PUBLIC SECTOR

NI KADEK EVIANA DAMAYANTI / 121211779

DEWA AYU TRYANA DEWI / 121211826
I GUSTI AYU RADHE VRNDAVANESWARI / 121211860
ACCOUNTING IC
CHAPTER 2. Characteristics and Scope of
Public Sector
A. The Meaning and Scope of Public Sector Accounting

Some of the tasks and functions of the public

The meaning of public sector has sector can actually also be carried out by the
private sector, for example, communication
various meanings. From an services, tax withdrawal, education,
economic point of view, it can be transportation, etc. It would be impossible for
understood as an entity whose certain tasks in the existence of the public
sector cannot be replaced, for example, the
activities are related to efforts to function of the government bureaucracy. As a
produce public goods and services consequence, public sector accounting is in
for the public's needs various ways different from the private sector
accounting
B. THE NATURE AND CHARACTERISTICS OF PUBLIC SECTOR
ACCOUNTING

Differences in the nature and characteristics of accounting

in the public sector and the private sector due to
differences in the affecting environment. The public sector
is heterogeneous and moves in a very complex
environment. Environmental components that influence
public sector organizations, including economic, political,
cultural, and demographic factors
C. VALUE FOR MONEY

Value for money is

the concept of
managing public
sector Economic Efficiency Effective
organizations.
Some of the
reasons why value
for money needs to
be considered are
seen from 5
elements, namely Input Value (Rp) Input Output Outcome
economy,
efficiency,
effectiveness,
fairness, and equity
D. DIFFERENCES AND SIMILARITIES BETWEEN THE PUBLIC SECTOR AND THE PRIVATE SECTOR

I. DIFFERENCES BETWEEN THE PUBLIC SECTOR AND THE PRIVATE

SECTOR

DIFFERENCES PUBLIC SECTOR PRIVATE SECTOR

The Purpose of the Organization Nonprofit motive Profit motive
Sources of Funding Taxation, levies, government bonds, debt, • Internal financing: Own capital,
profits of SOEs / BUMDs, sale of state retained earnings, sale of assets.
assets, etc. • External financing: bank debt, bonds,
issuance of shares
Accountability Accountability to the public (public) and Liability to shareholders and creditors
parliament (DPR/DPRD)

Organization Structures Bureaucratic, rigid, and hierarchical Flexible, flat, pyramid, cross functional,
etc.
Budget Characteristics Open to the public Closed to the public
Accounting System • Cash Basis Accrual Basis
• Cash Toward Accrual/Cash
Transitioning to Accrual
• Accrual Basis
 II. SIMILARITIES BETWEEN THE PUBLIC SECTOR AND THE PRIVATE
SECTOR

The process of managing

The public sector and the
Both face the same problem management, including
private sector are an integral
which is the problem of scarcity financial management, is
part of the economic system in a
of resources basically the same in both
country and use the same
sectors
resources

Both sectors produce the same Both sectors are bound by the
products, for example, both the laws and other legal provisions
government and the private sector hinted at
are engaged in mass transportation,
education, health, etc.
E. THE PURPOSE OF PUBLIC SECTOR ACCOUNTING

The American Accounting Association (1970) in Glynn (1993)

states that the objectives of accounting in public sector
organizations are to:
1. Provide the information needed to manage an operation
appropriately, efficiently, and economically and the allocation
of resources entrusted to the organization.
2. provide information that allows managers to report on the
implementation of managing responsibilities appropriately and
effectively and allows government employees to report
publicly on the results of government operations and the use of
public funds.
F. THE DEVELOPMENT OF PUBLIC SECTOR ACCOUNTING

• In 1952, the term "sector public" began to be used for the first
time.
• In the 1970s, criticism, and attacks from proponents of radical
development theory showed the impression of wanting to re-
question the role of the public sector in development.
• In the 1980s, public sector reforms were carried out in
developed industrialized countries in response to various
criticisms.
• Then, in two decades, there has been a rapid development of
public sector accounting. The terms public accountability, value
for money, public sector reform, and good public government,
have so quickly entered the dictionary of the public sector.
G. PUBLIC SECTOR ACCOUNTING AND GOOD GOVERNANCE

