Guidance on Annual Government Financial Reporting

7/30/2019 Guidance on Annual Government Financial Reporting

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Guidance on Government Annual Financial Reporting on the Modified

Cash Basis

for Countries of sub-Saharan Africa

Introduction

Accounting Standards for the Public Sector

Timely, clear and open annual financial statements play a significant role in the accountability of governments to

their citizens and their elected representatives. The benefits of achieving consistent and comparable financialinformation across jurisdictions are also important and it is hoped that this Guidance will play a key role in

enabling these benefits to be realized. The adoption of this Guidance by governments of sub-Saharan frica willimprove both the !uality and comparability of financial information reported by their central government entities.

Governments and national standard setters have the right to establish guidelines and accounting standards for

financial reporting. This Guidance is an important step forward in improving the consistency and comparability offinancial reporting and we encourage the adoption of this Guidance.

This Guidance is based on the e"isting good practice across sub-Saharan frica which was identified in a recent

study by the frican #apacity $uilding %oundation&. s such, the Guidance is based on a bottom-up study ofannual general purpose financial statements as an aid to developing practical international accounting standards

for governments. The Guidance is based around the structure of the current #ash $asis '(SS). 't is hoped that

this Guidance will be used to influence accepted good practice across the globe and lead to a review of the #ash$asis '(SS. This Guidance assumes that the modified cash basis of financial reporting is adopted. This is the

basis currently adopted by all nglophone governments of sub-Saharan frica and the overwhelming majoritygovernments across the world.

Public sector Accountability and the Role of Financial Statements

long with the auditor*s report, a government*s annual financial statements provide the essential financial data

necessary for accountability purposes. 'n a parliamentary democracy, parliament sets the annual budget and so

authorises the government to raise ta"es and to spend money as indicated. %or governments, a budget takes on aspecial legal significance. Governmental budgets are e"pressions of public policy priorities and legally authorize

the purposes for which public resources may be raised and spent. The publication of government budgets and thenthe reporting of actual results against them are the primary method by which citizens and their elected

representatives hold governments to account for their financial management. The annual financial statements arethe key way in which the government accounts to parliament and its citizens for the ta"es raised, loans contracted,

grants received and the money spent on the provision of public services.

government*s financial statements +and associated report of the uditor General indicate how its managementof financial resources complied with the annual budget, authorised by (arliament, relevant laws and financial

regulations. #itizens and their elected representatives have the right to know whether the government actuallyused funds and resources in accordance with the approved budget and relevant financial regulations.

emonstrating accountability for compliance with budgetary authority is a distinguishing objective ofgovernmental financial reporting. The aim is to facilitate control by parliament to ensure that all public

e"penditure is within the limits set by parliament.

%or governments which are dependent on donors for a significant proportion of their revenue, their annualfinancial statements are also a key document to enable the donor community to monitor adherence to agreed

policies. These may include, for e"ample, poverty reduction strategies, the proportion of government e"penditure

to be allocated and actually spent on defined pro-poor e"penditure +for e"ample, primary healthcare and educationspending.

$ecause revenues raised through governments* power to ta" are e"pected to be used to advance the publicinterest, the public is entitled to hold governments to a standard of financial accountability that is wider in scope

1ndy ynne +)/&&Annual Financial Reporting by Governments - what is Africas best practice!" frican#apacity $uilding %oundation0 1arare - http022tinyurl.com2esaag)/&)2'nternational (ublic Sector ccounting Standards $oard +)//3, )//4, )//5Financial Reporting #nder theCash Basis of Accounting, '%#, 6ew 7ork, 'S$60 859-&-83:558-&)-; - http022tinyurl.com2


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than for private sector companies. ccountability to parliament is the cornerstone of all financial reporting in arepresentative democracy. Government accountability is based on the belief that citizens and their (arliament have

a =right to know,> a right to openly receive financial information that may lead to public debate by the citizens and

their elected representatives.

?any of the key users of government financial statements +citizens and their political representatives are not

financially literate and so e"tra effort is needed to make sure the financial statements are accessible, clear andunderstandable.

Current Good Practice

variety of approaches are currently used by governments of sub-Saharan frica and these approaches have yet

to be comprehensively documented and the good practice identified, but all the member countries currently usethe modified cash basis for their financial statements. 'n )//4, the


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undue reliance on international consultants.

This Guidance, if adopted by governments, will increase the level of accountability of these governments to their

citizens. 't will also increase the level of comparability of financial statements between governments and sofacilitate international comparisons.

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CONTENTS

INTRODUCTION...................................................................................................................................IACCOUNTINGSTANDARDSFORTHEPUBLICSECTOR.............................................................................IPUBLICSECTORACCOUNTABILITY ANDTHEROLEOFFINANCIALSTATEMENTS.................................I

CURRENTGOODPRACTICE....................................................................................................................IIBROADINDICATIVECRITERIA...............................................................................................................II

BENEFITS................................................................................................................................................II

1 OVERVIEW........................................................................................................................................1OBJECTIVEOFTHEGUIDANCE...............................................................................................................1SCOPEOFTHEGUIDANCE.....................................................................................................................1

2 THE MODIFIED CASH BASIS.........................................................................................................2DEFINITIONS...........................................................................................................................................2CASHEQUIVALENTS..............................................................................................................................3

3 PRESENTATION AND DISCLOSURE REQUIREMENTS..........................................................3DEFINITIONS...........................................................................................................................................3POPULARPRESENTATIONOFFINANCIALSTATEMENTS........................................................................4COMMENTARYONTHEFINANCIALSTATEMENTS..................................................................................4FINANCIALSTATEMENTS.......................................................................................................................5

4 INFORMATION TO BE PRESENTED IN THE STATEMENT OF RECEIPTS AND.............. .6

PAYMENTS............................................................................................................................................6CLASSIFICATION.....................................................................................................................................6LINEITEMS HEADINGSANDSUB!TOTALS.............................................................................................."REPORTINGONANETBASIS.................................................................................................................."

5 INFORMATION TO BE PRESENTED IN THE STATEMENT OF FINANCIAL POSITION..8

6 INFORMATION PRESENTED AS ACCOUNTING POLICIES AND EPLANATORYNOTES....................................................................................................................................................8STRUCTUREOFTHENOTES....................................................................................................................#SELECTIONANDDISCLOSUREOFACCOUNTINGPOLICIES.....................................................................$

CASHANDBAN%BALANCES..................................................................................................................$INVESTMENTS OUTSTANDINGLOANS ADVANCES IMPRESTETC.........................................................$DETAILSOFPUBLICDEBT...................................................................................................................1&ARREARS.............................................................................................................................................1&LOSSES.................................................................................................................................................1&PROCEEDSFROMPRIVATISATION.........................................................................................................11ACCOUNTINGFORCAPITALPROJECTS................................................................................................11SALARIESANDBENEFITSOFSENIORPOLITICIANSANDPUBLICOFFICIALS.......................................11

! GENERAL CONSIDERATIONS....................................................................................................11REPORTINGPERIOD..............................................................................................................................11TIMELINESS..........................................................................................................................................11AUTHORI'ATIONDATE........................................................................................................................12

INFORMATIONABOUTTHEENTITY......................................................................................................12OPINIONOFTHEAUDITORGENERAL..................................................................................................12RESTRICTIONSONCASHBALANCESANDACCESSTOBORRO(INGS..................................................13CONSISTENCYOFPRESENTATION........................................................................................................13COMPARATIVEINFORMATION..............................................................................................................13IDENTIFICATIONOFFINANCIALSTATEMENTS.....................................................................................14SECRETE)PENDITURE.........................................................................................................................15

