January 26, 2022

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Meaning of Public Sector Accounting and Key Explanations

Meaning of Public Sector Accounting and Key Explanations
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Public sector accounting (PSA) or government accounting is the system of accounting for government and its organization. PSA is different from private sector accounts. It uses a cash basis or a modified accrual basis. More so, it uses a special accounting standard that is not used by companies and businesses.

Definition of Public Sector Accounting

Public sector accounting is the collection, recording, organizing, presenting, analyzing, and interpreting government transactions to help users make informed decisions.

Key Explanations

PSA involves collecting data from each government and its agency. There are several books used to collect data for government accounting. These are organized and recorded in the recommended books of accounts of the government parastatals. Books used by ministries, departments, and agencies (MDAs) are the vote book, treasury cash book, revenue collector cash book among others.

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Next, the organized data is presented in the income and expenditure account and the balance sheet. Government accounting uses the cash basis of accounting. This implies that there are no accounts payable or receivable. However, if it uses a modified cash basis, there will be the aforementioned accounts.

Also, public sector accounting aims to provide information for its users. The number one user of government accounting is the president of the country. Other users are the state government (governor), public analysts, the media, federal ministry of finance, auditor general, world bank among others.

Finally, government accounting follows government policies, rules, and regulations. In Nigeria, the following rules, policies, and regulations are followed. The Nigerian constitution, the financial regulation, allocation of revenue act, finance (control and management) act, finance/treasury act, public procurement act, fiscal responsibility act, among others.

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Conclusion

Public sector accounting deals with accounts of the government and its agencies. These parastatals prepared financial statements for users. The users include and are not limited to the president, governors, the media.

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