ii) The intention, methods and procedures of the regulatory and financial reporting framework of government are meant to ensure that the objectives of public institutions and the government are achieved.
Required:
Explain TWO objectives of the government regulatory and financial reporting framework. (2 marks)
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The objectives of government regulatory and financial reporting framework should achieve the following:
- Show whether financial resources are obtained and spent in accordance with the national budget;
- Show whether the government overspent or under spent budgeted amounts and what changes necessitated those performances;
- Show whether control over commitments and obligations are effective and whether any challenges that exist are due to cash outlays or revenue inflows;
- Show whether financial flows may be determined or predicted;
- Evaluate the performance of the economy and state institutions.
iii) Explain ONE major challenge that may affect the implementation of the objectives of effective financial reporting. (1 mark)
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New Environment:
i) Sometimes regulations designed to promote financial soundness and reporting may prevent desirable changes and interfere with the ability of the system to adapt itself to a new environment;
Outmoded Laws:
ii) Regulatory bodies are usually slow to redefine the purposes and financial structures of public institutions. As public entities seek to broaden their scope of operations they are often faced with legal constraints and outmoded laws and financial regulations
iii) Timeliness – Undue delays will make reports lose their relevance;
iv) Cost Benefit – Cost of providing information should not be more than the benefits;
v) Quality – Quality of reports should meet objectives of financial reports;
vi) Collusion – When public officers collude to misapply or misappropriate public funds and property the objectives of regulations are defeated;
vii) Corruption – This is one of the risk factors that undermine public institutions and destroy the goals of public entities, making the application of regulations ineffective.