An effective internal control system plays a vital role across every pillar in addressing risks and providing reasonable assurance that operations meet the control objectives. Controls are instituted in a PFM system to achieve these objectives:

• To ensure that operations are executed in an orderly, ethical, economical, efficient, and effective manner;
• To ensure that accountability obligations of public officers and institutions are fulfilled;
• To insist that applicable laws and regulations put in place are complied with; and
• To ensure that resources are safeguarded against loss, misuse and damage.

(Any 3 well explained point @ 1 mark each = 3 marks)

• Control environment. The control environment deals with values and culture of the organisation. It sets the tone of the control at the top by which the entire organisation is directed and controlled.
• Risk assessment. It emphasizes the identification and mapping of risk in the organisation to ensure that risk is effectively managed by management. It moderates the exposure of the entity to risk of the organization.
• Control activities. It relates to the rules, policies and procedures that are instituted within the organisation to ensure that resources are safeguarded. Accounting controls is an example of control activities.
• Information and communication. It deals with information flow within the entity. The right information is received by the right person at the right time.
• Monitoring. It entails review and monitoring procedures that are put in place to ensure that deficiencies in systems and policies are corrected.

The PEFA framework is a very usefulness too for improving public financial management across countries and governments. However, the framework has some inherent limitations:

• The PEFA indicators focus on the operational performance of key elements of the PFM system rather than on all the various inputs and capabilities that may enable the PFM system to reach a certain level of performance.
• PEFA also does not involve fiscal or expenditure policy analysis that would determine whether fiscal policy is sustainable.
• PEFA does not provide recommendations for reforms or make assumptions about the potential impact of ongoing reforms on PFM performance.
• For the purpose of a PEFA assessment elements of the defense, public order and safety function may not be included if information is not available.

(Any 2 points @ 1 mark each = 2 marks)

1) Accounting policies
Relevant accounting policies applied to the preparation of the financial statements include the following

• Basis of accounting. The financial statements have been prepared on accrual basis where transactions and events are recognised as and when they occur.
• Cost measurement. Assets are measured on historical cost basis except for motor vehicle donated to the assembly which was measured and recognized at fair value.
• Consumption of fixed assets. Consumption of fixed assets are charges using the straight-line basis. The estimated useful life of the assets are as follows:
  .                       Assets                                         Estimated useful life
                          Motor vehicle                                  5 years
                          Furniture and fittings                      5 years
                          Premises                                          10 years
                          Equipment                                       8 years
• Valuation of inventory. Inventory of office consumable was valued at lower of cost and current replacement cost in compliance with IPSAS 12: inventory
• Compliance with IPSAS and PFM Act. The financial statements have been prepared in conformity with the IPSAS and the Public Financial Management Act 2016.

The role of the Conceptual Framework is to establish the concepts that underpin financial reporting in the public sector entities that adopts the accrual basis of accounting. The IPSASB applies these concepts in developing the IPSAS and RPGs applicable to the preparation and presentation of general-purpose financial reports of public sector entities.
In relation to authority, the Conceptual Framework does not establish authoritative requirements for financial reporting by public sector entities that adopt IPSAS. It does not also override the requirements of IPSAS and RPGs.

(1 marks for discussing role and 1 mark for discussing authority = 2 marks)

Primarily, the Conceptual Framework provides a conceptual foundation for developing the IPSAS and the RPGs and therefore is relevant to standard setters.
However, the preparers of the GPFR based on the IPSAS will also find the conceptual framework useful in some instances. Particular, the conceptual framework will provide guidance to preparers in dealing with financial reporting issues not dealt with by the IPSAS or the RPGs. The preparer can refer to and consider the applicability of the definitions, recognition criteria and measurement principles and other concepts in the Conceptual Framework.
For example, a preparer of a financial report finds that there is a peculiar transaction of the entity which there is no specific IPSAS in force to deal with the matter and therefore has to use his own judgement. In solving the problem, the prepare may rely on the definitions, recognitions criteria and measurement principles in the Conceptual Framework to arrive at a treatment of the transaction which will largely conform with the spirit of the IPSAS, if one had existed.

