Question

Many countries around the world have undertaken rapid, wide-ranging, and substantial actions to respond to COVID-19 pandemic. These actions include the stimulus packages injected by those countries in their economies in order to deal with the social and economic challenges that both individuals and organizations are facing as the result of COV-19 pandemic. The focus of those stimulus packages can be grouped into categories such as. 1/ direct government support (e.g. income support and unemployment benefit), 2/ businesses support (e.g. loan, grant, delay to tax payment), and 3/ support for finance industries (e.g. lowering interest rate, repurchase bonds and other issued securities. The above-mentioned governments support to businesses and citizens has raised some concerns regarding the adequacy of the current government accounting practices in enabling the transparency, comparability, and comprehensiveness of the accounting reporting of government organizations, and whether the current government accounting systems are able to provide accounting information that can help in measuring the impact of these stimulus packages on both economies and people. As part of the effort to combat the effect of COV19 Pandemic and its adverse effect on economy, Qatar took similar steps that are followed by other countries and revealed a generous stimulus packages in May 2020 worth 75 billion Qatari riyals for the private sector in order to to help mitigate the economic impact of the COV19 outbreak. This package was accompanied by re-planning of the government sector financial resources with the intention to rationalize spending and increase all types of resources needed for combating COV-19. This large spending will require an appropriate accounting and reporting systems that enable the scrutiny of government spending and as well as public servants decisions on how to use financial resources. A special Interest Group (SIG), many of its members are Qatar university graduates, have expressed their concern about the relevance and adequacy of the accounting basis that is currently used in Qatar for the government accounting reporting. Assume that your team is part of that (SIG) and are intending to investigate the relevance and adequacy of the current government accounting basis used in Qatari government for government accounting reporting on the effect of the stimulus packages on individuals and economy.

2. Based on the opinion you express in 1.b, you are required to either propose an alternative accounting basis OR provide some advice on how to improve the current accounting basis used in Qatari Government accounting in order to fill in the reporting gaps identified as part of these weaknesses.

Answer 1

1) Answer

Qatar government announced on March 2020, QR 75 billion or USD 20.6 billion (14 percent of GDP) package to reduce the effects of COVID-19. The program aims at helping small businesses and hard-hit sectors through six-month exemptions on utilities payments like water, electricity etc. The Qatar Central bank is also providing additional liquidity to banks operating in the country through a special REPO window at zero interest rate for postponing loan instalments or granting new loans

As a member of Special Interest Group (SIG) my opinion is that the current Goverment's Accounting basis cannot provides an accounting framework within which economic data can be compared and presented in a format that is designed for the purposes of economic analysis, decision-taking and policy-making.

The current Accounting basis cannot be used for measuring the difference between two periods or yearwise comparison. The accounts themselves present only in a condensed way a great mass of detailed information, organized according to economic principles and perceptions and cannot estimated. It cannot find the effect of the stimulus packages on individuals and economy.

2). Answer

The new accounting basis should provide a comprehensive and detailed record of the complex economic activities taking place within an economy and of the interaction between the different economic agents, and groups of agents that takes place on markets or elsewhere. In practice the accounts are compiled for a succession of time periods, thus providing a continuing flow of information that is indispensable for the monitoring, analysis and enable comparison.

It should provide information not only about economic activities, but also about the levels of an economy's productive assets and the wealth of its inhabitants at particular points of time. It enables the scrutiny of government spending and as well as public servants decisions on how to use financial resources. The base year for calculating per capita GDP should be changed according to the requirement.

The new accounting basis should be able to monitor the staff payroll of companies to ensure whether the employees are getting salaries in time under wages protection system (WPS) and rents are paid. The timely payment of salary and rent is an indicator that the stimulus package reached the grassroot level.