Question 1

(a) The Uganda Public Finance Management Act, 2015 requires that the national budget and work plans for public organisations are approved by Parliament by 31 May every year and budget execution commences on 1 July. Business organisations, on the other hand, are not required to comply with the provisions of the Act.

Required:

(i) Contrast financial management in public and business organisations.

(5 marks)

(ii) Discuss the following as provided for in the Public Finance Management Act, 2015:

• Powers of the Secretary to the treasury. (4 marks)
• Responsibilities of the Accountant General. (5 marks)
• Delegation of a function or responsibility by an accounting
• officer.
• (3 marks)

1. The district complies with the provisions of the International Public Sector Accounting Standards (IPSAS).
2. The district received 20,000 doses of drugs for the treatment of the rare condition from UNICEF on 1 October, 2016 and immediately distributed them to the health centres. Each dose was valued at USD 3. The council did not recognise the drugs in its books of account.

1. The district received 5 graders at a cost of USD 400,000 from the Federal Republic of Aruantan as a 2% loan for road maintenance on 1 August, 2016. The district is required to start repaying the loan in 5 years' time. The district paid the interest up to the end of the financial year. The policy of the district is to depreciate graders at 20% per annum on a reducing balance basis. These transactions have not been recorded in the
2. district's books of account.
3. The closing balance on the current receivables reported by the district in
4. its final accounts was actually its opening balance. You have established that the correct closing balance is Shs 200 million. Current receivables relate to outstanding taxes.
5. The district Senior Accountant prepared its statement of financial performance based on revenue receipts and payments.
6. The district budget for the financial year ended 30 June, 2017 was as follows:

Revenue:

Taxes

Fees, fines, penalties & licenses

Revenue from exchange transactions Transfers from other Government entities Other revenue

Total revenue

Expenses:

Wages, salaries & employment benefits Grants transfer and other payments Supplies consumed

Revenue collected

Taxes

Fees, fines, penalties & licenses

Revenue from exchange transactions Transfers from other Government entities Other revenue

Expenses paid:

Acquisition of Lo Ping

Wages, salaries & employment benefits Grants transfer & other payments Supplies consumed

Depreciation expenses

Other expenses

Finance cost

Shs '000' 7,800,000 5,000,000 2,300,000

14,500,000 3,700,000

500,000 12,098,730 17,300,000 400,000 897,400 674,000 1,400,000

Revenue from exchange transactions Other revenue

Total revenue

Expenses:

Wages, salaries & employment benefits Supplies consumed

Depreciation expenses

Other expenses

Finance cost Total expenses Surplus/ deficit

10. The exchange rates are as follows:

Kwasas 750,000 340,000

1,090,000

700,000 250,000 75,000 35,000 27,000 1,087,000 3,000

Shs 250 300 330 295 297 295

8. The district's cash receipts and payments during the financial year were as follows:

9 Lo Ping's statement of financial performance for the financial year ended 30 June, 2017 was as follows:

Date 1 USD to Shs 1 July, 2016 3,000 1 August, 2016 3,020 1 October, 2016 3,700 1 March, 2017 3,500 30 June, 2017 3,400 Average rate 3,520

1 Kwasa to

SECTION B

Attempt two of the four questions in this section

Question 2

Bank loan (description below)

15% debenture dated 1 January, 2016 repayable 2019 10% 8-year note dated 1 September, 2012, with simple interest payable annually on 31 December

Shs 'million' 1,600 400

2,400

Required:

1. (i)Prepare consolidated statement of financial performance of the district for the year ended 30 June, 2017 in accordance with IPSAS 24: Presentation of Budget Information in Financial Statements.
2. (23 marks)
3. (ii)Prepare consolidated statement of financial position of the district as at 30 June, 2017.

