Unit 2 Legal Basis of Public Sector Accounting Acc 558 2020 Lectures

ACC 558
PUBLIC SECTOR ACCOUNTING
EDWARD YEBOAH
Email: eddie.yeboah401@gmail.com Tel:0244271879/0204353792
APRIL 2020
UNIT 2
LEGAL BASIS OF PUBLIC SECTOR ACCOUNTING
2
Legal Framework
The 1992 Constitution of the Republic of Ghana

 Public Financial Management Act 2016, (Act 921).
Public Financial Management Regulation 2019, (L.I. 2378).
The Income Tax ,Act 2015 (Act 896)
The Customs Act, 2016 (Act 923)
3
Legal Framework
The Bank of Ghana Act 2002, (Act 612)
The Local Governance Act 2016 , (Act 936)
Public Procurement Act 2003, (Act 663)& Amendment Act 2016 ( Act 914)
Audit Service Act 2000, (Act 584).
Internal Audit Agency Act 2003, (Act 658).
Any other regulation that parliament may enact from time to time.
4
KEY PROVISIONS
1. Key Financial Management Provisions in the 1992 Constitution-
Chapter 13, Articles 174 to 189 entitled ‘Finance’
2. Public Financial Management Act, 2016 (Act 921)/Interpretation
Section 102
3. Public Financial Management Regulations, 2019 (L.I
2378)/Interpretation Section 235
5
The 1992 Constitution of the Republic of Ghana
 The 1992 Constitution of the Republic of Ghana, the supreme law of the land provides the
foundation for the regulatory framework of management of public funds.
 In Chapter 13, Articles 174 to 189, titled ‘Finance’; various issues related to the management of
public finance have been provided.
 It is to be noted that, being the supreme law of the land; these provisions of the Constitution
provide the foundation for the enactment of all other regulations related to public sector financial
management including those that have been listed above.
 It addresses Micro and Fiscal Policy Principles and Strategies;
6
Public Financial Management Act, 2016 (Act 921)
 The Act defines clearly the powers and responsibilities of financial stewards (individual office
holders) and their precise roles.
 It defines the central players in the financial administration of the country, the assignment of
responsibilities, their functions and roles.
 This includes the responsibilities and powers of Minister of Finance, Chief Director , Principal
Spending Officers, the Controller and Deputy And Accountant-General, Parliament and their
Oversight Responsibilities.
7
It addresses issues concerning Budget Preparation and its approval
and implementation processes;
It set out rules for managing Contingency Fund;
It establishes Sinking Fund for Public Debt Servicing ;
It establishes Strategies for managing public Assets.
It has established Treasury Single Account, Consolidated Fund and
issues on investment of Consolidated Fund balance;
8
• Section 102 of Act 921 deals you interpretation.
• This section affords one to under the key terms and terminologies used
in the Act.
• Students are advised to read this section and note the meaning of key
terminologies in public financial management.
• These include:
9
Terminologies in Act 921
• Accounting Standards
• Appropriation
• Appropriation Act
• Approved Financial Institutions
• Arrears
• Auditor General
• Autonomous Agency
• Baseline Parameters
10
• Borrowing
• Borrowing Instrument
• Budget
• Budgeting
• Cash Management Bill
• Capital Expenditure
• Central Government
• Chief Director
11
• Commitment
• Consolidated Fund
• Consolidated Public Account
• Controller and Accountant-General
• Covered Entities
• Debt
• Debt Market
• Debt Portfolio
12
• Debt Securities
• Economic Classification
• Expenditure
• Financial Assets
• Finance Lease
• Financial Management System
• Financial Year
• Financial Estimates
13
• Financial Swap
• Fiscal Agent
• Fiscal Policy
• Fiscal policy Document
• Fiscal Policy Objective
• Fiscal risk
• Fiscal Risk Statement
• Fixed Asset
14
• Forecast Fiscal Balance
• Foreign Market
• Ghana Integrated Financial Management Information System
• Government
• Government Cash Management
• Government Debt
• Government Property
15
• Guarantee
• Internally Generated funds
• Inventories
• Investment
• Liability
• Liquidity Buffer
• Local government Authority
• Macro Fiscal risk
16
• Market Transaction
• Medium-term Expenditure Framework
• Medium-Term Fiscal Framework
• Medium Term National Development Plan
• Minister
• Ministry
• Monetary Grants
• Monetary Policy Objective
17
• Multi-Year Ceilings
• Multi-Year Contract
• Multi-Year Expenditure Commitment
• Other Entities
• Petroleum Funds
• Petroleum Revenue
• Prepayment
• Principal Account Holder
18
• Principal Spending Officer
• Property
• Public Accounting Record
• Public Accounts
• Public Corporation
• Public Finances
• Public Financial Management System
• Public Funds
19
• Public Money
• Public Office
• Public Officer
• Public Procurement Authority
• Public Resources
• Public Service
• Public Trust
• Resources
20
• Resource Envelope
• Sector Minister
• Short-Term
• State-Owned Enterprise
• Statutory Expenditure
• Spending Plan
• Subvention
• Supplementary Appropriation Act
21
• Supplier’s Credit Agreement
• Treasury Single Account
• Unexpended
• Virement
• warrant
22
Public Financial Management Regulations 2019 (L.I.2378)
These regulations were made by the Minister in the exercise of the
