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PROGRAM : BA III-2017/2018






Group members

1) SIIMA EZEKIEL J. BA/0807/T.2015

2) THOMAS LYIMO BA/0696/T.2015
3) MCHARO RABIETH BA/0791/T.2015
4) NNKO JUDICA J. BA/0815/T.2015
6) MAKUNDI HILARY R. BA/0828/T.2015
7) NANYARO PROSPER K. BA/0754/T.2015
8) MSACKY LUCY R. BA/0694/T.2015
9) MSAMBA HENRY BA/0789/T.2015

Accountability can be defined as a relationship between an actor and a forum, in which the actor
has an obligation to explain and to justify his or her conduct, the forum can pose questions and
pass judgment, and the actor can be sanctioned. With public accountability, the actor will often be
a public institution or a government agency.

Accountability is the acknowledgment and assumption of responsibility for actions, products,

decisions, and policies including the administration, governance, and implementation within the
scope of the role or employment position and encompassing the obligation to report, explain and
be answerable for resulting consequences.

Therefore, Accountability is one of those golden concepts that no one can be against. It is
increasingly used in political discourse and policy documents because it conveys an image of
transparency and trustworthiness.

a) Forms of accountability
Public accountability comes in many guises. Public institutions are frequently required to account
for their conduct to various forums in a variety of ways. The following are the forms of

i. Corporate accountability:
It is the organisation as actor. Many public organisations are corporate bodies with an
independent legal status. They can operate as unitary actors and can be held accountable
accordingly. Most countries accept corporate liabilities in civil, administrative, and even
criminal law. Public organisations are usually included in these corporate liabilities, with
the exception of criminal liability. Legal and administrative forums often follow this
corporate accountability strategy. In the event of organisational deviance, they can turn
directly to the organisation and hold it.

ii. Professional Accountability

Professional accountability may take place and in fact it does within the general framework
of administrative action and accountability. This is due to the enlargement of public
administration and to increase in the complexity and technical specialization of its task,

which has meant the entrance in the administrative structure of a great number of
professionals of high qualification, therefore to the development of numerous
administrative activities of a professional character. Also it’s characterized by the existence
of a set of norms and practices of a technical or professional nature that govern the behavior
and performance of member of certain profession.

iii. Public Accountability or Political Accountability

This involves various parties such as elected representatives, political parties, voters, and
media. Political accountability is an extremely important type of public accountability
within democracies. Here, accountability is exercised along the chain of principal-agent
relationships (Strom, 2000). Voters delegate their sovereignty to popular representatives,
who in turn, at least in parliamentary democracies, delegate the majority of their authorities
to a cabinet of ministers. The ministers subsequently delegate many of their authorities to
their civil servants or to various, more or less independent, administrative bodies. The
mechanism of political accountability operates precisely in the opposite direction to that of
delegation. In some sense, the people’s representatives render account to the voters at
election time.

iv. Social accountability

It involves interest groups, charities and other stakeholders. In reaction to a perceived lack
of trust in government, there is an urge in many democracies for more direct and explicit
accountability relations between public agencies on the one hand and clients, citizens and
civil society on the other hand Influenced by the debate on corporate social responsibility
and corporate governance in business, more attention has been being paid to the role of
NGOs, interest groups and customers or clients as relevant ‘stakeholders’ not only in
determining policy, but also in rendering account. Agencies or individual public managers
should feel obliged to account for their performance to the public at large or, at least, to
civil interest groups, charities, and associations of clients.

v. Legal accountability
This involves courts. In most countries, legal accountability is of increasing importance to
public institutions as a result of the growing formalization of social relations or because of
the greater trust which is placed in courts than in parliaments. These can be the ‘ordinary’
civil courts or specialized administrative courts. Legal accountability will usually be based
on specific responsibilities, formally or legally conferred upon authorities. Therefore, legal
accountability is the most unambiguous type of accountability, as the legal scrutiny will be
based on detailed legal standards, prescribed by civil, penal, or administrative statutes, or

vi. Administrative accountability

It involves auditors, inspectors, and controllers next to the courts, a wide range of quasi-
legal forums exercising independent and external administrative and financial supervision
and control, has been established in the past decades. These administrative forums vary
from country to country from audit offices, to independent supervisory authorities,
inspector general, anti-fraud offices, and chartered accountants. These administrative
forums exercise regular financial and administrative scrutiny, often on the basis of specific
statutes and prescribed norms. This type of accountability arrangement can be very
important for quangos and other executive public agencies.

