Question Tag: Statement of Financial Performance

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  • 16 Marks

PSAF – May 2017 – L2 – Q4a – Preparation and presentation of financial statements for local government

This question requires the preparation of a Statement of Financial Performance and a Statement of Financial Position for a Municipal Assembly, along with detailed workings.

The Trial Balance was extracted from the books of Bokom Municipal Assembly (BMA) as at 31st December 2015.

Debit GH¢’000 Credit GH¢’000
Property rate 450 Sundry payables 60
Basic rates 200 Short term loans 120
Special rates 50 Deposits 100
Lorry park fees 40 Accumulated Fund 43
Marriage and divorce registration 10
Building permits 110
Penalties 80
Market toll 620
Share of District Assembly Common Fund 980
District Development Facility 350
Compensation for employees 1,000
Herbalist licenses 20
Hawkers licenses 15
Other licenses 12
Royalties 50
Share of stool land revenue 150
Market Store rent 70
Other rentals 40
Interest on investment 10
Gains from business 30
Established post 1,080
Non-established post 700
Goods and services 950
Interest expense 20
Social benefits 180
Other expenditure 260
Bank and Cash 40
Advances and loans 80
Investment 100
Property, Plant, and equipment 1,200
4,610 4,610

Additional Information:

  1. Revenues are classified as follows: Rate, Land Revenue, Fees and Fines, Licenses, Rent income, investment income, and Grants.
  2. The expenditure classification should comply with the harmonized Chart of Accounts.
  3. Consumption of fixed capital for the year is computed as GH¢260,000.

Required:

a) Prepare:

i)  A Statement of Financial Performance for the year ended 31st December 2015.

ii) A Statement of Financial Position as at 31st December 2015. (Please show all workings clearly). (16 marks)

i) Statement of Financial Performance for the year ended 31st December 2015:

Revenues GH¢’000
Rates (Property, Basic, Special) 700
Land Revenue (Royalties, Stool Land) 200
Fees and Fines (Lorry park fees, Marriage registration, Building permits, Penalties, Market toll) 860
Licenses (Herbalist, Hawkers, Other licenses) 47
Rent Income (Market Store, Other rentals) 110
Investment Income (Interest, Gains from business) 40
Grants (DACF, DDF, Compensation) 2,330
Total Revenue 4,287
Expenditures GH¢’000
Compensation (Established and Non-Established Posts) 1,780
Goods and Services 950
Consumption of Fixed Capital 260
Interest Expense 20
Social Benefits 180
Other Expenditure 260
Total Expenditure 3,450

Surplus: GH¢837,000

ii) Statement of Financial Position as at 31st December 2015:

Assets GH¢’000
Property, Plant, and Equipment (1,200 – 260) 940
Investment 100
Advances and Loans 80
Bank and Cash 40
Total Assets 1,160
Liabilities and Fund GH¢’000
Sundry Payables 60
Short Term Loans 120
Deposits 100
Accumulated Fund (837 + 43) 880
Total Liabilities and Fund 1,160

Workings:

  1. Rates:
    • Basic Rate: GH¢200,000
    • Property Rate: GH¢450,000
    • Special Rate: GH¢50,000
  2. Land Revenue:
    • Royalties: GH¢50,000
    • Share of Stool Land Revenue: GH¢150,000
  3. Fees and Fines:
    • Lorry Park Fees: GH¢40,000
    • Marriage and Divorce Registration: GH¢10,000
    • Building Permits: GH¢110,000
    • Penalties: GH¢80,000
    • Market Toll: GH¢620,000
  4. Licenses:
    • Herbalist Licenses: GH¢20,000
    • Hawkers Licenses: GH¢15,000
    • Other Licenses: GH¢12,000
  5. Rent Income:
    • Market Store Rent: GH¢70,000
    • Other Rentals: GH¢40,000
  6. Investment Income:
    • Interest on Investment: GH¢10,000
    • Gains from Business: GH¢30,000
  7. Grants:
    • Share of District Assembly Common Fund: GH¢980,000
    • District Development Facility: GH¢350,000
    • Compensation for Employees: GH¢1,000,000
  • 20 Marks

PSAF – May 2016 – L2 – Q1 – Preparation and presentation of financial statements for central government

Prepare a statement of financial performance and a statement of financial position using IPSAS for the Department of Aviation Affairs.

Stated below are the balances extracted from the books of the Department of Aviation Affairs for the year ended 31st December 2014.

Account Description Amount (GH¢000)
Taxes 2,570.00
Wages 1,000.00
Fees, fines, licenses, penalties 104.00
Grants and other transfer payments 120.00
Finance costs 52.00
Supplies and consumables 170.00
Transfers from other government entities 250.00
Revenue from exchange transactions 60.00
Depreciation and amortization expense 66.00
Other revenue 150.00
Impairment of property, plant, and equipment 46.00
Other expenses 70.00
Cash and cash equivalents 255.00
Receivables 80.00
Investments (short-term) 45.00
Prepayments 47.00
Inventories 75.00
Intangible assets 190.00
Land and buildings 1,044.00
Payables (short-term) 1,420.00
Other non-financial assets 15,000.00
Investments (Long-term) 170.00
Receivables (Medium-term) 851.00
Short-term borrowings 700.00
Provisions (Current) 45.00
Superannuation 104.00
Payables (Medium-term) 240.00
Borrowings (Long-term) 665.00
Provisions (Long-term) 82.00
Employee Benefits (Medium-term) 150.00
Other non-financial assets 200.00
Current portion of borrowings 55.00
Employee Benefits (Short-term) 74.00
Capital contributed by other Government entities 194.00
Reserves 850.00

Required:
Use the International Public Sector Accounting Standards (IPSAS) to prepare a statement of financial performance for the year ended 31st December 2014, and a statement of financial position for the year ended 31st December 2014, including Net Assets / Equity.

