The Impact Of Effective Public Sector Accounting On Public Funds Management In Nigeria

Project and Seminar Material for Accountancy / Accounting

The Impact Of Effective Public Sector Accounting On Public Funds Management In Nigeria


This study has been carried out critically analysis and the impact of effective public sector accounting on public fund management in Nigeria. This project work was necessitated by the way government play in the development of the grassroots socially, economically and politically. In so doing, the researcher used both primary and secondary method in collecting government council. Both questionnaire and interview method were used while other data were collected from textbooks, journals and magazines of related literatures to government accounting in Nigeria government. However, from the result of the finding and conclusion, it was observed by the research that the accounting system of government fell short of being effective. As a result of this government has been caught in the cobweb of inadequate function and powers, inadequate finance, low administration, inefficiency and poor budgetary control. In spite of that the researcher did make some reaching and clear recommendation, which if adopted will greatly solves some of these problems in the government council.

Chapter One


1.1 Background to the Study

Nigeria as a nation consist of three level of government that have interest in the public sector accounting, therefore, the status and power of these government are dearly defined by the constitution of the federal republic of Nigeria. Included in the government is federal, state and local government. The local government is regarded as the thired tier of the aforementioned level of government and it is essential in the development process of any country like Nigeria. This entail such as provision of social welfare services, provision of community mobilization, maintenance of local markets and roads etc.

Okhaide (2001) opined that the united nation office for public administration (UNOPA) defined local government as a political subdivision of a nation or (in a federal system) state which is constituted by law and its substantial control of local affairs including the power to oppose, take and to employ labour for prescribed purpose.

The state government has a considerable power over their local government council. The financial regulation in which the local government applies in the preparation and presentation of their account are formulated by the relevant statues.

Financial regulation provides a basis for internal control and external accountability nevertheless, the question which has frequently arisen in the issues of local government in not really living up to expectation in the eye of the common man and government. One move aspect that has drawn the attention of the researchers has been the allege lack of financial.

Johnson (1995) attributed these as inadequate funds embezzlement, shortage of trained personal, poor infrastructure, illiteracy among councilors bribery, and corruption, favoritism, and nepotism, poor collection method of taxes and poor communication system.

In addition the system of accounting, auditing and control in Nigeria local government dearly leaves much to desire. These local government hardly know of any form of audit other than those performed periodically by officials of state government. This audit exercise came up infrequently and when conducted are done unprofessionally. In view of these clear deficiencies in local government councils, this research will provide a deliberate attempt to approach this question with a view to take a stand on some critical issues and making recommendation on how to improve on the system of accounting used by the local government.

1.2 Statement of the Problem

Accounting in the public sector was necessitated by the need to collected and disburse funds for the government.

  1. Is there any system of accounting in the third tier of government?
  2. Is there any need for effective and sound system of accounting in the local government councils?
  3. Is local government accounting and financial data useful?
  4. Do public officers at the grassroot level of local government councils given evidence of accounting of their stewardship?
  5. Is there adequate information useful for the good control and efficient management of government operation?

1.3 Objective of the Study

Government performs a wide range of service and activities involving sizeable public funds. This high degree of financial commitment has created the need for sound system and techniques of accounting necessary for responsible and effective public administration. The process and structure of any accounting system have to be related to the need of the users of accounting information. Hence the purpose of this research includes.

  1. To evaluate and access the existing system of accounting in the third tier of government.
  2. To ascertain the usefulness of local government financial data.
  3. To emphasize the need for an effective and sound system of accounting in the local government council
  4. To emphasize the need for public officers at the grassroots level to give evidence of accountability for their stewardship.
  5. To provide useful information for effective control and efficient management of government operation.
  6. To clearly understand the type of account and return prepared by the local government.

1.4 Research Hypotheses

In the following hypothesis were formulated in order to have better understanding of this study.

Hypothesis One
  • HO: Nigeria local government council has no accounting recorded.
  • HI: Nigeria local government council has accounting recorded.
Hypothesis Two
  • HO: Local government accounts are not prepared in compliance with the applicable guidelines.
  • HI: Local government accounts are prepared in compliance with the applicable guidelines.

1.5 Significance of the Study

In the light of the present economic recession in Nigeria and the need to bring government closer to the people at the grassroot level, the federal government has deemed it fit to extend some of its responsibilities to the local government councils. This research will help to solve problems encountered by local government authorities in effectively in having a system of book keeping and sound system of accounting. Thus, this research will mostly be useful in the following ways.

