QUESTION TWO Below is the complete set of Financial Statements of Take-Home University (THU), a Public University of Ghana, issued on 1 May 2020. Statement of Financial Performance for the Year Ended 31 December, 2018 Revenue Notes GOG grant 1,540,000,000 Internally Generated Funds 14,427,492,000 Donations and other income 9.278.258.000 25.245.750.000 Expenditure Compensation for employees 8,385,270,000 Goods and services 2,238,083,000 Social benefit 1,720,000 Interest 1,720,000 Capital expenditure (CAPEX) 25,542,515,000 Other expenses 79.100.000 36.248.408,000 Net Operating Result - Deficit (11.002.658.000) 4 Statement of Financial Position as at 31 December 2018 Notes Current Assets Cash and cash equivalent 294,233,000 Receivable (468,050 -10,000) 458,050,000 Inventory 155.254,000 907.537.000 Liabilities and Fund Payable 20% Loan 7 696,325,000 8.600.000 704.925,000 202.612.000 907.537.000 Accumulated fund Cash Flow Statement for the Year ended 31st December 2018 Cash Inflows GOG grant 1.540,000,000 Internally Generated Funds 14,427,492.000 Donations and other income 9.278.258.000 25.245.750,000 Cash Outflows Compensation of employees 6,385,270,000 Goods and services 1,989,112,000 Social benefit 1.720,000 Interest 1,720,000 Capital expenditure (CAPEX) 15,542,500,000 Other expenses 79.100.000 23.999.422.000 Increase in Cash and Cash Equivalent 1,246,328,000 Cash and Cash Equivalent as 1/1/18 -952,095.000 Cash and Cash Equivalent as 31/12/18 294.233.000 NOTES TO THE FINANCIAL STATEMENTS Accounting policy a) Basis of accounting The financial statements are prepared on accrual basis of accounting. b) Inventory valuation Inventory is valued at lower of cost and net realisable value. c) IPSAS The financial statements are prepared in compliance with the IPSAS and all relevant financial legislations Internally Generated Fund Fees income Consultancy fees Admission forms Employees Compensation Allowance Establish post Non establish post Books and Research allowance Project work allowance Superannuation End of service benefits Books and Research allowance arrears 4,575,622,000 655,600,000 9.196,270.000 14.427.492.000 856,670,000 5,312,430,000 1,253,600,000 150,765,000 48,500,000 278,500,000 298,040,000 186,765,000 8.385.270,000 4 Use of Goods and Services Legal cost Consultancy cost Seminar cost Training and Workshop Cost Utilities Increase in Provision for doubtful debt Opening inventory Closing inventory 25.039.000 800,000,000 500,000,000 104,000,000 560,053,000 5,060,000 399,165,000 (155.254.000) 2.238.083.000 Capital expenditure Property, plant and equipment Vork in Progress 17.292.500,000 8.250.015.000 25.542.515.000 Other expenses Trial balance Sponsorship 71,000,000 8.100.000 79.100.000 Payables Payables Consultancy cost Book & Rescarch An. Interest payable Tax withholding Accumulated Fund Balance at start Net operating result 182.840,000 234,500,000 186,765,000 1.720,000 90.500.000 626.325.000 11,205,270,000 (11.002.658.000) 202.612.000 Required: a) Using the Qualitative Characteristics (QCs) of General Purpose Financial Report as a Framework, evaluate the information usefulness of the set of financial statements presented by the THU (10 marks) b) Based on the relevant IPSASs, explain the significant observations you have made about the financial statements of THU and suggest improvement, if any. (10 marks) (Total 20 marks)