DETAILSONTHEPAYMENTSANDRECEIPTSOFPRIMARYSERVICEDELIVERYUNITS..........................15CORRECTIONOFERRORS.....................................................................................................................15CONSOLIDATEDFINANCIALSTATEMENTS...........................................................................................15

i*


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TREATMENTOFFOREIGNCURRENCYCASHRECEIPTS PAYMENTSANDBALANCES.........................16

8 PRESENTATION OF BUDGET INFORMATION IN FINANCIAL STATEMENTS...............16DEFINITIONS.........................................................................................................................................16APPROVEDBUDGETS...........................................................................................................................1"ORIGINALANDFINALBUDGET............................................................................................................1"

ACTUALAMOUNTS..............................................................................................................................1"PRESENTATIONOFACOMPARISONOFBUDGETANDACTUALAMOUNTS..........................................1"SCOPE...................................................................................................................................................1#COMPARISONOFBUDGETANDACTUALAMOUNTS............................................................................1#LEVELOFAGGREGATION.....................................................................................................................1#CLASSIFICATIONBASIS........................................................................................................................1$NOTEDISCLOSURESOFBUDGETARYBASIS PERIODANDSCOPE.......................................................1$%EYBUDGETDOCUMENTS...................................................................................................................1$

" RECIPIENTS OF ETERNAL ASSISTANCE..............................................................................2#DEFINITIONS.........................................................................................................................................2&E)TERNALASSISTANCE.......................................................................................................................2&OFFICIALRESOURCES..........................................................................................................................2&

E)TERNALASSISTANCEAGREEMENTS ..............................................................................................21E)TERNALASSISTANCERECEIVED.....................................................................................................21

ENTITY $URISDICTION..........................................................................................................32

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Guidance on Annual Government Financial Reporting on the Modified

Cash Basis

for Countries of sub-Saharan Africa

&he 'ey aspects of this Guidance" which have been written in bold italic font" should be read in the conte(t of the

commentary paragraphs in this Guidance" which are in plain font) An entity whose financial statements comply

with the 'ey aspects of this Guidance should disclose that fact) &he financial statements should indicate any 'ey

aspects which have not been complied with and e(plain the reasons for any such non-compliance) *ther

re+uirements of this Guidance are indicated by the word ,should) *ther aspects of good practice" which are

encouraged" are indicated by the word ,may)

1 Overvie

Ob!ective of the Guidance

&.& The purpose of this Guidance is to describe the manner in which the annual general purpose financial

statements of public sector entities should be presented to their parliaments and citizens under the modified cash

basis of accounting.

&.) Governments usually have a common fund +sometimes called the #onsolidated Aevenue %und into which allgovernment income is paid. Transfers are made from this fund, with the authority of the annual budget approved

by parliament, to ministries, departments and agencies to enable them to provide the agreed public services.Governments should be accountable to parliament for the funds raised and the payments made directly from the

#onsolidated Aevenue %und. They are also accountable for the financial management and accounts of individualministries, departments and agencies that are funded from the government*s annual budget. ccounting Ffficers

personally take on this responsibility. They are personally responsible to (arliament and may be called to accountfor the financial management of their entity to the (ublic ccounts #ommittee. ccounting Ffficers present

annual financial statements of their entities to (arliament. The uditor General provides independent assurance to(arliament that the monies utilised by each entity have been raised and spent in line with the annual budget and

the relevant laws and financial regulations, where necessary the annual report of the uditor General will also

highlight irregularities that have been identified.

&.3 #ompliance with the re!uirements of this Guidance will enhance comprehensive and transparent financial

reporting by public sector entities. 't will also enhance comparability with the entity*s own financial statements of

previous periods and with the financial statements of other entities which adopt this Guidance.

Sco"e of the Guidance

1.4 Central government entities which prepare and presents annual financial statements to account for the

monies raised or spent under the authority of its governments annual budget agreed by parliament, should

apply the requirements of this Guidance in the presentation of their general purpose annual financial

statements prepared under the modified cash basis.

&.; General purpose financial statements and the associated reports of the uditor General are the core way in

which budget funded ministries, departments and agencies account to parliament for the money they have raisedand spent during the relevant financial year. General purpose financial statements include those financial

statements that are presented separately or within another public document such as an annual report.

&.4 This Guidance applies to both the financial statements of an individual budget funded entity +ministry,department or agency and to the financial statements of the #onsolidated Aevenue %und +or e!uivalent from

which transfers are made to the individual ministries, departments and agencies. 't re!uires the preparation of a=Statement of Aeceipts and (ayments>, a =Statement of %inancial (osition> and the disclosure of accounting

policies and e"planatory notes.

&.5 (ersonal accountability is achieved by the appointment of an accounting officer who is personally responsible

to parliament for the budget +or vote+s for their organisation. The ccountant General is the accounting officer

for the #onsolidated Aevenue %und and so is responsible for providing parliament with the financial statementsfor this %und. ccounting officers are similarly responsible for providing parliament with annual financial

statements for the ministry, department or agency for which they are responsible.

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&.9 Fther funds may be established under parliamentary authority, for e"ample, a #apital %und or a Aoads %und.'n each case arrangements should be made to appoint an accounting officer for each of the funds who will be

personally responsible to parliament for the financial management of the fund and for presenting annual financial

statements for the fund to parliament. This Guidance also applies to the financial statements of such funds.

1.9 n entity whose financial statements comply with the !ey aspects of this Guidance should disclose that fact.

"he financial statements should indicate any !ey aspects which have not been complied with and e#plain thereasons for any such non$compliance.

&.&/ The key aspects of this Guidance are set in bold italic font.


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/e0 is controlled by a public sector entity.

Modified Cash Basis of Accounting

).) The modified cash basis of accounting recognizes transactions and events only when cash +including cash

e!uivalents is received or paid by the entity. %inancial statements prepared under the modified cash basis provide

readers with information about the sources of cash raised during the period, the purposes for which cash was usedand the cash balances at the reporting date. The measurement focus in the financial statements is balances of cashand changes therein compared with the annual budget approved by (arliament. 6otes to the financial statements

should provide additional information about all material financial assets and financial liabilities, such asgovernment debt, payables and borrowings, and some non-cash assets, such as receivables and investments.

).3 cash e!uivalents unless they are, in substance, cash e!uivalents or a short-term loan.

).; $ank borrowings are generally considered to give rise to cash inflows. 1owever, in some jurisdictions, bankoverdrafts which are repayable on demand form an integral part of an entity*s cash management. 'n these

circumstances, bank overdrafts are included as a component of cash. characteristic of such bankingarrangements is that the bank balance often fluctuates from being positive to overdrawn. 'n such cases, any bank

overdrafts are netted off against other bank balances and cash holdings and are not reported as cash receipts.

).4 #ash flows e"clude movements between items that constitute cash because these components are part of thecash management of an entity rather than increases or decreases in the cash it controls. #ash management includes

the investment of e"cess cash on hand in cash e!uivalents.

) Presentation and &isclosure Re(uirements

&efinitions

2.1 "he following terms are used in this Guidance with the meanings specified(

ccountability 3the obligation to demonstrate that wor! has been conducted in compliance with agreed rulesand standards or to report fairly and accurately on performance results against mandated roles and plans.

ccounting fficerDpublic official with ultimate responsibility and personal accountability to parliament forthe control of a vote /section of the annual budget0 and the financial management of the related public sector

entity. *ay be appointed by the "reasury56ermanent 7ecretary in the *inistry of -inance /most senior public

official0 or the 6resident of the 7tate.

ccounting policies are the specific principles, bases, conventions, rules and practices adopted in preparing

and presenting the financial statements of an entity.

-inancial assets and financial liabilities are assets or liabilities which are directly measurable in financial

terms.

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*ateriality( information is material if its omission or misstatement could influence the assessments of users

made on the basis of the financial statements. *ateriality depends on the nature or si+e of the item or error

udged in the particular circumstances of omission or misstatement.