II. The Elements of Accountability

i. A relationship: Accountability involves two (or more) parties in a relationship that

features certain obligation
ii. Obligations. All parties in an accountability relationship have obligations that imply
responsibilities and consequences. In addition to the obligations inherent in the relationship
(to demonstrate, review, and take responsibility), others can come from outside (such as
legal, professional, contractual, and hierarch obligations) and from an internalized sense of
iii. Demonstrate. Demonstrating performance involves proactively reporting what results
have been achieved and the appropriateness of the means used; it requires honesty,

openness, and transparency. In a hierarchic relationship, this obligation is on the
subordinate party.
iv. Review. Review involves analyzing and reflecting on the reported results and the means
used, and then taking appropriate action. Each party has an obligation to review. Those
accounting should review to learn what is working and what is not and should adjust their
activities accordingly. Those holding to account should direct or call for any needed
change. If performance is good, this could simply mean reconfirming current activities or
could entail individual rewards. If performance is weak, corrective action would be
expected. Review and adjustment of unacceptable performance might involve sanctions on
individuals. Review can also result in revising expectations or adjusting other elements of
the accountability relationship.
v. Take responsibility. Taking responsibility emphasizes answering for and accepting
responsibility for what has or has not been accomplished and for the means used in the
vi. Agreed expectations. The agreed expectations stem from either a formal or informal
agreement on what is to be accomplished. In a hierarchic situation, one would expect a
degree of discussion between the two parties as what is reasonable and feasible, placing an
obligation on the superior party to be clear about what is expected.
vii. Results. A key focus in accountability is on the results (outputs and outcomes)
accomplished or not accomplished.

b) With relevant practical examples, the needs for accountability in different public
i. It helps to obtain honest feedback from others.
Asking questions is one of the best ways to get feedback on a specific goal. Everyone views
the world differently because our “lens” is tainted by our own experiences, knowledge and
education. The things we believe are common sense are often not fully understood by
others. With external accountability, you consistently have people in your life who ask:
“Why is this important?” or “How does this action relate to your goal?” Being challenged

like this is a good thing because it forces you to closely examine each goal and make sure
it’s your best course of action.
ii. It forces the organizations to follow through on commitments.
We are all human and as such, it’s easy to make mistakes. You might start working toward
a new goal and have every intention of following through with it, but rarely does that good
feeling last more than a few days. There are many reasons it’s hard to stick to a new routine;
however, one of the main reasons you don’t follow through is because you lack of
accountability. Example, in Tanzania, every ministry are accountable with their duties and
responsibility, if they fail the President can make a changes on the system on administration
iii. It creates firm deadlines for important tasks.
One essential component of planning is setting firm (and public) deadlines. Sure, keeping
a private timeline in your head can work, but there is a better chance you’ll follow through
if you tell others about your timeline. Not only does sharing your goals keep your feet to
the fire, it also forces you to finish projects by specific deadlines. Example, when a report
needed by CAG on time the general accountant must prepare and should meet the deadline,
otherwise he/she should left the job because of poor punctuality.

iv. It prevents little problems from turning into big ones.

Little problems almost always grow into big ones unless they’re immediately addressed.
Sometimes you’re blind to these little issues, and other times you might be wilfully
ignoring them. Example, when you play your part on time its reduce the availability of
problems occurrence, so as an accountant let say, when you receive any cash or you made
any payment you must record on time/on spot
v. You perform better under observation.
People make better choices and perform at a higher level when they know they are being
watched by others. The reasoning is simple when you are held accountable for your actions,
you will work harder. Example, nowadays in Tanzania many people in different sector
perform their duties and without corruption because the president say, their voter is poor
people and he works for them

(c) In your own view examine the extent to which public enterprises in Tanzania have attained a
reasonable level of accountability

Principles of Effective Accountability

i) Clear roles and responsibilities. The roles and responsibilities of the parties in the
accountability relationship should be well understood and agreed upon.
ii) Clear performance expectations. The objectives pursued, the accomplishments expected
and the operating constraints to be respected (including means used) should be explicit,
understood, and agreed upon.
iii) Balanced expectations and capacities. Performance expectations should be clearly linked
to and balanced with each party’s capacity (authorities, skill, and resources) to deliver.
iv) Credible reporting. Credible and timely information should be reported to demonstrate
what has been achieved, whether the means used were appropriate, and what has been
v) Reasonable review and adjustment. Fair and informed review and feedback on
performance should be carried out by the parties, achievements and difficulties recognized,
appropriate corrections made and appropriate consequences for individuals carried out.