(Award 2 marks for explaining the circumstances when the preparer will rely on the Conceptual Framework. Award another 2 marks for illustration = 4 marks)

Materiality
Information is material if its omission or misstatement could influence the discharge of accountability by the entity, or the decisions that users make on the basis of the information provided in the GPFR. In developing the IPSAS and RPGs, the IPSASB will consider the materiality of the consequences of the application of a particular accounting policy, basis of preparation or disclosure of a particular item or information. Thus, materiality is a constraint on the information included in the GPFR and thus entities consider the materiality of the information in making the decision on disclosure.

Cost-benefit
Financial reporting involves costs to both the preparer and the user. The benefit of the financial reporting should justify the cost involved in producing that information. Thus, judgment of cost -benefit analysis is required. The standard setters and preparers of financial reports considers the cost in relation to the benefits of the information in making decision on information to be included in the GPFR.

Balance between the Qualitative characteristics
The qualitative characteristics work together to contribute to the usefulness of the information. For example, faithfully representing an irrelevant information in the

GPFR does not achieve usefulness of the information. Thus in some instances, balancing or tradeoff between qualitative characteristics may be necessary to achieve the objectives of financial reporting.

(2 marks each for any constraints explained = 4 marks)

The PFM Act 2016 defines covered entity to mean

• Executive, Legislature and Judiciary;
• Constitutional bodies;
• Ministries, Departments Agencies and local government authorities;
• The public service; autonomous agencies; and
• Statutory bodies.

• Establish appropriate structures for the effective and efficient execution of the object of the Agency,
• Secure the achievement of the object of the Agency,
• Approve plans for the development and maintenance of an efficient internal audit for bodies and institutions to whom this Act applies, and
• Take reasonable and timely action on the reports submitted to it by the Director-General.

Revenue
Cash accounting policy
Revenue is recognized in the statement of cash receipt and cash payment when received. No asset is recognized when the revenue is not received at the reporting date.
Accrual accounting policy
Revenue is recognized when earned but not when received. Revenue receivable are treated as assets on the statement of financial position.

Capital asset
Cash accounting policy
Capital assets are recognized as expenditure for the year in which the asset was purchased or developed. No depreciation is charged to the determination of cost of service of the period.
Accrual accounting policy
The asset is recognized as an asset. The cost of the asset is written off over its useful life in the determination of financial performance.

Allowances and provisions
Cash accounting policy
No room for allowances and provisions since recognition is purely on cash basis.
Accrual accounting policy
Allowance and provisions are made on receivables, stock loss and non-current assets.

Expenditure
Cash accounting policy
Expenditures are recognized when paid for. Unpaid expenditures are not accounted for.
Accrual Accounting Policy
Expenditure is recognized in the determination of financial performance when incurred not when paid for. Expenditure outstanding is reported as liability in the financial position of the entity.

(1 mark for each policy explained= 4 marks)

Government needs to plan its activities, programmes and projects by setting clear objectives and targets for a given period. Fiscal planning refers to government’s anticipation of revenues, spending and financing within the planning period. Fiscal planning involves determination of government revenue, spending and borrowing for the ensuing year. Fiscal planning is very important in government budgeting as it provides the macroeconomic and fiscal framework within which budget is implemented.

Therefore, planning relates to fiscal planning which entail policy making stage of the budgeting process. It is the fiscal policies that influence the budget statement. Budget on the other hand is the expressing of government policies and programmes in some quantitative terms. It relates government spending to the attainment of fiscal and economic policies of government.

Treasury Single Account (TSA) is a set of linked bank accounts through which the government recognizes all its receipts and payments and obtains consolidated view of its cash resources at the end of each day. TSA is a unified structure of government bank accounts which enables the consolidation and optimum utilization of government resources.

