Question
At present, no assets are recognized as the modified cash basis accounting treats all expenditure relating to heritage item (including purchase cost) as expenses in
At present, no assets are recognized as the modified cash basis accounting treats all expenditure relating to heritage item (including purchase cost) as expenses in the year they were incurred. Under accrual based accounting, all assets should be capitalized if their cost or fair value could be measured reliably. This requirement would be challenging for the department. No effort at all has been made to value its collection items. According to management of the department: " Accrual accounting is new to us. We have no idea on how to place financial value to those heritage items. In fact, we never identified any experts who can value this items. These are going to be a great challenge if the items are recognized as assets." (Director, Departments of National Heritage Malaysia) (extracted from Case Study: National Heritage Department. Article: Challenges in Accounting Heritage Assets and Way Forward: Towards Implementing Accrual Accounting in Malaysia'. (Basnan, Md Salleh, Ahmad, Upawi & Mohd Harun,2016
) Required: i. By examining Malaysian Public Sector Accounting Standards 1 Presentation of Financial Statements (MPSAS 1), recommend whether heritage items should be classified as expense or capitalized as assets. (Refer Appendix 1 for MPSAS 1). (6 marks) (CLO2:PLO5:C2)
ii. Recommend ways on how should the public sector address the above challenges. (6 marks) (CLO2:PLO5:C2
) b) For accounting for payment, recommend any THREE (3) internal control can be implemented by public sector as to ensure the public money are safeguarded. (6 marks) (CLO2:PLO5:C2)
c) Compare and contrast between the votebook practiced by public sector organizations and legder that being maintained by private sector organizations.
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