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ICAN Public Sector Accounting and Finance 2025 past questions and answers

This 2025 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 2025 set with instant marking.

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Sample ICAN Public Sector Accounting and Finance 2025 questions

1. A ministry's annual appropriation assigns ₦80 million to health outreach and ₦50 million to vehicle replacement. The appropriation law permits transfers between these heads only after legislative approval. The ministry's finance director transfers ₦10 million from vehicle replacement to outreach without seeking approval. What is the most appropriate conclusion?
  1. The transfer is valid because the total ministry appropriation has not changed.
  2. The transfer is valid if the finance director records it in the cashbook.
  3. The transfer is an unauthorised virement because the required approval was not obtained.
  4. The transfer is valid because outreach is a recurrent service.

Answer: C. The transfer is an unauthorised virement because the required approval was not obtained.

Appropriations authorize spending for specified purposes, and the stated law requires legislative approval for a transfer between heads. Keeping the overall ministry total unchanged does not remove that control.

2. A department applies the IPSAS Cash Basis for its annual financial statements. Supplies costing ₦6 million were delivered and accepted on 28 December 2025, but the invoice was paid on 15 January 2026. When should the payment be reported as expenditure under the cash basis?
  1. In 2026, when cash is paid.
  2. In 2025, when the supplies were delivered.
  3. Half in each year because the delivery and payment fall in different years.
  4. In 2025 as expenditure and again in 2026 as a cash payment.

Answer: A. In 2026, when cash is paid.

Under the cash basis, expenditure is recognized when cash is paid, so the payment falls in 2026. Delivery in 2025 does not by itself create cash-basis expenditure.

3. A public hospital prepares accrual-basis accounts for the year ended 31 December 2025. Staff earned ₦4.2 million in December, but payroll paid them on 5 January 2026. What should the hospital recognize at 31 December 2025?
  1. No expense or liability, because payment has not occurred.
  2. A cash receipt of ₦4.2 million.
  3. A prepaid expense of ₦4.2 million.
  4. A staff expense and a corresponding payable of ₦4.2 million.

Answer: D. A staff expense and a corresponding payable of ₦4.2 million.

Under accrual accounting, the expense is recognized when the employees render the service in December, with a liability until payment. Recognizing nothing would incorrectly apply cash-basis timing.

4. A small government agency uses the IPSAS Cash Basis and is preparing its annual statement. Which information is central to a cash-basis statement of cash receipts and payments?
  1. Only the agency's non-current assets and depreciation expense.
  2. Cash receipts, cash payments, and opening and closing cash balances.
  3. Only unpaid invoices and accrued salaries.
  4. The fair value of all services delivered during the year, whether paid or not.

Answer: B. Cash receipts, cash payments, and opening and closing cash balances.

Cash-basis reporting focuses on cash receipts and payments and reports cash balances. Unpaid obligations and non-cash asset measures are not substitutes for those cash flows.

5. A state government makes its approved annual budget publicly available and prepares financial statements under IPSAS. Which presentation best meets the IPSAS 24 budget-comparison objective?
  1. Show only the original budget and omit actual amounts.
  2. Compare actual cash payments with the final budget but omit the budget basis and period.
  3. Present budget and actual amounts on a comparable basis and explain material differences, with a cross-reference if the explanation is in another public report.
  4. Replace the statement of financial performance with a list of proposed projects.

Answer: C. Present budget and actual amounts on a comparable basis and explain material differences, with a cross-reference if the explanation is in another public report.

IPSAS 24 calls for comparison of budget and actual amounts on a comparable basis and explanatory comments for material differences, unless another public document contains them and is cross-referenced. Showing only the budget is not a comparison.

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