powers conferred upon him by the Public Financial Management Act
2016, Act 921.
They are basically rules and regulations governing management of
public finances.
23
Highlights
It sets out the responsibilities and role for Public Financial
Management;
It defines Public Financial Management addressing GIFMIS ,
establishment and responsibilities for the implementation of the
systems;
24
Highlights
It sets out the process of Budget Preparation, Approval and
Management. This covers Forecasts for compensation, Budget
Ceilings, Budget Proposals and Hearing, Budget Models for GIFMIS,
Budget Document, supplementary Budget , Mid year Review ,
Virement and Contingency Fund
It has addressed Revenue Management , focusing on responsibilities
of collecting Domestic revenues , the use of Revenue systems of
collecting revenues by GRA etc.
25
Highlights
It defines government expenditure controls, focusing on expenditure
subject to commitment controls;
It has also address government payment process focussing on
responsibilities for payment , certification of completion of work.
Inspection of work, inspection for certification , record of invoices and
supporting documents;
26
Highlights
It has covered National Development Plan more importantly costing
aspect of National Development Plan
Debt management has been addressed focussing on computerised debt
management systems and straight through process;
Domestic and external loans covering power to raise loans and debt
services payment.
27
(L.I 2378)/Interpretation Section 235
• This section affords one to understand the key terms and terminologies
used in the regulation.
• Students are advised to read this section and note the meaning of key
terminologies in the application of the Public Financial Management
Act.
28
Terminologies / Interpretation Section 235 (L.I 2378)
• Affordable or Affordability
• Approved Commitment
• Asset
• Budget Cost Centre
• Budget Module of the Ghana integrated Financial Management
Information System
• Cash Buffer
• Cash Management Committee
29
• Central Oversight Body
• Chart of Accounts
• Compensation for Employees
• Charter
• Computerised Budget Management System
• Computerised Human Resource Management System
• Computerised Payroll System
• Credit-in-Kind
30
• Debt-Equity Swap
• Debt Management System
• Departmental Accounting Instructions
• Employee Salary Payment Voucher
• Expense Order
• Forecasting Working Group
• Ghana Customs Management System
• Ghana Education Trust Fund
31
• Government of Ghana Accounting Manual
• Idle Cash
• Imprest Recoupment
• Internal Audit Charter
• Internal Audit Resource Plan
• Management Instructions
• Management Unit
• Minerals Development Fund
32
• National Health Insurance Fund
• National Infrastructure Plan
• Nominal Roll
• On-Lending Facility
• Outturns
• Payment Method
• Payment Voucher
• Project Concept Note
33
• Public Financial Management
• Public Investment Plan
• Purchase Order
• Purchase Requisition
• Questioned Expenditure
• Revenue Information Processing System Module
• Revenue Transit Account
• Risk Based Audit Plan
34
• Road Fund
• Salary Instructions
• Social Contribution
• Staff Advance
• Stores
• Student Loan Trust
• Sub-Imprest
• Third Party Deposit
• Treasury Instructions
• Youth Employment Agency
35
REGULATORY AUTHORITIES
THE COUNCIL OF STATE
Functions of the Council of State
The Council of State shall consider and advise the President or any
other authority in respect of any appointment which is required by this
Constitution or any other law to be made in accordance with the advice
of, or in consultation with, the Council of State.
The advice referred to in clause (1) of this article shall be given not
later than thirty days after the receipt of the request from the President
or other authority.
36
THE COUNCIL OF STATE
The Council of State may, upon request or on its own initiative,
consider and make recommendations on any matter being considered
or dealt with by the President, a Minister of State, Parliament or any
other authority established by this Constitution except that the
President, Minister of State, Parliament or other authority shall not be
required to act in accordance with any recommendation made by the
Council of State under this clause.
The Council of State shall perform such other functions as may be
assigned to it by this Constitution or any other law not inconsistent
with this Constitution.
37
THE CABINET
Decisions on government policies with regard to financial outlays are taken by the
office of the President together with the Cabinet representing the executive arm of
government.
 In the course of making decisions with financial implications, the President and
Cabinet exercise careful control about appropriations.
This is because whatever decisions are taken at that level must be approved by
parliament.
38
THE CABINET
• Executive control of government finances is therefore very crucial and
critical especially with the view not to overburden the taxpayer, and at
the same time exercise careful commitments acceptable to the
legislature.
39
PARLIAMENTARY CONTROL
According to the rules in the 1992 Constitution, no revenue shall be levied or