(d) The way we can improve the level of accountability in Tanzania.

I. Have the difficult conversation

While holding ministry accountable may sound confrontational, it doesn’t have to be. Just
remember to focus on the performance, not the person. Assume that most people genuinely want
to do a good job and aren’t being difficult on purpose. Throughout your conversation, seek to
understand why certain actions were taken or tasks were performed. Examples include: “Can you
walk me through the process you followed here?” or “Did you experience a technical issue we
need to fix?” or “Would it help if I sat in on your next meeting?”

Employees may not understand how their behavior affects other team members. Other common
reasons for inadequate performance:

 The manager didn’t give clear instructions
 Extra training is needed
 There’s a technical issue
 A personal issue is seeping into work
 Conflicting priorities

II. Address the poor performance as soon as possible

Deal with the individual one-on-one and as quickly as possible. After all, nothing is likely to
change unless you confront the problem. You also don’t want your frustration to build to the
breaking point or for an employee’s non-performance to become a big issue. You need to figure
out the why behind the poor performance. This is where you’ll need to find a way to make your
leadership style match the situation. For example, a new employee may just need additional
training, while an experienced employee has too much on their plate. A highly conscientious
employee may do well with some coaching while a lazybones may respond better to heavy
authority. Regardless, you need to be clear about the action or behavior you expect from the
employee going forward and have suggestions for how to make that happen.

If you are dealing with a truly bad employee, don’t rely only on verbal communication. Written
goals and instructions can help you both remain accountable. As a manager, you will be forced to
think through what is really needed for performance to improve, and the employee won’t be able
to make the excuse of “I didn’t understand” or “I didn’t know.”

III. Set SMART goals

When things are busy it may seem like a pain to stop and write down procedures, goals and
policies. However, employees need to know what is expected of them in order to perform well and
stay motivated. If you find a consistent lack of accountability in your team, it’s likely you need to
create some written SMART goals. SMART stands for:

S – Specific

M –Measurable

A –Attainable

R –Relevant

T –Timely

Developing SMART goals are a whole topic in itself, so there’s much more to learn than what is
mentioned here. Just know that this tactic leaves little to the imagination and provides clear
communication between employee and supervisor.

IV. Follow through and follow up

After every conversation, write down what was said. You don’t have to report every issue to HR,
but it helps to send an email to yourself and the employee to outline the problem that was
addressed, the solutions you both agreed upon and the expectations for future behavior. This helps
clarify the conversation for everyone involved, and gives you a paper trail should additional action
be necessary.

Finally, follow up with John or Jasmine to see if they are performing as expected. This doesn’t
have to be time-consuming. You can stop by the following morning to ask if the employee had
any other questions or ideas after a night’s sleep. Then, follow up again in a week or so and ask
how things are going. Or, ask the employee to follow up with you after a set amount of time.

You may need to help them make midstream adjustments to reach their goals. Best of all, praise
them when you find them doing things right. Nothing encourages great work like focusing on the
positive. Find even more tips for improving your management skills.

V. Maintain good communication

From emails and retirement calculators to information about their service, your provider should
keep you and your employees up-to-date. And the communication doesn’t stop with the provider.
You play a role in this, too. Don’t be a passive administrator. Although you’re paying a vendor or
provider to take on some of the administrative burden of a plan, you should be an active program
endorser – help the vendor connect with your workforce.

For example, you may receive posters or other materials about retirement plan changes. Pass those
along or make them available for all employees to see – like in a break room. Or, let’s say the
provider sent an email about enrollment. A reminder from you may be the encouragement one of
your employees needs to get started saving. Oftentimes, your employees take their cue from you.
If your employees see that you’re excited about what the plan offers, then they’ll feel more inclined
to be involved.