8otes to the financial statements are e#planations or additional disclosures which are not directly part of the

main financial statements.

eporting date means the date of the last day of the reporting period to which financial statements relate.

3.) %inancial statements result from processing large !uantities of transactions that are aggregated into groups

according to their nature or function. The final stage in the process of aggregation and classification is thepresentation of condensed and classified data that form line items either on the face of the financial statements or

in the notes. 'f a line item is not individually material, it is aggregated with other items either on the face of thefinancial statements or in the notes. n item that is not sufficiently material to warrant separate presentation on the

face of the financial statements may nevertheless be sufficiently material that it should be presented separately inthe notes.

3.3 The principle of materiality provides that the disclosure re!uirements need not be met if the resulting

information is not material. ?ateriality covers both the financial significance of transactions and the level ofpolitical interest in the subject.

Po"ular Presentation of Financial statements

3.: summary of the main financial statements and other key aspects should be produced as a short populardocument of ); pages or less with supporting details available on the 'nternet for those that re!uire them. The full

financial statements, as presented to (arliament should also be provided for public download from the main site ofthe ?inistry of %inance. The summary financial statements should be produced in a well-presented and printed

colour publication.

3.; here appropriate, the financial statements, or at least a summary, should be produced in the main locallanguages in addition to the official language+s. lternative presentations may be considered that will increase

the openness and understandability of the financial statements by citizens and their elected representatives, thismay include presentations for television or radio.

Commentary on the financial statements

3.6 The Accountant General should provide a commentary with the financial statements to explain the contextfor any significant developments and set the financial results for the year within the context of trends over the

last few years.

3.5 The ccountant General should provide an introduction and commentary on the financial statements, the level

of budget outturns and recent public financial management reforms. This may be in the form of a managementdiscussion and analysis or similar reports. This may be complemented by the introduction to the annual report of

the uditor General.

3.9 The provision of graphs will assist in the assessment and understanding of the financial statements especiallywhere trends over five years or more are provided. The longer-term view of government operations is consistent

with focusing on financial trends, rather than on short-term fluctuations.

3.8 #ommentaries should, as far as possible, be written in non-technical language and provide an e"planation ofthe key terms used in the financial statements.


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3.&) %or the financial statements of the #onsolidated Aevenue %und the relevant ccounting Ffficer may be theSecretary to the Treasury or the ccountant General. The financial statements for individual ministries,

departments and agencies should be signed by the relevant ccounting Ffficer of the entity.

Financial Statements

2.12 n entity should prepare and present to parliament general purpose financial statements which includethe following components(

/a0 a statement of receipts and payments showing a comparison of budget and actual amounts

/b0 a statement of financial position showing financial assets and financial liabilities with comparative figures

for the previous financial year and

/c0 accounting policies and e#planatory notes.

2.14 "he financial statements, especially the statement of financial position, should be presented in the same

format as the annual budget agreed by parliament.

3.&; The core purpose of public sector financial statements is to provide a comparison of budget and actualamounts as a key component of accountability of the relevant ccounting Ffficer to (arliament and so plays a key

role in the control of the entities financial affairs. %or this reason, the presentation, format and classification +seealso :.4 below of the financial statements should be consistent with the annual budget to ensure that this

comparison can be provided simply and clearly.

3.&4 The general purpose financial statements comprise the =Statement of Aeceipts and (ayments>, the=Statement of %inancial (osition> and the accounting policies and e"planatory notes.

3.&5 The =Statement of Aeceipts and (ayments> should include both recurrent and capital transactions which may

be disclosed in separate sections of the Statement. here a separate #apital %und or other funds have beencreated the financial results of these funds should be disclosed separately in the notes to the financial statements.

3.&9 6otes to the financial statements include narrative descriptions and more detailed schedules or analyses of

amounts shown on the face of the financial statements, as well as additional information. The narrativedescriptions should e"plain major variations between the approved budget and outturns for major votes, budget

heads and sub-heads. They should also include information re!uired and encouraged to be disclosed by thisGuidance, and can include other disclosures considered necessary to achieve a clear and understandable

presentation and enhance accountability.

3.&8 This Guidance does not preclude an entity from including in its general purpose financial statements, other

financial statements in addition to the =Statement of Aeceipts and (ayments> and the =Statement of %inancial

(osition>, as specified in paragraph 3.&3 above. #onse!uently, general purpose financial statements may alsoinclude additional financial statements which, for e"ample0

+a report receipts, payments and balances for major fund categories such as the #apital %und or

+b provide additional information about the sources and deployment of borrowings and the nature and type of

cash payments.

3.)/ (ublic sector entities reporting under the modified cash basis of accounting fre!uently provide informationon items that would not be recognized under pure cash accounting.


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information in the notes to the financial statements. here such disclosures are made they should be clearlydescribed and be readily understandable.

* Information to be Presented in the Statement of Recei"ts and

Payments

4.1 "he 7tatement of eceipts and 6ayments: should provide a clear comparison of actual cash receipts and

payments with the budget agreed by parliament and comparative figures for the previous reporting period /see

;.''0, it should also present the following amounts for the reporting period(

/a0 total cash receipts of the entity compared to the annual budget agreed by parliament, showing separately a

sub$classification of total cash receipts using a classification basis appropriate to the entitys operations

/b0 total cash payments of the entity compared to the annual budget agreed by parliament, showing separately

a sub$classification of total cash payments using a classification basis appropriate to the entitys operations

and

/c0 beginning and closing cash and ban! balances of the entity.

4.' "otal cash receipts and total cash payments, and cash receipts and cash payments for each sub$

classification of cash receipt and payment, should be reported on a gross basis, e#cept that cash receipts and

payments may be reported on a net basis when(

/a0 they arise from transactions which the entity administers on behalf of other parties and which are

recogni+ed in the 7tatement of eceipts and 6ayments: or

/b0 they are for items in which the turnover is quic!, the amounts are large, and the maturities are short.

4.2 which disclosesbeginning and closing cash balances of the entity, total cash receipts and total cash payments over the reporting

period, and major sub-classifications thereof. This will ensure that the financial statements provide comprehensiveinformation about cash received and collected by the entity and how these monies have been used over the period

in comparison with the annual budget agreed by (arliament.

:.; isclosure of information about such matters as whether cash is generated from ta"es, fines, fees, and2orborrowings and whether it was e"pended to meet operating costs, for the ac!uisition of capital assets or for the

retirement of debt will enhance transparency and accountability of financial reporting.

Classification

:.4 "he classifications used in the financial statements should be the same as those used in the governmentsannual budget. detailed comparison of sub-classifications of the budget may be provided in the notes to thefinancial statements or in separate reports which are publically available from the ebsite of the ?inistry of

%inance.

:.5 The sub-classifications +or classes of total cash receipts and payments which should be disclosed inaccordance with paragraphs :.& and :.) are a matter of professional judgment. That judgment will be applied in

the conte"t of the objective and !ualitative characteristics of financial reporting under the modified cash basis ofaccounting +see paragraph 4.3. Total cash receipts may be classified to, for e"ample, separately identify cash

receipts from0 ta"ation or appropriation grants and donations borrowings proceeds from the disposal of property,plant and e!uipment and other ongoing service delivery and trading activities. Total cash payments may be

classified to, for e"ample, separately identify cash payments in respect of0 salaries goods and services ongoingservice delivery activities transfers to other governments or entities debt reduction programs ac!uisitions of

property, plant and e!uipment and any trading activities. lternative presentations are also possible, for e"ampletotal cash receipts may be classified by reference to their source and cash payments may be sub-classified by

reference to either the nature of the payments or their function or program within the entity, as appropriate.

