PUBLIC REVENUE

MANAGEMENT
LECTURER:
ALHASSAN YUSIF TRAWULE
0242 732976 / alhassantrawule@gmail.com

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Outline
• Sources of revenues to different aspects of government
• Fiscal policy relating to revenues
• Revenue management
• Accounting for revenues (IPSAS)

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Public revenue
• Revenue is the increase in the net financial position of an entity, other than
increases arising from ownership contribution
• Revenue comprises gross inflows of economic benefits or service potential
received and receivable by the reporting entity, which represents an increase in
net assets/equity, other than increases relating to contributions from owners
(IPSAS 1)
• Revenues are inflows of government pertaining to current financial period only

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Difference between revenue and receipt
• Revenue differs from receipt in that revenue relates to only inflows attributable a
particular year, whether received or not.
• Receipt is all cash flows, including those relating to a particular year and those that
are capital in nature
• For example, tax revenues received in revenue as well as receipt but loan received
is only a receipt not revenue

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• A fiscal policy objective of every government is to ensure that sufficient revenues
are available to support government programmes and activities
• Revenue are needed at all levels of government and public sector to carry out
public service delivery
• We will examine sources of revenues to each aspect of government as follows
• Central government (Consolidated Fund)
• Ministries, Departments and Agencies
• Metropolitan, Municipal and District Assemblies
• Sub vented entities
• Government business enterprises (State own enterprises)

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 SOURCES OF
REVENUES TO THE
CONSOLIDATED FUND

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Revenues to Consolidated Fund
• Revenues into the consolidated fund are made up of:
• Tax Revenues
• Non tax revenues
• Grants

• Other moneys received into the consolidated fund include:

• Note that other receipts are not revenues as they create obligation on
government to repay in future.

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Tax Revenues
• What is Tax?
• Taxes are compulsory levy imposed on the people of a country by a legitimate
body or person.
• According to IPSAS 23: Revenue from Non-Exchange Transactions, taxes are
economic benefits or service potential compulsorily paid or payable to public
sector entities, in accordance with laws and/or regulations, established to provide
revenue to the government.
• Taxes do not include fines or other penalties imposed for breaches of the law.
• In Ghana, only Parliament can approve the imposition of taxes on the people of
Ghana (Article 174 of the Constitution).

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REASONS FOR LEVYING TAXES
• Traditionally, taxes are levied to raise funds to support government expenditure.
Taxes, among others, generate revenue to finance public sector wages, service
public debts and provide public goods.
• Tax as a tool for redistributing wealth: Tax systems of several nations use
progressive tax regimes to tax income. This way, persons with higher incomes pay
higher proportion of their income as taxes relative to persons with lower income.
• Taxes as a tool for protection of local industries: Taxes can be used as a tool to
shield local industries from foreign competition. Government may impose excise
duties and other taxes on imported products that are also produced locally.
• Narrowing Budget Deficit: An efficient tax administration may result in increased
tax revenue. This may result in narrowing the budget deficit and hence reduce
government borrowing

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• Taxes can be used as a tool to discourage consumption of certain
commodities: By imposing relatively high taxes on certain
commodities, the ultimate price of the commodity becomes
unreasonable. This discourage people from consuming this category
of products. Taxes on tobacco products, alcohol and coal serve this
purpose.
• Control of Inflation: Taxation can be used as a tool to control the
level of inflation or deflation. A spiraling inflation may be checked by
increasing the incidence of taxation and thereby withdrawing the
excess money in circulation.
• Tax as a tool for stimulating economic growth: It is argued that
taxes can be used to signal investment into desired sectors of the
economy. Through tax incentives and reliefs, investors may channel
their investments to critical sectors of the economy.
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Tax Classifications
• Taxes may be classified on the basis of the following:
• Tax Incidence: Direct taxes and Indirect taxes
• Origin or Source: Domestic taxes and International/
Custom taxes
• Relativity with Income levels: Progressive,
Proportional and Regressive taxes

