Question

You have just been posted to the Office of the Accountant General Expenditure Unit. The Unit is responsible for the consolidation of Government accounts. You have been asked to analyze the information given below in the Trial Balance of the Consolidated Fund for the year ended December 31, 2018.

	Dr. ($m)	Cr. ($m)
Salaries – Established scale	6,760
Salaries – Division 1 & 2	2,010
Salaries - Division 3	230
Administration cost	3,350
Conferences & seminars	1,260
Foreign travel	750
Social benefits	1,040
Domestic debt interest	1,450
External debt interest	1,740
Purchase of vehicles	250
Purchase of equipment	410
Construction of infrastructure	560
Cash and bank	2,470
PAYE		7,330
Corporate tax		5,010
VAT		2,320
Fines		150
Fees		310
Fuel Levy		700
Grants		430
Treasury bills		11,120
Bonds		13,460
Euro Bond		7,460
Bilateral & multilateral debt		19,660
Other expenditure	910
Accumulated Fund	44,760
	67,950	67,950

Additional information:

1. The Current Chart of Accounts based on the GFS 2001 is used to classify revenues and expenditure.
2. VAT of $50m was due to Government but was not received by Government as at December 31, 2018.
3. A grant agreement signed in 2017 by the Government of Zambia and the Swedish Embassy for the purchase of various medical supplies for Kabwata Health Centre was received and paid for in 2018.                                                                     

Required:

1. Define the following terms as used in Public Sector Accounting and give two (2) examples of each classification.

                1. Financial Assets

                2. Non – Financial Liabilities

2. Using the information from the Trial Balance prepare Statement of Financial Performance for the Consolidated Fund for the year ended December 31, 2018.

Answer 1

Financial assets may seem intangible—non-physical—with only the stated value on a piece of paper such as a dollar bill or a listing on a computer screen. What that paper or listing represents, though, is a claim of ownership of an entity, like a public company, or contractual rights to payments—say, the interest income from a bond. Financial assets derive their value from a contractual claim on an underlying asset.

The primary purpose of these assets is to help pay for ACC claims and fund future superannuation costs

Common Types of Financial Assets

• Cash
• Equity instruments of an entity—for example a share certificate
• A contractual right to receive a financial asset from another entity—known as a receivable
• The contractual right to exchange financial assets or liabilities with another entity under favorable conditions.

Non-Financial Liabilities are contingencies and / or the type of liabilities that are not of financial transaction origin. Such as but not limited to: Deferred revenue, advances received, and provisions.

Statement of financial performance

Particulars	$m
Revenues:
PAYE	7,330
Corporate tax	5,010
VAT+ Due of $50m	2,370
Fines	150
Fees	310
Fuel Levy	700
Grants Expended	430
Total Revenue	16300
Less:Expenditure:
Salaries – Established scale	6,760
Salaries – Division 1 & 2	2,010
Salaries - Division 3	230
Administration cost	3,350
Conferences & seminars	1,260
Foreign travel	750
Social benefits	1,040
Domestic debt interest	1450
External debt interest	1,740
Other expenditure	910
Total Expenses	19500
Gains/(Losses) excluding Minority Interests	(3200)