto), the Capital Development Fund and the contingency Fund. The application of the Revenue Allocation formula is also treated in this unit Unit 4- discusses the authorization of a Government Expenditure by means of Financial Warrants which are categorized into Recurrent and Capital Expenditure Warrants. The issues of revenue control as well as the classification of funds in the context of the Public Sector are also treated. Unit 5- discusses expenditure control by the various levels of Government in order to ensure proper accountability in Government finances. The learners will also be able to appreciate the type of controls put in place by the Executive, the Legislature, the Ministry of Finance and the Treasury. Module 2: Unit 1- covers the essential feature of payment vouchers as instrument of financial control to enable learners to appreciate the different types of vouchers in use in Government. Unit 2- the subject matter is the importance of cash office in the accounting for and control of Government funds. Learners will be able to know the various records and books used in the cash office, the mode of keeping them and the importance of prompt preparation of bank reconciliation statements in the control of Government funds. Unit 3- deals with the preparation of monthly ‘Transcript’ of a Self-Accounting Unit. The term ‘Transcript’ and the procedure for preparing it have been carefully explained. Learners will be able to as Self-Accounting Units and the obvious advantages and disadvantages of operating these units. Unit 4- reviews the organ gram of the office of Accountant- General of the Federation. It goes further to give details of the various statement prepared by the Accountant- General of the Federation and the new reporting formats stipulated by the International Federation of Accounting (IFAC) Unit 5- discusses stores and Store Accounting in the context of Public Sector operations. The various classifications of stores and the store accounting procedures have been comprehensively treated. Procedures to be adopted in relation to loss of stores have also been treated in the unit, with emphasis on the composition and functions of the Board of Survey and the Board of enquiry. Module 3: Unit 1 covers comprehensively the constitutional framework for the operations of the Local Government. Learners will also learn about the various sources of revenue of Local Governments and the nature of their expenditure. The accounting procedures and the nature of their expenditure and formats of a Local Government Cash Flow Statement, Revenue and Expenditure Statements of Assets and Liabilities have been given. The peculiar problems of this third-tier of Government have also been highlighted in the unit. Unit 2- discusses comprehensively the concept of budget and the various types of budgets applicable in the Public Sector. It goes to emphasize why the traditional method of preparing budget is still practiced in Nigeria. The procedures for preparing and approving budget under the Presidential System of Government have been well explained Unit 3- discusses the procedure for awarding contracts for construction works, goods and consultancy services. It discusses the operation of the Public Procurement Act, 2007, the implementation of the Due Process Guidelines, the e-payment as well as the spending limits of government officers and organizations Unit 4-discusses the various types of audit that are applicable in the Public Sector with emphasis on what makes audit an effective tool of financial control. The nature and composition of the Audit Alarm Committee as well as what audit queries are all about have been carefully explained. The unit also explains the procedures for carrying out investigations in the Public Sector. Unit 5- A comprehensive treatment of the various types of advances that are available to Government employees and the conditions that must be fulfilled by employees who desired to obtain them are given in this unit Module 4: Unit 1- discusses the objectives and methods of transfer pricing system. The merits and demerits of the methods are discussed. It also discussed the factors to be considered when setting transfer prices for multinational transactions and the nature and meaning of dual transfer pricing system. Unit 2- discusses the objective of price decision and factors affecting it. It also discusses the relationship between selling price, various pricing methods and their application; the use of differential calculus to find optimum price and the different pricing policies. Unit 3- discusses the concept of ratio analysis and explains the benefits and limitations of ratio analysis. The computation of various ratios including value added ratio. Unit 4- discusses the concept of cost control and cost reduction. It also discusses the main differences and limitations between cost control and cost reduction; the scope and factors of cost reduction. The various cost techniques are also discussed. Unit 5- discusses current trend in management accounting involving the following: advanced management technology, total quality management, throughput accounting, back-flush accounting, target costing, lifecycle costing, teardown accounting analysis and strategic management accounting Module 5: Unit 1- discusses the objectives and methods of transfer pricing system. The merits and demerits of the methods are discussed. It also discussed the factors to be considered when setting transfer prices for multinational transactions and the nature and meaning of dual transfer pricing system. Unit 2- discusses the objective of price decision and factors affecting it. It also discusses the relationship between selling price, various pricing methods and their application; the use of differential calculus to find optimum price and the different pricing policies. Unit 3- discusses the concept of ratio analysis and explains the benefits and limitations of ratio analysis. The computation of various ratios including value added ratio. Unit 4- discusses the concept of cost control and cost reduction. It also discusses the main differences and limitations between cost control and cost reduction; the scope and factors of cost reduction. The various cost techniques are also discussed. Unit 5- discusses current trend in management accounting involving the following: advanced management technology, total quality management, throughput accounting, back-flush accounting, target costing, lifecycle costing, teardown accounting analysis and strategic management accounting 7.0 ASSESSMENT There are two aspects to the assessment of the course: first is the tutor-marked assignment; and secondly, the examination. Within each unit are self-assessment exercises, which are aimed at helping you to check your assimilation as you proceed. Try to attempt each of the exercises before finding out the expected answers from lecture. 