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Direct Taxes
• These are taxes that are directly paid to the Government by the taxpayer.
It is a tax imposed upon a person (individual or organizations) or property
distinct from tax imposed on a transaction. The tax payer cannot shift the
tax burden to someone else.
• It is also defined as the tax where the liability as well as the burden to pay it
resides on the same individual. Examples include; Income tax (corporate
and personal tax), property tax, wealth tax and others.
• The nature of direct tax is progressive; thus, tax burden increases whiles
the income of the tax payer also increases. This type of tax can be evaded
by tax payers if proper tax administration is not done.
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Direct taxes
• These are taxes imposed on income, capital gains and gifts.
• The tax burden associated with these taxes fall on the tax payer.
• Examples include:
• Personal income tax (PAYE) paid on employment income.
• Corporate taxes paid by Companies
• Rent tax paid by landlords
• Dividend taxes paid by shareholders.
• Vehicle income tax (VIT) paid by transport owners
• Stamp taxes paid by people in small business and other categories
• Capital gain tax
• Gift taxes

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Fiscal policy on direct Taxes
• Taxing the formal sector is relatively easy due to the tax withholding system.
• However, broadening the tax net to cover informal economy is cumbersome but
sustainable policy.
• The requirement for taxing the informal sector are:
• Integrated national identification system
• Effective tax payer identification system (TIN)
• Innovative tax administration system to adapt to needs of informal sector.
• Tax education
• Transparency and accountability for revenues collected

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Indirect taxes
• These are taxes imposed on goods and services rather than on the income of a
person.
• The tax burden falls on the final consumers in the form of higher prices.
• These are initially paid to the government by an intermediary, who then adds the
amount of the tax paid to the value of the goods or services and passes it on to the
consumer of the product.
• In other words, indirect tax is collected by one entity in the supply chain (usually a
producer or retailer) and paid to the government, but it is passed on to the
consumer as part of the purchase price of the good or service. Therefore, the
consumer of that product or service is ultimately paying more for that product.

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Indirect taxes
• The nature of this type of tax is regressive or proportional. Examples of indirect
taxes include; sales tax, VAT, custom duty, excise duty, service tax and others
• Examples of indirect taxes include:
• Value added taxes (VAT now 17.5%) imposed on chargeable goods and services.
• Communication service taxes (tax talk) paid on air time and data.
• Custom duties (export and import taxes) on international trade.
• Petroleum taxes on petroleum products and operations.
• Excise duties imposed on certain locally manufactured goods, such as beer, sachet
water, polythene bags, wine etc

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Fiscal Policy Implications for Indirect
Taxes
• Generally, indirect taxes have cascading effect with the potential to destabilize the
economy
• Indirect taxes are easy and quick to collect at less cost but an abuse can need to
macroeconomic lapses
• Government should be extra cautious in formulating policies that increases
revenue for this source
• It is better for government to collect more direct taxes than indirect taxes, as
economic implications are mild for direct taxes

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Domestic and International Taxes
• Domestic taxes are those taxes that are imposed on local goods and services and
incomes derived from Ghana
• Examples include
• P AY E
• Corporate taxes
• Gift
• VAT on local goods
• Fuel taxes
• Communication service taxes
• International taxes are obtained from custom duties including VAT on imported
and exported goods

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Progressive and Regressive Taxes
• A progressive tax is defined as a tax whose rate increases as the payer's income
increases. It takes a larger percentage of income from high-income groups than
from low-income groups and the tax rate along with the tax liability increases
• Individuals who earn high incomes have a greater proportion of their incomes
taken to pay the tax. Eg. Corporate and Personal Income Tax
• A regressive tax on the other hand, is one whose rate increases as the payer's
income decreases.
• This is a tax that takes a larger percentage of income from low-income groups
than from high-income groups. Rather than basing the tax on the individual or
entity's earnings or income level, the government assesses tax as a percentage of
the asset that the taxpayer purchases or owns

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• Proportional taxes: This system of tax is in-between the regressive and
progressive tax systems. Thus, is a tax that takes the same percentage of income
from all income groups and is normally termed as a flat tax system. It is meant to
create equality between marginal rate and average tax rate paid.
• For example, under a proportional income-tax system, individual taxpayers would
pay a set percentage of their annual income, regardless of the size of that income.
Say the fixed rate is 10%. Since it does not increase or decrease as income rises or
falls, an individual who earns GH₵20,000 annually pays GH₵2,000, while someone
who earns GH₵200,000 each year pays GH₵20,000 in taxes. Examples include per
capita taxes, gross receipts taxes, occupational taxes, withholding taxes (like 10%
on commission earned by insurance sales agent) and others.

