AN OVERVIEW OF THE OPERATIONS OF ACCOUNTS DEPARTMENT

AN OVERVIEW OF THE OPERATIONS OF ACCOUNTS DEPARTMENT BY ACCOUNTS DEPARTMENT APRIL 2013

OUTLINE v Preamble v Financial Authorities v Expectation Gap & the Service Charter v Transaction Processing Cycle v Mode of Operation v Conclusion v Q&A v References

PREAMBLE The Science of Accounting is a continuously evolving body of knowledge that changes in line with the turbulent business environment. These changes have extended the boundaries of Accounting and created a problem in defining its scope.

PREAMBLE This presentation attempt to demystify the mode of operations of a typical Accounts Department in a Government-owned Hospital and bridge the “expectation gap”, using the premier General Hospital as a case study.

FINANCIAL AUTHORITIES Like other field of Science, the practice of Accounting is based on a set of Laws, Principles, Concept and standards, collectively called GAAP. In the Public sector, these are codified as Financial Authorities.

Examples of FINANCIAL AUTHORITIES are: üThe 1999 Constitution of the Federal Republic of Nigeria üAnnual Appropriation Act üSupplementary Appropriation Act üWarrants Issued by the Minister of Finance üTreasury Circulars and Financial Circulars üOfficial Gazette of the Government üFinancial Regulations Issued by the Minister of Finance

üPublic Procurement Act of 2007 üFiscal Responsibility Act of 2007 üPension Reform Act of 2004 üRevenue Mobilization, Allocation and Fiscal Commission Act, 2004 üFinance (Control and Management )act 2004 üEFCC Act 2004 üICPC Act 2002

SECTIONS/UNITS UNDER THE ACCOUNTS DEPARTMENT ØSALARIES Section ØVARIATION Section ØF. I. S Unit ØRECONCILIATION AND REVENUE MONITORING ØFUNDS Section ØC. P. O

SECTIONS/UNITS UNDER THE ACCOUNTS DEPARTMENT ACCOUNTS DEPT. SALARIES CLERICAL OFFICER VARIATIONS F. I. S FUNDS RECONCILIATION&REVENUE MONITORING C. P. O

EXPECTATION GAP Vs SERVICE CHARTER EXPECTATION GAP is an Accounting term use to describe the disparity between what the public is expecting from Accountants and what the profession require of the Accountants to do.

SERVICE CHARTER is a policy initiative that seeks to establish a vibrant social contract between a public officer/organisation and external parties (the Client)

TRANSACTION PROCESSING CYCLE Each transaction follows a standardized procedure which is a flow of activities from the Medical director (Accounting Officer) through the head of Accounts to the relevant Section/Officer of the Accounts Department.

Computation &Analysis Classification of Data collection of Financial Data Summarizing Financial Information Financial Reporting

SALARIES In Public Service, the monthly remuneration of workers are usually charged to the Consolidated Revenue Fund (CRF) on the authority of Recurrent Expenditure Warrant. Prior to the introduction of the e-Payment systems by the Lagos state government, staff salaries were manually processed base on an extremely tedious and delicate procedures. However, with the advent of NEFT (National Electronic Fund Transfer) and NUBAN (Nigerian Uniform Bank Accounts Numbers), Payments of staff salaries has brought a relief to Accounts department. The simple steps to be follow include: ØSalary Meeting ØSending of H. O. P List to CPDVD through S. T. O and

VARIATION This section takes care of any variance in staff salaries ranging from Short-payments, unpaid Salary Arrears , Erroneous deductions e. t. c. Procedures for a typical Variation work include the following : Application/Complaint Letter by the affected Officer ØApproval of the Medical Director ØDirectives from the Head of Accounts ØComputation by the Variation Officer using Variable Cards ØVerification by the Internal Auditor ØVerification by Auditor at S. T. O ØProcessing by CPDVD ØRelease of Pay 04, prior to Salary Schedule for Correction ØPayment of the new Salary

FINANCIAL INFORMATION SYSTEMS (F. I. S) UNIT Lagos State public Service is reputed to be the most advance in terms of Economic Planning , Financial Operations and Database Management. In year 2001, the Government introduced an integrated web-based application called Oracle Financials (Oracle 11 i) This application uses an automated system to upload and process financial data and generate electronic financial statements in an effective and efficient manner.

RECONCILIATION AND REVENUE MONITORING This section monitor financial transactions and ensure that balances in various Accounts accord with expectation. The section also seek to proffer reasonable answers to any disagreement between Account balances, particular on transaction between the Organization and third parties. achieving the objectives of financial reporting. Some of the FUNCTIONS include: §Review Bank Statements §Review Cash book of Various Accounts §Compute Revenue Returns §Prepare Bank reconciliation Statements

FUNDS SECTION This section is one of the engine rooms of the Accounts Department where all expenses are formally processed and documented based on the approval of the Accounting officer. Functions include ØPreparation of Payment Vouchers ØPreparation of Vote. Book (DVEAB) ØComputation of Expenditure Returns ØComputation of Budget Performance Liaising with the Auditors ØMaintenance of PV registers e. t. c

VOUCHERS A Voucher is any document showing evidence of authority for the payment or receipt of money or stores as authorized by the Accounting Officer. There are 3 Classification of Vouchers namely : Payment Vouchers Receipt Vouchers Adjustment Vouchers

PREPARATION OF VOUCHERS §A written request for fund indicating the need for an item or service §The request must contain the approval of the Accounting Officer. §A written directive to the Head of Accounts from the MD on the request §A directive from the head of Account to the Funds Section §Preparation of Vouchers by the Funds Section §Scheduling of Vouchers to the IAU for Pre-Audit §Sending of Vouchers to the Head of Accounts for signing §Head of Accounts Send Vouchers to the C. P. O for Listing

The Central Pay Office (C. P. O) This section of the Accounts department is responsible for processing payments, maintaining statutory records and retirement of vouchers. Payments procedures : q. Completion of Vouchers by Funds Section q. Compilation of Vouchers (Listings) q. Writing and confirmation of Cheques q. Signing of Cheques by the MD and H. O. A q. Registration of Payments into appropriate Register q. Presentation of Cheques for withdrawal q. Signing of Vouchers and Register by the beneficiary q. Presentation of Reciepts and relevant documents

RETIREMENT OF VOUCHERS Anyone who has collected money from a Government Organisation for purchases or Service rendered (other than employeess) is expected to sign and submit certain documents. This process called Retirement involves the following : v. Signing of Vouchers v. Submission of Reciepts (NOT INVOINCE) or Honour Certificate. v. Submission of Store Reciept Vouchers (SRV)- for tangible items v. Submission of Job Completion Certificate(for Construction &Technical Work) v. Minutes of the meeting Authourising the action

REFERENCES Financial Regulations (2009 Edition). No 72, . Vol. 96 1999 Constitution of the Federal Rep. of Nigeria Berger, T. M. (2009) IPSAS explained West Sussex, United Kingdom: John Wiley & Sons Ltd. IPSASB (2011) Handbook of International public sector accounting pronouncements Vol. I &II. New York, USA: IFAC Mackenzie, Coetsee, Njikizana, Chamboko and Colyvas (2011) Interpretation and application of IFRS. New Jersey, USA: John Wiley & Sons Ltd. Siddiqui, J. (2011) Public sector financial management. Paper presented at IPSAS course in Manchester, United Kingdom.