(a) Kiira Public University is constructing a building expected to take 24 months to complete. The University began construction on 1 January, 2017 with the following payments made during the year:

Shs 'million' 31 January 400 31 March 900 July 200 30 September 400 30 November 500

The following borrowings were outstanding at the reporting date 31 December, 2017:

The first payment on 31 January was funded from the University's existing borrowings. However, the University succeeded in raising a bank loan for an amount of Shs 1,600 million on 31 March, 2017 at a simple interest of 8% per annum, calculated and payable monthly in arrears. These funds were specifically used for this construction. Excess funds were temporarily invested at 5% per annum receivable monthly in arrears, in cash. The pool of borrowings was again used for a Shs 400 million payment on 30 November, which could not be funded from the bank loan. Construction of the building was temporarily halted for two weeks in June, when substantial administrative and technical work was carried out.

Required:

1. (i)Determine the borrowing costs which can be capitalised in respect of the building referred to above for the year ended 31 December, 2017.
2. (9 marks)
3. (ii)Discuss the recognition, commencement, and cessation of capitalisation of borrowing costs according to IPSAS 5: Borrowing Costs.
4. (6 marks)

(b) IPSAS 28: Financial Instruments: Presentation sets out the principles for presenting financial instruments as liabilities or net assets and for offsetting financial assets and financial liabilities.

Required:

(i) (ii)

Discuss the difference between a 'financial asset' and a 'financial liability'.

(6 marks)

Explain a 'puttable instrument', and discuss the circumstances under which a financial asset and a financial liability shall be offset.

(4 marks) (Total 25 marks)

Assets:

Current assets:

Cash

Receivables

Inventory

Total current assets Non-current assets: Bearer biological assets: Dairy livestock-immature Dairy livestock-mature

Properly, plant and equipment Total non-current assets

Total assets Liabilities: Current liabilities: Payables

Total current liabilities Non-current liabilities: Loan

Total non-current liabilities Total liabilities

Net assets/ equity:

Accumulated surplus

Total net assets/ equity

Total net assets/ equity & liabilities

Additional information:

Shs '000'

525,000 76,407 8,500,000 9,101,407

50,000 200,000 250,000

25,000,000 25,250,000 34,351,407

120,000 120,000

20,000,000 20,000,000 20,120,000

14,231,407 14,231,407 34,351,407

Question 3

(a) The following statement of the financial position is for the Ministry of Health as at 30 June, 2017.

1.

The Ministry manufactures a drug for treating the ZIKIV virus for sale to the pharmacies in the country on a commercial basis. On 1 July, 2016 there were 5 million tablets of this drug which were valued at Shs 2.5 billion. The Ministry borrowed Shs 20 billion at an interest rate of 5% from Geode Commercial Bank specifically to manufacture the drug. The loan was wholly used for the manufacture of the drug during the financial year. The Ministry did not use any other source of funds for manufacturing the drug. Each tablet of the drug was manufactured at Shs 500. The manufacturing system is so efficient that no loss of materials was registered. The interest charge for the year was paid and expensed. For purposes of valuation of drugs, the ministry uses the first in first out (FIFO) method.

The Ministry received 3,000,000 doses of a special drug on 1 July, 2016 from UNICEF for free distribution to the public. UNICEF, however, did not provide the cost details of the drug to the Ministry. By close of the financial year, a third of the drug had had not been distributed. The Ministry has not recognised the drug in its books of account due to the fact that UNICEF did not provide values. The price of the drug in market, per dose, on the following dates was as follows.

3.

4.

Included in the inventories at 30 June, 2017 is Shs 5 billion attributed to drugs for HIV which are distributed free of charge. Each tablet of the drug cost the Ministry Shs 5,000. By the end of the financial year, each tablet cost Shs 4,950 in the market.

The Ministry owns a dairy farm which produces and sells 90,000 liters of milk per quarter. At the end of the financial year, the Ministry had not sold 2,000 litres of milk which was produced on 30 June, 2017. The average selling price and cost of selling milk were Shs 1,000 and Shs 200 per litre respectively during the financial year. On 30 June, 2017 the selling price and cost of selling milk were Shs 1,200 and Shs 230 per litre respectively. The Ministry only recognises revenue from the sale of milk in its books of account. The cost of selling milk includes tax of Shs 80 per litre which is charged by local tax authorities.