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Tax Administration in Ghana
• In recent past, three state institutions were responsible for collecting tax revenues
and these were the IRS, VAT and CEPS
• In an attempt to improve tax administration, a single institution called the Ghana
Revenue Authority was established in 2009 by the GRA Act, 2009 (Act 791)
• This is achieved by merging the three existing collecting agencies into one
• GRA has three divisions Domestic Tax Division (VAT / IRS), Custom Division and
Support Services Division (newly introduced)

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• Objectives of establishing GRA per GRA Act include:
• Provide a holistic approach to tax and customs administration;
• Reduce administrative and tax compliance cost and provide better service to
taxpayers;
• Promote efficient collection of revenue and the equitable distribution of tax
burden and ensure greater transparency and integrity.
• Ensure greater accountability to Government for the professional management of
tax administration;

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• Improve information linkage and sharing of information among the Divisions of
the Authority
• Provide a one stop service for taxpayers for the submission of returns and
payment of taxes
• Provide common tax procedures that enable tax payers to be governed by a single
set of rules and
• Provide for other matters related to the improvement of revenue administration

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Functions of GRA include:
• Assess and collect taxes, interest and penalties on taxes due to the Republic with
optimum efficiency
• Pay the amounts collected into the Consolidated Fund unless otherwise directed
• Promote tax compliance and tax education
• Combat tax fraud and evasion and cooperate to that effect with other competent
law enforcement agencies and revenue agencies in other countries
• Advise District Assemblies on the assessment and collection of their revenue

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• Prepare and publish reports and statistics related to its revenue collection;
• Make recommendations to the Minister on revenue collection policy; and
• Perform any other function in relation to revenue as directed by the Minister or
assigned to it under any other enactment.

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NON TAX REVENUES
• NTRs are dealt with by IPSAS 9: Revenue from Exchange Transactions.
• NTR refers to revenues that accrued to government from sources other than
taxes, grants and borrowings.
• NTR is also termed exchanged revenues or reciprocal revenues.

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Types of NTRs
• NTRs include
• Sales of public assets (divestiture proceeds).
• Sale of goods such as gold, Cocoa etc.
• User fees and charges for services such passport fees, academic facility user fees, DVLA
charges, road tolls etc.
• Dividend from GBEs
• Interest from investment in securities and loans receivable
• Rent income
• Fines, penalties and forfeits
• Royalties on natural resources (mining companies) etc.

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Collection of Non tax revenues
• Collection of non tax revenues is the responsibility of the various agencies or
institutions involved in such transactions or services
• For example court fines are collected by the law courts on behalf of government
• Dividends are collected by the MOF on behalf of government
• Rent income by provider of the accommodation or grounds etc.
• Principal spending officers are responsible for ensuring that NTRs are collected
and paid into the Consolidated fund or retained in accordance with law

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Fiscal policy implications on NTR
• NTR remains a neglected element of government revenue over the years.
• Fiscal policy should be tailored towards increasing the contribution of NTR to
government revenue.
• Some policy directives are that:
• Fees and charges should be introduced on non-essential public services such as parking
fees, licenses etc
• Premium services introduced in the public sector
• Retention policy should be reviewed to allow entities to retain all revenues collected to
motivate them to collect more. E.g. police service should retain all spot fines.

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Grants/other transfers
• Grants are a form of financial or other similar assistance that is given freely
without any requirement of repayment.
• Grants are usually in the form of money, but some types of grants may offer
access to resources, services, goods or other aid.
• Most grants are made to fund a specific project and require some level of
compliance and reporting.
• The grants may be in the form of:
• Donor grants and reliefs (bilateral and multilateral) for programmes
• Capital grants for projects.
• Counterpart grants

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Fiscal policy implication for grants
• Current Policy of Government is “Ghana Beyond Aid”.
• Therefore, the fiscal policy should not encourage increasing revenue from grants
• However, grants should not be rejected by government unless inimical to the fiscal
policy of government
• Targeted grants could be taken advantage of, where available

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SOURCES OF REVENUES
TO THE MDA

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Revenue to MDAs
• MDAs are expected to meet their commitments through:
• Appropriation/votes of parliament for the MDAs (approved budget allocation to
the MDAS which is the main source of revenues to them)
• Appropriation-in-aid.
• It refers to any income to an MDAs outside the budget allocation
• Such incomes are set off against the budget allocation before disbursement is made.
• Such income may include donor grants, retained IGF and other receipts.
• Any such revenues requires approval by parliament

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SOURCES OF REVENUES
TO MMDAS

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Sources of Revenue to MMDAs
• S 124 of Local Governance Act, 2016 make
provisions on revenues of a District Assembly to
comprise of:
• Decentralized transfers;
• Internally generated funds; and
• Donations and grants.