The World Bank defines good governance as an Characteristics of Good Governance according to UNDP
implementation of solid and responsible
development management that is in line with the
principles of democracy and an efficient market,
the avoidance of misallocation of investment
funds, prevention of corruption both politically UNDP provides characteristics of the
and administratively, implementing budgetary implementation of good governance,
discipline and creating legal and political including:
frameworks for growth business activity. 1. Participation
2. Rule of law
3. Transparency
To realize good public and corporate governance in order to
4. Responsiveness
create public welfare, a series of reforms in the public sector is
needed. In addition to institutional reform and public sector 5. Consensus Orientation
management reform, to support the creation of good 6. Equity
governance, a series of further reforms are needed, namely : 7. Efficiency and Effectiveness
1. Budgeting Reform
2. Accounting Reform
8. Accountability
3. Audit Reform 9. Strategic Vision
4. Financial Management Reform
H. ACCOUNTABILITY PUBLIC

Public accountability that must be

Public accountability is the carried out by public sector
obligation of the trust holder to organizations consists of several
provide accountability, present, dimensions. Ellwood (1993)
report, and disclose all activities and explains that there are 4 dimensions
activities that are their responsibility of accountability that must be met
to the buyer of the trust who has the by public sector organizations,
right and authority to demand such namely:
accountability. Public accountability  Accountability for probity and
consists of 2 types, namely: legality
• Vertical Accountability  Process accountability
• Horizontal Accountability  Program accountability
 Policy accountability
CHAPTER 3. MANAGEMENT ACCOUNTING OF
PUBLIC SECTOR
A. Foreword

The main role of public sector management accounting is to provide accounting

information that will be used by public managers in carrying out organizational
planning and control functions.

The accounting principles of public sector management are not much different from
the principles applied to the private sector, such as the principle of strategic
management and cost management.

But the application of such principles cannot be applied directly without

modification.
B. Accounting as an organizational planning tool

 Planning is an organization's way of setting

organizational goals and objectives. planning
includes activities that are strategic, tactical, and
involve operational aspects. Accounting information as a planning tool can
 In terms of organizational planning, management be divided into 3:
accounting plays a role in providing historical and
prospective information to facilitate planning. 1. Information is routine or ad hoc
 Planning aspects also involve behavioral aspects,
2. Qualitative quantitative information
namely participation in the development of
planning systems, goal setting, and selecting the 3. Information is conveyed through formal or
most appropriate tools to monitor the progress of informal channels
achieving goals.
C. Accounting as an organizational controlling tool

To ensure that the strategy to achieve organizational goals is carried out economically,
efficiently, and effectively, an effective control system is needed.

In public sector organizations because of their non-pursuit of profit and the presence
of great political influence, the control tool is more in the form of bureaucratic
regulations.

The main function of accounting information is a control tool that provides

information of a quantitative nature.

In understanding accounting as a control tool, it is necessary to distinguish the use of

accounting information as financial control with accounting as organizational control
D. Managerial planning and control processes of public
sector organizations

 Jones and Pendlebury (1996) divided the

managerial planning and control process in
 Planning and control is a process of forming
public sector organizations into 5 stages,
a cycle so that one stage will be related to
namely:
other stages and integrated into an
organization.
1. Planning basic goals and objectives
2. Operational planning
3. Budgeting
4. control and measurement
5. Reporting, analysis, and feedback
 E. The role of public sector management accounting

 The main role of

management accounting
in public sector
organizations is to
provide managers with The roles of management accounting in public sector organizations include:
relevant and reliable
accounting information to 1. Strategic planning
carry out the planning 2. Providing cost information
and control functions of
3. Investment appraisal
the organization.
4. Budgeting
 In public sector 5. Determination of service fees and determination of service rates
organizations, planning 6. Job appraisal
begins with strategic
planning, while control is
carried out on task
control.
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