- 20 Marks
PSAF – April 2022 – L2 – Q5 – Accounting policies for cash and accrual-based accounting systems
Explain constitutional provisions on budgeting, the concept and benefits of Citizen’s Budget, the role of budget guidelines, and how to address financial transactions not covered by IPSAS.
Question
a) Budgeting is an essential element of Public Financial Management and it is a requirement of the Constitution and other Public Financial Management enactments. Budgeting is a process that requires the engagement and participation of citizens for accountability purposes. The prime objective of budgeting is to set out the financial plans of government for the ensuing year and how government plans and programs will be financed.
Required:
i) Explain TWO (2) provisions in the 1992 Constitution relating to budgeting. (4 marks)
ii) Explain Citizen’s Budget and identify THREE (3) of its benefits in Public Financial Management. (5 marks)
iii) Explain the role of budget guidelines in budgeting and identify FOUR (4) items of information to be expected in a budget guideline. (6 marks)
b) A Public Sector entity that applies IPSAS is currently faced with a particular financial transaction for which no IPSAS exists for dealing with the issue. The management is undecided on the choice of accounting policy to apply.
Required:
Discuss how the matter can be dealt with by the management of the entity. (5 marks)
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