An economy is divided into public sector and private sector. The public sector deals with the government and all its establishments. To ensure proper accountability and responsibility, government accounting is prepared to explain to users how the receipt of funds is disbursed and utilized. This article defines public sector accounting.
Meaning of government accounting
R.A. Adams, (2004) in his book “Public Sector Accounting and Finance Made Simple” defines Public sector accounting (or government accounting) as “a process of recording, communicating, summarizing, analyzing and interpreting government financial statements and statistics in aggregate and details; it is concerned with the receipt, custody, disbursement, and rendering of stewardship on public funds entrusted”.
Explanation of the definition of Public sector accounting
Public sector accounting is also referred to as government accounting. Just as in the private sector, the definition of public sector accounting begins with a process. This process starts with recording, communicating, summarizing, analyzing, and interpreting. Financial data are collected from various sources by different government establishments known as ministries, departments, and agencies (MDAs). This data is processed by complying with several regulations and standards in accounting.
Government accounting makes use of a cash basis of accounting or a modified cash basis in recording financial data and preparing and presenting financial statements for the federal, state, and local government. There is also the use of a commitment basis in the public sector accounting processes. With the adoption of the public sector accounting standard, the accrual accounting system by the FRCN is being used today in most MDAs in Nigeria.
Other areas of public sector accounting are the receipt of public funds as well as the custodian and disbursement of those funds by each MDAs that is saddled with the responsibility to do so. More so, through government accounting, MDAs can be monitored. They are held responsible for their stewardship of public funds at their disposal. Therefore, the public can hold them accountable for their use of public funds.
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