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ICAN Public Sector Accounting and Finance 2023 past questions and answers

This 2023 ICAN Public Sector Accounting and Finance set has 20 practice questions. Try these 5 free sample questions, tap a question to reveal the answer and explanation. Then practise the whole 2023 set with instant marking.

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Sample ICAN Public Sector Accounting and Finance 2023 questions

1. A state ministry is preparing its annual estimates. The government wants the budget to translate policy priorities into funded programmes, set spending limits and provide a basis for monitoring performance. Which best describes the budget's central public-finance role?
  1. To record only cash transactions after the year has ended
  2. To authorize and plan public revenues and expenditure in line with policy objectives
  3. To replace the government's financial statements
  4. To guarantee that every approved programme achieves its target

Answer: B. To authorize and plan public revenues and expenditure in line with policy objectives

A public budget plans and authorizes the use of public resources and connects expenditure to policy. Approval does not guarantee results, and the budget does not replace year-end reporting.

2. A ministry's approved budget includes salaries, routine office supplies, construction of a new clinic and purchase of medical equipment. Which item is most clearly capital expenditure?
  1. Monthly salaries of clinic staff
  2. Routine stationery consumed during the year
  3. Electricity bills for the clinic
  4. Construction of the new clinic

Answer: D. Construction of the new clinic

Construction creates a long-lived public asset and is capital expenditure. Salaries, utilities and routine consumables are recurrent operating costs.

3. A department has an appropriation of ₦80 million for road maintenance. It has already committed ₦70 million and proposes to award a new ₦15 million contract, although no supplementary appropriation or authorized virement is available. What is the best control response?
  1. Do not make the commitment because it would exceed the available appropriation
  2. Proceed because the contract will be paid in the next financial year
  3. Proceed if the department expects to underspend on salaries
  4. Record the excess only in the next year's budget

Answer: A. Do not make the commitment because it would exceed the available appropriation

The proposed commitment would bring expenditure to ₦85 million against an ₦80 million appropriation, so it requires lawful additional authority before commitment. Expected savings elsewhere or later payment do not by themselves authorize the excess.

4. A government unit using the IPSAS cash basis issues an invoice for ₦2.4 million of licence fees on 28 December, but the customer pays on 10 January. The reporting date is 31 December. When is the receipt recognized under the cash basis?
  1. On 28 December when the invoice is issued
  2. Half in December and half in January
  3. On 10 January when cash is received
  4. It is never recognized because it is a licence fee

Answer: C. On 10 January when cash is received

Under the cash basis, revenue is recognized when cash is received, so recognition occurs in January. Issuing an invoice alone does not constitute a cash receipt.

5. A ministry receives and accepts office equipment costing ₦6 million on 27 December. The supplier's invoice arrives on 5 January, and the equipment is available for use before year-end. Under accrual accounting, what should be reported at 31 December?
  1. No entry until the invoice is paid
  2. Recognize equipment and a payable of ₦6 million
  3. Recognize cash expenditure of ₦6 million
  4. Recognize revenue of ₦6 million

Answer: B. Recognize equipment and a payable of ₦6 million

Control of the equipment and the obligation to pay arise when it is delivered and accepted, so the asset and payable are recognized by year-end. The invoice date and payment date do not defer accrual recognition.

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