VI. Ensure accrual accounting is central to the whole public financial management
(PFM) system to provide an accurate financial picture: Many countries have introduced
accrual-reporting systems but are not employing the information it provides in decision
making. By going beyond reporting on cash coming in and going out, accrual accounting
also looks at assets and liabilities and provides a more complete and accurate picture of the
financial position of an organization. Yet these accrual numbers are often not being used
when governments make fiscal and budgetary decisions, which leads to misallocation of
resources, reduced financial resilience, enhanced financial risk, and reduced transparency.
VII. Reduce tolerance of corruption through big data and analytics: Big data and data
analytics can greatly strengthen the fight against corruption. Such tools equip governments
to identify these behaviors and fraudulent activities. For example, Tanzania launched data
analytics software which called Tanzania National Bureau of Statistics that cross-checks
data across public and private sector organizations to identify conflicts of interest. To
ensure that these kinds of programs are adopted and implemented there must be a greater
appetite within political systems to reduce corruption.
VIII. Properly plan for reform: Reforming PFM systems needs to be properly planned to
ensure that governments have available needed resources. Most countries face similar sets
of challenges, which include having to update existing laws and regulations, identifying
and valuing all their assets and liabilities, and developing IT systems. Tanzania government
must be aware of how to most effectively achieve change over the medium term. If in the
planning stage, there seems to be a great deal to be done to support reform, that simply
highlights the poor state of their existing PFM system and, therefore, the greater need to
improve their financial management processes.


A) Accounting issues

When prison department produced food worth Tsh.600, 000,000 and allowed to use it within by
the treasury. This is an Appropriation-in-aid because the fund is raised within the prison
department. At the point when these funds have been collected and allowed to use it within by
the treasury, and spent Tsh.550, 000,000 out of the Appropriation in aid, the following
accounting transactions should take place:

DR Appropriation in aid account 550,000,000

CR General Account of vote a/c 550,000,000


DR Pay Master General a/c 550,000,000

CR Appropriation in aid account 550,000,000

When parliament approved Tsh.23, 000,000,000 for prison activities in the financial year, the
following transactions has to take place:

DR Exchequer account 23,000,000,000

CR General Account of vote A/C 23,000,000,000

When the prison department has received Tsh.20, 000,000,000 from the treasury for
development and recurrent expenditures, the drawings from exchequer account to paymaster
general should be made and the transactions will be as follows:

DR Pay master general (PMG) A/C 20,000,000,000

CR Exchequer account 20,000,000,000

The general ledgers of the prison department will look as follows:


General account of vote a/c 23,000,000,000 Pay master general A/C 20,000,000,000
Balance c/f 3,000,000,000
23,000,000,000 23,000,000,000


Balance c/f 23,550,000,000 Appropriation in aid a/c 550,000,000
Exchequer account 23,000,000,000
23,550,000,000 23,550,000,000


General account of vote 550,000,000 PMG a/c 550,000,000
550,000,000 550,000,000


Appropriation in aid account 550,000,000 Balance c/f 20,550,000,000
Exchequer account 20,000,000,000
20,550,000,000 20,550,000,000



Exchequer 3,000,000,000

PMG 20,550,000,000

Total Asset 23,550,000,000


GAV 23,550,000,000

Total equity and liabilities 23,550,000,000


Using the information above, the head of finance of the prison department should take
accounting the issues of all expenditures used by prison department and every collected internal
revenue from food production. The head of finance of the prison department should submit his
appropriation accounts and other statements to the treasury and the controller and auditor general
(CAG) as required by the law.

The head of finance of the prison department should ensure that the fund entrusted to him are
applied for the purposes intended by the National assembly and make sure that the actual
expenditure does not exceed budgetary provision.

Therefore the head officer must ensure that all amount received from treasure must be recorded
before start using, and he must ensure that the amount received must be used for the activities
intended. And must prepare the statement to show the uses of that amount which the treasure are
received authority from the parliament.

B) According to IPSAS, Assets are resources controlled by an entity as a result of past
events and from which future economic benefits or service potential are expected
to flow to the entity. Ministries and departments must ensure that sale by scrap
follows the proper procedures.
 First, government agencies must apply to the licensing Authority for special approval to sell
scrap from their yard.
 Contractors must obtain a license from the Ministry of Trade and Industry in order to be
allowed to buy items recommended for sale by scrap.
 The supervising officer must ensure that proper documentation is done before the vehicle
carrying scrap leaves the government yard to the weighbridge where the weight of scrap is
 The weight of each load of scrap should be properly recorded and accounted for before the
scrap is off loaded at the contractor’s yard.
 Each Ministry and Department must ensure that one officer accompanies the scrap metal
truck to the weighbridge and records the weight of the load of scrap.
 Scrap metals must be weighed according to its specifications on the contract document.
Contractors after receiving a pro-forma invoice from the Fiji Procurement Office must make
every effort to pay for the scrap within 30 days to the relevant Ministries or Departments.
 An independent weighbridge is used to weigh the scrap to determine the exact weight of the
scrap metal.