By the beginning of the financial year, the farm had 100 Friesian cows. The farm also had 100 one-month-old calves. All the calves and cows were alive by the end of the financial year. The per-unit fair values less costs to sell were as follows:

Shs 5,000 4,900

Mature bearer cows One-month-old calves

One year and one month old calves

1 July, 2016 Shs 2,000,000 500,000 1,000,000

30 June, 2017 Shs 2,500,000 600,000 1,500,000

The Principal Accountant of the Ministry did not adjust the values of the cows and calves which he maintained at the value of 1 July, 2016.

6. The Ministry policy is to prepare its financial statements using accrual basis of accounting in accordance with the IPSAS.

Required:

Redraft the Ministry's statement of financial position as at 30 June, 2017 taking into account the transactions mentioned above.

(20 marks)

(b) Describe the term 'segment reporting, as applied under IPSAS 22: Disclosure of Financial Information about the General Government Sector.

(5 marks) (Total 25 marks)

Question 4

The National Data Management Agency, a Government owned organisation has a procurement and disposal unit under the department of finance and administration. Most employees in each department raise requisitions to procure goods and services in piecemeal as and when the need arises. The method of procurement usually used by this Agency is direct procurement irrespective of the procurement value, and most staff are unbothered about value for money as demonstrated by hardly any price comparison since no more than one quotation is obtained. This was one of the issues raised by Auditor General in the recent audit particularly raising a red flag on lack of proper procurement planning and non-compliance to the Public Procurement and Disposal of Public Assets Act (PPDA) Act, 2003. Other issues raised included incidences where employees in the Agency have freely and directly participated as bidders. The Agency employees have also been involved in direct negotiations with contractors on prices.

Required:

With reference to the PPDA Act, 2003 and the PPDA Regulations, 2014:

1. (a)Discuss the main considerations in planning procurement requirements by
2. a procuring and disposing entity. (10 marks)
3. (b)Explain the conditions for use of 'sale to public officers' as a method for
4. disposal of a public asset. (4 marks)
5. (c)Discuss the powers of the user department in exercising its functions in
6. the public procurement and disposal process. (5 marks)
7. (d)Describe the circumstances under which a procurement and disposal entity (PDE) is permitted to have price negotiations with a contractor in case the best evaluated bid or proposal exceeds the budget of the PDE.
8. (2 marks)
9. (e)Discuss the circumstances under which the direct procurement method can be used. (4 marks) (Total 25 marks)

Question 5

1. (a)Government of Uganda (GoU) recently introduced the e-cash platform as an alternative payment system to the Integrated Financial Management System (IFMS). You are the Finance Manager of the Uganda Road Maintenance Authority. Following a one-day workshop you attended at the Ministry of Finance about the e-cash platform solution, you have been asked by your supervisor to train accounts and finance staff in all upcountry stations about this new payments system.
2. Required:
3. Prepare set of notes to be used in the training, discussing the following aspects:
4. (i)Meaning and objectives of the e-cash platform.
5. (ii)Transactions to be covered under the e-cash payment system.
6. (iii)The process of handling e-cash transactions.
7. (15 marks)
8. (b)The objective of the Government, when setting fiscal objectives within the macroeconomic framework, shall be to ensure macroeconomic stability and economic growth having regard to the National Development Plan. The fiscal objectives shall be based on certain principles.
9. (Source: The Public Finance Management Act, 2015).
10. Required:
11. Discuss any four principles Government should follow in setting fiscal
12. objectives within the macroeconomic framework.
13. (8 marks)
14. (c)Tyrad District Local Government has been handling cases of property of the deceased persons in a bid to reduce conflicts in the communities. Slandriate (the transferor), a 19 year old citizen is an orphan who wants to fly to America. His aunt lives there and has invited him for a job. He has made a will and named Tyrad District Local Government as a primary beneficiary since he trusts no one in his parental linage. He has entrusted a 2 star hotel worth Shs 800 million to the district.
15. Required:
16. Describe the accounting treatment of the 2 star hotel in the books of the district local government guided by IPSAS 23 (Revenue from Non- Exchange Transactions (Taxes & Transfers).