Statement of Financial Performance for the Year Ended 31st December 2014

Description GH¢000
Revenue
Taxes 2,570
Fees & Fines 104
Revenue from Exchange Transactions 60
Transfers 250
Other revenue 150
Total Revenue 3,134
Expenses
Wages 1,000
Grants 120
Supplies & Other Consumables 170
Depreciation & Amortisation 66
Impairment 46
Other Expenses 70
Financial Cost 52
Total Expenses (1,524)
Surplus for the Period 1,610

b)
Statement of Financial Position as at 31st December 2014

Description GH¢000
Current Assets
Cash & Cash Equivalent 255
Receivables 80
Investments (Short-term) 45
Prepayments 47
Inventories 75
Total Current Assets 502
Non-Current Assets
Intangible Assets 190
Land & buildings 1,044
Other Non-Financial Assets 15,200
Investment (Long-term) 170
Receivables (Medium-term) 851
Total Non-Current Assets 17,455
Total Assets 17,957
Liabilities / Equities
Current Liabilities
Payables (Short-term) 1,420
Short-term Borrowings 700
Current Portions of Borrowings 55
Provisions 45
Employees Benefits (Short-term) 74
Superannuation 104
Total Current Liabilities 2,398
Non-Current Liabilities
Payables (Medium-term) 240
Borrowings (Long-term) 665
Provisions (Long-term) 82
Employees Benefits (Medium-term) 150
Total Non-Current Liabilities 1,137
Total Liabilities 3,535
Net Assets / Equity
Capital Contributed by Other Government Entities 194
Reserves 2,460
Total Net Assets / Equity 2,654
  • 20 Marks

PSAF – Mar 2023 – L2 – Q2a – Preparation and presentation of financial statements for local government

Preparation of a Statement of Financial Performance for Nsuta-Appiah Krom Municipal Assembly for the year ended 31 December 2021.

The following Trial Balance is the financial details of Nsuta-Appiah Krom Municipal Assembly for the year ended 31 December 2021.

Additional Information:

  1. It is the policy of the Assembly to adopt Accrual Basis in preparing its Financial Statements in compliance with Public Financial Management Act, 2016 (Act 921), Public Financial Management Regulation 2019 L.I 2378 and the International Public Sector Accounting Standards (IPSAS) and Local Governance Act 2016, (Act 936).
  2. Office consumables in respect of stationery and other items bought for GH¢1,800,000 remained unused during the year. The current replacement cost of the inventories is GH¢1,550,000. Meanwhile, the net realizable value of the inventories is estimated at GH¢1,400,000. No market exists for unused office consumables and other items.
  3. Property Rates received in respect of the 2022 financial year amounted to GH¢2,050,000.
  4. Salaries outstanding during the year amounted to GH¢750,000, and other expenses amounting to GH¢1,105,000 paid in respect of the 2022 financial year.
  5. Consumption of fixed assets is charged on a straight-line basis for the year as follows:
    • Motor vehicles: 10 years
    • Furniture, Fixtures & Fittings: 5 years
    • Building and Structures: 50 years
  6. Included in the Work in Progress is an amount of GH¢2,000,000 relating to a Building that was completed, commissioned, and put to use on 5 July 2021, after an additional amount of GH¢800,000 was spent to complete the pavement aspect of the building. This expenditure has not yet been paid.
  7. Interest on Loans to staff is at the rate of 15% per annum and interest on long-term Loans is at the rate of 10% per annum.

Required:

a) Prepare a Statement of Financial Performance for Nsuta-Appiah Krom Municipal Assembly for the year ended 31 December 2021.
(9 marks)

b) Prepare a Statement of Financial Position for Nsuta-Appiah Krom Municipal Assembly as at 31 December 2021.
(9 marks)

c) State TWO (2) Accounting Policies adopted and applied in preparing the financial statements.
(2 marks)

a) Nsuta-Appiah Krom Municipal Assembly
Statement of Financial Performance for the Year Ended 31/12/2021

b) Nsuta-Appiah Krom Municipal Assembly
Statement of Financial Position as at 31/12/2021


c) Accounting Policies

  1. General Statement: The Assembly prepares its financial statements in compliance with the Public Financial Management Act, 2016 (Act 921) and its Regulation 2019, L.I 2378, International Public Sector Accounting Standards (IPSAS), and the Local Government Act, 2016 (Act 936).
  2. Basis of Accounting: The Assembly uses Accrual Accounting Basis in the preparation of its Financial Statements.

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