An Appraisal Of Local Government Finances And Accounting System
The management of public resources has always been a turbulent issue. This is precisely the heart of any governmental administration. Government business in whatever for, be it policies, programmes, activities or function is run in accordance with the laid down formalities. These formalities in the area of government accounting and financial control and procedures may include laws, rules and accepted norms certain financial memorandum of the local government system. The accounting framework regulates the account format for the preparation of government account in local government system in an instrument for introduction of new policies and guide lines, before inclusion into the financial regulation as a part of a more permanent code of regulation. It is used to aid the achievement of probity and accountability in government. The frameworks specify action acceptable and those doomed unacceptable. The system is set to ensure uniformly and conformity of application.
This work examined the general background and concept of the research topic listing the aims, objectives, statements of problems and the scope and limitations of the research work. The existing literature on the accounting framework was examined so as to create in theoretical base for the study.
“The third level of government is the local government. State governments have considerable powers over their local government council, but the functions of local government councils are now separately recognized by the constitution. Oshinsami.
The issue of fund availability, utilization and accountability is of vital important to both public and private organizations. An organization must be funded to be able to carry out its objectives can be achieved with minimum cost, with the local government, now having democratically elected government and the increasing debate on its autonomy. It was become necessary to look into the finances of the local government with a view to ascertaining their preparedness for the task ahead of them.
Today, most states of the federation have enacted their own local government laws to regulate and control and the operation of their own local authorities, Such law make provision for the conduct of business in the local government council a good accounting system of local management of government operation and resources as part of their responsibilities, local government account – for their income and expenditure in order to
- Demonstrate compliance will established laws and other controls
- Give evidence of accountability in terms of judicial stewardship.
- Summarize and report the financial operation of each function.
- To match explicitly the defined income and expenditure
The local government is the nearest level of government to the grassroots and only adequate funding and effective utilization of funds will make her impact felt in the local authorities and communities, It is in view of this relevance that the study of finance accounting systems at local government level is being considered quite appropriate and timely in view of the dwindling revenue coupled with their increased responsibilities .
1.2 Statement of Problem
In general, local governments in Nigeria are financially weak, There are three main reason for this as adduced by omapariola (1990;1).
The inequitable system of revenue sharing among the three tiers of government in the country.
The guideline of local government reforms of 1976 as confirmed by the presidential constitution of 1979 and 1989, which assigned wide and varied functions to the local government but failed to provide them with adequate financial resources to discharge their responsibilities
Inefficient internal revenue generation and collection methods.
Public finance literature reveals two major sources of local government finances literature reveals two major sources of local government finances viz; the internal and external sources
1.3 Objective of the Study
The purpose of this study is to critically appraise the various sources of finances available to Aniocha south local government council and ascertain the efficacy of its revenue yielding machinery.
To provide insight into the current accounting system carried on at the local government level this way we shall examine the appropriateness of the present system of local government accounting.
It is also the aim of this study to review the much debated revenue allocation formula as used in the country.
The present finance regulations as product of a commission set up by the federal government to formulate such regulation for the whole local government systems in the country. To this end the study will examine the effect of these regulations on the local government. By also attempting to undertake a comparison of the effect so far on the desired hopes aspirations of the government that making the local government autonomous will make it function effectively as a third tier of government .
This study shall also examine the utilization of local government finances after a careful examination of the various sources of the council’s finances and determination of proportion of internally generated revenue to total revenue of the council and trend of the statutory allocation over a period of years with a view to determining whether these allocations on the increase or on the decrease.
1.4 Research Question
Consequently this attempts to provide question to this study; Determining how well the accounting system in operation in the local government caters for and meet the need of the internal administration of the council?
How can the local government council ascertain and evaluate allocation? And what are the method of data collections and who are those qualified personnel.
For the purpose of this current study the following hypothesis has been formulated. Also this hypothesis is going to be stated in the null and the alternative form that is
- Null hypothesis (Ho)
- Alternative hypothesis (Hi)
- Null hypothesis (Ho); Method of collection is not responsible for the poor revenue generation of the council.
- Alternative hypothesis (H1): Method of collection is response able for the pure revenue generation of the council.
- Null hypothesis (Ho); The present finance of their council is adequate to meet her financial and budgeting requirement.
- Alternative Hypothesis (Hi): The present finance of the council is adequate to meet or financial and budgetary requirement
- Null hypothesis (Ho); Lack of qualified personnel is not responsible for the poor system of book-keeping in the local government treasury.
1.6 Significant / Justification of the Study
The provision of the financial framework in the local government system is a unique feature in the administration of finance. Hence, this study will add to the effectiveness of the operators of the systems.
Information contained in this work will serve as a very useful guide to executive council as well as various heads of units seeking to achieve better result. More importantly is the power of the council over the budget prepared and presented to it by the executive.