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Decentralized transfers
• This is also known as intergovernmental transfers.
• Decentralized transfers comprise funds from the following revenue sources:
• The District Assemblies Common Fund;
• Grants-in-aid from the central government such as the DDF; and
• Any other revenue transferred from the central Government to the District Assembly

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Internally generated funds
• Internally generated funds comprise funds from the following:
• Licences (vehicle licenses, entertainment license etc.);
• fees and miscellaneous charges;
• taxes;
• investment income; and
• Rates
• Fines and penalty

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Licenses
• A District Assembly may charge fees for a licence issued by or on behalf of the
District Assembly, subject to guidelines in respect of the charging of fees for
licences, as may be prescribed by the Minister.
• A licence from a District Assembly may be issued subject to conditions specified in
a by-law or, where there is no provision in a by-law, conditions that the District
Assembly may consider fit.
• Failure to pay licenses is an offence.
• Sources of licenses: vehicle license, entertainment licenses and other licenses on
economic operators.

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• Vehicle licenses is imposable on the following
• Every cart, truck or wagon, not propelled by mechanical power and used primarily
for the conveyance of goods and provision of other services except a wagon, truck
or carriage used on Government railway
• Every bicycle other than a bicycle belonging to an establishment or Government
Department or the Prison Service, Armed Forces or Police Service or other bicycle
not propelled by mechanical power

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• Examples of entertainment licenses
• Concerts, musical or theatrical performances
• Video shows
• Cinemas
• Fairs
• Circuses
• Discotheques
• Clubs
• Other entertainments to which admission is to be obtained on payment of money or
reward, except where the whole proceeds are being devoted to charity.

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• Licenses on economic operators (S137-2) include:
• Dog licences
• Hawkers licence
• Extension of Hours licence
• Hotels and Restaurants licences
• Beer and Wine Sellers licences
• Petroleum Installations licences
• Palm-wine Sellers licences
• Akpeteshie Distillers or Sellers licences

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• Herbalists licences
• Taxi Cabs licences
• Lorry Park Overseers licences
• Taxi Drivers licences
• Self-employed Artisans licences
• Fishing Tolls licences
• Births and Deaths licences
• Electronic Communication Servers and Providers licences
• Licence for any other locally brewed beverage

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Fees and miscellaneous charges
• District Assembly may charge fees for any service or facility provided by that
District Assembly or for any permit issued by or on behalf of the District Assembly
subject to guidelines on fee charging prescribed by the Minister
• Despite the provisions of any enactment to the contrary non tax revenue collected
by a department of a District Assembly shall be retained by that District Assembly
and be used for the performance of the functions of that department

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• Examples of fees and miscellaneous charges
• Cattle pounds
• Conservancy
• Slaughter House
• Market Dues
• Market Stalls and Stores
• Lorry Park Dues
• Advertisements
• Trading Kiosks
• Restoration of Conservancy Services
• Public Cemeteries and Burial Grounds
• Bread Confectioneries
• Chop Bars
• Corn Mills
• Dressing Stations

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Taxes
• A District Assembly shall collect the taxes chargeable on the income of the income
earners specified under the Act 936
• The Minister may, in consultation with the Minister responsible for Finance and
subject to the terms and conditions agreed upon with an appropriate public body,
authorise that the public body collect taxes imposed on the income earners on
behalf of the District Assembly

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• The following income earners are subject to local taxation:
• Spare parts dealers
• Chemical sellers
• Tailors and dressmakers
• Sand Crete block manufacturers
• Musical spinners
• Radio and television repairers
• Gold and silver smiths
• Drinking bar operators
• Professional photographers
• Chop bar keepers and cooked food sellers

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• Butchers
• Refrigeration and air-conditioning workshop owners
• Hairdressers
• Garage owners
• Video operators
• Corn mill owners
• Co-operative distillers
• Scrap dealers
• Livestock breeders and traders
• Traders
• Liquor sellers

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Investment Income
• A District Assembly may in consultation with the Minister responsible for Finance
invest any portion of moneys of the District Assembly in safe securities other than
Government treasury bills
• Income from the investment made shall constitute part of the revenue of the
Assembly

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Rates
• A District Assembly shall be the only authority to levy rates for a district despite
any customary law to the contrary.
• Two methods of rating:
• General rating
• Special rating

• A District Assembly shall levy general or special rates for the amount considered
necessary to raise sufficient funds to meet expenditure.

