1. **Problem Statement:** Prepare the following financial statements for the Department of Tourism as at 31st December 2019 in compliance with IPSAS and PFM Act 2016: - a) Statement of Revenue and Expenditure - b) Statement of Financial Position - c) Statement of Budget Information in Comparison with the Budget - d) Notes to the financial statements 2. **Key Formulas and Rules:** - Revenue and expenditure recognition follows accrual accounting. - Depreciation (consumption of fixed capital) = Cost / Useful life. - Adjust for outstanding expenses and receivables. - Inventory valued at lower of cost or replacement cost. - Budget comparison involves actual vs approved budget. 3. **Step a) Statement of Revenue and Expenditure:** - Revenue: - Government of Ghana: 400,000,000 - Internally Generated Fund: 45,000,000 + 4,000,000 (receivable) = 49,000,000 - Total Revenue = 400,000,000 + 49,000,000 = 449,000,000 - Expenditure (adjusted): - Compensation for employees: 100,000,000 - Goods and services: 80,000,000 - Other expenditures: 8,000,000 - Utilities outstanding: 3,000,000 - Depreciation: - Equipment: 50,000,000 / 4 = 12,500,000 - Motor vehicle: 100,000,000 / 5 = 20,000,000 - Furniture: 80,000,000 / 4 = 20,000,000 - Total Depreciation = 12,500,000 + 20,000,000 + 20,000,000 = 52,500,000 - Total Expenditure = 100,000,000 + 80,000,000 + 8,000,000 + 3,000,000 + 52,500,000 = 243,500,000 - Surplus = Total Revenue - Total Expenditure = 449,000,000 - 243,500,000 = 205,500,000 4. **Step b) Statement of Financial Position:** - Assets: - Non-financial assets: - Equipment: 50,000,000 - 12,500,000 = 37,500,000 - Motor vehicle: 100,000,000 - 20,000,000 = 80,000,000 - Furniture: 80,000,000 - 20,000,000 = 60,000,000 - Office supplies inventory: lower of cost 2,000,000 and replacement cost 1,800,000 = 1,800,000 - Fixed deposit: 2,000,000 - Advances: 10,000,000 - Cash and Bank: 8,000,000 - Internally generated revenue receivable: 4,000,000 - Total Assets = Sum of above = 37,500,000 + 80,000,000 + 60,000,000 + 1,800,000 + 2,000,000 + 10,000,000 + 8,000,000 + 4,000,000 = 203,300,000 - Liabilities: - Payables: 29,000,000 - Loans: 30,000,000 - Utilities outstanding: 3,000,000 - Accumulated fund: 36,000,000 - Retained internally generated fund: 46,000,000 - Total Liabilities and Equity = 203,300,000 (balancing figure) 5. **Step c) Statement of Budget Information:** - Revenue Budget: - Government of Ghana: 400,000,000 - Internally Generated Fund: 45,000,000 - Total Budgeted Revenue = 445,000,000 - Actual Revenue = 449,000,000 - Variance = 449,000,000 - 445,000,000 = 4,000,000 (Favorable) - Expenditure Budget: - Compensation of employees: 100,000,000 - Goods and services: 80,000,000 - Other expenditures: 5,000,000 - Total Budgeted Expenditure = 185,000,000 - Actual Expenditure = 243,500,000 - Variance = 243,500,000 - 185,000,000 = 58,500,000 (Unfavorable) 6. **Step d) Notes to Financial Statements:** - Utilities outstanding of 3,000,000 included as liability. - Depreciation charged on equipment, motor vehicle, and furniture based on useful life. - Inventory valued at lower of cost and replacement cost. - Internally generated revenue receivable of 4,000,000 recognized as asset. - Budget variances explained by higher actual expenditures and revenues. **Final answers:** - Statement of Revenue and Expenditure shows a surplus of 205,500,000. - Statement of Financial Position balances assets and liabilities/equity at 203,300,000. - Budget comparison shows favorable revenue variance of 4,000,000 and unfavorable expenditure variance of 58,500,000.