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					                                                                      OVERVIEW OF THE
PUBLIC SECTOR ACCOUNTING                                               PUBLIC SECTOR




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                                                                               SOME ATTEMPTED DEFINITIONS
              INTRODUCTION
                                                                    • Is that part of the economy which is owned or
• Several and different meanings are given to the phrase              controlled by the public (everyone, the citizenry),
  ‘public sector’.                                                    usually through government agencies. ...
• Different disciplines reflecting world-views, define the public   • Is the part of economic and administrative life that
  sector differently. For instance, in the western part of the        deals with the delivery of goods and services by
  world, the use of the term “Public” means listed entities,          and for the government, whether national, regional
  thus the term “Governmental” is used in that part.                  or local/municipal.
• However, what is prevalent is that, that sector is associated     • It comprises the sub-sectors of general government
  with:                                                               (mainly central, state and local government units
   – greater taxation,                                                together with social security funds imposed and
   – bureaucracy and                                                  controlled by those units) as well as public
   – restrictions.                                                    corporations, i.e. corporations that are subject to
                                                                      control by government units

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 FORMS OF ORGANIZING THE PUBLIC SECTOR                                  • In Ghana, the public sector mainly comprises MDAs, MMDAs and State-
                                                                          owned entities. See also article 190 of the 1992 constitution of Ghana.
1. Direct administration funded through taxation; the delivering
   organization generally has no specific requirement to meet           • In the UK, the public sector includes the British council, central
   commercial success criteria, and production decisions are              government organizations, executive agencies and non departmental
   determined by government.                                              bodies, houses of parliament, local government, the police, etc

2. Publicly owned corporations (in some contexts, “state-owned          • For Japan it includes central and local governments, and quasi-
   enterprises”); They have greater commercial freedoms and are           governmental special corporations - for which the size of profits does
   expected to operate according to commercial criteria, and              not provide an effective measurement for evaluating performance
   production decisions are not generally taken by government
   (although goals may be set for them by government).                  • In the US, they include, the federal, state, local and not for profit
                                                                          organizations (educational, health institutions, etc).
3. Partial outsourcing is considered a public sector model. A
    borderline form is a complete outsourcing or contracting out.



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      OBJECTIVES OF THE PUBLIC SECTOR                                   • To assist the development of small
                                                                          and ancillary industries
• To accelerate the economic growth and
  industrialization of the country creating the                         • To create employment of opportunities
  necessary infrastructure for development                              • To avoid and circumvent the
  to promote fair distribution of income and wealth,                      limitations and abuses of the private
  interpersonal as well as inter regional                                 sector and
• To promote balanced regional development
                                                                        • To generate forces of economics and
• To promote the growth of strategic defence
                                                                          technological self reliance
  oriented industries


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                                                                 • Decisions made for political reasons, not financial;
     COMPARISON OF THE PUBLIC AND PRIVATE                        • Test of management competence is political, not financial.
                  SECTORS
                                                                 • In the public sector there is no market. Therefore a critical
                                                                   difference between the private and public sectors is that:
  – Public sector organizations are service-oriented and
                                                                 • In the private sector you have a choice about whether to
    there is no profit motive inherent in their inception or
                                                                   spend and on what to spend;
    operation;
                                                                 • In the public sector through taxation, you have no choice –
  – they usually are "owned" collectively, and ownership
                                                                   you are forced to spend, usually depending upon your
    interests cannot be sold or traded;
                                                                   level of income.
  – contributors of financial resources to PS organizations
                                                                 • Sources of financial resources – types and amounts of
    do not necessarily receive any direct or proportionate
                                                                   taxes, licenses, fines or fees; procedure for setting user
    shares of their goods or services;
                                                                   charges
  – they often provide goods or services that are not feasibly
    provided through the private sector; and

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  their major policy decisions, and perhaps some operating         THE GENERAL STRUCTURE OF GHANA’S PUBLIC
    decisions, typically are made by consensus vote of an                      ADMINISTRATION
    elected or appointed governing body whose members
    serve part-time and have diverse backgrounds,
    philosophies, capabilities, and interests.                   • The Constitution of the Fourth Republic (1992) defines the
• Others are,                                                      overall structure of the public administration system in
• No test of performance such as profit or rate of return;         Ghana. The main features of the system are as
• Non financial measures needed;                                 • An elected President for a maximum tenure of 2 terms
                                                                   of 4 years per term.
• Problem of linking inputs to outputs;                          • A national Parliament/Legislature with ---- members
                                                                   elected for a 4-year term.
                                                                 • A local government system with ----- elected
                                                                   Assemblies spread across all the 10 geographic
                                                                   regions.
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• Ten Regional Coordinating Councils, which represent                 THE LEGAL ASPECT OF PUBLIC ADMINISTRATION
  the interests of the central government in the 10
  geographic regions of Ghana.
• An independent Judiciary.                                    •   The 1992 Constitution
• A professional and impartial Civil Service.
• A National Electoral Commission to oversee free and
                                                               •   The Civil Service Law,
  fair elections by secret ballot.                             •   The Local Government Act
• A Media Commission which upholds the freedom of the
  press and maintains standards of objectivity in reporting.
                                                               •   The district Assembly Common Fund Act
• A Commission on Human Rights and Administrative              •   The FAR & FAA
  Justice which protects citizens from “maladministration”
  and/or injustices.
                                                               •   The IAA Act,
                                                               •   The procurement Act
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  GOVERNANCE IN                                                • Background


    THE PUBLIC                                                      Origin of corporate governance reforms lie in the
                                                                    private sector.

