ACCRUAL Accounting for Funds Kenya School of

Transcript:ACCRUAL Accounting for Funds Kenya School of:
ACCRUAL Accounting for Funds Kenya School of Government 5th December 2018 Robinson Kweyu and Christine Nthiga Overview of the Presentation Introduction Fund Accounting Primary Financial Statements Financial Records to be maintained by a Fund Key sections of financial statements Issues Raised by OAG on Funds Introduction Section 167 of the PFM Act, 2012 requires the Administrator of a County Public fund established by the Constitution, an Act of Parliament or County Legislation to prepare financial statements for the Fund for each financial year in a form prescribed by PSASB. The financial statements should be submitted to the Auditor General by 30th September with a copy of the report to the CEC member responsible for that Fund. Section 168 requires the Administrator to also prepare quarterly reports and submit to the County Treasury within 15 days after the end of each quarter with a copy to the Controller of Budget. Fund Accounting Fund Accounting is the process of recording, measuring and reporting financial transactions relating to Funds. Funds are accounted for using the Accrual basis of accounting. In Kenya, the PSASB has prescribed the International Public Sector Accounting Standards (IPSAS) as the accounting framework for public entities. Consequently, Funds should be accounted for using the IPSAS Accrual accounting standards. This is in accordance with section 2.2.2 of Gazette Notice No 5440. TYPES OF FUNDS What type of funds do we have in Counties? TYPES OF FUNDS Revolving funds e.g. Car and Mortgage, Non Revolving funds e.g. Bursary, Emergency Journal Entries Whether loan is given or loan is taken, it is a must to record it in books because given loan is our asset and taken loan is our liability. Moreover on the basis of outstanding balance, interest is calculated and it is paid by borrower to lender. So, for knowing actual balance of loan outstanding, we need to pass journal entries. In the Books of Lender When loan is given by a Lender ( e.g Car and Mortgage) Dr. Borrower's Loan Account Cr. Bank Account In the eyes of the borrower; ( Logic : Cash though banks will come in the business which is our asset. It is increase of asset in the business. So, Bank account Debit . Lender's Loan is our liability. It is increase in existed liability, so this account will credit. ) When loan is received by borrower Dr. Bank Account Cr. Lender's Loan Account In the