i) Asset definition according to the standard

Asset is a resource controlled by the entity as a result of past events and from which future
economic benefits are expected to flow to the entity
It is worth noting that the framework defines asset in terms of control rather than ownership. While
control is generally evidenced through ownership, this may not always be the case. Therefore, an
asset may be recognized in the financial statement of the entity even if ownership of the asset
belongs to someone else. For instance, if a machine is leased to a company for the entire duration
of its useful life, the machine may be recognized in its Statement of Financial Position (Balance
Sheet) since the entity has control over the economic benefits that would be derived from the use
of the asset. This illustrates the use of Substance over Form whereby the economic substance of
the transaction takes precedence over the legal aspects of a transaction in order to present a true
and fair view.

Arusha City Council when taking shops for internal use accounts this event in a separate account,
classified as such, and not on the purchase account. The principle thus maintains the purchase
account as reflecting only actual purchase in substance, that is, items delivered from businessmen
for payment, and not events that merely fit the form of purchase documentation for convenience
or expedience.

Also international public sector accounting standards one (IPSAS1) has narrate that asset with no
directly generate net cash inflows described as embodying service potential while assets that
used to generate net cash inflows are often described as embodying future economic Benefits.
So, based on the confusion about substance over form control issue regard on Arusha city council
asset truly the assets is owned by Arusha city council but the city council will not disclosed such
asset to the financial statement, because of term and structure of agreement, the government will
not benefit any things since useful of the structures is estimated to be 20 years. Arusha City council
has the title to structures that it’s belong and allow the businessmen to occupy the structure.

ii) Control of 60% find out it implication under international public sector
accounting standards thirty two (IPSAS 32)

If the government’s equity interest rate in an enterprise exceeds 50 percent, it would be logical to
classify it as a public enterprise and include it in the public sector. However, an enterprise in which
the government has a minority shareholding but which is controlled, for example, by the
government’s representation on its board of directors, or through government instructions
requiring that it implement specific policy decisions, would be under government control. Such an
enterprise would also be included in the public enterprise sector.

Arusha City Council has 60 percent equity interest in Arusha Development Corporation, making
the Arusha Development Corporation to be a public enterprise. To clarify further the different
aspects associated with the notion of “control,” the Is the power that Arusha City Council has to
govern the financial and operating policies presently exercisable in Arusha Development

Consolidated financial statements are the combined financial statements of Arusha City
Council and Arusha Development Corporation. Arusha City Council shall present consolidated
financial statements in which it consolidates its controlled entities in accordance with IPSAS 34
(Separate financial statements) and IPSAS 35 (Consolidated financial statement). Arusha City
Council need not present consolidated financial statements if and only if:

a) The controlling entity is:

i. Itself a wholly-owned controlled entity and users of such financial statements are
unlikely to exist or their information needs are met by its controlling entity’s
consolidated financial statements; or
ii. A partially-owned controlled entity of another entity and its other owners,
including those not otherwise entitled to vote, have been informed about, and do
not object to, the controlling entity not presenting consolidated financial

b) The controlling entity’s debt or equity instruments are not traded in a public market (a
domestic or foreign stock exchange or an over-the-counter market, including local and
regional markets);
c) The controlling entity did not file, nor is it in the process of filing, its financial statements
with a securities commission or other regulatory organization for the purpose of issuing any
class of instruments in a public market; and
d) The ultimate or any intermediate controlling entity of the controlling entity produces
consolidated financial statements available for public use that comply with International
Public Sector Accounting Standards.

iii) Accrual basis and cash basis and weaknesses of cash basis
 The accrual accounting method provides the advantages of comparability and
communication, because it communicates the activities that occurred during the
period. For example, if the company earned revenue during the current month, this
revenue appears on the income statement. The company may not receive payment
until the following month, but users of the income statement can see that the
company engaged in income-producing activities during the current month. Many
companies use accrual accounting because of the communication. Since these
financial statements follow the same format, companies who use this method can
compare their financial activities with other companies'

