what is fund accounting in public sector
in as much as the source of the private sector for funds for their activities so as the public also have a way of managing and provides funds so what is fund accounting for government sectors?
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MEANING OF FUND ACCOUNTING
Fund Accounting in public sector accounting, a fund may be defined as an independent accounting entity and must be accounted for using a separately identifiable set of accounts in such a way that it is possible to identify the specific asset and liabilities that represent the balance on the fund
WHAT IS A FUND
A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts for recording assets, liabilities and residual equities and changes which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations.
It is a sum of money aggregated from a specified source for a government unit for obtaining specific objective in accordance with certain regulations.
Since the fund is separated entity, it should be accounted for using a separate identifiable set of account in such a manner that makes it possible to specifically identify the assets and liabilities of the fund.
WHAT IS FUND ACCOUNTING
Fund accounting, therefore, is a method of recording financial information that groups resources in a fund based on their source and the use of those resources.
Fund accounting reports in terms of the fund rather than in terms of organisation. in a fund accounting system, sums of money which are intended for the specific objective are aggregated into different accounting unit. each fund represents a separated accounting entity.
Each fund may have
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The purpose of fund accounting is to demonstrate fiduciary stewardship, that is, to show that resources have been handled in a proper way, honestly within proper procedures, the budget, and, the consolidated fund.
The structure of a fund and the accounting system designed to assist in reaching the fund’s objectives depends on the policies and programs, requirements of its implementation, monitoring and evaluation. Programme classification and appropriation structures also depend on the fund’s objectives.
The financial Administration Regulations, 2004 and various enactments establishing the funds provide the rules of accounting and responsibilities of stewards who operate the funds
In the public sector, diversity of functions and restrictions on how certain resources may be used makes it necessary to focus attention on individual areas of operation and to segregate resource provided for a specific purpose. Central and local government both use the fund system of accounting, rather than the entities system fund in the private sector.
The organization is seen as a series of funds or as a series of reporting units, Financial reporting for the organization is an aggregation or consolidation of the individual reports of the constituent ‘funds’.
There is some flexibility in defining the reporting units buts the major funds are subject to an explicit framework of controls. Individual funds operate within a complex pattern of:
These cover the sources of capital and revenue, financial and the purposes for which they may be spent.
Resources of central and local governments cannot be treated as an unrestricted total.
A fund is a sub-division of the fiscal activities, assets, liabilities, revenues and expenditure of the organization, related to the conduct of a specific function or activity or the attainment of a specific objective. Thus, a fund is a separated accounting entity, operating within a framework of specific controls, with a self-balancing set of accounts.
In practice accounts of funds are kept separately, so for each fund, and operating statement (revenue account) and balance sheets may be produced, and completely separate sets of books are not kept. Cash is usually the balancing entry, so if the cash on each fund is aggregated it should produce the total cash book balance.
A fund is an independent accounting entity and must be accounted for using a separately identified set of accounts in such a way that it is possible to identify the specific assets and liabilities that represent the balance on the fund.
Each fund may have
Most funds are controlled by annual budget (annual estimates) and all require at least annual balancing and reporting. For each fund, a revenue account and balance sheet may be produced, buy in many cases the balance sheet is not published.
The main aim of fund accounting is to demonstrate fiduciary stewardship, ie to show that resource has been dealt with in a proper way. This involves ensuring that:
(a). payable by, or under an Act of parliament into some other fund established for a specific purpose or
That may, under an Act of parliament, be retained by the department or agency of government that received them for the purpose of defraying the expenses of that department or age.