ICAN 2025 Public Sector Accounting and Finance | Mixed

The following information relates to one of the ten Local Council Development Authority of Wazobia State. Trial balance Ogogo Local Council Development Authority for the year ended December 31, 2023 \begin{array}{l|r|r} \hline \textbf{Description} & \textbf{N'000} & \textbf{N'000} \\ \hline Consultancy cost & 85,500 & - \\ Interest on loan notes & 103,320 & - \\ Interest on financial assets & - & 18,900 \\ Repairs and maintenance & 174,960 & - \\ Conferences & 262,440 & - \\ Commission to revenue collectors & 284,220 & - \\ Office stationaries (1/1/2023) & 329,220 & - \\ Court fines & - & 1,969,200 \\ Donations & - & 1,453,860 \\ Accumulated fund & - & 1,275,660 \\ Gift from Philanthropist & - & 1,054,800 \\ Hawker’s license & - & 668,700 \\ Car Park rates & - & 454,860 \\ Motor vehicles & 1,101,240 & 327,960 \\ Contract retention fee – payables & - & 251,460 \\ Advertisement and promotions for immunisation & - & 207,000 \\ Furniture and fittings & 450,000 & 180,000 \\ Buildings & 2,145,600 & 134,100 \\ Councillors’ allowances & 1,422,000 & - \\ Loans and advances to staff & 372,600 & - \\ Lock-up shops rents & - & 1,540,800 \\ Long-term loan notes & - & 1,355,940 \\ Market tolls & - & 459,900 \\ Marriage and divorce registration & - & 789,120 \\ Warehouse rent & - & 373,500 \\ Special emergency grant from Wazobia & - & 544,680 \\ Open shop licenses & - & 568,620 \\ Withholding tax & - & 817,200 \\ Telecommunication cost & 338,940 & - \\ Other expenses & 461,160 & - \\ Special audit fees & 488,340 & - \\ Purchase of office stationaries & 856,440 & - \\ Printing and publication & 1,189,980 & - \\ Revenue receivable & 3,754,260 & - \\ Salary for non-established post & 4,793,040 & - \\ Salary for established post & 5,671,620 & - \\ Property rate & - & 1,318,140 \\ Payables & - & 1,741,680 \\ Share from federation account & - & 10,574,100 \\ Town-hall meetings & 1,168,020 & - \\ Transport & 984,060 & - \\ Utility bills & 360,720 & - \\ Work-in-progress & 369,360 & - \\ Cash and cash equivalents & 913,140 & - \\ \hline \textbf{Total} & \textbf{28,080,180} & \textbf{28,080,180} \\ \hline \end{array} Additional information: (i) Included in the work-in-progress is an amount of N36 million relating to a Building which was completed and commissioned by the state Governor on June 1, 2023. After an additional amount of N14.4 million was spent on tiling, the building was put to use for half of the accounting year. This expenditure has not yet been paid. (ii) Interest on loans to staff is at the rate of 7% per annum. (iii) Interest on long-term loans is at the rate of 10% per annum. (iv) Office stationaries and other items bought for N32.4 million remained unused during the year. The fair value of the inventories is now N27.9 million. (v) Property rates received in respect of 2024 financial year amounted to N36.9 million. (vi) Salaries outstanding during the year amounted to N13.5 million. (vii) Other expenses amounting to N19.89 million was paid in respect of 2024 financial year. (viii) Depreciation of non-current assets is charged on straight line basis for the year as follows: Assets Useful life Building 50 years Furniture and fittings 5 years Motor vehicles 10 years The State Government and all Local Council Development Authority have adopted a policy of preparing financial statements in compliance with International Public Sector Accounting Standards (IPSAS) using Accrual Basis.

Accountability is an obligation to answer for the execution of one’s assigned responsibilities. It is the requirement to provide explanation about the stewardship of public money and how this money has been used. Accountability, requires government to carry out all aspects of its financial responsibilities with openness, trust, basic values and ethical standards so that its activities are transparent to the public. Where a government has something to hide, public reporting is more likely to be unreliable and less comprehensive in order to obscure material facts. Included in the four IMF Codes of practices and fiscal transparency is assurances of integrity.

The following initiatives have recently been taken by Ojaja State Polytechnic, a publicly subsidised institution of higher learning which was established by an Act of the State House of Assembly. First, Ojaja State Polytechnic allowed a property developer to use a portion of the campus to construct a mall that will be available for rent, and it is projected that N10.5 billion will be needed to complete and furnish the building. The developer will be responsible for a portion of the cost, and after ten years of operating the asset, the property will be transferred to Ojaja State Polytechnic. It is also agreed that during the period the developer will operate the mall, a percentage of earnings will be distributed to employees of the polytechnic. A former Rector of Ojaja State Polytechnic currently serves as the Chairman of the Board and Chief Executive Officer of the real estate development firm. The administration at Ojaja State Polytechnic reportedly chose him without advertising the post because they believe he is a well-known person of integrity. This Build, Operate and Transfer arrangement will no doubt boost the internally generated revenue of the polytechnic. Secondly, exceptional students from low-income backgrounds can apply for one of ten available scholarships at Ojaja State Polytechnic. The scholarship scheme includes a matrix for evaluating and ranking applicants considering the two main factors of brilliance and low-income level background. Officers from the Ministry of Social and Humanitarian Affairs routinely investigate the list of awardees to confirm compliance with the requirements of the scheme. Evidence show that one of the supervisors working on the external audit of Ojaja State Polytechnic approached the Rector of Ojaja State Polytechnic for two spots in respect of students with very low income level background and the Rector granted him, his request. Thirdly, prior to joining the Office of the Auditor - General as a Senior Auditor, Mr. Koko had a position in the accounting department of Ojaja State Polytechnic. At different times, he was in charge of internal auditing and preparation of financial report at the polytechnic. As a staff of the office of the Audior-General, Mr. Koko led the latest audit of the polytechnic after two years of leaving the polytechnic. Subsequent to the audit, allegation on mismanagement of finances surfaced in the media titled “Former accounting department worker sues Ojaja State Polytechnic for unfair termination after being accused of theft” during the year. This led to negative public perception of the Polytechnic and Mr. Koko was contacted by management with the request to testify in court. During that period, a government-funded initiative to educate chartered accountants on the International Public Sector Accounting Standards (IPSAS) and International Standards on Auditing (ISA) for public auditors got under way. The functioning of the International Organisation for Supreme Audit Institutions (INTOSAI) will be discussed as part of the training workshop. In addition, at the end of the session, attendees are expected to be able to prepare both targeted and broad financial reports and apply a conceptual framework for public sector financial statements.

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.

The design of fiscal transfers is critical to ensuring the efficiency and equity of local service provision and the fiscal health of sub-national governments.

Debt Management, a key component of Public Finance Management (PFM), enables the government meet its financing needs at minimum costs and within acceptable levels of risk. One method government use in managing its debt portfolio is to annually conduct a Debt Sustainability Analysis (DSA).

The total amount of money raised by government directly or through any of the authorised agencies is known as public debt. The money could be raised within the domestic economy or externally from citizens and or foreigners.