 Accrual basis accounting is more popular than cash basis accounting because it
produces more accurate, more faithful financial statements that constitute better
representations of actual circumstances than its main competitor. Since accrual
basis accounting records revenues and expenses together in the same time periods
based on their causal relationships, it produces more accurate gauges of entities'
performance in any time period. By contrast, the use of cash basis can lead to
distortions due to the collection of cash and cash equivalents not aligning with the
actual timing of sales

Weakness of cash basis

a) Single-Entry System: While the simplicity of the single-entry system needed for the cash
method is an advantage, it is also a disadvantage. The accrual method necessitates the use
of a double-entry system, which is based on accounting equations. This system provides
far greater control of transaction posting, and reduces the chance of errors.
b) Short-Term Indicator: While it does indicate the cash flow of a business, it may offer a
misleading picture of longer-term profitability. The cash method doesn’t show income that
has been invoiced but not received. Furthermore, it doesn’t take future expenses into
account. It can also be misleading. For example, your books might show one month as
being extremely profitable. However, deeper insight may reveal that sales were actually
slow, but a number of customers paid their outstanding bills.
c) Restrictions: According to the IRS, you cannot use the cash method if your business
maintains inventory, is a corporation, or has gross receipts in excess of five million dollars
per year. These are the general rules, but there are exceptions — so if you feel that your
business falls into one of these categories, you should consult a professional.

iv) Auditors express their opinion on financial statements that have been authorized
for issue.

Auditors do not express their opinion on financial statements that have been authorized for issue.
Or otherwise the issued financial statements should be noted to inform users it is unaudited
financial statements, the district council must sign the financial statements to be issued after they
have been audited by an independent auditors and government auditors

The objectives of the auditor are:

(a) To form an opinion on the financial statements based on an evaluation of the conclusions drawn
from the audit evidence obtained; and
(b) To express clearly that opinion through a written report that also describes the basis for that

The auditor shall form an opinion on whether the financial statements are prepared, in all material
respects, in accordance with the applicable financial reporting framework.
In order to form that opinion, the auditor shall conclude as to whether the auditor has obtained
reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error. That conclusion shall take into account:
(a) The auditor’s conclusion, in accordance with ISA 330, whether sufficient appropriate audit
evidence has been obtained;
(b) The auditor’s conclusion, in accordance with ISA 450, whether uncorrected misstatements are
material, individually or in aggregate; and the auditor shall evaluate whether the financial
statements are prepared, in all material respects, in accordance with the requirements of the
applicable financial reporting framework. This evaluation shall include consideration of the
qualitative aspects of the entity’s accounting practices, including indicators of possible bias in
management’s judgments.
In particular, the auditor shall evaluate whether, in view of the requirements of the applicable
financial reporting framework:
(a) The financial statements adequately disclose the significant accounting policies selected and
(b) The accounting policies selected and applied are consistent with the applicable financial
reporting framework and are appropriate;

v) IPSAS 20-Related Party Disclosure

The objective of this Standard is to require the disclosure of the existence of related party
relationships where control exists and the disclosure of information about transactions between the
entity and its related parties in certain circumstances. This information is required for
accountability purposes and to facilitate a better understanding of the financial position and
performance of the reporting entity. The principal issues in disclosing information about related
parties are identifying which control or significantly influence the reporting entity and determining
what information should be disclosed about transactions with those parties.

On the above requirements Arusha city council financial statement should not disclose that
information of related parties on notes and mentioning that there was a transaction of city council
and the supply company owned by district commissioner wife, because the law require the
financial statement to disclose only related party who can influence a party in making decision

vi) Publishing budget on the website necessitate compliance with the requirement of

This Standard requires a comparison of budget amounts and the actual amounts arising from
execution of the budget to be included in the financial statements of entities which are required to,
or elect to, make publicly available their approved budget(s) and for which they are, therefore,
held publicly accountable. The Standard also requires disclosure of an explanation of the reasons
for material differences between the budget and actual amounts. Compliance with the requirements
of this Standard will ensure that public sector entities discharge their accountability obligations
and enhance the transparency of their financial statements by demonstrating compliance with the
approved budget(s) for which they are held publicly accountable and, where the budget(s) and the
financial statements are prepared on the same basis, their financial performance in achieving the
budgeted results.
Means applies to public sector entities, other than Government Business Enterprises, that are
required or elect to make publicly available their approved budget. The city council should
continue to publish their annual budget as required by legislative or any other law governing them.

vii) IPSAS-17 Property, Plant and Equipment

According to IPSAS 17 “require an entity to include the estimate of asset dismantlement, removal
and restoration costs as an element of cost of property, plant and equipment, including the
obligations which the entity incurs both when the asset is acquired and when it is used at
subsequent periods, except when it is used to produce inventories. IPSAS 12 applies to the
obligations for dismantling, removing and restoring that are incurred during the period of using
the item to produce inventories.” Previously, IPSAS 17 included within the cost of property, plant
and equipment only the obligation which the entity incurs when the item is acquired. As per above
requirement Arusha city council should estimate and include all the cost of drilling the hole and

the cost of fill the hole after ten years as required by the national legislation to relocate that kind
of asset in the total cost of the machine.

