COURSE : DIPLOMA IN IPSAS

EXAMINATION : OPEN BOOK

PAPER CODE : 02

DATE : MONDAY, 27TH AUGUST 2018

TIME ALLOWED : THREE HOURS (4.00PM-7.00PM)

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GENERAL INSTRUCTIONS
1. There are four questions in this paper, attempt ALL four questions

2. Write your examination number in the space provided on the answer

booklet

3. Marks are shown at the end of each question

4. Show clearly all your workings in respective answers, where applicable

5. This paper comprises six printed pages

Page 1 of 6
QUESTION ONE
University of Tanzania (UT) is a public university operating under the Ministry of Education
located at Kigamboni Municipal Council (KMC). The University sources of revenue are from the
Government, donor agencies, tuition fees and consultancy. The financial year of UT ends on 30th
June.
The following information relates to accounting records for the year ended 30th June, 2016 which
were prepared by a Junior Accountant.
Revenue information for the year ended 30thJune 2016
Revenue Received Approved Budget Actual Received Spent
(TZS) ( TZS) (TZS)
1 Fund from the Government 12,500,000,000 11,000,000,000 10,450,000,000
budget through Ministry of
Education for development
projects
2 Fund from the Government 2,580,000,000 2,440,000,000 2,100,000,000
for salaries
3 Fund from the Government 2,875,000,000 1,546,000,000 1,546,000,000
for other charges
4 Revenue from donor 2,850,000,000 2,500,000,000 1,950,000,000
agencies

Other Revenue Approved Budget Actual Received Uncollected

(TZS) (TZS) (TZS)
1 Tuition fees 5,075,000,000 4,750,000,000 250,000,000
2 Consultancy 1,940,000,000 1,600,000,000 100,000,000

As per directives from the Government (for development projects), 95% of the total amount
transferred to the University should be used for construction of a modern library and 5% for
purchasing modern computers to be fitted in the new library building. The other directive was to
return the fund received if not used as directed. The unspent amount for development projects
relate to modern computers not yet purchased at the year end, while the spent amount used to
construct modern library which was completed on 30 June, 2016.
As per the Government Policy fund transferred for salaries and other charges are to be used as
specified in the current year otherwise they should be returned to the Government.
For the purpose of increasing number of female students various donor agencies support the
Government by subsidizing the university budget allocated for construction of female students’
hostels. According to the agreement with the donor agencies 90% of their contribution should be
used for supporting constructions of hostel, and the remaining should be used for buying related
furniture in female’s hostel. The transfer agreement does not indicate fund to be returned if not
utilized as per the transfer agreement.

Page 2 of 6
 Revenue expected to be collected as tuition fees is from Government sponsored students and from
private sponsored students. The uncollected amount represents the amount outstanding from
private students which is usually recovered in the next financial year as private sponsored students
can not access their results without clearing their balances. UT charges tuition fee below market
price.
The University run independent Consultancy Bureau, services offered to the general public by this
Bureau are charged at market price. Uncollected amount represent unpaid amount for the
consultancies services provided during the year.
Kigamboni Municipal Council transferred 100 hectors of land to the University for the purpose of
constructing a new University Campus in Kigamboni. The transfer agreement specified that the
land is to be used for building a University Campus, but does not specify that the land is to be
returned if not used for the Campus construction. The fair value of the transferred land as
established by the independent professional valuer on 30th June 2016 was TZS. 1,000,000,000.
Operating expenses information for the year ended 30th June, 2016 were as follows:
S/n Item Outstanding as Amount Paid Outstanding as
th
at 30 June 2015 during the year at 30thJune 2016
1 Administration expenses 220,000,000 3,280,000,000 106,500,000
2 Examination expenses - 1,230,000,000 367,000,000
3 Teaching expenses 120,000,000 850,000,000 120,000,000
4 Consultancy expenses - 750,000,000 152,000,000
5 Practical training expenses 130,000,000 980,000,000 144,000,000
6 Salaries - 2,100,000,000 -

Accumulated depreciation as at 30th June, 2016 amounted to TZS. 1,300,000,000 including

TZS.660,000,000 which were charged during the year.
Amortization of intangible assets charged during the year was TZS. 196,000,000.