     SECTOR                                                         In recent times, there has been a vigorous interest in
                                                                    the governance of public sector organisations as
                                                                    citizens expect the public sector to have exemplary
                                                                    governance principles and practices.

                                                                    Unlike the private sector, public sector governance
                                                                    covers a very wide spectrum.


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           WHY PUBLIC SECTOR
             GOVERNANCE?                                                                            DEFINITIONS
                                                                                    • Public sector governance covers:
• Effective governance in the public sector can:
  – encourage the efficient use of resources,
                                                                                      – ‘…the set of responsibilities and practices, policies
  – strengthen accountability for the stewardship of those
                                                                                        and procedures, exercised by an agency’s executive,
     resources,
                                                                                        to provide strategic direction, ensure objectives are
  – improve management and service delivery, and                                        achieved, manage risks and use resources
     thereby contribute to improving peoples’ lives.                                    responsibly and with accountability (ANAO, 2006)
  – essential for building confidence in public sector
     entities — which is in itself necessary if public sector
                                                                                      – ‘….the traditions and institutions by which authority in
     entities are to be effective in meeting their objectives.”
                                                                                        a country is exercised (Kaufmann et al, 1999).
      (IFAC, Corporate Governance in the Public Sector: A Governing
      Body Perspective, 2001)

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  “the manner in which public officials and
  institutions acquire and exercise the                                               FUNDAMENTAL ELEMENTS
  authority to shape public policy and provide
  public goods and services” (World Bank                                            • There are several schools of thought, but the
  2007)                                                                               most common indicators (principles) are:
                                                                                    • transparency and accountability;
  It includes;                                                                      • Fairness and equity;
  •   ‘…the process by which governments are selected, monitored and                • efficiency and effectiveness;
      replaced;
  •   the capacity of the government to effectively formulate and                   • the rule of law; and
      implement sound policies; and
  •   the respect of citizens and the state for the institutions that govern
                                                                                    • High standards of ethical behavior (OECD, Policy
      economic and social interactions among them (Kaufmann et al,                   Brief, “ Public Sector Modernization: Open Government,”
      2008).
                                                                                     2005)
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• accountability—being answerable for decisions and having
  meaningful mechanisms in place to ensure the agency adheres to                                  OTHERS
  all applicable standards
                                                                             • Voice and accountability—measuring political, civil
• transparency/openness—having clear roles and responsibilities
  and clear procedures for making decisions and exercising power               and human rights
• integrity—acting impartially, ethically and in the interests of the
  agency, and not misusing information acquired through a position           • Political instability and violence—measuring the
  of trust
                                                                               likelihood of violent threats to, or changes in,
• stewardship—using every opportunity to enhance the value of
  the public assets and institutions that have been entrusted to care
                                                                               government, including terrorism
• efficiency—ensuring the best use of resources to further the aims
  of the organisation, with a commitment to evidence-based                   • Government effectiveness—measuring the
  strategies for improvement                                                   competence of the bureaucracy and the quality of
• leadership—achieving an agency-wide commitment to good                       public service delivery
  governance through leadership from the top

                                                                             • Regulatory burden—measuring the incidence of
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                                                                               market-unfriendly policies                            22




• Rule of law—measuring the quality of                                           OFFICERS AND ORGANS FOR PUBLIC SECTOR
  contract enforcement, the police, and                                                       GOVERNANCE
  the courts, as well as the likelihood of                                   • Legal and regulatory framework
  crime and violence
                                                                               – The 1992 Constitution, The Civil Service Law,
                                                                                 The Local Government Act, The district
• Control of corruption—measuring the                                            Assembly Common Fund Act, The FAR &
  exercise of public power for private                                           FAA, The IAA Act, The Procurement Act,
                                                                                 Audit Service Act and others
  gain, including both petty and grand
  corruption, and state capture
                                                                             • Bodies/institutions/organs

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   Good Governance Features                            Corruption Check: World Scenario
                                                                                • Dark green
                                                                                  (90-100%)
                                                                                • Light green
                                                                                  (75-90%),
                                                                                • Yellow (50-
                                                                                  75%,
                                                                                • Orange (25-
                                                                                  50%
                                                                                • Pink (10-25%
                                                                                • Red (0-10%.

                                                                                • Higher values
                                                                                  indicate
                                                                                  better
                                                                                  governance
                                                  25                              ratings. 26




     GROUP ASSIGNMENT I

A. Choose two organisations, one from each
   sector and outline the similarities and the
   differences between them.

B. Identify the similarities and differences in
   their governance practices.
Submission:
When?
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