ACT 4161

PUBLIC SECTOR ACCOUNTING

CHAPTER 6
Accounting for receipts and payment
CONTENTS OF THE COURSE
PART 3 : FINANCIAL PART 4 : AUDIT AND
ACCOUNTING ACCOUNTABILITY
 Consolidated fund  Audit in government
 Accounting for receipts  accountability
and payments
 Financial reporting in PART 5 : ACCOUNTING
public sector PRACTICE AND
DEVELOPMENT IN
PUBLIC SECTOR
PART 3 : FINANCIAL ACCOUNTING
Accounting for
receipts and
payments Define the
government
 Learning Objectives accounting
machinery
Explain the Identify the
process of government’s
accounting for chart of
petty cash accounts

Describe the
Maintain the process of
vote book accounting for
receipt

Describe the
Describe and
process of
explain the vote
accounting for
book
payment
ACCOUNTING FOR RECEIPTS AND PAYMENTS
GAM

AGENCY PERSONNEL SYSTEM AND

PROCEDURE
 Define the
government Ministr Accounta
y of nt Federal
accounting finance general constitution
Financial
machinery Treasur Controlli procedure act
 (GAM) y ng officer 1957
Account Government
ant accounting
general Accounti
departme ng officer standard
nt Audit act
Self 1957
accounti
ng dept Treasury
Responsib instruction
ility
centre
Treasury
circular
Accountant
general circulars
State
government
circular
ACCOUNTING FOR RECEIPTS AND PAYMENTS
GAM

AGENCY PERSONNEL SYSTEM AND

 Define the Ministry
PROCEDURE

government of
finance
Accountan
t general
Federal
constitution
accounting Treasur Controllin
Financial
procedure act
y g officer 1957
machinery Government
Accountant general Accountin accounting standard
(GAM) department g officer
Audit act
Self accounting 1957
dept
Treasury
instruction
 government Responsibil
ity centre Treasury
accounting circular

agency Accountant
general circulars
State government
circular
ACCOUNTING FOR RECEIPTS AND PAYMENTS
GAM

AGENCY SYSTEM AND

 Define the PERSONNEL
PROCEDURE
Ministr
government y of Accounta
nt general
Federal
constitution
finance
accounting Treasur Controlli
Financial
procedure act
y
machinery Accountant
ng officer 1957
Government
Accounti accounting
general
(GAM) department ng officer standard
Audit act
Self accounting 1957
dept
Treasury
instruction
 Ministry of Responsib
ility centre Treasury
finance circular
Accountant
general circulars
State
government
circular
 GOVERNMENT ACCOUNTING
AGENCIES
 Treasury: Central agency of govt which is largest
agencies in Malaysia that operate under Ministry
of Finance.
 Accountant General Department (Known as
Jabatan Akauntan Negara Malaysia-JANM):
primary responsibility is to maintain the acconts
of Federal Government.
GOVERNMENT ACCOUNTING
PERSONNEL
1)Accountant General: Head of JANM. Charge of all
matters relating to the systems, procedures &
accounting principles used in Federal and state
Govt.
 Duties of accountant general:

a) to see that a proper system of accounts is

established and appropriate precautions
instituted against losses.
b) to exercise supervision over the receipt of
the Federal revenue and to take steps to secure
its punctual collection.
GOVERNMENT ACCOUNTING
PERSONNEL
2)Controlling Officer: Chief of Accounting Officer.
Responsible for an effective mgmt of public moneys
allocated to the agency under his control.
 Duties of controlling officer are:

a) to control the authorized estimates for the particular

purpose
b) to be in charged for the public moneys collected,
received, held or disbursed and all public stores received,
held and disposed
c) to secure proper exercise of performance of their
duties
d) to report the appropriate Service Commission and
financial authority
e) to be responsible to explain for the correctness of the
statement of public moneys
GOVERNMENT ACCOUNTING
PERSONNEL
3) Accounting Officer: The duties are to maintain
proper books of accounts and to render those
accounts as required by the act or as instructed
by Treasury. If the accounting officers failed to
perform their duties, they can be surcharged.
 Surcharge is one way of fine imposed to any
person who is or was in the employment of
Federal Government of the Stake Government.
 The amount of surcharged to be imposed will not
exceed the amount not collected.
GOVERNMENT ACCOUNTING SYSTEMS &
PROCEDURES
 System & procedures that have to be followed by accounting
personnel are:
a) Financial Provisions of the Federal Constitution
b) Financial procedure Act 1957
c) Audit Act 1957
d) Treasury Instruction
e) Treasury Circular
 Reason for government needs system & procedures are:
a) Diverse government objectives
b) Large annual expenditure at all levels
c) To ensure accountability of public moneys
d) To take care of public interest
e) To ensure the objectives of public sector are achieved in
compliance with the legal requirement
 ACCOUNTING OPERATIONS
 Government accounting is required by law to keep
the principal books:
 Cashbooks – Receipts and Payments
 Journals
 Ledgers – General and Subsidiary
 Any entry to the books must be properly supported
and authorized
 Principal accounting operations in Malaysian public
sector are accounting for receipts and accounting for
payments
 In order to improve transaction processes, entries are
coded and organized based on the type of transaction
-Chart of Accounts (COA)
 CHART OF ACCOUNTS (COA)
 COA – coded listing of accounts in the GL to classify
financial information
 Objective of coding system is to improve the
transaction process.
COA