REQUIRED:
(a) Prepare UT Statement of Financial Performance for the financial year ended 30 June, 2016
(20 Marks)
(b) Prepare UT Extract Statement of Financial Position as at 30 June, 2016. (8 Marks)
(c) Present relevant disclosure on revenue accounting policy for each category of revenue.
(10 Marks)
(d) Propose relevant accounting policy for modern library building. (2 Marks)
(Total 40 Marks)

Page 3 of 6
QUESTION TWO
Mwananchi Building Agency (MBA) is a Government Agency which is commissioned by the
Government to build low cost houses to be sold to Government employees. MBA is also dealing
with renting houses at market rate. Low cost houses were sold to Government employees below
market value. MBA reporting period ends on 30th June each year.
The following accounting information were extracted from Mwananchi Building Agency for the
year ended 30th June, 2015.
(i) 54 Completed houses unsold as at 30 June 2015, costing TZS. 45,760,000 each. Selling
price was TZS. 55,000,000 per house.
(ii) As at 30th June 2015, 10 houses were rented out to various private organizations. Fair values
of these houses as at 30th June 2015 were TZS. 300,000,000 each.
(iii) In the list of unfinished buildings as at 30th June 2015 includes 15 low cost houses which
were partially completed by 65%, the total cost of construction as at 30th June 2015
amounted to TZS. 628,827,500.
(iv) At the end of June, 2014 MBA completed construction of 2 buildings marked as BLOCK
A and BLOCK B to be used for administrative purposes at a total cost of TZS. 300,000,000
each. These buildings were inspected in July 2014 and certificate of occupancy were issued
in early August 2014. MBA’s staff moved to these building with effect from 1st October
2014. Estimated useful life of these office buildings were 50 years with nil residual value.
(v) In the list of assets included two motor vehicles which were donated by a parent Ministry
in July 2014 in order to improve operations of MBA. The donated motor vehicles were
bought in January 2012, and before being donated were being used by the Ministry for
administrative purpose. By using professional valuer MBA established that used motor
vehicle of the same brand can be bought at TZS. 120,000,000. MBA estimated that received
motor vehicle will be used for five years with TZS. 20,000,000 residual value. The Ministry
directed MBA to use these two motor vehicles for facilitating construction of low cost
houses, if not used as specified they should be returned to the Ministry.

REQUIRED:

(i) Prepare MBA Extract Statement of Financial Position as at 30th June, 2015.
(15 Marks)
(ii) Present necessary disclosures on accounting policies for the above assets in MBA
Financial Statements for the year ended 30th June 2015. (5 Marks)
(Total 20 Marks)

Page 4 of 6
QUESTION THREE
You have just been employed by the Minerals Government Agency (MGA) as a Chief Accountant.
You observed that under the previous policy, the Government through MGA has been getting
income from mineral resources through royalty received from private companies doing
extractions.
You noted further that with effect from the current year Government policy on minerals has been
changed whereby, MGA will cooperate with private investors in extracting mineral resources.
From your knowledge of IPSASs, you noted that MGA can cooperate with Private Investors in
any of the following forms.
(i) By a joint arrangement with private entities through joint operation
(ii) By a joint arrangement with private entities through joint venture
(iii) By establishing a new company in which MGA will have significant influence in
decision making
(iv) By establishing a new company in which the MGA will be regarded as controlling
entity.
REQUIRED:
(i) Indicate the meaning of each form above. (8 Marks)
(ii) Prepare memorandum to the Director General of MGA indicating how each option
above will be treated in the financial statements of MGA. (12 Marks)
(Total 20 Marks)

Page 5 of 6
QUESTION FOUR
The Permanent Secretary of Ministry XYZ attended one of the NBAA conference on public sector
accounting as a guest of honour. One presenter during her presentation insisted that the Conceptual
Framework for General Purpose Financial Reporting by Public Sector Entities (Conceptual
Framework) was the main building block of public sector accounting. She maintained that a single
primary requisite for any aspiring public sector accountant was to be fully aware and understand
the Conceptual framework thoroughly. She emphasized that it was the bottom line of ensuring
public sector accountability and transparency framework. Failure to acknowledge Conceptual
framework, public finance management programs in the country are bound to fail. A participant
from the floor reacted on remark by the presenter that in the absence of an understanding and
appreciation of the Conceptual Framework, all efforts of the Government to drive the Tanzanian
Economy to middle income through industrialization might fail.
The Permanent Secretary rose up and remarked that with due respect to all accountants at the
conference, the presenter and the contributing participant were misleading conference participants.
He went on to say that good public finance management in the country can only be enhanced
through adhering to Public Finance Act 2001 as amended in 2004 and 2010, with its relevant
regulations which require recording all funds received from the government and appropriate
documentation of expenditure and not the conceptual framework as was being portrayed at the
conference. The Permanent Secretary further said the Government has put forward sound
economic policies, instilled discipline, and is working to root out corruption. These are the driving
forces for sound Public Sector Finance Management Programs. Lastly, the guest of honour issued
a strong warning to Accountants not to organize conferences which are not supporting Government
initiatives for Industrialization in order to make Tanzania a middle income country by 2025.
You happen to be at the conference and you are the Chief Accountant of Ministry XYZ.
REQUIRED:
Prepare a memorandum to the Permanent Secretary of the Ministry XYZ indicating the following:
• Applicability of the Conceptual Framework for preparation of Financial Statements in the
Public Sector.
• Specific characteristics of the Public Sector Entities required to apply IPSASs.
• Justifications for adopting accrual accounting in the public sector.
(20 Marks)

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