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• General rate is
• a rate payable by the owner of premises within the district on the rateable value of
the premises or
• a rate assessed on the possessions or any category of possessions of persons who
reside within the district
• Special rate is
• a basic amount payable by any person of the age of eighteen years and above, but
below the age of seventy years who resides within the area or
• an amount imposed on an owner of movable or immovable property in the area,
but a District Assembly in fixing the basic rate, shall consult with district level
stakeholders in the district

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• Rates
• Are compulsory levy imposed on all ratable persons and properties within the jurisdiction
of the assembly.
• There are three types of rates
• Basic rate
• Property rate
• Special rate
• Basic rate are rates per ratable person per a year
• Property rate are imposed on the value of ratable properties (immovable property) .
However some properties such as registered places of worship, burial grounds, etc are
excepted
• Special rate are special levy impose on only beneficiaries of a given service.

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Exemptions from and remission of rates
• The following tenements are exempted from assessment and rating:
• (a) premises appropriated exclusively for the purpose of public worship and registered
with the District Assembly;
• (b) cemeteries and burial grounds registered by the District Assembly;
• (c) charitable or public educational institutions registered with the District Assembly;
• (d) premises used as public hospitals and clinics; and
• (e) premises owned by diplomatic missions approved by the Minister responsible for
Foreign Affairs.

• Persons who are exempted from paying basic rates include:

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 REVENUE
MANAGEMENT

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Revenue Management
• It involves the approval of revenues, collection of approved revenues and custody
of the revenues collected.
• The management of tax revenues is the responsibility of the Minister of Finance
and the Ghana Revenue Authority.
• Non-taxes are managed by the principal spending officer of the entity in line with
the PFMA, 2016.

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Responsibility of collection
Institution Revenues to collect
MOF •Dividend from public corporations and SOEs
•Interest income on lending
•Proceeds from sale of shares held by GOG
•Proceeds from sale of nom-financial assets
GRA •Tax revenues
•Petroleum revenues under the PRM Act 2011
•Airport Taxes
GRA, NPA, ECG, NEDCo, VRA etc •Energy sector levies
Covered entities •Other non-tax property income such as rent
•Internally Generated Fund
•Other non tax revenues

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Responsibility of PSO in Revenue
Collection
• Principal spending officers have the responsibility to collect public funds and trust moneys,
• PSOs shall appoint supervising collector for each area where collection is required.
• PSOs shall take effective and appropriate steps to collect money due the covered entity.
• Report to cash management office any impending under collection of revenues due and
shortfalls in the budget revenue.
• PSOs are to ensure that NTR collected are lodged gross within 24 hours in designated CF transit
bank account, unless it is an IGF
• PSOs are to monitor and ensure that NTR lodged are transferred to main CF bank account
• A PSO shall seek prior written consent from CAG before collecting amount owned government
in foreign currency.
• Moneys collected in foreign currency shall be deposited into the TSA within 72 hours after
receipt.

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Revenue collectors
• A person or officer not authorised to collect revenue shall not collect monies owed to
government and a covered entity
• Public officer collecting revenues has these responsibilities
• A collector shall issue an original receipt to the payer and treat the duplicate and triplicate in
accordance with the requirements of the departmental accounting instructions,
• A collector shall not use temporary receipts or receipts other than the authorised form (GOG
Counterfoil Receipt) for collection
• Cheques issued for government wrongly issued in the name or position of an officer, the
officer should endorse it immediately with the statement “Pay to the GOG”
• Uncrossed cheque issued in the name of GOG should be crossed immediately upon receipt by
officer who receives it
• All moneys collected shall be paid in gross into the public funds accounts and disbursement
shall not be made from the money except provided by an enactment
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Official Receipts
• Official receipts as evident for moneys paid to government and covered entity
include:
• A deposit-slip issued by the BOG or a commercial bank
• An electronically-generated deposit-slips of an electronic fund transfer (EFT)
• All official receipts approved by CAG issued by a cashier of an office of GRA or covered
entity

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Payment in Kind, Foreign Currency and
ceremonial receipts
• Tax or NTR payment in Kind is not allowed unless permitted by an enactment or
CAG
• PSO who intends to collect revenue in foreign currency must seek prior written
consent of CAG
• Moneys collected in foreign currency should be deposited in the TSA within 72
days after the receipt
• Ceremonial receipts shall be paid within 48 hours into the appropriate accounts
• Symbolic cheques should not be accepted if it is not supported with an actual
cheque

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Review of rates, fees and charges
• All rates, fees and charges to be collected shall be submitted through MOF to
Parliament for approval.
• PSO shall review annually the administrative efficiency of collection, the accuracy
of past estimates and relevance of rates, fees, and charges to the current
economic conditions and submit proposals through MOF to Parliament for
approval.