TSA strategy is geared towards the rationalization of government bank accounts with commercial banks and both implementation of bank accounts tracking system (B-Tracking) which is to give Controller and Accountant General Department and all Ministries Departments and Agencies (MDAs)/ Metropolitan, Municipal and District Assemblies the opportunity of having real- time visibility of all government bank accounts with the commercial banks and the investment of government cash balances with both the BOG and the Commercial Banks. It is established under PFM Act 2016, (Act 921).

• Treasury Single Account enhances the effectiveness of PFM systems. It makes it possible to monitor all payment mechanisms precisely and improves the quality of fiscal data.
• It ensures effective aggregate control over government cash balances.
• It is meant to provide consolidated view of Government cash resources.
• The full implementation of TSA is expected to contribute to the improvement in Treasury.
• Operations and consequently facilitate better service delivery.
  

• Preventive mechanisms are in place to eliminate theft, loss, wastage and misuse; and
• Processes, whether manual or electronic, and procedures are in place for effective, efficient, economical and transparent use of the assets.
  

• The principal Spending Officer is discharged of accountability of Government stores where the store have been;
• Consumed in the course of public business and records are available to show that the stores have been consumed;
• Worn out in the normal course of public business and deletion from the accounts has been approved by the Minister and they have been disposed of in accordance with the directives of the Minister; or
• Lost, stolen, destroyed, damaged or rendered unserviceable other than by fair wear and tear and deletion from the accounts has been approved by Parliament.
  

• The payment has been budgeted for and approved by Parliament.
• Warrants have been given by the Minister of Finance
• Valid commitments entered for the expenditure in the GIFMIS
• Certificate of completion of work is issued by the principal pending officer.
• When valid Store receipt Advice (SRA) is issued from the Store.
  

• It will provide better infrastructural solution than initiative that is wholly Public.
• It will result in faster project completion and reduce delay on infrastructural project by including time to completion as a measure of performance.
• Greater efficiency of the Public Public Partnership will reduce government budget and budget deficit.
• High quality standard are better obtained and maintained throughout the life cycle of the project.
• P3s that reduced costs potentially can lead to lower taxes since the government can have options of financing its expenditure than burdening its citizens through increase taxes.
• PUPs allows 2 or more public or non-governmental organization to join forces and leverage their shared capacities.
• PUPs allows multiple public organization to pool resources and technical expertise in achieving Government objective.
  

• Value for money: value for money is paramount and PPPs should give greater value for money than the best realistic public sector project designed to achieve similar service outputs. Achieving value for money is a key requirement of government at all stages of a project’s development and procurement and is a combination of the service outcome to be delivered by the private sector, together with the degree of risk transfer and financial implications for government. Value for money is the driver for adopting the PPP approach, rather than capital scarcity or the balance sheet treatment.
• Risk allocation: An efficient risk allocation is vital in determining whether value for money can be achieved in PPP projects. GoG’s principle with regards to risk allocation shall be used to optimize, rather than maximize, the transfer of project risks to the private party. Risks will therefore be allocated to the party best able to control and manage them in such a manner that value for money is maximized. The allocation of risk will therefore determine the chosen method of private sector involvement and allocation of responsibilities, which shall take into account the protection of the public interest.
• Ability to Pay: end user ability to pay shall be a key consideration for all PPP projects. The PPP option must demonstrate long-term affordability to the public and overall Government budgetary sustainability, forward commitments in relation to public expenditure and the potential for returns on private sector investment, given other priorities and commitments.
• Local content & technology transfer: PPP projects shall be structured to encourage the maximum use of local content and technology transfer. As much as possible, the PPP arrangement shall facilitate the promotion of local industries and the private sector in Ghana.
• Safeguarding Public interest and consumer Rights: GoG is committed to ensuring that each PPP project shall have positive impact upon the public interest. The following principles shall be addressed in PPP transactions: Safeguards to users particularly vulnerable groups and Setting affordable user charges and tariff structures
• Environmental, climate and social safeguards: The Government shall ensure that PPP activities conform to the environmental laws of Ghana and the highest standards of environmental, climate and social safeguards.