  1. To Local Dwellers: it serves as an opportunity on the need of local authorities to put in place effective and sound system accounting, which provides financial data that will enable them appraise the activities and performance of local government authorities in relation to their expectation.
  2. Administration and Politicians: the will find this project very useful as it compels the need on the need of the part of local government chairman and their council values of system of accounting which provides a suitable evidence of their stewardship.
  3. This project will also educate the government better so as to pay more attention to grassroot development.
  4. In addition researcher will also find it very useful not to serve as material but also to serve as an insight into the particular area of study.
  5. This project work will be of great benefit to the nation as is gendered towards finding solution to the problems of accounting in local government council

1.6 Scope and Limitation of the Study

In the view of diverse nature of this research work, the researcher has focused his research study within the geographical areas of a local government council in Edo State. To adequate cover this research work personal interview and well structured. Questionnaires were administered to the local government council for extracting relevant information necessary for the purpose of this study. The scope of this study also cover such issues as the financial processes subsisting in the local government and the audit of books account of the local government council with the view of critically evaluating the effectiveness of the system of accounting. Again it also interest the researcher to critically examine the internal control system of the council and advise the council professionally if there is any weakness in the internal control system.

The researcher encounters some constrain which limited the scope of the study;

a) Availability of Research Material:

The research material available to the researcher is insufficient, thereby limiting the study

b) Time:

The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

c) Organizational Privacy:

Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities

1.7 Definition of Terms

Adams (2006) defined public sector accounting as a process of recording, communicating, summa rising, analyzing and interpreting government financial statement in aggregate and in details reflecting all levels of transaction involving the receipt custody and disbursement of government funds.

The public sector includes all organization which is not privately owned, and their goal is not primary to earn profit by its owners.

The local basis of this accounting is governed by the constitution.

Audit ordinance, financed regulations and revenue fund, the development fund management fund and contingency fund.

1.8 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows

  • Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.
  • Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature.
  • Chapter three deals on the research design and methodology adopted in the study.
  • Chapter four concentrate on the data collection and analysis and presentation of finding.
  • Chapter five gives summary, conclusion, and recommendations made of the study

Chapter Five

Summary, Conclusion and Recommendation

5.1 Introduction

It is important to ascertain that the objective of this study was on the impact of effective public sector accounting on public funds management in Nigeria. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of the impact public sector accounting on public funds management in Nigeria

5.2 Summary

This study was on the impact of effective public sector accounting on public funds management in Nigeria. Six objectives were raised which included: To evaluate and access the existing system of accounting in the third tier of government, to ascertain the usefulness of local government financial data, to emphasize the need for an effective and sound system of accounting in the local government council, to emphasize the need for public officers at the grassroots level to give evidence of accountability for their stewardship, to provide useful information for effective control and efficient management of government operation, to clearly understand the type of account and return prepared by the local government. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of selected local government in Edo state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up cashiers, secretaries, senior staff and junior staff was used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies

5.3 Conclusion

Accountability is a central concept for governance. Accountability requires that those who hold positions of public trust should account for their performance to the public or their duly elected representatives. Accountability, therefore, implies that decision makers are monitored by, and are responsible to, others, each of whom is, in turn, responsible to the people of the country. In respect of public financial management, there are several mechanisms through which accountability is enforced such the auditor general, public account committee, and the ombudsman. These accountability mechanisms must be strengthened to reduce the level of corruption in the country. The nation’s annual budget must be an instrument of accountability, a stewardship report of what was done in any given financial year and just a reflection of how money was allocated, unspent and subsequently returned to the coffers of the government or even wasted. Cash accounting system used by most of the governments for accountability and the efficiency of public sector expenditure have been proven to be inadequate for providing important information to citizens for planning, decision making and analysis (Bellanca & Vandernoot, 2014; Bruno, 2014; Ibanichuka & James, 2014; Jones & Browrey, 2013; Owolabi & Dada, 2014; Seenivasan, 2014). The system which only records the cash coming in and out, fails to report other important information necessary for taking decisions and assessing performance.

5.4 Recommendation

Based on the findings and the conclusion reached in this study, the following recommendations have been made:
Government: (i) Should ensure that they create enabling environment for the development of professional Accountants and employed them in the civil service. This will be achieved by retaining the existing through motivation and attracting the new with good working conditions. (ii) The problem of ethical and accountability failure in the public sector should be tackled by strengthening the capacity for control institutions through re-orientation programs (iii) A proactive legislature and regulatory framework that should not only exist on paper but must be operational. (iv) The provision of 1999 constitution giving time for submission of financial statement auditing and report, and` review by PAC should be strictly adhered to with punishment spelled out for non-compliance (v) The constitution should be amended to provide for the qualification of members of PAC.

Professional Accounting Bodies: (i) The professional bodies should redesign their programmes and carry out more enlightenment campaign activities to attract more Nigerians to the profession. (ii) There should be re orientation of members to encourage them to work in the public sector. Citizenry: Another control mechanism is that the citizenry should be motivated by the civil society and organized labour union to be more vibrant in other challenge the actions of the bureaucrats.

As accountability is the hallmarks for good governance, if Nigeria is to a member of the twenty most developed nations of the world by the year 2020, political office holders, citizens and all stakeholders in the Nigerian project should embrace integrity, transparency and accountability in the management of public funds.

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