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Authority for Refund
• Refunds may be authorised:
• By the authority prescribed in the appropriate enactment e.g.
contract retention
• By the head of the department to be made from the CF in
accordance with the PFMR, in relation to erroneous collection
that took place within the current year
• By CAG to be chargeable to an accounts so designated in the
departmental accounting instructions in respect of erroneous
collection that occur in the current year

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GIFMIS and Revenue Management
• GRA and covered entities are required to process all revenues collected in the
GIFMS through the Ghana Customs Management System and Revenue
Information Processing modules.
• Revenue data on prior revenue administration system interfaced with GIFMIS or
recorded directly into GIFMIS shall be transferred to the GIFMIS

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ACCOUNTING FOR
REVENUES

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Accounting for Revenues
• Under the PFMR, a PSO shall fully disclose all non-tax revenues collected, lodged
or retained as part of a monthly report to the MOF and CAG
• Disclosure required:
• The collection points of the department in the regions and districts by type of NTR
• Attainment of revenue target for the month and corrective measures, if necessary
• Expenditure out of retained NTR, including IGF
• NTR including IGF due but not collected
• Any other NTR, including IGF leakages and measures to address them;
• Certification confirming reconciliation of lodgments with collections

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Accounting for Revenue under IPSAS
• Both Cash based IPSAS and Accrual based IPSAS make standards for revenue
accounting.
• Cash Accounting Policies for Revenue recognition
• Revenue should be recognized when received at amount duly receive.
• Revenue received should be reported on Gross Basis unless the receipt arise from:
• A transaction an entity administered on behalf of another entity and transaction recognized in
the statement of receipt and payment.
• A pass-through transaction, which is a quick turn over item with large amount with short
maturity.

• In such case the revenue will be accounted for on net basis.

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IPSAS-Revenue
• Accrual based IPSAS are of two:
• IPSAS 9 – Revenue resulting from Exchange Transactions
• IPSAS 23 - Revenue resulting from Non-exchange Transaction

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IPSAS 9 - Revenues from Exchange
Transactions
• Revenue of government should be recognized when it meet the following
conditions:
• It is probable that the economic benefits or service potential associated with the
transaction will flow to the entity; and
• The amount of the revenue can be measured reliably.

• Revenue shall be measured at the fair value of the consideration received or

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Accounting treatment
• Revenue from exchange transactions shall be recognized using the following
accounting treatments:
• Interest shall be recognized on a time proportion basis that takes into account the
effective yield on the asset;
• Royalties shall be recognized as they are earned in accordance with the substance of the
relevant agreement; and
• Dividends or similar distributions shall be recognized when the shareholder’s or the
entity’s right to receive payment is established.
• Other revenues are recognized when earned.

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• Revenues from services
• When the outcome of a transaction involving the rendering of services can be estimated
reliably, revenue associated with the transaction shall be recognized by reference to the
stage of completion of the transaction at the reporting date
• The outcome of a transaction can be estimated reliably when all the following
conditions are satisfied
• The amount of revenue can be measured reliably
• It is probable that the economic benefits or service potential associated with the
transaction will flow to the entity
• The stage of completion of the transaction at the reporting date can be measured
reliably and
• The costs incurred for the transaction and the costs to complete the transaction can be
measured reliably

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• Sale of goods
• Revenue from the sale of goods shall be recognized when all the following
conditions have been satisfied:
• The entity has transferred to the purchaser the significant risks and rewards of
ownership of the goods
• The entity retains neither continuing managerial involvement to the degree usually
associated with ownership nor effective control over the goods sold
• The amount of revenue can be measured reliably
• It is probable that the economic benefits or service potential associated with the
transaction will flow to the entity and
• The costs incurred or to be incurred in respect of the transaction can be measured
reliably

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Disclosure for Revenue from Exchange
Transactions
• The reporting entity discloses the following:
• The accounting policies adopted for the recognition of revenue, including the methods
adopted to determine the stage of completion of transactions involving the rendering of
services;
• The amount of each significant category of revenue recognized during the period,
including revenue arising from:
• The rendering of services;
• The sale of goods;
• Interest;
• Royalties; and
• Dividends or similar distributions; and
• The amount of revenue arising from exchanges of goods or services included in each
significant category of revenue.

