HOW IS THE GOVERNMENT DOING FINANCIALLY? A PRELIMINARY ASSESSMENT OF PUBLIC ACCOUNTS Dr Zakiah Saleh Senior Lecturer Department of Financial Accounting and Auditing Faculty of Business and Accountancy University of Malaya [email protected] 603 – 7967 3924 Outline Introduction Objectives
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“To provide information about the reporting entity useful to users of general purpose financial reports for accountability purposes, and for making resource allocation, political, and social decisions.” (IFAC, 2008)
To provide information about financial position, financial performance and changes in financial position. This information is useful to various users. (PPK2)
Assets = Liabilities + Fund balances
Statement of Memorandum Accounts
Statement of Cash Receipts and Payments
“Governments are accountable not only for financial results, but also for the efficiency and economy of their operations and the results of their programs and activities.”
(American Association of Accountants in Attmore, 2007)
Information overload – “... a state of affairs where an individual’s efficiency in using information in their work is hampered by the amount of relevant, and potentially useful, information available to them.” (Bawden, Holtham and Courtney, 1999)
“Users feel the complexity and volume of data in [financial report] are significant factors in their inability to make meaningful sense of the information presented in the [financial report].” (Molnar, 1994)
IPSAS Cash Basis (para 1.9.21)
In some cases, the detailed financial information included in approved budgets may need to be aggregated for presentation in financial statements in accordance with the requirements of this Standard. Such aggregation may be necessary to avoid information overload
Accounting models (rule-based) vs. Accounting standards (principle-based)
Piawaian Perakaunan Kerajaan (PPK)
International Public Sector Accounting Standards (IPSASs)
“Before we can decide what to include in public sector financial reports we must first of all determine who uses them and what for.” (Jones and Pendlebury, 2000)
Government Financial Reporting: Users’ Perpectives
1. To assess whether existing reporting requirements related to Public Accounts adequately meet the needs of financial statement users.
2. To consider potential changes to improve the usefulness of Public Accounts.