HOW IS THE GOVERNMENT DOING FINANCIALLY? A PRELIMINARY ASSESSMENT OF PUBLIC ACCOUNTS

1. HOW IS THE GOVERNMENT DOING FINANCIALLY? A PRELIMINARY ASSESSMENT OF PUBLIC ACCOUNTS Dr Zakiah Saleh Senior Lecturer Department of Financial Accounting and Auditing Faculty of Business and Accountancy University of Malaya zakiahs@um.edu.my 603 – 7967 3924

2. Outline • Introduction • Objectives • Method • Findings • 4.1 Preliminary assessment of Public Accounts • Reporting objectives • Financial position and changes therein • Financial performance • Presentation and disclosures • Accounting standards • 4.2 Issues that warrant further research • Conclusion and recommendations

3. 1. Introduction • How is the government doing financially? • What • Where • Assessment of Public Accounts • Federal Public Accounts

4. 2. Objectives • To assess Public Accounts • Based on conceptual framework and practice of other countries • Focus on reporting objective, presentation and disclosure • To identify problem or issue that need further research

5. 3. Methods • 1. Content analysis • 2. Unstructured interview/discussion

6. 4. Findings • Assessment of Public Accounts • Reporting objectives • Presentation and disclosures • Accounting standards • Issues that warrant further research

7. Reporting Objectives “To provide information about the reporting entity useful to users of general purpose financial reports for accountability purposes, and for making resource allocation, political, and social decisions.” (IFAC, 2008) To provide information about financial position, financial performance and changes in financial position. This information is useful to various users. (PPK2)

8. Financial Position Assets = Liabilities + Fund balances Balance Sheet Statement of Memorandum Accounts Statement of Cash Receipts and Payments

9. Financial Performance “Governments are accountable not only for financial results, but also for the efficiency and economy of their operations and the results of their programs and activities.” (American Association of Accountants in Attmore, 2007)

10. Presentation and disclosure Information overload – “... a state of affairs where an individual’s efficiency in using information in their work is hampered by the amount of relevant, and potentially useful, information available to them.” (Bawden, Holtham and Courtney, 1999)

11. Presentation and disclosure “Users feel the complexity and volume of data in [financial report] are significant factors in their inability to make meaningful sense of the information presented in the [financial report].” (Molnar, 1994)

12. Presentation and disclosure IPSAS Cash Basis (para 1.9.21) In some cases, the detailed financial information included in approved budgets may need to be aggregated for presentation in financial statements in accordance with the requirements of this Standard. Such aggregation may be necessary to avoid information overload

13. Accounting Standards Accounting models (rule-based) vs. Accounting standards (principle-based) Piawaian Perakaunan Kerajaan (PPK) International Public Sector Accounting Standards (IPSASs)

14. Compliance with IPSAS Cash Basis

15. 4.2 Suggestion for future research “Before we can decide what to include in public sector financial reports we must first of all determine who uses them and what for.” (Jones and Pendlebury, 2000) Government Financial Reporting: Users’ Perpectives 1. To assess whether existing reporting requirements related to Public Accounts adequately meet the needs of financial statement users. 2. To consider potential changes to improve the usefulness of Public Accounts.

16. 5. Conclusion • Public Accounts has been prepared in accordance with relevant Acts and IPSAS Cash Basis • But there is room for improvements

17. Thank You