Standard Code Sub-head Code

The same code is used across
government agencies (general)
Eg.
11000 – Salary and wages
12000 – fixed allowances
31000 – land
32000 - building
The code used differs across
agencies (detail codes)
Eg.
11100 Staff Salary
11101 Permanent staff salary
31101 Leasehold land
31102 Freehold land
ACCOUNTING FOR RECEIPTS
 Revenue includes all sorts of receipt by government such
as taxation, fees, and licenses.
 Each government agency that makes collection must
follow the procedures stated in the Treasury Instruction.
 Controlling Officer is responsible:
a) to make a proper collection to all the public moneys
received and receivable
b) to safe custody of the money collected
c) to record in the accounts rendered.
 Revenue received from public can be in the form of cash,
stamps, cheques, legal tender and foreign currency.
ACCOUNTING FOR RECEIPTS

Accounting for receipts

Cash Non-cash

1. Issuance of receipts
2. Custody of unused Stamps
3. Recording of collections Cheques valuable
4. Banking-in of collection Foreign currency
Subject to Legal tender
 ACCOUNTING FOR RECEIPTS
Issuance of receipts
 Official receipts must be issued on the same day of
money being received
 Official receipt must be signed by an authorized
officer except:
 Computer printed receipt
 An approved mechanized scheme for issuance of
receipts is in operation
 Fixed fee is preprinted on the receipt
 “Off-site collection”
 No second officer or special sanction by AG
 Segregation of duties (receipt of money and signing
official receipts)
 ACCOUNTING FOR RECEIPTS
Custody of unused receipts
 All unused receipts, receipt books and license
books are kept in a secured and locked up place
under the control of another officer who is not in
charge of any collections and issuing receipts
 Defective book must be returned to AG

 Issuance of receipts must be in numerical

sequence
Recording of collections
 All receipts must be recorded in the cashbook at
the time of transactions or at the end of the day
 Cashbook must be balanced at the end of the day

 Any discrepancies must be notified to the collector

ACCOUNTING FOR RECEIPTS
Banking-in of collections
 All money received that reaches an approved
amount must be banked-in on the same day
(next working day) in accordance to the revenue
code
 All money banked in must also be recorded in
cashbook
 Money collected should not be used neither as
advances nor as loans between the receipt time
and banking-in time
ACCOUNTING FOR PAYMENTS

Accounting for
payments

*Purchases Claims Salaries

Payments Recording

* Goods & services Vote Book

Transfer/Vire allocation
Additional allocation Reduced allocation
ACCOUNTING FOR PAYMENTS

Payment for purchases

 According to TI 93, the accounting officer upon receipt of a
report from purchasing department should ensures that:
a) The amount will not cause an excess on the amount
provided for the code of expenditure
b) The payment are certified by authorized officer
c) Repayment/advanced has been deducted from the amount
of payment (particularly for claims)
 After considering the above matter, the payment voucher is
prepared.
 All payments must be authorized by payment vouchers
 A cheque is prepared only after a payment voucher is
vouched
ACCOUNTING FOR PAYMENTS

Recording for payment transaction

 In order to record the transaction, vote book is used.

 Reason for maintaining the vote book are:

a) to control and ensure that expenditure &

liabilities do not exceed the approved allocation
b) To produce report on how allocation was utilized.
 3 part of vote book:

a) part I- used to recording vote information such as

number, program code and object code
b) part II- used to record information on increase or
decrease in allocation
c) part III- used to records detail transactions inflow
& outflow
ACCOUNTING FOR PETTY CASH
Petty cash fund:
 The petty cash must be used for specified
purposes as approved by the HOD.
 The recording of petty cash transaction must be
separated from the main cashbook.
 The advantages of maintaining the petty cash
book and account for petty cash are:
a) efficiency in job division
b) monthly total for each period posting to GL.
ACCOUNTING FOR PETTY CASH
 TI 111(c) requires disbursement from the petty cash
fund to be made in accordance to the specified
warrant.
 List of expenditure to be disbursed must be
submitted to the Accountant General or State
Accountant/ State Treasurer.
 The requested amount has to be kept to a minimum
as the reimbursement can be made more than once
in a month.
 The HOD will be made responsible to validate the
transaction, authorized, and to ensure that the
petty cashier records the transaction accurately
and promptly.