The Relevance Of Finance Department In The Public Sector (A Case Study Of Etsako West Local Government)

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The Relevance Of Finance Department In The Public Sector (A Case Study Of Etsako West Local Government)


Abstract


The study aims to examine the relevance of finance department in the public sector using a case study of Etsako West Local Government Area. It aims to ascertain whether there is a proper authorization of expenditure in the council and to ascertain if a sound system of internal control is being instituted over council expenditure. The data collected was presented using tables and simple percentage and both the primary and secondary sources of data collection method was used in gathering the data. It was discovered that there is no significant relationship between proper authorizations of expenditure and the council. Finally, it was recommended that the local government authority should endeavor to look into its administrative activities regularly and then prosecute any officer(s) found embezzling public funds and also make the head of the account office answerable for any such misappropriation.


Chapter One


Introduction

1.1 Background to the Study

In recent times, there has been rapid increase in public expenditure in some African countries particularly in Nigeria due to the fact that the functions of the various levels of government have equally increased both intensively and extensively the fund being pumped into the sector which calls for adequate expenditure control.

The circumstances surrounding the low rate of development in the public sector could as well be described to lack of proper accountability, composition and incidence public expenditure and finally, the structure of institution which surrounds public sector decision.

One begins to imagine with the high rate of wealth acquisition by politicians in public offices, if stringent control are not being instituted over public funds or the finance managers in the public fund control the finance (Afolabi, 2004).

In the past, several attempts have been made to present proper and acceptable practices on finance budgeted and also to ensure an efficient financial control system in the public sector. All attempts so far have failed and short comings in the operations of establishment in the public sector have regrettably been on the increase. The work of those public officers who are charged with the responsibility of interpreting the laid-down rules and regulations leave much to be desired.

As widely reported in Udodis’ report the poor result in the operation of public sector establishment could be blamed on the interpretation and application of the financial regulation invariably adverse consequences on the availability and efficiency of government services (Ogunle, 2004).


1.2 Statement of Problem

Over the years, it has been observed that every government establishment has its own peculiar problem. The same can be said of Etsako West Local Government Area, Auchi.

Some of these problems could be as a result of the difficulties normally encountered by the finance managers in an attempt to effectively control the expenditure process of the council. Others could be as a result of administrative bottle necks and policies, executive financial misappropriation and the internal control weakness in the council in respect to detection and prevention of fraud.

Some of the major problems that may initiate against the finance managers in an attempt to effectively control council expenditure are: that sources of revenue available to Etsako West Local Government authority most often is not enough for them, poor Administration of Local Government Funds. It is as a result of this that these are still setbacks in the local government as regards to infrastructural development.


1.3 Research Questions

This study also seeks answers to the following questions:

  1. Is there a proper authorization of expenditure in the council?
  2. Is there a sound system of internal control over council expenditure?
  3. Is adequate financial record in the council expenditure being maintained?
  4. Is the role finance managers play in an attempt to exercise control over the council funds being maintained?
  5. Are the reports prepared by the finance managers been utilized?

1.4 Objective of the Study

In order to address the problem listed, certain objectives that should be achieved by the study are set out below:

  1. To ascertain whether there is a proper authorization of expenditure in the council.
  2. To ascertain if a sound system of internal control is being instituted over council expenditure.
  3. To know if adequate financial records in the council expenditure have been maintained.
  4. To examine the role finance managers play in an attempt to exercise control over the council funds.
  5. To examine the extent in which the reports prepared by the finance managers are utilized.

1.5 Statement of Hypotheses

The following hypotheses were formulated for this study.

Hypothesis I
  • Ho: There is no significant relationship between proper authorizations of expenditure and the council.
  • Hi: There is a significant relationship between proper authorizations of expenditure and the council.
Hypothesis II
  • Ho: There is no significant relationship between a sound system of internal control being instituted and the council expenditure.
  • Hi: There is a significant relationship between a sound system of internal control being instituted and the council expenditure.
Hypothesis III
  • Ho: There is no significant relationship between adequate financial records and the council expenditure.
  • Hi: There is a significant relationship between adequate financial records and the council expenditure.
Hypothesis IV
  • Ho: There is no significant relationship between finance managers and their control over the council funds.
  • Hi: There is a significant relationship between finance managers and their control over the council funds.

1.6 Significance of the Study

This study is expected to be useful in the following ways:

Managers:

It will serve as a reference document for the finance managers in local government area to be alive to their responsibilities over the control of public sector.

Management:

It will help the management/executives of local government area in the administration of the public sector.

Public:

To ensure adequate internal control measure are put in place to guide against public fund mis-use.
Executives: It helps the executive in recognizing the relevance of accountants’ participation in decision making in the public sector.


1.7 Scope of the Study

The study centres on the relevance of finance department in the public sector using Etsako West Local Government Area as a case study. The participation is restricted only to the finance department in the public sector.


1.8 Limitations of the Study

During the course of this study, many factors which were beyond the researcher’s control and some of these problems are:

Attitude of Respondents:

It was difficult for the researcher to get 100% feedback and cooperation as a result of some of the respondents’ constant inability to give adequate attentions as of much responsibilities and work load at the time of visit.

Time Factor:

The time within which project work was conducted was inadequate for the researcher to obtain enough information regarding the work schedule.

Lack of Sufficient Materials:

This research work was also limited by lack of sufficient reference materials to the government area and finance on the part of the researcher.


1.9 Definitions of Terms

1. Dominant:

This is the process of having power and influence over others.

2. Council:

It is a group of people who are elected to govern an area.

3. Financial:

This is connected with money and finance.

4. Finance:

The management of large amounts of money especially by governments or large companies. It is also a field that deals with assets and liabilities over time under conditions of certainty and uncertainty.

5. Note Book:

This is memorandum account book.

6. Accounting:

This is the process of identifying, measuring, communicating economic information to permit judgement and decision.

7. Accounting System:

This is an organize set of manual and computerized accounting methods, procedures, and control established to gather, record, classify, analyze, summarize, interpret, and present accurate and timely financial data for management decisions.

8. Public Sector:

This is that sector of the economy established and operated by the government and its agencies.

9. Public Sector Accounting:

This can defined as the receiving and disbursement of funds to meet the goals/objectives such as health, education, power supply, water, transport, etc.


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