Accounting Q&A · Government Accounting · Topic 3
Practise 25 government accounting questions on budget authority and restricted resources using five worked public-sector cases. Try each answer before revealing it. The cases are illustrative. Check the applicable reporting framework and local budget rules.
A project appropriation is 100,000, commitments are 80,000 and payments are 60,000
1. What should the accountant establish?
Identify available authority under the applicable commitment rules.
2. What evidence should be obtained?
Obtain budget, commitment and payment registers.
3. What calculation or procedure would help?
Assuming payments are included in commitments, unused authority is 20,000 and unpaid commitments are 20,000.
4. What limitation or alternative matters?
Cash paid alone overstates remaining authority in this example.
5. What should happen next?
Report both measures and check local controls.
The final budget rises from 200,000 to 230,000
6. What should the accountant establish?
Identify authorised changes to the original budget.
7. What evidence should be obtained?
Collect amendments and approval dates.
8. What calculation or procedure would help?
Reconcile the increase of 30,000 to approved revisions.
9. What limitation or alternative matters?
An internal forecast is different from a legally approved change.
10. What should happen next?
Present original and final budgets where required.
A grant fund can be spent only on road safety
11. What should the accountant establish?
Track restricted resources and eligible spending.
12. What evidence should be obtained?
Inspect grant terms, fund codes and invoices.
13. What calculation or procedure would help?
Match each charge to the eligible purpose.
14. What limitation or alternative matters?
A separate fund code does not establish legal eligibility.
15. What should happen next?
Correct mischarges and reconcile the restricted balance.
Actual spending is 95,000 against a final comparable budget of 100,000
16. What should the accountant establish?
Calculate a 5,000 underspend on that basis.
17. What evidence should be obtained?
Check the approved budget and comparable actual amounts.
18. What calculation or procedure would help?
Investigate timing, cancelled activity and efficiency separately.
19. What limitation or alternative matters?
An underspend does not prove a saving in service cost.
20. What should happen next?
Explain material differences and delayed commitments.
The budget is cash-based but statements use accrual accounting
21. What should the accountant establish?
Distinguish the two reporting bases.
22. What evidence should be obtained?
Obtain budget classifications and accrual adjustments.
23. What calculation or procedure would help?
Identify basis, timing and entity differences and reconcile as required.
24. What limitation or alternative matters?
Comparing an accrual expense directly with cash budget can mislead.
25. What should happen next?
Present actual amounts on the budget basis for comparison.