Public Sector Accounting - Chapter 1 Public sector - device for regulating human activities to live in reasonable harmony 1.

Provide basic government services - federal, state, local / municipal 2. Encompass universal & critical services - national defence, healthcare, public roads & primary education 3. Not control by individuals or private companies Component of public sector 1. Federal government a. the highest tier of the government b. Authority - stated in 9th Schedule (List 1) of Federal Constitution i. External affairs, defence, education, finance c. Comprise of i. Ministries - carry out responsibilities entrusted to government Highest body in federal administrative machinery Control departments & statutory bodies under it Headed by Minister o Formulate, plan, control & coordinate government policy Secretary general - most senior administrative officer Example - ministry of finance ii. Departments / agencies - implementing government policies 2nd highest agencies o Responsible for implementing government policies Headed by Director General (chief administrative office) Direct rendering services to the society o Social, security, development & other social services Example - companies commission malaysia (CCM) iii. Public Enterprises - implement certain duties & responsibilities in line with national objective Statutory - governed by law o implement certain duties in line with national objectives o adopt Public Services appointment, terms & conditions of services & remuneration services o Good financial stead, freedom of own policy & procedure o UiTM, MARA, MIDA, MIA Non statutory o Establish under CA1965 o not subject to government, free to have own schemes of services but in line with provisions or acts o TM, MAS, TNB o Derive own financial sources & own budget, monitor by government 2. State government a. Second tier b. Authority - YDP Negeri State Exec Council (Chief Minister) c. Example - State Religious Department, State Sports Councils 3. Local government a. Governed by the Local Government Act 1976 1|Page

Public Sector Accounting - Chapter 1 b. Example i. City council (Malacca History City Council) ii. Municipal Council (Hang Tuah Jaya Municipal Council) iii. District council (Kota Tinggi District Council) Features of public sector accounting 1. Stakeholder - Parliament, Auditor General, Cabinet 2. Operational Framework - powers derived ultimately from Parliament 3. Objectives-basis of perceived needs 4. No direct financial interest - to the contributors of resources 5. Accounting principles & practices -Fund Accounting a. Consolidated Revenue, Consolidated Trust & Consolidated Loan) 6. Political rather than financial control-national agenda not profitability Separation of powers 1. Executive a. To formulate policy implement by governmental administrative agencies b. Art 39 - Vested by YDPA, exercise by him or cabinet led by PM c. State level: Ruler of the State, exercisable by him or the executive council 2. Legislative a. To make new laws or to amend or repel existing laws b. For Federal level vested in Parliament, State is vested in the State Legislative Assembly 3. Judiciary a. The power to hear & determine civil & criminal matters between two parties b. Head: Chief Justice - appointed by the YDPA, advised by PM, after consulting with Conference of Rulers. Relationship between federal & state - power 1. Legislative a. Federal i. Art 74 - matters of education, defence, Health b. State i. 9th sch - matters of forestry & agriculture, land, islamic revenues 2. Executive a. Federal i. -Art 80 ii. -Art 80 (2) - enquiries on state matters, assist states in conducting research, inspecting state activities b. State i. Art 81 - state not impede executive authority of Federation 3. Financial a. Federal & state revenues i. Federal Provide financial assistance (grants) ii. State Shall receive proceeds from tax & fees, export duty b. Expenditures & Financial Commitments 2|Page

Public Sector Accounting - Chapter 1 i. Federal Cover own expenditure( charged, supply & development) ii. State Federal government will finance some expenditure on reimbursable basis c. Borrowing Powers i. Federal Art 111 - Prohibits from borrowing except under authority of fed law ii. State Not authorize to borrow except from Federation or from bank Unless approved by fed government not exceed 5 years Public sector accounting 1. Accounting method practice by non-profit entities in the public sector 2. Aim to establish good public governance in managing public monies 3. Tool to ensure that public interest is maximized Components of public sector accounting 1. Maintenance of books & records a. Vote book - a financial record by government agencies for recording expenditure, liabilities & changes in budget 2. Compliance with rules & regulation a. Fed Constitution, Financial Procedure Act 1957, Audit Act 1957, Treasury Instructions & Treasury Circulars 3. Preparation of reports & statements a. Art 99 - submit Statement of Assets & Liabilities at the end of financial year to parliament for approval b. Sec 16 of FPA - to prepare annual statement (Consolidated Revenue, Loan, Trust & Assets & Liabilities

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