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Accounting for Revenues from non-
exchange transactions - IPSAS 23
• Measurement of Revenue
• Revenue from non exchange transactions shall be measured at the amount of the
increase in net assets recognized by the entity

• Recognition
• An inflow of resources from a non exchange transaction recognized as an asset shall be
recognized as revenue, except to the extent that a liability is also recognized in respect
of the same inflow
• As an entity satisfies a present obligation recognized as a liability in respect of an inflow
of resources from a non exchange transaction recognized as an asset, it shall reduce the
carrying amount of the liability recognized and recognize an amount of revenue equal to
that reduction. E.g. tax received in advance

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• Tax revenues
• Taxation revenue shall be determined at a gross amount
• It shall not be reduced for expenses paid through the tax system
• However, taxation revenue shall not be grossed up for the amount of tax expenditures .

• Tax expenditure
• Tax expenditures are preferential provisions of the tax law that provide certain taxpayers
with concessions that are not available to others

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Measurement and Recognition Transfers
• Transfers include grants, debt forgiveness, fines, bequests, gifts, donations, and
goods and services in kind
• All these items have the common attribute that they transfer resources from one
entity to another without providing approximately equal value in exchange, and
are not taxes

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Recognition of transfers
• Grants
• Are recognised as revenue and asset in the year in which it was received

• Debt forgiveness
• Entities recognize revenue in respect of debt forgiveness when the former debt no
longer meets the definition of a liability or satisfies the criteria for recognition as a
liability, provided that the debt forgiveness does not satisfy the definition of a
contribution from owners.
• Revenue arising from debt forgiveness is measured at the carrying amount of the debt
forgiven.

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Recognition of transfers
• Fine
• Fines are recognized as revenue when the receivable meets the definition of an asset
and satisfies the criteria for recognition as an asset.
• Assets arising from fines are measured at the best estimate of the inflow of resources to
the entity.

• Bequest
• A bequest is a transfer made according to the provisions of a deceased person’s will.
• Bequests that satisfy the definition of an asset are recognized as assets and revenue
when it is probable that the future economic benefits or service potential will flow to the
entity, and the fair value of the assets can be measured reliably.

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Recognition of transfers
• Gifts and Donations
• Gifts and donations (other than services in kind) are recognized as assets and
revenue when it is probable that the future economic benefits or service potential
will flow to the entity and the fair value of the assets can be measured reliably
• Goods in kind
• Goods in kind are recognized as assets when the goods are received, or there is a
binding arrangement to receive the goods. If goods in kind are received without
conditions attached, revenue is recognized immediately.
• An entity may, but is not required to, recognize services in kind as revenue and as
an asset.

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Recognition of transfers
• Concessionary loans (soft loans)
• Where the difference between the transaction price (loan proceeds) and the fair value of the
loan is non-exchange revenue, the difference is recognize as revenue, except where a present
obligation exist (say condition imposes obligation on the recipient)
• Where present obligation exist, recognize the difference as liability and subsequently
recognize revenue when the condition is satisfied.
• Example
• Ghana obtained a concessionary loan of GHc100,000,000 from China at the rate of 2% p.a
at the time the commercial rate for such loan is 10% p.a.
• a)Assume no condition exist for the loan, how you recognized the transaction under IPSAS 23
revenue from non-exchange transaction.
• b)Assume condition imposes present obligation on Ghana, how you would treat the
transaction under IPSAS 23.

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Classification of Revenues for Reporting
Purposes
• Under the 2018 Chart of Accounts of GOG, Revenues are classified into four
headings
• Tax revenues
• Donor Grants and Reliefs
• Other revenues (also known as NTR)
• Notional revenues - Revenues that pass through the Consolidated fund to other funds
e.g.:
• DACF
• GETFUND
• Domestic NHIL
• Project grant
• Petroleum, Energy and Road Fund
• NHIL - Import and SSNIT

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