Public Sector, Not-for-Profit Accounting and Accounting Ethics
What the domain tests
You must distinguish public sector and not-for-profit accounting from commercial accounting, prepare a receipts and payments account or income and expenditure account, and apply ethical principles to accountant dilemmas.
Public sector and not-for-profit rules
Public sector accounting in Cameroon is budget-driven and primarily cash-based, organised around the Finance Law, the Treasury and public accountants; IPSAS provides the accrual reference used in reform. Fund accounting separates resources restricted to particular purposes.
Not-for-profit organisations aim to provide services, not profit. A receipts and payments account records cash actually received and paid, including capital items and loans. An income and expenditure account records income earned and expenses incurred on an accruals basis and shows a surplus or deficit. Subscriptions in arrears are income only if considered recoverable. Life membership is usually capitalised and recognised over the membership period or credited to a life membership fund. The accumulated fund replaces capital.
Worked example
Subscriptions received are 2,400,000. Opening arrears 150,000; closing arrears 200,000; opening prepaid subscriptions 50,000; closing prepaid 80,000. Income = receipts − opening arrears + closing arrears + opening prepaid − closing prepaid = 2,400,000 − 150,000 + 200,000 + 50,000 − 80,000 = 2,420,000. The closing arrears are added because they relate to the current year but were not received; the opening arrears are deducted because they were received but relate to the prior year.
Ethics
ONECCA members apply integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. Threats include self-interest, self-review, advocacy, familiarity and intimidation. Safeguards include disclosure, independent review, rotation and declining the engagement. Confidentiality is not absolute: disclosure may be required by law or by the professional body.
Traps
A receipts and payments account is not an income and expenditure account; it includes capital receipts and payments. Do not treat a surplus as profit available for dividend. Do not count doubtful subscriptions as income. A gift from a client can create a self-interest threat even if small. Confidentiality does not prevent reporting a legal requirement.