Case Study - Question

CORIS RECREATION ASSEMBLY

CORIS RA is a government owned enterprise which is legislated to generate its own income which it uses to cover capital and recurrent expenditures. The legislation also give the government the powers to order CORIS RA to transfer all or part of the income it generates to the consolidated fund as it deems fit. Outside of these powers, its government also provides CORIS RA with monthly subventions to cover its recurrent expenditures based on CORIS RA budgetary demands and the legal allocations by the government.

For the 2017 and 2018, CORIS RA used the cash basis to prepare its financial statements, although some of the accounting transactions were recorded using the accrual basis. It should be noted that the government instructed all of its agencies to use an accrual basis that is guided and recommended by IPSASs.

You were asked by to government to assist CORIS RA with its accounting processes, which involved the recording, generation and preparation of accounting transactions and final accounts as stipulated by the IPSASs.

Working with a team of qualified and experienced accountants, you were able to prepare the following accounting information of CORIS RA for the year ending December 2020:

Details	Amount
Dividend Received	93,250
Loan payment	143,000
Amounts Recovered	194,000
Interest Expense	200,000
Court Administration Fees	240,000
Cost of Training	275,000
Bar License	300,400
Store Rent	300,750
Fines and Penalties	330,000
General Cleaning	350,000
Sanitation	370,000
Accumulated Fund (1/1/2020)	370,600
Basic Taxes and Rates	370,900
Allowances	390,470
Equity Investment Acquired	420,000
Royalties	430,000
Accountancy and Consultancies cost	470,000
Work-In-Progress	490,000
Herbalist License	530,370
Posts not on Establishment	580,000
Other Expenditure	600,000
Stool Land Revenue	600,000
Transport and Travelling cost	620,000
Utilities	630,000
Hostel License	630,920

Details	Amount
Advances to Staff	660,000
Local Park Fees	720,400
Inventory and Consumables	800,000
Special Services	820,000
Property Rate	820,900
Social Benefit	840,300
Market Tolls	870,000
Consumption of Fixed Assets	960,000
Infrastructure, Plant and Equipment	980,000
Permit Fees	990,000
Proceeds from Sale of Equity	990,320
Established Posts	1,140,700
Development Bonds Issued	1,300,000
Business Income	2,300,600
Loans Received	2,330,000
Local Fund	2,930,000
Rent from Land and Building	6,120,800
Central Government Salaries	12,000,000
Cash and Cash Equivalent @ (1/1/2020)	12,300,240
Parish Development Facility	15,000,600

NOTES

1. YouaretoensurethatCORISRAadoptsandmaintainstheaccrualaccountingbasiswhenpreparing its financialstatements.
2. As of December 31, 2020, the Established Post had outstanding salaries of$180,000,000.00
3. Closing Inventory and Consumables as at December 31, 2020, stood at$170,000,000.00

Using the guidelines and formats set out in the applicable IPSASs, you are to:

1. Prepare CORIS RA Statement of Cash Flow for the year ended December 31, 2020.
2. Prepare CORIS RA Statement of Financial Performancefor the year ended December 31, 2020.
3. Usingthecontentssupportedbyinformationintherelevant IPSASs,givea comprehensive definition (with examples) of revenue and expenditure appropriate for a Central Government.
4. The IPSASs indicated some benefits of Cash Flow Information. State any two of these benefits to an entity and also the general public.