This study will also help internal auditors. Internal auditors are those who officially examine the financial records of a company within. It will help them evaluate the effectiveness and responsibility of the information they have.
In addition, supporting staff such as those on industrial training attachment, those of Youth services and also casual workers re to benefit immensely from the study.
1.7 Scopes / Delmination of the Study
The study is limited to Owerri. Even though there are other local governments with similar problem, we decided to take Aniocha south local government council as our case study.
1.8 Limitations of the Study.
In the process of carrying out this study, we encountered some problems which militated against the research project and also the major constraint of the research time.
The slow time frame did not allow for proper coverage of a wide area.
Finance is another factor. The money needed for going thro and fro Aniocha south local government council.
Also, the money need to cover the area to administer questionnaire.
Another limitation is the level or degree of literacy of the respondent. Some of the respondent could not read and write hence a problem.
Also, it is the nature f the topic of study. We found it difficult to get information from sources like internet, newspaper, books etc. concerning the topic of the study.
Lastly, it is the problem of easy access to information from the local government. This is because those in authority who have the right to give out information were restrictive of management of information which is benchmark data for any meaningful research also posed a problem.
1.9 Definition of Terms
Some of the following terms relevant to the course of study are defined below:
a) Local Government:
This can be defined as a unit of government administration at the local level established by law to perform some specific function within a given area of jurisdiction.
According to advance learner’s dictionary. Council is of people elected to give advice, make rules and manage affairs.
A budget is defined as a financial pal that serves as an expenditure for decision making. According to Abubakar 1998, he sees it as a conscious and systematic allocation of resources prepared and based on the forecast of key variables adopted to achieve certain policy objectives which may or may not set explicitly. Performance target for the achievement of objective relates anticipated revenue and form the basis against which all revenues can be measured.
d) Strong Room:
This is a place in the treasury where all cash, monetary and other valuables are kept.
This is defined as the identification, collection measurement, processing, evaluation and communication of financial information to facilitate decision regarding activities and resources.
5.1 Discussion of Finding
This chapter is discussing the work done in the study. It also makes recommendation on area that needed improvement in the finance and audit department of local government.
Every game has its own rules; the administration of finance is not left out if the rules are strictly adhered. Both preparation and setting up of financial system. Requires a guiding rule to have in-depth knowledge of financial system and audit department of the local government. In financial management, public accountability and internals are necessary and very important.
The problem of finance has to do with operational requirements and determine what these are in terms of executives responsibility and how local government finance will ensure reduction in misappropriation and financial recklessness. The financial framework will help the operators to pull the thread correctly and disburse fund accountability according to financial regulation.
The provision of the frame work will enhance the work of the treasurer and internal auditor and their staffs.
Lack of probity and fraud will be systematically reduced is the inbuilt control is strictly adhered to.
The study also examines the accounting procedures or local government system and how the control measures are religiously adhered to. The objectives of the study are highlighted.
It examined how the frame work has not left out anybody that has anything to do with local government especially the financial operation. The critics for a sound financial discipline was examined in framing the annual estimates, the aim was to endure that the total estimates of the recurrent revenue is sufficient.
This work made an insight of the appraisal of the financial frame work of local government system. The fact that the financial frame work is very essential in every organization cannot be over emphasized. From the analysis of data generated for this work, the provision of the framework has made the work of the financial department in the local government less cumbersome.
The recommendations embodied in this work are meant to guide the management in improving the effectiveness and efficiency of the treasury department. They should be adopted to enhance the achievement of the local government objectives.
In the course of this study, the researchers encountered an acute shortage of information on the subject of study. A lot of work is yet needed to be done in the area. It is pertinent to add that this work is by no means comprehensive. Further effort in this area of study is therefore encouraged. Estimates, the aim was to ensure that the total estimates of the recurrent revenue is sufficient.
The financial framework really did a lot in the establishment of a very functional procedural mechanical for a virile and viable local government. In the however, some areas that require further action to improve their efficiency were identified here under and recommendations offered for their improvement.
- The system of accountability must evolve internally through internal consensus.
- The treasury staff resolves to promote financial accountability by carrying out assigned duties conscientiously.
- The local government should Endeavour to carry out campaign on the local government, activities in order to dram the attention of more people to appreciate the local government activities.
- The official entrusted with supervision of staff should be treated indispensable expert and hence over burdened with almost all the duties.
- The head of finance department must realize that it is a sound policy to be fiscally responsible and to be committed to ensuring that financial control operates as expected.
- The local government service commission should ensure that only those with proven competence in the discharge of duties for which they were employed are put in-charge of profit.
- The auditor general therefore, should report on a yearly basis, the position of the annual accounts to both the local government and the local government service commission.
- Lastly, proper sanction should be imposed on only treasury department of any local government that fail to abide by the order.
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