Deck 25: Financial Reporting in the Public Sector

Question 1

The main issues relating to the recognition of land under roads include:

A) uncertainty about which entities control land under roads
B) there is no recognised method for reliably measuring land under roads
C) there is no direct economic benefits associated with land under roads
D) all of the above

Answer 1

A

Question 2

In Australia,postal services and police services would be classified respectively as:

A) government department: government department
B) government trading enterprise: government trading enterprise
C) government trading enterprise: government department
D) government department: government trading enterprise

Answer 2

C

Question 3

Government departments should be classified as 'reporting entities' in accordance with Statement of Accounting Concepts SAC 1:

A) because the Auditor-general requires that they prepare financial reports
B) because individual Members of Parliament rely on the financial reports for information to help them carry out their responsibilities
C) because individual government departments require financial reports for internal management purposes
D) for all of the above reasons

Answer 3

B

Question 4

Compare government financial statistics with the general purpose GAAP reporting models.

Question 5

Compare and contrast the main features of 'fund accounting' and of 'accrual accounting' as they apply to the government (or public)sector of the economy.

Question 6

When the legislation that creates a public sector entity also specifies particular accounting methods to be used or disclosures to be made,these requirements:

A) are in addition to those required by AASB's
B) allow the government entity to select the method that best reflects the economic circumstances
C) are superceded by the requirements of AASB standards
D) may be disregarded if the requirements of AASB 101 are met

Question 7

All of these are current differences between Government Finance Statistics (GFS)and Generally Accepted Accounting Principles (GAAP)reporting,except:

A) GPS has two performance statements whereas GAAP has only one statement of financial performance
B) GPS requires all borrowing costs to be recognised as expenses whereas GAAP, in some circumstances, allows them to be capitalised
C) GFS only recognises bad debts when they are written off and does not recognise expenses arising from establishing a provision for doubtful debts, whereas GAAP recognises expenses arising from establishing a provision for doubtful debts
D) Accrual accounting only applies to GAAP not to GFS

Question 8

The Australian federal government should report regularly about the results of its operations and its financial position because:

A) electors can then assess the quality of management of the resources controlled by government
B) it is required under the Corporations Law
C) the Senate (the upper house of the federal parliament) demands it
D) it is required under the Australian Constitution

Question 9

Rowles (1992)concludes that there is no difference between investments such as in roads and drains made by public sector entities and assets such as blast furnaces made by the private sector.Discuss this view in the light of accounting for infrastructure and heritage assets.

Question 10

When a Government Trading Enterprise is restructured into a company and at least some shares are held by private investors it is said to be:

A) corporatised
B) privatised
C) publicised
D) globalised

Question 11

AASB 1052 requires:

A) local governments to disclose financial information by function
B) government departments to disclose financial information about service costs and achievements
C) government departments to disclose the assets deployed and the liabilities incurred by each of their activities
D) all of the above

Question 12

All of these are essential features of most of the definitions of infrastructure assets,except:

A) they are usually very profitable
B) they are necessary to sustain living standards
C) they are generally immovable
D) none of the above, i.e., all are essential features of infrastructure assets

Question 13

A Government Trading Enterprise is 'corporatised' when it is restructured into a company and:

A) special legislation controls its activities
B) all the shares are held by the government
C) all the shares are held by private investors
D) some of the shares are held by the government and some are held by private investors

Question 14

For financial reporting purposes,public sector operations are classified into the broad groupings:

A) government trading enterprises, government departments, whole of government
B) government trading enterprises and government departments
C) the house of representatives and the senate
D) none of the above

Question 15

The 'fund accounting' system previously used by government departments:

A) is very similar to conventional accrual accounting
B) is based wholly on cash receipts and expenditures
C) maintains a distinction between operating and capital expenditure
D) operates over a three to four year cycle, based on the normal period between elections

Question 16

Who are the likely main users of general-purpose financial reports of (a)governments and (b)private sector businesses? Briefly outline why each user group listed under (a)might be interested in the general-purpose financial reports of governments.Then explain the reasons for any similarities and/or any differences between the two lists of users.

Question 17

It can be argued that 'heritage assets' deserve special accounting treatment as they are different from all other types of assets because:

A) they cannot be replaced and will be preserved indefinitely
B) they are owned by the government
C) they are not readily saleable or have no market value
D) all of the above

Question 18

Characterisitic(s)of a GTE may include:

A) they are sometimes in competition with private enterprise
B) they pay dividends to government
C) they are in the business of selling goods and services to the public
D) all of the above

Question 19

Arguments against the adoption of accrual accounting,and hence for the retention of fund accounting,for the government sector include:

A) there is more continuity with fund accounting
B) fund accounting provides a better picture of the public sector's assets and liabilities than is possible under accrual accounting
C) fund accounting is best suited to meet the accountability objective of public sector financial reporting
D) fund accounting allows a measurement of the full cost of providing goods and services