Property, plant and equipment are tangible items that:

(a) Are held for use in the production or supply of goods or services, for rental to others, or for
administrative purposes; and
(b) Are expected to be used during more than one period.
In the public sector, we also frequently have infrastructure assets. They have the following
(a) They are part of a system or network;
(b) They are specialized in nature and do not have alternative uses;
(c) They are immovable; and
(d) They may be subject to constraints on disposal.

viii) IPSAS 27 Biological assets

According to IPSAS 27 “All biological assets (included those acquired a biological asset through
a non-exchange transaction) are measured at fair value less costs to sell, unless fair value cannot
be measured reliably and Agricultural produce is measured at fair value at the point of harvest less
costs to sell.

Examples of biological assets held for the provision or supply of services include: horses and dogs
used for policing purposes and plants and trees in parks and gardens operated for recreational
purposes. The IPSASB concluded that such biological assets are not held for use in an agricultural
activity because they are not routinely managed for the purpose of measuring and monitoring the
change in quality or quantity brought about by biological transformation or harvest,
Because harvested produce is a marketable commodity, there is no ‘measurement reliability’
exception for produce.” As per provided information there is a probability of reliably measuring
the present value of the sale proceeds of the fish if the fish is not harvested produce and the fish is
harvested produce means there is measurement reliability.

Recognition and Measurement
 An entity should recognize a biological asset or agricultural produce when and only when:
 The entity controls the asset as a result of past events
 It is probable that future economic benefits or service potential associated with the asset
will flow to the entity
 The fair value or cost of the asset can be measured reliably.
 Control may be evidenced by legal ownership of cattle, branding/marking the cattle on
acquisition, birth or weaning.

ix) IPSAS 17- Property, Plant and Equipment, What it talks about heritage asset

According to IPSAS 17 “Some assets are described as “heritage assets” because of their cultural,
environmental or historical significance. Examples of heritage assets include historical buildings
and monuments, archaeological sites, conservation areas and nature reserves, and works of art.
Certain characteristics, including the following, are often displayed by heritage assets (although
these characteristics are not exclusive to such assets):

A heritage asset is an item that has value because of its contribution to a nation's society,
knowledge and/or culture. They are usually physical assets, but some countries also use the term
in relation to intangible social and spiritual inheritance.
This Standard does not require an entity to recognize heritage assets that would otherwise meet
the definition of, and recognition criteria for, property, plant and equipment. If an entity does
recognize heritage assets, it must apply the disclosure requirements of this Standard and may, but
is not required to, apply the measurement requirements of this Standard.

Some assets are described as “heritage assets” because of their cultural, environmental or historical
significance. Examples of heritage assets include historical buildings and monuments,
archaeological sites, conservation areas and nature reserves, and works of art.
Certain characteristics, including the following, are often displayed by heritage assets (although
these characteristics are not exclusive to such assets):
(a) Their value in cultural, environmental, educational and historical terms is unlikely to be fully
reflected in a financial value based purely on a market price;

(b) Legal and/or statutory obligations may impose prohibitions or severe restrictions on disposal
by sale;
(c) They are often irreplaceable and their value may increase over time even if their physical
condition deteriorates; and
(d) It may be difficult to estimate their useful lives, which in some cases could be several hundred


Public sector entities may have large holdings of heritage assets that have been acquired over many
years and by various means, including purchase, donation, bequest and sequestration. These assets
are rarely held for their ability to generate cash inflows, and there may be legal or social obstacles
to using them for such purposes.

Some heritage assets have service potential other than their heritage value, for example, an historic
building being used for office accommodation. In these cases, they may be recognized and
measured on the same basis as other items of property, plant and equipment. For other heritage
assets, their service potential is limited to their heritage characteristics, for example, monuments
and ruins. The existence of alternative service potential can affect the choice of measurement base.

