Definition of Public Sector Accounting

Definition of Public Sector AccountingPublic Sector Accounting and accounting analysis mechanism is applied to the management of public funds in the high state institutions and below-ministerial departments, local governments, state enterprises, enterprises, NGOs and charities as well as the projects of public and private sector cooperation (Bastian , 2001).Public sector accounting related to the recording and reporting of transactions that occur in the central and local government agencies. Public sector accounting is closely linked with the application and the accounting treatment in the public domain which had a wider and more complex than the private sector or business. Breadth public areas is not only due to the breadth of the types and forms of organization that are in it, but also the complexity of the environment that affect the public institutions.Public sector accounting purposes, are as follows:1. Provide the information necessary to manage properly, efficiently and economically over the operations and allocation of resources entrusted to the organization.2. Provide information that makes it possible for managers to report on the implementation of management responsibilities in a timely and effective programs and use of resources under its control, and makes it possible for government officials to report to the public on the results of government operations and the use of public funds.There are 3 parts of the Public Sector Accounting, namely:

Public Sector Management AccountingThe main role of management accounting in public sector organizations is to provide information that is relevant and reliable accounting manager to carry out the functions of planning and management control. Planning functions include strategic planning, information costs, investment valuation, and budgeting, while control functions include measurement of performance. The information provided includes the cost of the investment required and the identification, assessment taking into account investment costs with the benefits gained (cost-benefit analysis), and assessment of cost-effectiveness (cost-effectiveness analysis), as well as the amount of budget required.

Public Sector AccountingPublic sector financial accounting purposes related to the production of external financial reports. The purpose financial statements is to provide information used in decision-making, accountability and management of evidence, and evaluating managerial and organizational performance (IFAC, 2000; GaSb, 1999).Some financial accounting techniques that can be adopted by the public sector is accounting budget, commitment accounting, fund accounting, cash accounting and accrual accounting. Basically fifth technique is not mutually exclusive. That is, use one of the techniques of accounting does not reject the use of other techniques. Thus, an organization can use accounting techniques vary, and using the five techniques together (Jones and Pendlebury, 2000).Financial Statements generated public organizations, as a form of public accountability, it should portray the condition of a comprehensive operations, financial position, cash flow, and an explanation (disclosure) for items that exist in the financial statements. Financial Statements requires that the form of government accounting standards and accounting system that uses a recording system pairs.


Public Sector AuditingDuring this public sector / government did not escape the accusation as a hotbed of corruption, collusion, nepotism, inefficiency and waste of state resources, whereas the public sector is that the wheels of government are derived from the source of its legitimacy. Therefore, the trust given by the people to the government administrators must be balanced with the clean government.Along with a demand from the public to public sector organizations to maintain the quality, professionalism and accountability in carrying out its activities, required audits of the public sector organizations.Ability accountable (accountability) of the government's public sector is highly dependent on the quality of public sector audit. Without the audit quality is good, then there will be problems, such as the emergence of fraud, corruption, collusion, and various irregularities in government. Audit quality is affected by the public sector auditor's technical capabilities as well as the independence of the auditor, both personally and institutionally. To improve the attitude of the public sector auditor independence, the position of the public sector auditor must be free from the influence and interference, and apart from the government, eitherpersonal and institutional.Granting autonomy means giving authority and freedom to the region to manage and utilize resources optimally area. In order to prevent irregularities and fraud, granting authority and discretion must be followed by a strong monitoring and control, as well aseffective inspection.

Surveillance conducted by an outside party executive (in this case the Parliament and the public); controls, in the form of internal control and management control, under the control of the executive (government) and to ensure the strategy is executed so well that the goals are reached, while the examination (audit ) carried out by entities who have the competence and independence to gauge whether executive performance is in accordance with the criteria established (Mardiasmo, 2001).Strengthening oversight functions can be performed through the optimization of the role of Parliament as a balancing power between the executive and the public, either directly or indirectly, and through NGOs and social organizations in the area. It should be understood by the members of parliament that the oversight of the executive is monitoring the implementation of policies that have been outlined, not examination (audit). Examination remains to be done by the agency or agencies that have the authority and professional expertise, such as the BPK, BPKP, or Public Accounting Firm (KAP), which is carrying out its functions over to the private sector so that its functions in the public sector needs to be improved.There are some weaknesses in auditing government in Indonesia. The first weakness is inherent, the unavailability of adequate performance indicators as the basis for measuring the performance of government. While both are structural weaknesses of the issue of institutional audit and Regional Governments are overlapping each other, so that the auditing is inefficient and ineffective.Audit of the financial management responsibilities should not be limited to compliance audits, financial audits but also (in order to give an opinion on the fairness of financial statements) and expanded again with the performance audit.