expenditure incurred except as authorized by parliament.
 It is imperative therefore for the Executive to obtain Parliamentary consent, both
to raise money (revenue) and to spend it (disbursements).
Parliamentary financial control is exercised in three different phases, namely,
appropriation, audit and review by public accounts committee.
40
Functions of Parliament
Scrutinisation and approval of National Budget
Scrutinisation of Auditor General’s report on public accounts and
interrogating public officials on the audit findings and
recommendations.
Holding Public officers accountable for financial losses to the state.
Promulgations of laws and legislative instruments to enforce financial
accountability and transparency.
41
Functions of Parliament
During budget execution, Parliament is mandated to receive in-year
implementation reports through select committees.
Parliament may also undertake direct monitoring of projects approved
in the budget through visits to projects sites to monitor project
implementation or service delivery
42
RESPONSIBILITIES OF MINISTER OF FINANCE
The Minister is responsible for the policy and strategic matters related
to the efficient operation of the public financial management
system of the country subject to policy guidance from Cabinet.
For the purpose of subsection (1) and subject to the Constitution and
any other enactment, the Minister shall
prepare the annual and supplementary budget estimates and reports
for submission to Parliament;
43
submit to Parliament for approval, the budget of covered entities as
required under this Act or any other enactment to ensure compliance
of the covered entities;
monitor and assess the implementation of the annual budget and
ensure the implementation of the fiscal policy of Government;
Manage Government property, financial assets, Government debts,
Government guarantees and other contingent liabilities specified under
this Act;
44
Account for public funds through a consolidated public account;
Supervise the financial operations of a covered entity;
Prepare Fiscal Strategy Document;
Manage public funds;
coordinate and mobilize resources including financial assistance from
development partners and integrate the resources into the planning,
budgeting, reporting and accountability processes provided under this
Act;
45
POWERS OF MINISTER
Pursuant to section 4, the Minister may request a
report or any other information from any covered
entity or any other person receiving grants, advances,
loans, guarantees or indemnities from the
Government;
In consultation with the Civil Service Council and
with the approval of Cabinet, establish structures or
units, within the Ministry necessary to enable the
Minister discharge responsibilities under this Act;
46
POWERS OF MINISTER
acting on the advice of the Attorney-General and subject to the
approval of Parliament, enter into and execute an agreement on behalf
of the Government in relation to matters of a financial nature; and
Give directives and instructions necessary for the implementation of
the provisions of this Act.
47
POWERS OF MINISTER
The Minister may delegate any of the responsibilities under

