One objective of Public Sector Accounting is accountability. Accountability requires that government justifies how public resources are raised and utilized by means of Financial Reporting. Financial Reporting helps to improve the performance of, and trust in, the public sector.
Required:
Explain FOUR (4) other objectives of Financial Reporting in public sector organisations. (6 marks)
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- Statutory/ Legal Requirement: The conduct of financial business by public organizations is governed by laws, rules and regulations, example The 1992 Constitution, Financial Administration Act etc. This legal framework entreats officers to keep proper records of all transactions and produce them for inspection at the instance of the appropriate authorities, for example the Minister of Finance. This is to assure the public that they are complying with the law and meeting the objectives for which they were set up.
- Compliance and Stewardship: It is the objective of public sector accounting to provide the responsible authorities and users of such information with the assurance that there has been conformity with legal and other mandatory requirements in the organization’s use of resources.
- Viability: Another objective of financial reporting of public sector organizations is to enable the authorities to monitor and evaluate the performance of such organizations, as well as to predict the economic conditions of such organizations. Similarly, it affords readers to judge whether the organization can continue to provide Goods & Services in the future (going concern).
- Planning and Authorization Information: Public sector accounting has the objective of providing financial information which serves as the basis for planning future policies and activities and to provide support.
- Full disclosure of the financial results of department and agency activities.
- Production of adequate financial information needed for department and agency management purposes.
- Effective control over and accountability for all funds, property, and other assets for which each department and agency is responsible.
- Reliable accounting reports to serve as the basis for preparation and support of department and agency budget required to control the execution of the budget and to provide financial information.
- Suitable integration of department and agency accounting with the central accounting and reporting operation of the Treasury Department.