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:.9 summary of total e"penditure analysed by the standard &/ #F%FG functions outlined in the Government

Financial Statistics Manual.may assist in the understanding of the relative level of government spending in

different areas. This is especially useful for international comparisons as the structure of ministries, departmentsand agencies is different in each country. See (

the bank account of the reporting entity may be large relative to the entity*s own transactions, and responsibilitymay occur for only a short time before the amounts are transferred to the ultimate recipients. This may also be true

for other cash flows including for e"ample, advances made for, and the repayment of0

+a the purchase and sale of investments and

+b other short-term borrowings, for e"ample, those which have a maturity period of three months or less.

:.&: The recognition of these transactions on a gross basis may undermine the ability of the financial statements

3I+,-+/,i0+/ M0+-,/ F+ 2&&"Manual on Fiscal Transparency IMF7 (/89i+:,0+ DC P/:- "64PEFA 2&&5Public Financial Management Performance Measurement FrameworkP;i< E=>-+i,- /+ Fi+/+


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of some governments and government entities to communicate information about cash receipts and cash paymentsresulting from the entity*s own activities. ccordingly, this Guidance permits cash receipts and cash payments to

be offset and reported on a net basis in the =Statement of Aeceipts and (ayments> in the circumstances identified

in paragraph :.&& above.

. Information to be Presented in the Statement of Financial Position=.1 "he :7tatement of -inancial 6osition: should provide a clear comparison of actual financial assets and

financial liabilities at the end of the reporting period with those of the previous period. Changes from one

period to the other should be clearly e#plained by the 7tatement of eceipts and 6ayments:. "he 7tatement

of -inancial 6osition: should also present the following amounts for the reporting period(

/a0 total financial assets of the entity showing separately the following balances and a sub$classification using

a classification basis appropriate to the entitys operations(

/i0 cash, including cash equivalents and ban! balances of the entity

/ii0 receivables and

/ii0 advances, loans and investments

/b0 total financial liabilities of the entity showing separately the following balances and a sub$classification

using a classification basis appropriate to the entitys operations(

/i0 public debt and loans received analysed to show total domestic debt and total debt

denominated in foreign currencies and

/ii0 sundry creditors

/c0 net assets and the funds by which these are represented including the Consolidated evenue -und and

other funds as appropriate.

5.2 C/89 /+


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(b) provide additional information which is not presented on the face of the financial statements but isnecessary for a fair presentation of the entity!s cash receipts" cash payments and cash balances and ade#uately

account to $arliament for the funds received and disbursed.

6.% &otes to the financial statements should be presented in a systematic manner. 'ach item on the face of the

7tatement of eceipts and 6ayments: and other financial statements should be cross referenced to any relatedinformation in the notes.

Selection and &isclosure of Accounting Policies

6.3 General purpose financial statements should present information that is

timely 3 the audited financial statements are made public promptly after the end of the financial year to

which they refer

understandable 3 the financial statements are clear and the !ey aspects and terms are e#plained

open 3 the !ey financial information of interest citi+ens and their elected representatives is made publically

available

consistent 3 the information is consistent from one year to the ne#t, between accounts within the same

financial statements and between related financial statements and is it reliable and free from material

error.

6.4 T9- ?/i, 0 i+0@/,i0+ >0*i- i+ :-+-/ >>08- i+/+9 6.3 -?i-8 ,9- -*-0>@-+, 0 /


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private companies.

4.&3 Summaries should be provided of outstanding advances, loans or unretired imprests provided to officials and

politicians by each ministry, department and agency. n analysis should be provided to show the main types andthe amount written off during the year if any. The financial statements of individual ministries, departments and

agencies should include details of loans to each individual person or entity, the amount loaned and repaid, and the

amount yet to be paid.

>.14 "he notes to the financial statements should provide details of contingent liabilities

4.&; etails should be provided of contingent liabilities outstanding showing the nature +loan guarantees, e"port

credit guarantees, court cases etc ma"imum liability and possible current outstanding value. The amounts of anycontingent liabilities should be analysed to show the agency, parastatal organisation or private company involved.

etails should be provided of any foreign currency implications.

4.&4 etails should be provided of any significant court cases outstanding against public sector entities theseshould include the name of the entity, brief details of the cases and the possible value of the liabilities.

&etails of Public &ebt

>.1; "he notes to the financial statements should provide details of the total of domestic debt and the total debtdenominated in each significant foreign currency. )etails should also be provided of each individually

material debt or loan agreement indicating the provider, original value, the amount outstanding at the end of

the period, the interest rate and the remaining term of the debt.

>.1? n entity should disclose in the notes to the financial statements the amount of debt cancelled during the

period.

6.1$ A i8,i+: 890 ;- >0*i- 0 / @/,-i/ i+i*i/ -;,8 890i+: ,9- >0*i- 0 ,9- -;, ,9- /@0+,0,8,/+i+: /+ ,9- 0*i- 0*i- 0 / i88-8 0 T-/8 Bi8 /+ B0+8 i+0>i/,- 8,i0+.

4.)& n entity e"periencing difficulty in servicing its e"ternal assistance debt may seek renegotiation of the terms

and conditions of the debt or cancellation of the debt. The amount of any debt cancelled during the period should

be disclosed in the notes to the financial statements to e"plain material reductions in the level of government debt.

Arrears

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5.: The usefulness of the financial statements are impaired if they are not made available to users within areasonable period after the reporting date. n entity should be in a position to issue its audited financial statements

within nine months of the reporting date. This should enable the audited financial statements for the previous year

to be presented to parliament before the debate on the following year*s budget.

5.; The timeliness of information may impact upon both the relevance and reliability of the financial information.

The maintenance of complete and accurate accounting records during the reporting period is essential for timelyproduction of annual financial statements. here governments do not submit their audited financial statements to(arliament within nine months of the reporting date +or at the very least &) months, then timeliness will be the

key priority in terms of improvements to the financial statements.

5.4 Timeliness has to be balanced with other factors such as cost, degree of consolidation and the detailedinformation provided. 'f the provision of additional information means that the financial statements are not

provided in a timely manner, then the value of such information should be critically evaluated. Fne of the majorbenefits of the modified cash basis of accounting is that the financial statements can be produced relatively

!uickly and cheaply. This benefit may be lost if fully consolidated financial statements are produced, fore"ample, for all central government ministries, departments and agencies.

5.5 The audited annual financial statements should be made available to the public as soon as possible after they

have been presented to (arliament. The audited financial statements should be made available to the media, onthe website of the ?inistry of %inance, in university and other libraries and for purchase from the government

printers2bookshop +if a charge is made for these financial statements, it should be modest and affordable by

general citizens. Greater details may be provided in the disclosures on the website of the ?inistry of %inance, fore"ample, payment by local service units +see 5.35 below.

Authori4ation &ate

;.? n entity should disclose the date when the financial statements were authori+ed for issue and who gave

that authori+ation.

5.8 The authorization date is the date on which the financial statements were approved by the individual or bodywith the authority to finalize those statements for issue. 't is important for users to know when the financial

statements were authorized for issue, because the financial statements do not reflect events after this date.

Information about the 'ntity

;.1@ n entity should disclose the following, as notes to the financial statements, if not disclosed elsewhere in

information published with the financial statements(

/a0 the domicile and legal form of the entity, and the urisdiction within which it operates

/b0 a description of the nature of the entitys operations and principal activities and

/c0 a reference to the relevant legislation governing the entitys financial statements and operations.

5.&& The disclosure of the information re!uired by paragraph 5.&/ will enable users to identify the nature of the

entity*s operations and gain an understanding of the legislative and institutional environment within which itoperates.

O"inion of the Auditor General

;.1' "he opinion of the uditor General should be provided in the same document and alongside the financial

statements.

