Question 1

The first task of John Nyamah, a newly appointed Assistant Accountant of Azadagli Municipal

Assembly, is to prepare the 2022 financial statements of the Assembly in compliance with the

International Public Sector Accounting Standards (IPSAS), the Public Financial Management Act

2016 (Act 921) and the current Chart of Accounts of the Republic of Ghana. Nyamah submitted

on 5th March 2023 the draft financial statements, presented below, to the Director of Finance for

review.

Statement of Financial Performance for 2022

Revenues

Decentralised Transfers 1 500,000,000

Internally generated fund 2 280,000,000

Donation and grants 125,000,000

905,000,000

Expenses

Compensation for employees 3 300,000,000

Goods and Services 4 100,000,000

Capital Expenditure (CAPEX) 5 600,000,000

Interest 40,000,000

Subsidies 2,000,000

Other expenditures 13,000,000 1,055,000,000

Operational Deficit (150,000,000)

Statement of Financial Position 2022

Non-current asset

Property plant and equipment 6 0

Investment 55,000,000

55,000

Current Asset

Inventory 30,000,000

Receivables 67,000,000

Fixed Deposit 15,000,000

Cash and Cash equivalent 25,000,000 137,000,000

137,055,000

Liabilities and Fund

Payables 36,000,000

Bank Loans 64,000,000 100,000,000

Funds

Accumulated Fund 142,000,000

Deficit (150,000,000) (8,000,000)

92,000,000

Page 2 of 10

Notes to the Financial Statements

Notes 1: Decentralised Transfer

District Assembly Common Fund 200,000,000

Salary subventions 220,000,000

District development facility 75,000,000

Other grants 5,000,000

500,000,000

Notes 2: Internally Generated Fund

Licences 80,000,000

Fees and Charges 150,000,000

Rates 30,000,000

Sanitation grant from the central government 10,000,000

Investment Interest 6,000,000

Rent 4,000,000

280,000,000

Note 3: Donations

Concerned Citizens Network made the donation to the Assembly

Note 4: Compensation for employees

Established post salaries 200,000,000

Non-established post salaries 40,000,000

Travel allowances 30,000,000

Travel and Transport 10,000,000

Assembly members sitting allowance 15,000,000

Pensions 5,000,000

300,000,000

Note 5: Use of goods and Services

Car maintenance allowances 12,000,000

Repairs and Maintenance 18,000,000

Office expenses 20,000,000

Computers for the Office 40,000,000

Training, Seminars and Conferences 10,000,000

100,000,000

Note 5: Capital Expenditure (CAPEX)

Construction of new market 120,000,000

Purchase of motor vehicles 80,000,000

Access roads 200,000,000

Furniture and refurbishment. 150,000,000

Plant and Machinery 50,000,000

Page 3 of 10

600,000,000

Note 6: Property Plant and Equipment

Property, Plant and Equipment are accounted for in the Statement of Financial

Performance.

As a Senior Accountant of Azadagli Municipal Assembly, you are to review and provide

recommendations for improvement to the financial statements.

Required:

a) Discuss the extent to which the financial statements presented comply with the components

of financial statements required under IPSAS1: Presentation of Financial Statements.

(10 marks)

b) Discuss, with evidence, the extent to which the financial statements presented reflect the

qualitative characteristics of general-purpose financial statements under Chapter 3 of

Conceptual Framework of Financial Reporting in the Public Sector.

(10 marks)

c) Under no more than five headings (categories), discuss the shortcomings you have

observed in the financial statements presented, if any. Note that you must categorise the

observations. (10 marks)

d) Provide recommendations for improvement based on your reviews.