Public Sector Accounting: Definition, Purpose, Types

What is public sector accounting, here are the definitions, objectives, scope, and how it is practiced in Indonesia, which will be explained by the Mekari Journal Blog?

The term public accountant is not widely known by the general public.

However, its existence is very important for the world of accounting.

Well, if you want to know more about this, let’s see the full explanation in this article.

Understanding Public Sector Accounting

The definition of public sector accounting is the process of accounting, recording, classifying, analyzing, summarizing, as well as communicating, and interpreting all government financial information which is carried out in detail and in aggregate.

This section also covers the recording of all transactions including the transfer, disposition, and receipt of property and public funds.

If reviewed in more detail, the phrase ‘public sector’ itself has the meaning to all organizations that are not run privately but are founded, financed, and operated by the government on behalf of the public.

There are also the opinions of several experts regarding the understanding of this type of accounting.

First, Dwi Ratmono (2015) defines public sector accounting as the process of measuring, identifying, recording, and reporting all financial transactions from local governments with the aim of making economic decisions.

In addition, Erlina et al (2015) explains that public sector accounting is accounting that is useful for recording the economic activities of a non-profit or non-profit organization.

Simply put, public sector accounting is generally used by public sector organizations, such as mosques, hospitals, health centers, universities/schools, political parties, and non-governmental organizations to the central government.

Public Sector Accounting Objectives

Now, after you know the meaning of what is public sector accounting, then you also need to know what the purpose of this type of accounting is.

  • It is useful to show the ownership of the transaction and the conformity of the transaction with the existing rules, laws, and regulations.
  • Measures the current performance of the public sector and provides information to control the efficient and effective management of government operations.
  • Planning for future operations and assessing the efficiency and effectiveness of the authorities.
  • Ensuring the legality of transactions and their compliance with applicable laws, regulations and norms.
  • Assist in planning and control as well as assist in conducting timely and objective reports.
  • A public sector accountant must also assist organizations in providing a basis for making important decisions.
  • Provide solutions if there are problems in the organization and improve management efficiency.

Nature of Public Sector Accounting

The nature of public sector accounting is that it meets legal requirements, namely that government accounts must be ready to be audited every year.

Another trait is being able to perform a stewardship function. The point is that the government as the administrator of state finances and resources must be able to make good calculations in using these finances.

It also enables the government to plan the nation’s programs and activities well in the future.

In addition, this section also provides control processes in terms of the use of financial and other resources.

Finally, this type of accounting evaluates the economy as well as efficiency and effectiveness in governance.

Characteristics of Public Sector Accounting


The characteristics of accounting for the public sector are different from accounting for the private sector.

The main difference is from the institutions that use it, namely non-profit institutions and government.

The second characteristic is that accounting for the public sector focuses on the goals of the institution or organization.

As the name suggests, accounting for the public sector provides information related to public services to increase the level of public welfare.

In practice, there are a number of components that can affect the work performance of public sector institutions or organizations.

The first component has an effect on the economy, such as currency exchange rates, inflation rates, infrastructure, and so on.

The next component has an influence on the political field, such as the relationship between each institution, the government in power, and so on.

Scope of Public Sector Accounting

The scope for public sector accounting is all government agencies and non-profit or not-for-profit organizations.

Examples of institutions that use this type of accounting are local government agencies, non-profit organizations, NGOs, political parties, foundations, health, schools, places of worship, and universities.

Now, so that it is easier for you to remember the scope, just remember and understand that this can be applied to institutions whose budgets come from public funds.

Therefore, the agency is responsible for the use of public funds using accounting for the public sector.

Types of Public Sector Accounting

Based on the above scope, public sector accounting is divided into two types, namely government accounting and social accounting.

1. Government Accounting

Government accounting is accounting data that aims to provide information about government economic or financial transactions, which are reported to the judiciary, legislature, executive, and the public.

Government accounting is further divided into central government accounting and local government accounting.

