Ican 2025 Public Sector Accounting And Finance Question 4

Ekenga Local Government known for production of edible agricultural crops in large quantity, is linked to other towns in Okoh State by a bridge constructed over a decade ago. This bridge suffered damage caused by ecological disaster lately. The importance of this bridge led to the commissioning of its total reconstruction by the Governor of Okoh State. Alongside this decision to reconstruct the bridge, the Governor also constituted a panel of enquiry comprising of engineers, quantity surveyors and accountants to identify the immediate and remote causes of the ecological challenge with a view to forestalling such in the future. A make-shift, temporary bridge was constructed for temporary use by the inhabitants pending when the construction of the main bridge is completed. The State’s Department of Works and Services also bid for the construction contract and won the contract having participated in the procurement process for contract award. The Department of Works and Services is funded by appropriation. The construction contract has requirements which include anticipated costs, technical specifications and timing of completion. The Department of Roads and Highways does not provide for any recovery of construction costs directly from the department. The initial estimate of the contract costs is N100 million. The construction of the bridge will take three years to complete. At the end of Year 1, the estimate of contract cost has increased to N108 million. An aid-giving NGO has agreed to provide funding of 60% of the costs for constructing the bridge which is N60 million and this is stated in the construction contract. In Year 2, a variation in the contract costs was approved on the advice of the Federal Department of Roads and Rural Infrastructures estimated at N15 million. The aid agency agrees to fund 50% of this variation. At the end of Year 2, costs incurred include N8 million for standard materials stored at the site to be used in Year 3 to complete the project. The Department of Works and Services determines the stage of completion of the contract by calculating the proportion that contract costs incurred for work performed to date, bears to the latest estimated total contract cost.