LECTURE 10 – FINANCIAL REPORTING IN THE PUBLIC SECTOR
Final Exam Information (this is available in the revised lecture slides which were added to blackboard last Friday)
Covers week 4-12
o As per W1 Document
o Week 1-3 will impact on what you right though
o So long as you understand the lecture material, text and tutorial questions you will be fine
o Fail rate in FAI is very low – approx 2/3%
o High pass rate on the final exam – exam is easy to pass but it is difficult to do well in. Need to put in the
o Builds on what you have done in the semester – the questions will look very familiar.
o If you have been keeping up with the work you won’t have any problems.
May take in one page (A4 size) of notes:
o Double sided
o No attachments (eg post-its)
o Handwritten or typed
o No restriction over font size/page margins etc was mentioned
o Does not believe that this is going to be much help – it is up to you whether or not you want to take in
the information or not.
Consists of 5 questions
o 4 questions – 10 marks
3 of the 10 mark questions are broken into parts worth between 2 and 5
o 1 question – 15 marks
Lecture notes and text all examinable – not being marked on written expression/correctness of English but it is
important to keep these factors in mind. Make sure you get all your ideas down – allocate time effectively (do
this based on how the marks are allocated – come up with a plan before you can)
Exam is 2 hours long + 15 minutes perusal
In the last lecture, the notes put up on Blackboard will be example type questions for the final exam (they will
go up on Friday this week).
o Not the exact type, though some are from past exams
o This is looking at HOW to approach the question.
o Justify answers – alot like the case studies.
o Not a content driven exam – about justifying your views and opinions.
o Length of this lecture will depend on the questions students ask (typically, usually an hour)
If you have any questions, you can contact Janet via her email.
Knowledge of definitions or listing rules/standards “of by heart” and defined is not required. You need to
understand that information and be able to use it to further your argument. Replication of the words of any
definition is not required, you only need to understand the meaning of the terms required. Concentrate on what
is important in the section not on learning the information word for word.
What is the Public Sector?
The public sector is the result of public, political decision-making, rather than market forces or outcomes.
o Public sector is a consequence of government activity – education, defence, roads, hospitals.
o Why is it necessary to have government? Primary reason is to provide social services for everyone in
society – equitable access regardless of income or status. Required for ‘big picture areas’ where a
private sector could not adequately account for the entire population ie. Defence. Government is
required to manage the economy at a macro and micro levels ie Reserve Bank.
Public sector takes action on the government decisions rather than market forces. It is a direct
result of a decision made in a political environment. Not about supply and demand. The public
sector runs with this decision and makes it operational – how it does this is important. Lots of
issues regarding equity, transperancy and process which are not relevant in the private sector.
Need to consider how it is different to the private sector (ref: Barton article):
Private exists to meet demand and make profits for shareholders. Public exists to meet
demand but not from a profit making perspective – demand is not one that people
would choose to pay for ie. Defence Force and those who believe that the government
should not fund education. Government’s fund education due to political views that
these services should be provided to lots of different people with no intention to make
profit. Non-reciprocal nature of transactions which occur in the public sector – no
consideration is received, or no equal value for the money handed over/spent in return.
Not a like for like transaction. For example: Rates – some people use lots of public
facilities such as the libraries whilst others do not.
Everyone participates in the public sector through payment of taxes and rates. You can’t
just decide to not make these payments. Participation is involuntary in nature. This does
not exist in the private sector – no one forces you to purchase shares in companies.
In the public sector there is no competitor, people do not have a choice over how their
money is spent by the government.
A public sector activity no matter how it is operationalised is a direct result of a decision made in the political
The public sector can be classified in several different ways – there is a whole host of organizations and different
legal structures. There is great variety in the types and purposes of organizations which exist in the public
sector, they are not all alike:
o Funding Source
How revenues are gained
Discussion of the Federal Government – also applies to State Government but would
not apply to smaller local Government or Councils ie BCC
In this system public sector entities are split between those that belong to the budget sector
and those that do not.
Non-budget Authorities – earn their own revenue through their own sales
Government Owned Corporations
o QR is a GOC – this is part of the controversy related to the sale of QR Freight at
o Nearly all government activity used to be in the budget sector (the majority still
is) but the non-budget activity has increased (huge shift towards GOC in the last
20 years but this shift has stabilized recently)
o Australian Bureau of Statistics
This is the classification adopted by the ABS in reporting, also the World Bank and the IMF. It is
used by the OECD in calculating rankings compared to other countries.
Government Finance Statistics.
General Government Sector (sort of the budget sector but wider)
Provision of public goods or services
Public Trading Enterprises (typically includes GOC but not all – the types of enterprises which
provides goods and services in a competitive or profit market)
Provide goods and services within a competitive market
Public Financial Enterprises
Enterprises engaged in financial activities eg. Banking and insurance ie QIC in QLD
Problematic when comparing this to other countries because we have three levels of
government – most countries only have 2.
To do with how the company is run or organised ie. Companies, Partnerships, Trusts in the
Line Departments – involved in the delivery of services ie Health Department
Commercialised Entities – QFleet, QLD government car fleet
Government Owned Corporations
Local Governments Australia’s Federal System of Government
Australia has three tiers of government: federal, state and local.
Both federal and state have a parliamentary system of government known as ‘responsible government’
Institutional (Parliamentary) Environment
The executive should be accountable to the legislature for all that is done in raising and spending public money
Parliament has to have some way of establishing accountability. The term used to explain this is parliamentary
There are three main oversight arrangements:
o Accounting information systems and documents
Accounting information systems and documents
Estimates and budgeting