subsection (1) to the Chief Director or to a senior public officer not
below the rank of a Director within the Ministry but shall not be
relieved of the ultimate responsibility for the performance of the
delegated responsibility.
Subject to any procurement laws, the Minister may hire or retain the
services of professionals, consultants or experts, as the Minister
considers necessary for the proper and effective performance of the
functions of the Minister under this Act, on the terms and conditions to
be agreed upon.
48
RESPONSIBILITIES OF CHIEF DIRECTOR
In addition to the duties assigned under section 20 of the Civil Service
Act, 1993 (PNDCL 327) and responsibilities specified under this Act
relating to a Principal Spending Officer, the Chief Director shall
Advice the Minister on economic, budgetary, and financial matters
and on matters related to the implementation of this Act;
Coordinate the preparation of the
Fiscal Strategy Document,
Budget estimates, and
The Appropriation Bill;
49
Co-ordinate the promotion and enforcement of a transparent, efficient and
effective management of
Public revenue,
Public expenditure, and
The assets and liabilities of a covered entity;
Monitor the performance of the public financial management systems of the
public sector;
Monitor the financial and related performance of a covered entity; and
Prepare a report within one month after the end of each quarter on the
implementation of the annual budget by the Government and submit the report to
the Minister.
50
For purposes of subsection (1), the Chief Director
shall through the Controller and Accountant- General have access,
during working hours, to
the accounting records or information of a covered entity,
the place where public accounting services are carried out
the place where public accounting records are kept; and may
inspect, during working hours, the offices of a covered entity and
access any information relating to public finance that the Chief
Director may request.
51
The Chief Director may, under paragraph (b) of subsection (2),
authorize a public officer to inspect the offices of a covered entity.
The Chief Director may, in writing, delegate any of the
responsibilities under this section to a senior public officer of the
Ministry but shall not be relieved of the ultimate responsibility for the
discharge of the delegated responsibility.
52
DUTIES OF A PRINCIPAL SPENDING OFFICER
A Principal Spending Officer of a covered entity
shall;
ensure the regularity and proper use of money
appropriated in that covered entity;
authorise commitments for the covered entity
within a ceiling set by the Minister under section
25; and
manage the resources received, held or disposed of
by or on account of the covered entity.
53
A Principal Spending Officer shall, in the exercise of duties under this
Act, establish an effective system of risk management, internal control
and internal audit in respect of the resources and transactions of a
covered entity.
Where a Principal Spending Officer receives a subvention on behalf
of another entity, that Principal Spending Officer shall remit the
subvention to that other entity in accordance with the approved cash
flow plan for the subvention.
54
• A Principal Spending Officer may delegate a function or responsibility
specified in this Act to a public officer who is under the control of that
Principal Spending Officer but shall not be relieved of the ultimate
responsibility for the performance of the delegated function or
responsibility.
• Where a Principal Spending Officer delegates a function or
responsibility under subsection that Principal Spending Officer shall
give the directives necessary for the proper exercise or performance of
that function or responsibility.
55
CONTROLLER AND ACCOUNTANT-GENERAL
The President shall, in accordance with article 195 of the Constitution,
appoint a Controller and Accountant-General who shall be the Chief
Accounting Officer of the Government and the chief advisor to the
Minister and Government in matters relating to accountancy.
The terms and conditions of service of a Controller and Accountant-
General shall be specified in the letter of appointment and shall be
appointed for a term of four years which may be renewed for another
term of four years.
56
The Controller and Accountant-General shall be responsible to the
Minister for the custody, safety and integrity of public funds.
The Controller and Accountant-General shall
compile and manage the accounts prepared in relation to public funds;
57
issue general instructions to a Principal Spending Officer in
accordance with this Act and the Regulations;
keep, render and publish statements on public accounts under this Act;
develop efficient accounting systems for a covered entity;
approve accounting instructions of a covered entity;
58
on the instructions of the Minister, open an account with the Bank of
Ghana and its agents necessary for the deposit of public funds subject
to compliance with the Treasury Single Account system established
under section 46;
authorise the opening of an account for a covered entity;
59
in consultation with the Auditor-General, specify for a covered entity,
the accounting standards, policies and the classification system to be
applied in public accounting to ensure that a proper system of
accounting operates;
provide accounting officers to covered entities; and
be responsible for the classification and management of value books.
60
BUDGET OFFICE
The Ministry shall have an office known as the Budget Office.