8.0 TUTOR-MARKED ASSIGNMENT (TMAS) This is your continuous assessment and accounts for 30% of your total score. You are expected to answer at least four TMA’s, three of which must be answered and submitted before you sit for the end of course examination. 9.0 FINAL EXAMINATION AND GRADING With this examination written successfully, you have completed your course in Basic research and one believes you would apply your knowledge (new or up-graded) in your project. The ‘end of course examinations’ would earn you 70% which would be added to your TMA score (30%). The time for this examination would be communicated to you. 10.0 HOW TO GET THE BEST FROM THIS COURSE In distance learning, the study units are specially developed and designed to replace the conventional lectures. Hence, you can work through these materials at your own pace, and at a time and place that suits you best. Visualize it as reading the lecture. This is one of the great advantages of distance learning. You can read and work through specially designed study materials at your own pace, and at a time and place that suits you best. Think of it as reading the lecture that a lecturer might set you some readings to do, the study unit will tell you when to read other materials. Just as a lecturer might give you an in-class exercise, your study units provide exercises for you to do at appropriate points. Each of the study units follows a common format. The first item is an introduction to the subject matter of the unit, and how a particular unit is integrated with the other units and the course as a whole. Next is a set of learning objectives. These objectives allow you to know what you should be able to do by the time you have completed the unit. You should use these objectives to guide your study. When you have finished the unit, you must go back and check whether you have achieved the objectives. If you make a habit of doing this, you will significantly improve your chances of passing the course. The main body of the unit guides you through the required reading from other sources. This will usually be either from a Reading Section of some other sources. Self-tests are interspersed throughout the end of units. Working through these tests will help you to achieve the objectives of the unit and prepare you for the assignments and the examination. You should do each self-test as you come to it in the study unit. There will also be numerous examples given in the study units, work through these when you come to them too. The following is a practical strategy for working through the course. (1) Read this course guide thoroughly. (2) Organize a study schedule. Refer to the course overview for more details. Note the time you are expected to spend on each unit and how the assignments relate to the units. Important information e.g. details of your tutorials, and the date of the first day of the semester will be made available. You need to gather all this information in one place, such as your diary or a wall calendar. Whatever method you choose to use, you should decide on and write in your own dates for working on each unit. (3) Once you have created your own study schedule, do everything you can to stick to it. The major reason that students fail is that they get behind with their coursework. If you get into difficulties with your schedule, please let your tutor know before it is too late for help. (4) Turn to unit 1 and read the introduction and the objectives for the unit. (5) Assemble the study materials. Information about what you need for a unit is given in the ‘Overview’ at the beginning of each unit. You will always need both the study unit you are working on and one of your references, on your desk at the same time. (6) Work through the unit. The content of the unit itself has been arranged to provide a sequence for you to follow. As you work through the units, you will be instructed to read sections from your set books or other articles. Use the unit to guide your reading. (7) Review of the objectives for each study unit and confirm that you have achieved them. If you feel you are not clear about any of the objectives, review the study material or consult your tutor. (8) When you are confident that you have achieved a unit’s objectives, you can then start on the next unit. Proceed unit by unit through the course and try to face your study so that you keep yourself on schedule. Check that you have achieved the unit objectives (listed at the beginning of each unit) and the course objectives (listed in the Course Guide). (9) You now take the e-TMA online (10) After completing the last unit, review the course and prepare yourself for the final examination. 11.0 SUMMARY This course ACC 418 is designed to give you some knowledge which would help you to understand public sector accounting and finance. After going through this course successfully, you would be in a good position to pass your examination at the end of the semester and use the knowledge gained to function in accounting and help you to contribute to the development of scholarly thoughts in public sector accounting and finance. We wish you success in this interesting course and hope you will use what you have learnt in this Bachelor of Science in Accounting to contribute to your organization and the society at large. We also hope you would appreciate the unique role and opportunity you have to make a difference in using the knowledge derived from this course in solving problems. We, therefore, sincerely wish you the best as you enjoy the course. GOOD LUCK. ACC418 Public Sector Accounting and Finance COURSE DEVELOPMENT ACC 418 PUBLIC SECTOR ACCOUNTING AND FINANCE MAIN CONTENT Course Developer/ Unit Writer ICAN Study pack Adapted by: Mr. E. U. Abianga NOUN, Course Editor: Dr. I.D. Idrisu NOUN Programme Leader: Dr. I.D. Idrisu NOUN Course Coordinator: Mr. E. U. Abianga NOUN