5.&3 The annual report of the uditor General is a key document complementing the financial statements to

ensure ade!uate accountability of the government and individual ccounting Ffficers to parliament for their

financial management. The opinion of the uditor General on the financial statements should be providedalongside the financial statements. 'n addition, details should be provided on how the full annual report of the

uditor General may be accessed.

5.&: The financial statements are undermined if the associate report of the uditor General indicates significantirregularities or weaknesses in internal financial control. Steps should be taken to reduce the number irregularities

reported by the uditor General

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Restrictions on Cash Balances and Access to Borroings

5.&; n entity should disclose in the notes to the financial statements together with a commentary, the nature and

amount of0

+a significant cash balances that are not available for use by the entity

+b significant cash balances that are subject to e"ternal restrictions and

+c undrawn borrowing facilities that may be available for future operating activities and to settle capitalcommitments, indicating any restrictions on the use of these facilities.

5.&4 #ash balances held by an entity would not be available for use by the entity when, for e"ample, an entity

operates in a country where e"change controls or other legal restrictions apply and the balances are not availablefor general use by the controlling entity or other controlled entities.

5.&5 #ash balances may be subject to restrictions which limit the purpose or timing of their use. This situationoften e"ists when an entity receives a grant or donation which must be used for a specific purpose. 't may also

e"ist where, at reporting date, an entity holds in its own bank accounts cash it has collected for other parties in its

capacity as an agent but not yet transferred to those parties.

Consistency of Presentation

;.1? "he format, presentation and classification of items in the financial statements should be retained from

one period to the ne#t unless(

/a0 a significant change in the nature of the operations of the entity or a review of its financial statements

presentation demonstrates that the change will result in a more appropriate presentation of events or

transactions

/b0 the relevant laws or regulations require such changes or

/c0 a change in presentation is required by a future amendment to this Guidance.

5.&8 major restructuring of service delivery arrangements the creation of a new, or termination of a major

e"isting, government entity a significant ac!uisition or disposal or a review of the overall presentation of theentity*s general purpose financial statements might suggest that the =Statement of Aeceipts and (ayments> or

other individual financial statements should be presented differently.

5.)/ Fnly if the revised structure is likely to continue, or if the benefit of an alternative presentation is clear,

should an entity change the presentation of its financial statements. hen such changes in presentation are made,an entity reclassifies its comparative information in accordance with paragraph 5.&9.

5.)& Technical terms and the !uantitative figures should be consistent between the different financial statements

and the notes to the accounts. Huantitative figures should also be consistent between, for e"ample, the financialstatements for the #onsolidated Aevenue %und and the financial statements for individual ministries, departments

and agencies. This should include, for e"ample, a consistent value and definition of Icash and cash e!uivalents*and Isurplus2deficit*. here there are differences in the values of transactions or balances between financial

statements these should be clearly e"plained and reconciled. The #onsolidated Aevenue %und should disclose thefunds transferred to each ministry, department and agency. These same figures should appear in the financial

statements of the ministries, departments and agencies as receipts from the #onsolidated Aevenue %und.

Com"arative Information

;.'' Comparative information should be disclosed in respect of the previous period for all numerical

information required by this Guidance to be disclosed in the financial statements. Comparative information

should be included in narrative and descriptive information when it is relevant to an understanding of the

current periods financial statements.

5.)3 This Guidance re!uires the presentation of a =Statement of Aeceipts nd (ayments> and a =Statement of%inancial (osition>. 't also specifies certain disclosures that are re!uired to be made in these statements and the

associated notes. 'n each of these cases, comparative information in respect of the previous period or financialyear should be provided.

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5.): This Guidance does not preclude the preparation of additional financial statements. here such financial

statements are prepared the disclosure of comparative information is encouraged.

5.); 'n some cases, narrative information provided in the financial statements for the previous period+s continues

to be relevant in the current period. %or e"ample, details of a legal dispute, the outcome of which was uncertain at

the last reporting date and is yet to be resolved, may be disclosed in the current period. Bsers benefit fromknowing that the uncertainty e"isted at the last reporting date, and the steps that have been taken during the periodto resolve the uncertainty.

5.)4 'n many cases the disclosure of longer term trends +of five years or more are helpful in understanding the

financial position of public sector entities. #omparative information on the main trends for the key aspects of theentities payments, receipts and financial position should be disclosed to provide a deeper understanding of the

medium term trends and to put the current results in perspective.

;.'; Ahen the presentation or classification of items required to be disclosed in the financial statements is

amended, comparative amounts should be reclassified, unless it is impracticable to do so, to ensure

comparability with the current period, and the nature, amount of, and reason for any reclassification should be

disclosed. Ahen it is impracticable to reclassify comparative amounts, an entity should disclose the reason for

not reclassifying and the nature of the changes that would have been made if amounts were reclassified.

5.)9 #ircumstances may e"ist when it is impracticable to reclassify comparative information to achieve

comparability with the current period. %or e"ample, data may not have been collected in the previous period+s ina way which allows reclassification, and it may not be practicable to recreate the information. 'n such

circumstances, the nature of the adjustments to comparative amounts that would have been made is disclosed.

Identification of Financial Statements

;.'9 "he financial statements should be clearly identified and distinguished from other information in the

same published document.

5.3/ This Guidance applies only to the financial statements, and not to other information presented in an annual

report or other document. Therefore, it is important that users are able to distinguish information that is preparedusing this Guidance from other information that may be useful to users but that is not the subject of this Guidance.

;.21 &ach component of the financial statements should be clearly identified. Bn addition, the following

information should be prominently displayed and repeated when it is necessary for a proper understanding of

the information presented(

/a0 the name of the reporting entity or other means of identification

/b0 whether the financial statements cover an individual entity or a group of entities

/c0 the reporting date or the period covered by the financial statements, whichever is appropriate to the related

component of the financial statements

/d0 the reporting currency and

/e0 the level of precision used in the presentation of figures in the financial statements.

5.3) The re!uirements in paragraph 5.3& are normally met by presenting page headings and abbreviated columnheadings on each page of the financial statements. Judgment is re!uired in determining the best way of presenting

such information.

5.33 %inancial statements are often made clearer and more understandable by presenting information in thousandsor millions of units of the reporting currency +rounded to the nearest whole number. This is acceptable as long as

the level of precision in presentation is disclosed and relevant information is not lost.

5.3: etails should be provided of the entities whose results are included within the financial statements. etailsshould also be provided of any significant entities which are e"cluded.

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Secret e0"enditure

;.2= )etails of secret e#penditure may not be provided in full in the financial statements or not in the level of

detail provided for other e#penditure. Ahere this is the case, summary details should be provided with a brief

e#planation of why such information is not being provided.

5.34 Secret e"penditure may relate to, for instance, national security and military intelligence. The total payments

made for such services should be provided in the financial statements, but the same level of sub-categories ofpayments may not be provided as for other public services. The financial statements should indicate where such

summarised financial information is being provided and the services or entities which are involved.

&etails on the "ayments and recei"ts of "rimary service delivery units

;.2; )etails of the payments and receipts of primary service delivery units should be made public.

5.39 etails of the payments and receipts of primary service delivery units +health clinics and primary schools, for

e"ample should be reported, although not necessarily as part of annual general purpose financial statements.Such details may be provided on the 'nternet and the financial statements should indicate where this information

may be found. This information may be provided in local languages.

5.38 Transfers to local authorities +and other sub-national entities should be disclosed in the annual financialstatements of the central Government and promptly each !uarter on the website of the ?inistry of %inance, with a

breakdown by recipient and type of transfer.

Correction of 'rrors

;.4@ Ahen an error arises in relation to a cash balance reported in the financial statements, the amount of the

error that relates to prior periods should be reported by adusting the cash at the beginning of the period.

Comparative information should be restated, unless it is impracticable to do so.

