ICAN 2021 Public Sector Accounting and Finance | Mixed

Okuku State University is one of the parastatals of Okuku State, but it is not a Government Business Enterprise (GBE). The following information relates to the accounts of the University for the year ended December 31, 2018: Statement of financial position as at December 31, 2018 Cost Accum. Dep. Carrying amount Non-current assets N‟million N‟million N‟million Land and buildings 15,000 250 14,750 Equipment 1,000 100 900 Furniture 800 80 720 Plant and machinery 550 50 500 Motor vehicles 450 45 405 17,800 525 17,275 Current assets Inventories 11,000 Receivables 15,000 Bank 3,000 29,000 Total assets 46,275 Non-current liabilities 30,000 Current liabilities 8,000 Total liabilities 38,000 Net assets 8,275 Net assets/equity Reserves 8,275 The following transactions, which took place during the year ended December 31, 2018 were not recorded in the books. (i) The University acquired office equipment worth ₦150,000,000 from Joko Nigeria Limited. The installation and transportation of the equipment amounted to ₦3,000,000. Half of the cost of the equipment was paid during the year, while the balance was paid later in January 2019. The University took over the building of a defunct State College of Education. The fair value of the building taken over was estimated at ₦500,000,000, at the end of the year. (ii) The University Teaching Hospital received motor vehicles and laboratory equipment from a UK based research institute as donation during the year. The intervention was to curtail the spread of lassa fever in the country. The cost of the motor vehicles and laboratory equipment donated amounted to ₦20,000,000 and ₦50,000,000, respectively. (iii) The University acquired a motor vehicle for ₦150,000,000 on January 1,2018. (iv) One of the buildings owned by the University was gutted by fire during the year ended December 31, 2018. The carrying amount of the building as at the date of the fire incidence was put at ₦160,000,000. The fair value of the building after the fire incidence at the end of the year was estimated by a valuer to be ₦130,000,000. (v) The University acquired motor vehicle on January 1, 2017 at ₦8,000,000 with an estimated useful life of 5 years. The University decided to dispose of the motor vehicle for ₦4,000,000 at the end of the second year. (vi) The University acquired computers on January 1, 2017 at the cost of ₦1,000,000. The computers have an estimated useful life of 5 years. Due to fire outbreak in the University on December 31, 2018, the computers were badly damaged and of no use to the University. It was resolved that they should be discarded and written off. The University uses straight-line method in depreciating its property, plant and equipment (PPE). (vii) The University acquired a land in 2018 at the cost of ₦50,000,000 to construct a plaza for rent. Cost of construction was put at ₦250,000,000 as at the end of the year 2018. The plaza was estimated to have a useful life of 25 years. It is the policy of the University to depreciate investment properties using the straight-line method. (viii) The University adopted full year depreciation policy using the following rates: % Motor vehicle 20 Building 4 Furniture 10 Equipment(including Laboratory and computers) 20 Plant and machinery 15

Debt management is a key component of public finance management that enables the government meet its financing needs at minimum costs and within acceptable levels of risk. One of the diagnostic tools that government uses in managing its debt portfolio is to annually conduct a Debt Sustainability Analysis (DSA).

Cash management implemented by the Budget Office of the Federation (BoF) was to ensure that the right amount of money is made available to fund government expenditure in a timely manner as well as meeting its obligations as they fall due.

As the Accountant in charge of the expenditure division, you are to assist the Director of Finance in the ministry to set up a budget committee. You have also been asked to review the recently issued 2020 Budget Call Circular.

IPSAS 12 on Inventories deals with the valuation and presentation of inventories in the financial statements in the context of historical cost system, the most widely adopted basis on which financial statements are presented.

External debt does not constitute a burden when contracted loans are optimally deployed and the return on investment is sufficient to meet maturing obligations, as and when due, while servicing of the domestic economy is not undermined. The magnitude and severity of debt burden cannot be determined on the basis of debt volume only, rather, the debt volume should be viewed in combination with certain debt ratios for better appreciation of the debt problem.