The Impact of Effective Public Sector Accounting on Public Funds Management in Nigeria
Chapter One
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.
- 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.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
INTRODUCTION
Most studies on tax compliance particularly in developing countries indicate that people avoid and evade taxes because of poor usage of tax revenue by the governments. Therefore efficiency and transparency in financial reporting system have become extremely important for governments all over the globe. The basis of accounting for achieving efficiency and transparency in government activities and programmes is of utmost importance. According to Omenika (2008), the basis of accounting is a set of rules and principles that determine the recognition of expenses and revenues in exchange transactions. It could be cash basis or accrual basis. While cash basis recognizes transactions and events only when cash is received or paid, accrual basis recognizes all transactions and events irrespective of whether cash is received/paid or not (Omenika, 2008).
To provide a proper perspective of the two basis of accounting, a comparative analysis based on existing literature is made as follows;
- Recognition of Total Liabilities: Liabilities are obligations owed. The basis of government accounting should provide relevant and accurate information about governments’ liabilities. Under the cash basis of accounting, no liabilities are recognized. Accordingly, neither liabilities due in the current period (short-term liabilities) nor liabilities which are owed beyond the current period (long-term liabilities) are recorded in the operating accounts of that period. As a result of not recognizing the long-term liabilities such as pensions and claims, their costs as well are not recognized and reported because the governments do not mke plans to meet these liabilities when they fall due. Consequently, the deficit in one period may increase more than the other periods (Langendijik, 1990). For example, Zik (1997) reported that in the late 1980s, Canada’s federal and provincial governments had accumulated more than $30 billion unrecorded employee pension liabilities. In some provinces, the size of unrecorded liability equaled or exceeded their accumulated deficits. But the accrual basis shows hidden liabilities and forces the government entities to suddenly show huge deficits in governmental funds. More so, receivables and payables of the government are made known at the end of the fiscal year only with the adoption of accrual accounting system.
- Revenue Recognition: Under the cash basis of accounting the revenues will only be recognized in the financial statements in the period in which cash is received. However, the cash receipts do not make distinction between current receipts and capital receipts. So an excess of receipts over payments cannot be called income because receipts might encompass capital receipts. This will result in that the revenues, which are earned in a given fiscal year, are not known. As such it is difficult to evaluate the efficiency of revenue collection staff and to discover the losses during the collection process (Okoye and Oghoghomeh, 2011). In addition, under cash basis, receipts and revenues are identical since no difference exists between the time when they are recognized and when they are collected. But under accrual basis, the recognition of revenues is required at the time when they are earned, and the receipts occur when revenues are collected. This manner of revenue recognition presents a better financial information (Saleh, 2007).
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought the impact of effective public sector accounting on public funds management in Nigeria
Sources of data collection
Data were collected from two main sources namely:
(i)Primary source and
(ii)Secondary source
Primary source:
These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment; the researcher has adopted the questionnaire method for this study.
Secondary source:
These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.
Population of the study
Population of a study is a group of persons or aggregate items, things the researcher is interested in getting information the impact of effective public sector accounting on public funds management in Nigeria. 200 staff of selected local government in Edo state was selected randomly by the researcher as the population of the study.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
DATA ANALYSIS
The data collected from the respondents were analyzed in tabular form with simple percentage for easy understanding.
A total of 133(one hundred and thirty three) questionnaires were distributed and 133 questionnaires were returned.
Question 1
Gender distribution of the respondents.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
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
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
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.
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.
References
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