;.41 n entity should disclose in the notes to the financial statements the following(

/a0 the nature of the error

/b0 the amount of the correction and

/c0 the fact that comparative information has been restated or that it is impracticable to do so.

5.:)


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Ffficer who is personally accountable to (arliament for the financial management of these entities. Thus a set offinancial statements is presented to (arliament by each of the ccounting Ffficers. 'f consolidated financial

statements are produced for a range of such entities then the accountabilities of the relevant ccounting Ffficers

for each individual entity have to be clearly retained and e"plained.

5.:5 gencies and other entities may be established which are related to or are overseen by a ministry, but have a

degree of autonomy. The financial results of all such agencies or other public bodies should be reported toparliament. This may be achieved by providing a separate set of financial statements for the agency or byconsolidating the financial results of the agency within the financial statements of the related ministry or

department.

5.:9 The benefits and usefulness of consolidating the accounts of parastatal organisations or sub-nationalgovernment with those of national government ministries, departments and agencies is not clear and may

adversely effect the timeliness of the submission of the financial statements or distort the financial resultsdisclosed in these statements.

$reatment of Foreign Currency Cash Recei"ts, Payments and Balances

;.49 Cash receipts and payments arising from transactions in a foreign currency should be recorded in an

entitys reporting currency by applying to the foreign currency amount the e#change rate between the

reporting currency and the foreign currency at the date of the receipts and payments.

;.=@ Cash balances held in a foreign currency should be reported using the closing rate at the end of the

reporting period.

;.=1 n entity should disclose the amount of e#change differences included as reconciling items between

opening and closing cash balances for the period.

;.=' Ahen the reporting currency is different from the currency of the country in which the entity is domiciled,

the reason for using a different currency should be disclosed. "he reason for any change in the reporting

currency should also be disclosed.

5.;3 Governments and government entities may have transactions in foreign currencies such as borrowing anamount of foreign currency or purchasing goods and services where the purchase price is designated as a foreign

currency amount. They may also have foreign operations and transfer cash to and receive cash from those foreignoperations. 'n order to include foreign currency transactions and foreign operations in financial statements the

entity must e"press cash receipts, payments and balances in reporting currency terms.

5.;: Bnrealized gains and losses arising from changes in foreign currency e"change rates are not cash receipts and

payments. 1owever, the effect of e"change rate changes on cash held in a foreign currency is reported in the=Statement of Aeceipts and (ayments> in order to reconcile cash at the beginning and the end of the period. This

amount is presented separately from cash receipts and payments and includes the differences, if any, had those

cash receipts payments and balances been reported at end-of-period e"change rates.

5 Presentation of Budget Information in Financial Statements

&efinitions

?.1 "he following terms are used in this Guidance with the meanings specified(

nnual budget means an approved budget for one year. Bt does not include published forward estimates or

proections for periods beyond the budget period.

ppropriation is an authori+ation granted by a legislative body to allocate funds for purposes specified by the

legislature or similar authority.

pproved budget means the authority derived from laws, appropriation bills, government ordinances and other

decisions related revenue and receipts for the budgetary period.

Comparable basis means the actual amounts presented on the same accounting basis, same classification

basis, for the same entities and for the same period as the approved budget.

16


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-inal budget is the original budget adusted for all reserves, carry over amounts, transfers, allocations,

supplemental appropriations, and other authori+ed legislative or similar changes applicable to the budget

period.

riginal budget is the initial budget approved by the 6arliament for the budget period.

A""roved Budgets

9.) n approved budget as defined by this Guidance reflects the anticipated revenues or receipts e"pected for the

annual budget period based on current plans and the anticipated economic conditions during that budget period,and e"penses or e"penditure approved by (arliament. n approved budget is not a forward estimate or a

projection based on assumptions about future events and possible management actions which is reported to(arliament.

9.3 'n some jurisdictions, budgets may be signed into law as part of the approval process. 'n other jurisdictions,

approval may be provided without the budget becoming law. hatever the approval process, the critical feature ofapproved budgets is that the authority to withdraw funds from the government treasury or similar body for agreed

and identified purposes is provided by a higher legislative body or other appropriate authority. The approved

budget establishes the authority limits for specific items of receipts or payments. The authorised e"penditure is

generally considered to be the legal limit within which an entity must operate. 'n some jurisdictions, the approvedbudget for which the entity will be held accountable may be the original budget and in others it may be the final

budget.

9.: 'f a budget is not approved prior to the beginning of the budget period, the original budget is the budget thatwas first approved for application in the budget year.

Original and Final Budget

9.; The original budget may include residual appropriated amounts automatically carried over from prior years bylaw. %or e"ample, governmental budgetary processes in some jurisdictions include a legal provision that re!uires

the automatic rolling forward of appropriations to cover prior year commitments. #ommitments encompasspossible future liabilities based on a current contractual agreement. 'n some jurisdictions, they may be referred to

as obligations or encumbrances and include outstanding purchase orders and contracts where goods or serviceshave not yet been received.

9.4 Supplemental appropriations may be necessary where the original budget did not ade!uately envisagee"penditure re!uirements arising from, for e"ample, war or natural disasters. 'n addition, there may be a shortfall

in budgeted receipts during the period, and internal transfers between budget heads or line items may be necessary

to accommodate changes in funding priorities during the fiscal period. #onse!uently, the funds allotted to anentity or activity may need to be cut back from the amount originally appropriated for the period in order to

maintain fiscal discipline. The final budget includes all such authorized changes or amendments.

Actual Amounts

9.5 This Guidance uses the term =actual> or =actual amounts> to describe the amounts that result from e"ecution

of the budget. 'n some jurisdictions, =budget out-turn>, =budget e"ecution> or similar terms may be used with thesame meaning as =actual> or =actual amounts>.

Presentation of a Com"arison of Budget and Actual Amounts

?.? n entity should present a comparison of the budget amounts and actual amounts as separate columns in

the 7tatement of eceipts and 6ayments: presented in accordance with this Guidance. "he comparison of

budget and actual amounts should be present separately for each level of legislative oversight /ministry,

department, section, subhead etc0(

/a0 "he original and final budget amounts

/b0 "he actual amounts on a comparable basis and

/c0 %y way of note disclosure, an e#planation of material differences between the budget for the entity andactual amounts, unless such e#planation is included in other public documents issued in conunction with the

financial statements, and a cross reference to those documents is made in the notes to the financial statements.

1"


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9.8 The fundamental purpose of financial reporting in the public sector is to fulfil the financial accountability

responsibilities of ccounting Ffficers to (arliament. Thus the key re!uirement is for the financial statements to

provide a clear comparison of the payments and receipts actually undertaken to the comparable amounts in theannual budget agreed by (arliament. here there are material differences between the actual and budgeted

amounts, these variances should be clearly e"plained in the notes to the financial statements. This will allow

citizens and their elected representatives to understand the reasons for any divergences between the budgeted andactual figures. This is especially important where payments have been made in e"cess of the budgeted figuresagreed by (arliament.

Sco"e

9.&/ 'n some cases, approved budgets will be compiled to encompass all the activities controlled by a publicsector entity. 'n other cases, separate approved budgets may be re!uired for certain activities, groups of activities

or entities included in the financial statements of a government or other public sector entity. This may occurwhere, for e"ample, a government*s financial statements encompass government agencies or programs that have

operational autonomy and prepare their own budgets. This Guidance applies to all entities which present financialstatements when approved budgets for the entity, or components thereof, are agreed by parliament.

Com"arison of Budget and Actual Amounts

9.&& (resentation in the financial statements of the original budget, final budget and actual amounts on acomparable basis will complete the accountability cycle by enabling users of the financial statements to identify

whether resources were obtained and used in accordance with the approved budget. ifferences +actual andpercentage between the actual amounts and the budget amounts, whether original or final budget +often referred

to as the =variance>, may also be presented in the financial statements for completeness.