The Budget Office shall be responsible for
the preparation of the annual estimates and Medium-Term
Expenditure Framework within the constraints specified in the
Government’s Fiscal Strategy Document;
61
BUDGET OFFICE
the preparation of the mid-year review and half-yearly budget
implementation reports under sections 28 and 34
advising the Minister through the Chief Director on all matters related
to the annual budget, supplementary budget and the Medium Term
Expenditure Framework;
advising the Chief Director on matters related to the classification of
the budget and systems required to prepare the budget; and
perform any other function assigned by the Chief Director.
62
THE GOVERNOR OF BANK OF GHANA
Functions
formulate and implement monetary policy aimed at achieving the
objects of the Bank;
promote by monetary measures the stabilization of the value of the
currency within and outside Ghana;
institute measures which are likely to have a favourable effect on the
balance of payments, the state of public finances and the general
development of the national economy;
63
THE GOVERNOR OF BANK OF GHANA
regulate, supervise and direct the banking and credit system and
ensure the smooth operation of the financial sector;
promote, regulate and supervise payment and settlement systems;
issue and redeem the currency notes and coins;
ensure effective maintenance and management of Ghana's external
financial services;
64
AUDITOR-GENERAL
FUNCTIONS
It is the responsibility of the Auditor General to examine and certify
government accounts.
Auditing of the foreign transactions through the Bank of Ghana.
Examination of the Controller and Accountant General’s report of public
accounts.
Submission of special audit report to parliament on special assignment
given by parliament.
Establishing accounting standards and policies in conjunction with the
Controller and Accountant General’s Department.
65
HEADS OF MDAS AND MMDAS
Functions
Manage and operate the MDA’s accounting systems, so as to ensure
accountability of all officers transacting such business and facilitate
the efficient discharge of such business;
Ensure that the department’s accounting system has been approved by
the CAG in consultation with the Auditor-General;
66
HEADS OF MDAS AND MMDAS
Functions
Receive and order the disbursement of any trust monies for which the
Head of Department has been appointed as administering authority by
or under any enactment or agreement;
Manage and reconcile the bank accounts authorised for the
department by the controller and Accountant-General;
Preserve in good order, and secure the economical use of all
equipment and stores used by the departments;
67
IMPORTANCE OF THE REGULATORY FRAMEWORK
They are intended to generate public confidence in public financial
managers in relation to the efficient, economic and effective use of
resources put under their stewardship.
Accounting and non-accounting officers are made aware of the
legal implications of financial transactions, so as to prevent
unlawful actions and decisions that may result in losses and wastes.
68
IMPORTANCE OF THE REGULATORY FRAMEWORK
Its knowledge prevents misunderstanding of the functions of
public financial managers and the controls they exercise; hence
they foster good and healthy relationship among public officers and
also between the officers and the public.
The enactments prescribe the responsibilities of persons entrusted
with financial management in public finance.
The enactments ensure the effective and efficient management of
national revenue, expenditure, assets, liabilities and other resources
of the government.
69
THANK YOU
For any concerns, please contact
elearning@knust.edu.gh
elearningknust@gmail.com
0322 191132
70

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ACC 558

PUBLIC SECTOR ACCOUNTING

The 1992 Constitution of the Republic of Ghana

According to the rules in the 1992 Constitution, no revenue shall be levied or

The Minister may delegate any of the responsibilities under

The Ministry shall have an office known as the Budget Office.

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