Local government accounting, namely accounting for provincial governments and accounting for district/city governments.

2. Social Accounting

In contrast to government accounting, social accounting is a special accounting sector for institutions, such as macro institutions that serve the national economy.

Social accounting is useful for recording economic activities in non-profit or non-profit organizations, such as health centers, mosques, political parties, hospitals, and so on.

Public Sector Accounting Practices in Indonesia

You also have to know in detail how the practice of public sector accounting itself.

  • Accountability accountability practices 

If the fulfillment of authorization from the DPR/DPRD or commissioners has been fulfilled, the payment and income policy from the center of the public sector organization can be implemented.

Usually, this authorization is done in a democratic way through voting.

  • 2. Gross Principle

All income paid by gross is charged as a deduction from income and must make a complete report to the relevant responsibility center.

  • Periodical

Periodic practice means that all expenditure transactions must be accounted for in each period.

Therefore, expenditure authorization is assessed on the basis of performance over a certain period.

If it turns out that there are excess funds used in expenditure transactions, then the institution or organization is obliged to return it to central management.

  •  Specification

If there are expenditure transactions for special purposes, the expenditure transactions must be based on the approval of the DPR/DPRD or commissioners.

This is called the concept of exception (exception).

This concept must refer to the rules that have been regulated by each institution but must not ignore the level of achievement of the organization.

The Role of Public Sector Accounting in Organizations

In public sector organizations, planning is carried out together with strategic planning, while the control is carried out by task controllers.

To carry out these two functions, namely control and planning, management accounting has a major role.

Therefore, the role of management accounting in the public sector is important.

There are 6 (six) roles in public sector management accounting, namely.

  • Strategic Planning

At the strategic planning stage, managers make plans and program alternatives to support the organization’s strategy to run effectively.

Management accounting plays a role in providing data and information, such as cost of activity and program cost. Planning starts from strategic planning to control in the form of task control.

  • Providing Cost Information

The second role of public sector management accounting is to provide cost information. The costs in question are input costs, process costs, and output costs.

The cost information must be provided because it relates to the transparency of funds.

So that management can evaluate whether the costs are over or under. Therefore, it is better if the information provided is detailed and detailed.

  • Investment Appraisal

When compared to the private sector, the public sector has more complicated characteristics, both in terms of activities, regulations, policy-making, management, and investment appraisal.

To carry out the assessment, the techniques used in the public and private sectors are also different. This is because the organizational goals are also different.

In the private sector, the goal is to get the maximum profit, while the public sector aims to provide the best service.

Therefore, you can use cost-effectiveness analysis.

  • Budgeting ( Budgeting )

The three functions of the budget are stability, distribution, and allocation of public resources. Public sector management accounting plays a role in providing facilities to create an effective and efficient budget and of course in accordance with the three budget functions.

The role of management accounting is to become a tool for allocating and distributing sources of public funds to the public appropriately, fairly, and efficiently.

  • Determination of Service Fees & Tariffs

Management accounting can be used to calculate expenses used to provide services. This includes spending on subsidies for the public interest.

  • Performance assessment

Management accounting can also be used to assess performance. Such as measuring how much the level of effectiveness and efficiency of the organization in achieving the goals that have been planned.

In other words, management accounting can be used as a control system for an organization.

Take Advantage of Journals, Indonesia’s Best Accounting Software

To make it easier to record transactions and manage finances, you can take advantage of the help of accounting programs, such as Mekari Journal.

With the Journal, you can get an easy recording for business purposes anytime and anywhere.

Not only recording transactions, the Journal also provides features for automatic invoicing, financial applications, tracking availability of goods, and asset management that will help grow the value of your business assets in the future.

Well, that is an explanation of public sector accounting starting from its understanding, purpose, nature, characteristics, types, and direct practice in the field. Hopefully, this article is useful for you.

Hopefully, the information above is useful. Follow Mekari Jurnal‘s social media for more information about accounting , business, finance, bookkeeping and accounting software.

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