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LOCAL GOVERNMENT

LOCAL GOVERNMENT. ACT4161- PUBLIC SECTOR ACCOUNTING BY SALMAH MUHAMED. BACKGROUND. Formed to administer and manage public resources for the benefit of local comminities.

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LOCAL GOVERNMENT

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  1. LOCAL GOVERNMENT ACT4161- PUBLIC SECTOR ACCOUNTING BY SALMAH MUHAMED salmah muhamed-act4161

  2. BACKGROUND • Formed to administer and manage public resources for the benefit of local comminities. • The Local Government Act 1976 LGA), Sec 60(1) requires all local government to prepare accounts to be audited by the Auditor General • Sec 60(2) LGA, it is the responsibilty of Auditor General to submit audited financial report by 31 Oct to the local authority. salmah muhamed-act4161

  3. Fuctions of Local Government • Comprises of City Hall, Municipalities, and District councils. • Functions to provide services that include cleanliness, maintaining health, planning, landscaping and beautification of public places, collection of taxes and issuance of permit and licenses salmah muhamed-act4161

  4. Definition and types of local government(LG) • Definition- Sec 2 LGA - any City Councils, Municipal Councils of District Councils of states. • All LG in Peninsular M’sia is under the Ministry of Housing and Local Government except City Hall of Kuala Lumpur which is under Prime Minister’s Dept salmah muhamed-act4161

  5. Formation, administration and authoritative sources of local government • Sec 13 - a body corporate, have perpetual succession and a common seal. A separate legal entity • Sec 10, appointement of councilors and terms of office • Art 95A of Federal Constitution requires the formation of National Council for local Government (NCLG). NCLG comprises : • Minster of Housing and Local Government as Chairman • Representative from states) 1 each) • Max of 10 from Federal Government salmah muhamed-act4161

  6. Revenues of Local Government-Sec 39 • Taxes, rates, rents, license fees, dues & other charges. • Profits from any trade, service or undertakings • All interest on monies invested and income from property • Grants, contributions, endowment from Federal/State or Statutory Authorities salmah muhamed-act4161

  7. Power to raise loan • Sec 41 • With consent from State authority • For acqusition of land, construction of buildings & renewal/replcement of plants/vehicles • To pay off existing loan • Sec 42- to borrow by issuing mortgages or debentures stock salmah muhamed-act4161

  8. Power to raise loan • Sec 46- borrowing powers for special purposes. Loans raise for any development of residential, commercial or industrial undertaking is secured by 1st mortgage or by debentures • Loans from Federal/State • Sec 48- Every loan granted under Sec 41-47 , be a first charge upon revenues and assets of the LG • Sec 49- Advances by way of overdraft salmah muhamed-act4161

  9. Local Authority Fund • Sec 40. • All monies received shall constitute the Local Authority Fund • Monies kept in current or deposit account with licensed banks or invested in securities authorised by Finance Minister • All orders or cheques must be signed by 2 authorised officers salmah muhamed-act4161

  10. Annual estimates-Sec 55 • Not later than 10th Nov of each year pass detailed estimates of revenues and expenditures • Copy of draft estimates deliver to each councillor not later than 7 days before the meeting • LG Council may pass, modify , reject or add • Forward to state government not later than 20th Nov and be considered not later than 31Dec • Budget summary shall be publish in the Gazette salmah muhamed-act4161

  11. Supplementary estimates-Sec56 • May pass supplementary estimates from time to time • State government shall consider not later than 6 weeks after the date of receipts salmah muhamed-act4161

  12. Virement- sec 58 • May transfer expenditure under the same head of expenditure salmah muhamed-act4161

  13. Accounts of Local government • Sec 53-Books and accounts shall be kept and open to inspection of any councillor with prior concern of the Mayor/President • Sec 54 – Financial year ended 31 Dec. Annual statements must be signed by Mayor/President and laid before the Local government in May. • Profit and loss Account, balance sheet and other supporting supplementary statements salmah muhamed-act4161

  14. Audits of account- sec 60 • Undertaken by the auditor general or other auditor appointed by State government on the recommendation of the auditor general • Duty of auditor to submit their reports to LG on or before 31st Oct • Audited account shall be laid before the LG and published in the Gazette • A copy forwarded to State Authority and tabled to State Legislative Assembly and House of Representative salmah muhamed-act4161

  15. Accounting practices • Accounting principles- Fund accounting • Basis of accounting- accrual basis • Commitment accounting- vote book salmah muhamed-act4161

  16. Financial management problems • Lack of financial resources • Lack of professional staff • Lack of power and legal administration • Inefficient administration • Limited power and function salmah muhamed-act4161

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