Question

Explain the main aspects that characterize public sector entities and discuss the main differences between private and public sector accounting.

Answer 1

1. State Ownership:

The enterprise ownership has to be vested with the State. It could be in the nature of Central, State or local government ownership or any instrumentality of the state too can have the ownership of public enterprise.

2. State Control:

Public Enterprise is controlled by the Government both in its management and functioning. The Government has the direct responsibility to manage the affairs of the enterprise through various devices and exercises control over it by means of a number of agencies and techniques.

3. Public Accountability:

Public Enterprises owe accountability to people as they are funded through public money. This accountability is realised through legislature and its committees, ministers, audit institutions and other specialised agencies.

4. Autonomy:

Public Enterprises function with utmost autonomy under given situations. They are free from day to day interference in their affairs and management.

5. Coverage:

The public enterprise traverses all areas and activities. There is hardly any field of activity, which is not covered by the operations of public enterprises.

Public sector refers to government-owned organizations and government-provided services. Private sectorrefers to 1) organizations that are not government owned, and 2) the goods and services provided by organizations outside of the government.