Public Sector Accounting .pdf

CONFIDENTIAL

UNIVERSITI KUALA LUMPUR BUSINESS SCHOOL

FINAL EXAMINATION JUNE 2015 SEMESTER

SUBJECT CODE

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EAB40503

SUBJECT TITLE

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PUBLIC SECTOR ACCOUNTING

LEVEL

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BACHELOR

TIME / DURATION

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9:00 AM – 12:00 PM / 3 HOURS

DATE

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14TH AUGUST 2015

INSTRUCTIONS TO CANDIDATES

1. Please read the instructions given in the question paper CAREFULLY. 2. This question paper is printed on both sides of the paper. 3. This question paper consists of FOUR (4) questions. Answer ALL questions. 4. Please write your answers on the answer booklet provided. 5..All questions must be answered in English (any other language is not allowed) 6. This question paper must not be removed from the examination hall.

THERE ARE FIVE (5) PAGES OF QUESTIONS, EXCLUDING THIS PAGE.

CONFIDENTIAL (Total: 100 marks)

Question 1 Public financial management is crucial to a country’s development process. A sound public financial management supports public sectors in managing and controlling the financial resources as well as producing quality delivery of services.

Required:

A. State FOUR (4) legal requirements for financial reporting and management in Malaysian government. (4 marks) B. Explain the FOUR (4) users of the government’s financial statements and how they are affected by the government’s financial reporting. (10 marks) C. Discuss how the following agencies play their role in facilitating the government’s financial management matters: a. Treasury b. Accountant General Department c. National Audit Department (12 marks)

D. Describe each of the components below: a. Consolidated Revenue Accounts b. Consolidated Trust Accounts c. Consolidated Loan Accounts. (10 marks) [Total: 36 marks]

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CONFIDENTIAL Question 2

Since 1950s, there are several types of budgeting systems being implemented by the Malaysian government. Starting from the year 2014, three ministries have been implementing a new budgeting system known as the Outcome Based Budgeting (OBB) while other ministries still using Modified Budgeting System (MBS). Required:

A. Describe the FOUR (4) elements of MBS and provide ONE (1) advantage for each of the elements. (14 marks)

B. Explain FOUR (4) key elements of OBB. (10 marks) [Total: 24 marks]

Question 3

The development of governmental activities over the years in terms of size and complexity has raised concerns over whether the traditional use of cash basis of accounting is sufficient for government accounting and reporting. Thus, there have been discussions in recent years for adopting accrual accounting for better financial management and reporting of the governmental activities. Required:

A. Explain the differences between cash basis and accrual basis. (10 marks)

B. Discuss FOUR (4) benefits for Malaysian government to move to accrual accounting. (10 marks) [Total: 20 marks]

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CONFIDENTIAL Question 4 KUALA LUMPUR, June 15 — The Agriculture and Agro-Based Industry Ministry’s secretarygeneral signed a RM268 million contract for a prawn farm project in 2012 without authorisation from the minister, the second series of the Auditor-General’s (A-G) 2014 report revealed today. The contract, in the form of incentives for a company called Sunlight Inno Seafood Sdn Bhd for the Replicating Integrated Zone for Aquaculture Model project, should have been signed by the minister, the report said.

The Government Contracts Act 1949 allows a ministry secretary-general to receive authorisation to approve only contracts worth between RM20 million and RM100 million. The minister at that time was Datuk Seri Noh Omar, who was succeeded by Datuk Seri Ismail Sabri Yaakob in 2013. In its reply dated May 12, 2015, the ministry acknowledged its fault, calling it “unintentional”. Despite that, it insisted that the minister can authorise the secretary-general to ink the deal, and is drafting a letter to allow him to do so.

Sunlight Inno was contracted for the development of a 2,200-hectare integrated aquaculture park in Sungai Telaga, Pitas, Sabah.

A total of RM2.142 billion was allocated for the project that was started in 2011 as one of the National Key Economic Areas, and is expected to be completed by 2020. (The Malaymail)

KUALA LUMPUR, June 15, 2015 - Aquaculture shrimp farm contracts valued at RM100 million were signed by a government officer exceeding his authority, the Auditor-General’s Report revealed.

As this was a National Key Economic Area agriculture project, Pemandu and the Department of Fisheries (DOF), while continuing efforts to achieve objectives, should ensure only government officers authorised in accordance with Contract Act 1949, were tasked with the responsibility of signing contracts.

Both agencies should also encourage anchor companies for shrimp food production or acquiring locally-made shrimp food to further achieve objectives.

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CONFIDENTIAL The Auditor-General’s report noted that the NKEA for agriculture was being implemented through 16 Entry Point Projects (EPP), and one of these was replicating Integrated Zone For Aquaculture Model (IZAQ) which commenced in 2011, and targeted to achieve its objective in 2020.

The IZAQ represented landed aquaculture shrimp farms which would be anchored by stronghold companies.

The objectives of IZAQ by 2020 were to produce 100,000 metric tonnes of quality shrimps for premium market and export with a total cultivation area of 10,000 hectares, generating Gross National Income (GNI) amounting to RM1.383 billion and creating 11,900 new jobs. Between 2011 and 2014, 11 contracts were signed between the federal government and 10 anchor companies involving 11 projects (shrimp/fish farm and hatchery centre). The total project cost of IZAQ was RM2.142 billion. The Auditor-General’s Report also brought to light several aspects which needed to be addressed and this included target analysis output for 2020. “Based on existing contracts, the targeted analysis on the overall IZAQ project objectives would only be achieved at 43.9%. “Environmental Management Plan (EMP) was also less satisfactory.” The Auditor-General’s Report also urged Pemandu and DOF to continuously monitor IZAQ projects to ensure they would be completed on schedule in order to achieve the stipulated target and also ensure that anchor companies comply with EIA and EMP conditions during the construction stage. (The rakyatpost.com) Required:

A. Describe the following types of accountability: a. Financial accountability b. Programme accountability c. Management accountability (9 marks)

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CONFIDENTIAL B. Discuss THREE (3) accountability issues from the above newspaper extract. (9 marks)

C. Briefly explain the importance of audit report to the government (2 marks) [Total: 20 marks]

END OF QUESTION PAPER

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