9.&) n e"planation of the material differences between actual amounts and the budget amounts will assist usersin understanding the reasons for material departures from the approved budget for which the entity is held publicly

accountable.

9.&3 Cegislation, regulation or other authority will often provide guidance on whether e"planation of materialdifferences between actual and the original budget amounts, or actual and the final budget amounts, is re!uired in

accordance with paragraph 9.9+c. 'n the absence of any such guidance, material differences may be determinedby reference to, for e"ample, differences between actual and original budget to focus on performance against

original budget, or differences between actual and final budget to focus on compliance with the final budget.

9.&: ?anagement discussion and analysis, operations review or other public reports which provide commentary

on the performance and achievements of the entity during the reporting period, including e"planations of any

material differences from budget amounts, are often issued in conjunction with the financial statements. 'naccordance with paragraph &.8.9+c of this Guidance, e"planation of material differences between actual and

budget amounts will be included in notes to the financial statements unless included in other public reports ordocuments issued in conjunction with the financial statements, and the notes to the financial statements identify

the reports or documents in which the e"planation can be found.

9.&; etails may also be provided of the amount of e"penditure which has been warranted or released compared

to the actual and budgeted amounts.

9.&4 The financial statements may also highlight key differences between the budgeted amounts intended to

benefit directly the country*s most impoverished populations and the actual outcome +for e"ample, primary healthcare, primary education and provision of safe water. Suitable e"planations should be provided in the notes to the

accounts for any material variances.

9.&5 here approved budgets are only provided for some of the entities or activities included in the financialstatements, the re!uirements of paragraph 9.9 will apply to only the entities or activities reflected in the approved

budget.

+evel of Aggregation

9.&9 $udget documents may provide great detail about particular activities, programs or entities. These details areoften aggregated into broad classes under common =budget heads>, =budget classifications> or =budget headings>for presentation to, and approval by (arliament. The disclosure of budget and actual information consistent with

those broad classes and budget heads or headings will ensure that comparisons are made at the level of

1#


24/45

(arliamentary oversight identified in the budget document+s.

9.&8 'n some cases, the detailed financial information included in approved budgets may need to be aggregated for

presentation in financial statements in accordance with the re!uirements of this Guidance. Such aggregation maybe necessary to avoid information overload and to reflect relevant levels of (arliamentary oversight. etermining

the level of aggregation will involve professional judgment. That judgment will be applied in the conte"t of the

objective of this Guidance and the !ualitative characteristics of financial reporting as identified in paragraph 4.3 ofthis Guidance.

9.)/ here any such aggregation takes place, a comparison of budget to actual amounts at the detailed levelshould be provided in notes to the financial statements or in separate reports which are made available on the

'nternet from the website of the ?inistry of %inance.

9.)& The financial statements for the #onsolidated Aevenue %und may provide e"planations for materialdifferences between the actual and budget amounts at the level of each entity and perhaps major budgetary

classifications with each entity. %urther e"planations of material variances at the sub-classification may then beprovided in the financial statements for the individual entities.

9.)) dditional budget information, including information about service achievements, may be presented in

documents other than financial statements. This Guidance encourages the inclusion in the financial statements ofa cross reference to such documents.

Classification Basis

?.'2 ll actual amounts should be classified on the same basis as the budget.

9.): The comparison of actual amounts with the budget should be presented using the same classification basis,for the same entities and for the same period as are presented in the approved budget. This will ensure that the

disclosure of information about compliance with the budget in the financial statements is on the same basis as thebudget itself.

ote &isclosures of Budgetary Basis, Period and Sco"e

?.'= n entity should e#plain in notes to the financial statements the budgetary classification adopted in theapproved budget.

9.)4 %ormats and classification schemes adopted for presentation of the approved budget may also differ from theformats adopted for the financial statements. n approved budget may classify items on the same basis as is

adopted in the financial statements, for e"ample, e"penditures by economic nature +compensation of employees,

supplies and consumables, grants and transfers, etc or function +health, education, etc. lternatively, the budgetmay classify items by specific programs +for e"ample, poverty reduction or control of contagious diseases or

program components linked to performance outcome objectives +for e"ample, students graduating from tertiaryeducation or surgical operations performed by hospital emergency services, which differ from classifications

adopted in the financial statements. %urther, a recurrent budget for ongoing operations +for e"ample, education orhealth may be approved separately from a capital budget for capital outlays +for e"ample, infrastructure or

buildings.

9.)5 isclosure of the budgetary basis and classification basis adopted for the preparation and presentation ofapproved budgets will assist users to better understand the relationship between the budget and accounting

information disclosed in the financial statements.

6ey budget documents

9.)9 The Fpen $udget (artnership has identified the following eight key budget documents which should be

presented to (arliament and made available to the public at appropriate stages of the budget cycle0

(re-budget statement 'n-year budget reports


25/45

7 Reci"ients of '0ternal Assistance

&efinitions

9.1 "he following terms are used in this Guidance with the meaning specified(

ssigned ternal ssistance means any e#ternal assistance, including e#ternal assistance grants, technical

assistance, guarantees or other assistance, received by an entity that is assigned by the recipient to another

entity.

%ilateral ternal ssistance gencies are agencies established under national law, regulation or other

authority of a nation for the purpose of, or including the purpose of, providing some or all of that nations

e#ternal assistance.

ternal ssistance means all official cash received which the recipient can use or otherwise benefit from in

pursuit of its obectives.

*ultilateral ternal ssistance gencies are all agencies established under international agreement or treatyfor the purpose of, or including the purpose of, providing e#ternal assistance.

8on$Governmental rgani+ations /8Gs0 are all foreign or national agencies established independent of

control by any government for the purpose of providing assistance to government/s0, government agencies,

other organi+ations or to individuals.

fficial esources means all loans, grants, technical assistance, guarantees or other assistance provided or

committed under a binding agreement by multilateral or bilateral e#ternal assistance agencies or by a

government, or agencies of a government, other than to a recipient of the same nation as the government or

government agency providing, or committing to provide, the assistance.

e$


26/45

multilateral or bilateral e"ternal assistance agencies or governments or government agencies, other than to arecipient of the same nation as the provider of the assistance. Governments as referred to in the definition of

official resources may include national, state, provincial or local governments in any nation. Therefore, assistance

provided by, for e"ample, a national government or state government agency of one nation to a state or localgovernment of another nation is e"ternal assistance as defined in this Guidance. 1owever, assistance provided by

a national or state government to another level of government within the same nation does not satisfy the

definition of official resources, and therefore is not e"ternal assistance.

'0ternal Assistance Agreements

8.4 Governments seeking particular forms of e"ternal assistance may participate in formal meetings or rounds ofmeetings with donor organizations. These may include meetings to discuss the government*s macroeconomic

plans and its development assistance needs, or bilateral discussions at governmental level regarding trade finance,military assistance, balance of payments and other forms of assistance. They may also include separate meetings

to consider the country*s emergency assistance needs as those needs arise. 'nitial discussions may result instatements of intent or pledges which are not binding on the government or the e"ternal assistance agency.

1owever, subse!uently binding agreements may be set in place to make available assistance loans or grantsprovided restrictions on access to the funds, if any, are met and agreed conditions or covenants are adhered to by

the recipient entity.

8.5


27/45

foreign currency at the date of the receipts or payments in accordance with paragraph 5.:9 of this Guidance) Suche"change rates should be reported to allow the providers of e"ternal assistance to confirm the receipt of the

amount of the assistance they provided.