The disclosure requirements require entities to make disclosures about recognized assets.
Therefore, entities that recognize heritage assets are required to disclose in respect of those assets
such matters as, for example:
(a) The measurement basis used;
(b) The depreciation method used, if any;
(c) The gross carrying amount;
(d) The accumulated depreciation at the end of the period, if any; and
(e) A reconciliation of the carrying amount at the beginning and end of the period showing certain
components thereof.

x) IPSAS 26- Impairment of cash generating Asset

Indicators of impairment
External and internal sources of information may indicate that an impairment loss recognized for
an asset, other than goodwill, may no longer exist or may have decreased. The external indicators
may include significant favorable changes in the asset's value and market conditions
External sources:

 market value declines

 negative changes in technology, markets, economy, or laws

 increases in market interest rates

 net assets of the company higher than market capitalization

Internal sources:

 obsolescence or physical damage

 asset is idle, part of a restructuring or held for disposal

 worse economic performance than expected

 for investments in subsidiaries, joint ventures or associates, the carrying amount is higher
than the carrying amount of the investee's assets, or a dividend exceeds the total
comprehensive income of the investee

Determining recoverable amount

 If fair value less costs of disposal or value in use is more than carrying amount, it is not
necessary to calculate the other amount. The asset is not impaired.

 If fair value less costs of disposal cannot be determined, then recoverable amount is value
in use.

 For assets to be disposed of, recoverable amount is fair value less costs of disposal.

Fair value less costs of disposal

 Fair value is determined in accordance with IFRS 13 Fair Value Measurement

 Costs of disposal are the direct added costs only (not existing costs or overhead).

Value in use

The calculation of value in use should reflect the following elements.

 an estimate of the future cash flows the entity expects to derive from the asset

 expectations about possible variations in the amount or timing of those future cash flows

 the time value of money, represented by the current market risk-free rate of interest

 the price for bearing the uncertainty inherent in the asset

 other factors, such as illiquidity, that market participants would reflect in pricing the future
cash flows the entity expects to derive from the asset

Cash flow projections should be based on reasonable and supportable assumptions, the most recent
budgets and forecasts, and extrapolation for periods beyond budgeted projections. IAS 36
presumes that budgets and forecasts should not go beyond five years; for periods after five years,
extrapolate from the earlier budgets. Management should assess the reasonableness of its
assumptions by examining the causes of differences between past cash flow projections and actual
cash flows. Cash flow projections should relate to the asset in its current condition – future
restructurings to which the entity is not committed and expenditures to improve or enhance the
asset's performance should not be anticipated.

Estimates of future cash flows should not include cash inflows or outflows from financing
activities, or income tax receipts or payments.

Discount rate

In measuring value in use, the discount rate used should be the pre-tax rate that reflects current
market assessments of the time value of money and the risks specific to the asset.

The discount rate should not reflect risks for which future cash flows have been adjusted and
should equal the rate of return that investors would require if they were to choose an investment
that would generate cash flows equivalent to those expected from the asset.

For impairment of an individual asset or portfolio of assets, the discount rate is the rate the entity
would pay in a current market transaction to borrow money to buy that specific asset or portfolio.

If a market-determined asset-specific rate is not available, a surrogate must be used that reflects
the time value of money over the asset's life as well as country risk, currency risk, price risk, and
cash flow risk. The following would normally be considered.

 the entity's own weighted average cost of capital

 the entity's incremental borrowing rate

 Other market borrowing rates.

Recognition of an impairment loss

 An impairment loss is recognized whenever recoverable amount is below carrying amount.

 The impairment loss is recognized as an expense (unless it relates to a revalued asset where
the impairment loss is treated as a revaluation decrease).

 Adjust depreciation for future periods.

Cash-generating units

Recoverable amount should be determined for the individual asset, if possible. If it is not possible
to determine the recoverable amount (fair value less costs of disposal and value in use) for the
individual asset, then determine recoverable amount for the asset's cash-generating unit (CGU).
The CGU is the smallest identifiable group of assets that generates cash inflows that are largely
independent of the cash inflows from other assets or groups of assets.


Apstolou, N.G. & Crumbley, D.L. (1992) Handbook of governmental accounting and finance.

Douglas Henley (1989) Public Sector Accounting and Financial Control, Van Nostrand Reinhold.

Rowan jones (2000) Public sector accounting 6th ed. Maurice pendlebury.