Financial Accounting · Lesson 15

Government accounting, financial control and IT in accounting

JAMBWAECNECO

What the syllabus asks

JAMB: Topic 17 Public sector accounting (CRF, cash and accrual bases, roles of Accountant-General, Auditor-General, Minister of Finance, LG Treasurer, virement, warrants, votes, AIE, budget, due-process certificate); Topic 18 Information technology in accounting

WAEC: Public sector accounting; IT in accounting (marked Ghana in WAEC; taught for completeness)

NECO: Public sector accounting; IT in accounting (marked Ghana in WAEC; taught for completeness)

What you will learn

Explain the nature and objectives of public sector accounting and contrast it with private sector accounting.
Describe the CRF, budget process, warrants, votes, AIE and virement.
Distinguish cash and accrual bases and outline IPSAS adoption in Nigeria.
State the roles of the Minister of Finance, Accountant-General, Auditor-General, accounting officers and LG Treasurer.
Explain due process and public procurement.
Describe computerised accounting: components, packages, advantages, disadvantages and controls.

Key points

Public sector accounting aims at accountability for public funds, not profit.
All federal revenues go to the CRF (s.80); withdrawals need constitutional or legislative authority.
Budget process: call circular, estimates, FEC, President lays bill (s.81), National Assembly passes, assent.
Section 82: spending up to six months if the Appropriation Bill is delayed; s.83 Contingencies Fund.
Warrants release funds; AIE authorises officers; votes are approved amounts; virement moves savings within a head.
Cash basis records cash only; accrual basis records income and expenses when incurred; federal accrual IPSAS from 2016.
Accountant-General keeps accounts and manages the treasury; Auditor-General (s.85) audits and reports to the legislature.
Due process: BPP certificate of no objection under the Public Procurement Act 2007.
Computerised accounting: hardware, software, people, procedures; speed and accuracy.
Controls: passwords, audit trail, backups, antivirus, segregation of duties, data protection.

Start here: Nature and objectives of public sector accounting

Governments at federal, state and local levels collect taxes, oil revenue and fees, and spend on salaries, roads, schools, hospitals and security. Public sector accounting is the process of recording, classifying, summarising and reporting these transactions so that the people, through their representatives, can see how public money was raised and used.

Objectives

Accountability and stewardship: officials must show that money was spent as the legislature approved.
Compliance: ensuring spending follows the Constitution, Appropriation Acts, Financial Regulations and procurement law.
Planning and control: comparing budgets with actual spending.
Information for decisions by government, lenders, donors and citizens.
Prevention and detection of fraud and waste.

Public vs private sector accounting

Public sector	Private sector
Aim: service delivery and accountability	Aim: profit
Funds from taxes, oil revenue, borrowing, grants	Funds from owners, lenders and sales
Budget has legal force (Appropriation Act)	Budget is an internal plan
Governed by Constitution, Financial Regulations, IPSAS	Governed by CAMA, IFRS
Fund accounting (CRF, Development Fund, Contingencies Fund)	Single entity accounts
Owned by the public	Owned by shareholders or proprietors
Audited by the Auditor-General, reported to the legislature	Audited by private auditors, reported to shareholders

Why accountability matters

Every naira the government spends belongs to citizens: it comes from taxes, from the nation’s natural resources, or from borrowing that future taxpayers will repay. When public accounts are clear and audited, citizens and civil society groups can ask whether schools were built and drugs delivered as budgeted. Weak accounting, by contrast, allows funds to be diverted. This is why the Constitution itself sets out rules for public money, and why public sector accountants carry heavy responsibility.

Continue this lesson in the free app →

Practice questions

1. Public sector accounting deals with the accounts of

government ministries, departments and agencies
sole traders
partnerships
private companies

Show answer

A: government ministries, departments and agencies
It records how public funds are raised and spent.

2. The Consolidated Revenue Fund of the Federation is provided for in section

85 of the 1999 Constitution
162 of the 1999 Constitution
120 of the 1999 Constitution
80 of the 1999 Constitution

Show answer

D: 80 of the 1999 Constitution
Section 80 establishes the CRF.

3. Money may be withdrawn from the CRF only

by the CBN alone
once every five years
as authorised by an Appropriation Act or the Constitution
when the Minister wishes

Show answer

C: as authorised by an Appropriation Act or the Constitution
Section 80(2)–(4).

4. A warrant in public sector accounting is

a tax receipt
an authority to spend issued after appropriation
a court order
a bank cheque

Show answer

B: an authority to spend issued after appropriation
The Minister of Finance issues warrants to release funds.

5. An Authority to Incur Expenditure (AIE) is issued to

an officer, authorising spending up to a limit on a vote
the Auditor-General
a contractor
the Senate

Show answer

A: an officer, authorising spending up to a limit on a vote
It delegates spending within the vote.

Key words

Public sector: Government ministries, departments and agencies (MDAs) and parastatals funded by public money.
Consolidated Revenue Fund: The main government account into which revenues are paid and from which authorised spending is made.
Appropriation Act: The law authorising government expenditure for a year (the budget).
Warrant: A document authorising the release of funds from the treasury for approved spending.
Authority to Incur Expenditure (AIE): Authority given to an accounting officer to spend up to a stated amount from a vote.
Vote: An amount approved by the legislature for a particular head or sub-head.
Virement: Transfer of funds between sub-heads of the same head, with approval.
Supplementary appropriation: Additional spending authorised during the year.
Accounting officer: The chief executive (e.g. Permanent Secretary) responsible for an MDA’s funds.
IPSAS: International Public Sector Accounting Standards.
Treasury Single Account (TSA): A unified structure of government bank accounts at the CBN.
Hardware: Physical computer equipment.

Learn Government accounting, financial control and IT in accounting step by step, free.
The Cara's Tips app teaches every topic from the very basics, with quick checks, worked examples and exam practice. It works offline.
Open this lesson in the free app Download for Android