Meaning, Purpose And Users Of Public Sector Accounting

Public Sector Accounting is the systematic process of recording, communicating, summarizing, analyzing and interpreting the financial statements and statistics of Government in aggregate and details. It deals with the receipts, custody, disbursement and rendering of stewardship on public funds entrusted”. ( R A Adams, 2004). The main aim of the government is not to make profit but to render essential services to her citizens.

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Public sector accounting can be used to measure incoming revenue and outgoing expenses of the government. It can also be used for budgeting, planning and forecasting. Although the main aim of most public sector entities is not to generate profit, it is still important to know how an agency is doing financially. The public sector is government accounting. Since they are not for profit businesses, the accounting for them is different from accounting for businesses that are for profit maximization.

OBJECTIVES OF PUBLIC SECTOR ACCOUNTING
Below are the main purposes of Public Sector Accounting are:
(a) To ascertain the authenticity of transactions and their compliance with the established laws, regulations and statutes.
(b) Providing evidence of stewardship.
(c) Assisting planning and control.
(d) Assisting objective and timely reporting.
(e) Providing the basis for decision-making.

The five objectives of public sector Accounting are explained below:

(a) To ascertain the authenticity of transactions and their compliance with the established laws, regulations and statutes: Public Sector disbursements should accord with the provisions of the Appropriation Acts and Financial Regulations. There should be due authorizations for all payments so as to avoid the commission of acts of misappropriation.

(b) To Provide evidence of stewardship: Rendering stewardship is being able to account transparently and diligently for resources entrusted. Public Sector operators are constrained to display due diligence and sense of integrity in the collection and disposal of public funds.

(c) Assisting planning and control: The future is full of risks and uncertainties. Mapping out plans prevents an organisation from drifting from the right direction. Plans of actions provide the focus of activities which are being pursued. The circumstances which are not seen are built into plans so as to avoid or at least reduce corporate failure. Public Sector establishments should act in accordance with the ‘mandate theory’ of governance.

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(d) Ensuring objective and timely reporting: The users of information on Public Sector Accounting are in a hurry to bridge their knowledge gaps of what the Government of their country is doing. They definitely value quick and accurate statistics to evaluate the performance of Government.

(e) Examining the costs incurred and the benefits to be enjoyed: In the Public Sectors, it is not easy to measure costs and benefits in financial terms in all respects. The analysis of Cost-Benefit assesses the economic and social advantages (benefits) and disadvantages or inconveniences (costs) of alternative courses of actions, to ensure that the comfort of the citizens is well catered for.

USERS OF PUBLIC SECTOR ACCOUNTING INFORMATION
The users of Public Sector Accounting information will be discussed under two categories which are listed below:
A. Internal Users - This category is made up of the following:
  1. The Executive arm of Government which include, the President of a country, the Governors of various States and Chairmen of the Local Government Councils.
  2. The Federal Ministers and State Commissioners.
  3. Top Administrators of Government Departments, e.g. The Permanent Secretaries and Directors.
  4. The Chief Executives of Government Business Entities/agencies such as Power Holding Company of Nigeria (PHCN) and the Nigeria Ports Authority (NPA) etc.
  5. Subordinates who oil the administration wheels.
  6. The organised labour unions in the public service.

B. External Users - This group comprises:
  1. The National Assembly.
  2. The members of the public.
  3. Any Government agency apart from the one that is preparing the report.
  4. Foreign countries.
  5. Foreign financial institutions such as International Monetary Fund (IMF), World Bank, Department for International Development (DFID), United Nations Children’s Fund (UNICEF) etc.
  6. Creditors, both local and foreign.
  7. Researchers.
  8. Political parties, trade unions and Civil Liberty Organisations.