8.&4 6ational governments usually retain the e"clusive right to enter into e"ternal assistance agreements with

multilateral or bilateral e"ternal assistance agencies. 'n many of these cases, the project or activity is implemented

by another entity. The national government may re-lend or assign the funds received to the other entity. The termsand conditions of the re-lent or assigned funds may be the same as received from the e"ternal assistance agency ormay be different than initially received. 'n some cases, a small fee or interest spread is charged to cover the

national government*s administrative costs. n entity which enters into an e"ternal assistance agreement andpasses the benefits as well as the terms and conditions of the agreement through to another entity by way of a

subsidiary agreement will recognize or report the e"ternal assistance as it is received. 't will also record paymentsto the second entity in accordance with its normal classification of payments adopted in the financial statements.

8.&5 here the initial recipient of a loan or grant passes the proceeds and the terms and conditions of the loan or

grant through to another entity, the initial entity may simply be administering the loan or grant on behalf of theend user. 6etting of transactions where the terms and conditions are substantially the same may be appropriate in

the financial statements of the administrator, in accordance with the provisions of paragraph :.) of this Guidance.

8.&9


28/45

AEN!"# $% "llustration of the &e'uirements of the (uidance

&his Appendi( is illustrative only and does not form part of the Guidance) %t illustrates an e(tract of a Statement

of Receipts and ayments and relevant note disclosures for the Consolidated Revenue Fund of a government that

has received e(ternal assistance loans and grants during the current and preceding periods) %ts purpose is to

assist in clarifying the meaning of the Guidance by illustrating its application in the preparation and presentation

of general purpose financial statements under the cash basis of accounting for/

23


29/45

G%&'()*')+ %, E-/0F0))0 -++'*')+-F%( +' '( ')' 31 D''*'( 2#1

Ministerial Statement

%iscal year )/&K has been a challenging but relatively successful year.


30/45

G%&'()*')+ %, E-/0F0))0 -++'*')+-F%( +' '( ')' 31 D''*'( 2#1

C%**')+( %) +' F0))0 S++'*')+- +' A%7)+)+ G')'(

I)+(%7+0%)

The financial statements of the Government of


31/45

G%&'()*')+ %, E-/0S++'*')+ %, R''0+- ) P*')+- ,%( +' C%)-%0+' R'&')7' F7)F%( +' '( ')' 31 D''*'( 2#1

A *%7)+- (' (%&0' 0) *00%)- %, 7((') 7)0+- 7)'-- %+'(90-' ('%(+'.

2#1 2#1:1

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;P*')+-233

8 316>5#2

N-, I+


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G%&'()*')+ %, E-/0S++'*')+ %, F0))0 P%-0+0%) ,%( +' C%)-%0+' R'&')7' F7)Y'( ')' 31 D''*'( 2#1

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&EO&T O+ TE A-!"TO&.(ENE&A/TO A&/"AMENT ON TE +"NANC"A/ STATEMENTS O+ TE

CONSO/"!ATE! &E0EN-E +-N!for the year ended 1$ !ECEMBE& 23$#

&EO&T ON TE +"NANC"A/ STATEMENTS

"ntroduction

&. Section KK of the (ublic %inance ?anagement ct, )//K +ct 6o. & of )//K

re!uires the ccountant General to prepare annual financial statements for the #onsolidated Aevenue

%und in accordance with generally recognised accounting practice.

). ' have audited the accompanying financial statements of the #onsolidated Aevenue %und. These

statements comprise the Statement of Aeceipts and (ayments for the year ended 3& ecember )/&K,

the Statement of %inancial (osition as at 3& ecember )/&K and a summary of significant accounting

policies and other e"planatory notes, as set out on pages KK to 77.

The accounting officer4s responsibility for the financial statements

3. The accounting officer is responsible for the preparation and fair presentation of these financial

statements in accordance with the modified cash basis of accounting specified in the


35/45

8. 'n my opinion, e"cept for the possible effects of the matters described in the basis for a !ualified

opinion paragraphs, the financial statements present fairly, in all material respects, the consolidated

financial position as at 3& ecember )/&K and the Statement of Aeceipts and (ayments for the year

then ended, in accordance with the modified cash basis of accounting as outlined in the


36/45

1 A%7)+0)/ P%00'-

B-0- %, ('(+0%)T9- i+/+->/- i+ /


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G0*-+@-+, E+,i, AB i8 i+/ /0*i- i-+,i ,>- 0 8-*i


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; ,9- Mi+i8,. T9- /- ,/+8-- ,0 ,9- >0>i/,- ,0 / Mi+i8, i+ /


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D'+- 9(0++') %,,D-;,8 /- i,,-+ 0 9-+ i-+,ii- /8 i-0*i8i0+ i8 @/- 0 i-


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P'-P//;-8 /- i+


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Authorization DateThe financial statements ere authori"ed for issue on ## $onth %&'( by $r )),the $inister of Finance, $inistry of Finance, *saagia.

2 N%+'- +% +' F0))0 S++'*')+-SECTOR

2 T? ('&')7'

A /i80+ 0 /0*i- +- 8-0,.

3 N%) +? ('&')7'

A /i80+ 0 /0*i- +- 8-0,.

4 G()+-

Di+: ,9- -/ :/+,8 0 i->0, -- -"46>!1">#84

5 B%((%90)/-

B00i+:8 i8- ;i624>532>512A, 318, D-


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G0*-+@-+, ;0+8 525221"526T-/8 ;i8 31$"&$&&&&&

L0/+8 1124&1414$#6

14">624>532>512

R'' - ,%%9-@(i,9i+ +-=, 0+- -/ 3452$125155

A,- 0+- -/ ;, i,9i+ ,0 -/8 24$6#14#5#A,- ,0 -/8 ;, i,9i+ ,9-- -/8 25

A,- ,9-- -/8 11&$$36&"3

14">624>532>512

E?+'() %((%90)/ 2##6F(9

B//+"24>188

A7 I+,--8, >//;- 54"6642321L-887 R->/@-+,8 454261465#

L-887 D-;, -i- 5$3"3426##65

A7 E=""6>4!6

! O+'( (''0+-

3"


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O+'( (''0+- %*(0-' %, +' ,%%90)/ 0+'*-@2##6

F(9M/:-/ 4"6"#516&6

'-0 ;//+-/,i0+8 335"41&&&F- >525>664

8 P*')+- ,(%* %'(+0%)-

A /i80+ 0 /-+i,- i8 >0*i- +- 8-0,.

" N'+ ,0))' %-+-

2##6F(9

I+,--8, 0+ 0@-8,i< >;i< -;, 34&&6"245"

I+,--8, 0+ @0+-,/ 0>-/,i0+8 3&3$&3$463

I+,--8, 0+ -=,-+/ >;i< -;, 54"6642321

T%+ 11>"16>354>241

1# B) ) - )'-

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3$


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Appendi( 0

Eight 6ey !ocuments Assessed by the Open Budget Sur5ey

The Fpen $udget Survey assesses whether governments produce and disseminate to the public eight

key budget documents throughout the fiscal year. listing of these documents including goodpractices that they should follow is provided below0

A re.Budget Statement should be issued at least one month before the e"ecutive submits the budget

proposal to the legislature. 't should present the assumptions used in developing the budget e"pected

revenue, e"penditure, and debt levels and the broad allocations between sectors.

The E7ecuti5e4s Budget roposal is the result of the formulation stage. 't presents the government*s

detailed declaration of the policies and priorities it wants to pursue in the upcoming budget year,

including specific allocations to each ministry and agency. 't should be submitted to the legislature at

least three months prior to the start of the fiscal year to allow for proper review. The budget should be

enacted prior to the start of the fiscal year.

The Enacted Budget should then be made publicly available, as it is the legal document that authorizes

the e"ecutive to implement the policy measures the budget contains.

The budget is usually a lengthy, technical document. Thus governments should also publish a Citi8ens

Documents

Guidance on Annual Government Financial Reporting