Managing Public Expenditure
CHAPTER ONE
Objectives of the study
The aim of this research work in general is to vividly evaluate the role of accounting in the control and management of public expenditure in Nigeria. The specific objectives for this research work are:
- To examine the relationship between internal control and total government expenditure in public sector in Nigeria.
- To determine the relationship between internal audit and total government expenditure in public sector in Nigeria.
CHAPTER TWO
Review of Related Literature Accounting Control
Accounting control is a procedure designed to protect assets and ensure that all financial transactions are recorded to prevent and reduce errors and fraud (Block & Geoffrey, 2008). It is the process which assures that financial resources are obtained economically and utilized efficiently and effectively in the attainment of the desired goals (Okezie, 2004). It varies from organization to organization and is part of both the financial management as well as internal controls, put in place by management, encompassing planning, budgeting and budgetary control, accounting, reporting and review.
The aim of accounting controls is to provide an overall guiding framework for a sound and efficient management of resources in all institutions. The goal of having a strong system of financial control is to promote the institution’s ability to reach its objectives, providing reliable financial data, safeguarding assets and records, evaluating operational efficiency through budget, organizational control and encouraging adherence to prescribed policies and regulations (John, 2014). Subomi (2010) opined that financial controls in an organization focus on the key transaction areas, with emphasis being on the safeguarding of assets and the maintenance of proper accounting records and reliable financial information. Financial controls facilitate effectiveness and efficiency of operations, thus helping to ensure the reliability of internal and external financial reporting and assist in compliance with laws and regulations (Hayles, 2005). Effective financial controls including the maintenance of proper accounting records help ensure that the institution is not unnecessarily exposed to financial risks and that the financial information is used only within the business (Hayles, 2005). This also contributes to the safeguarding of assets, including the prevention and detection of fraud (ACCA, 2010). Walters and Dunn (2001) have stated that obtaining sufficient knowledge of the internal financial controls, both information technology controls and application controls, are needed to facilitate the determination of the audit strategy and to carrying out subsequent steps.
Institutions of Financial Control in the Public Sector There are formal and informal institutions of financial control over public revenue and expenditure. The formal institutions of financial control include the Executive arm of government, Legislature and Office of the Auditor-General or Supreme Audit Institution. The informal institutions of financial control include; the media, the organised civil society and donor agencies (Sebastian, 2005). With respect to the formal institutions of financial control, the Constitution of the Federal Republic of Nigeria, 1999, establishes a cycle of financial accountability for public funds. The cycle provides that:
- Legislature authorizes expenditure.
- The Executive controls the collection and issue of funds. In addition, it prepares the accounts.
- The prepared accounts statements are audited by the Auditor-General.
- The Auditor-General submits the results of his audit to the Legislature through its Public Accounts Committee (PAC). Thereafter, PAC acts on the report by inviting accounting officers to appear before it where need be. The financial accountability cycle provides that the Executive arm of government collects, disburses and prepares the accounts of government. The other formal institutions of financial control are excluded from these very vital stages. Their involvement in public sector financial control is only visible when funds have been expended. Informal institutions of accounting control may promote financial accountability over public finance and these include; the mass media, the organised civil society, the World Bank and other international donors (Sahgal, 2001).
A vibrant media may promote financial accountability by reporting the findings of the AuditorGeneral. By exposing wrongdoings the media may influence the behaviour of public officials who may not want to be publicly exposed. The organised civil society too, may play a significant role in promoting financial accountability in the public sector.
Limitations of Accounting Control
Effah (2011) disclosed that; a foundation concept underlying the definition of accounting control is that a accounting control structure provides only reasonable assurance that agency objectives will be achieved. Limitations are inherent in all financial control systems. These results from poor judgement in decision-making, human error, management’s ability to override controls, collusion to circumvent control, and consideration of costs and benefits relative to financial control. No matter how financial control operates, some events and conditions are beyond management’s control (Lannoye 1999). No system of controls can be an absolute guarantee against the risk of wrongdoing or honest error. Any system that attempted to reach that goal, especially in a complex organization, would impose costs far out of proportion to the risks and create rigidities for the organization. Thus the proper goal of the control system should be to provide reasonable assurance that improprieties will not occur or that if they occur, they will be revealed and will be reported to the appropriate authorities (Pridgen, 2007).
CHAPTER THREE
Methodology
The study adopted survey research. Survey research is the method of gathering data from respondents thought to be the representatives of some population using an instrument composed of closed structure or open ended items (questionnaires). This survey research design was adopted through the use of questionnaire, oral interview and personal observation. The survey design was used so as to ensure originality and reliability. That is, to ensure that all information gotten were from primary source and not secondary data hence their reliability.
Area of the Study
The area of the study is the State Board of Internal Revenue Service in Anambra State.
Population of the Study
The population of workers in the state board of internal revenue is 115 comprising of managers and head of units in the SBIR and the general public comprising other experts in the field. Determination of Sample Size In deciding the sample size to be used, the researcher believed that the sample size will be a good representation of the whole population. To determine the sample size for this research, the Taro Yamani method was employed. This is designated by the formulae:
CHAPTER FOUR
Conclusion and Recommendation
Based on the outcome of the two hypotheses which were empirically tested and the research finding stated earlier in this work, the researcher therefore, concludes that there is a significant positive relationship between accounting control and total government in the public sector. Based on the findings of this study the researcher recommends that:
- The organization should pay more attention on internal audit than on internal control to ensure effective accounting control and improve on accountability thereafter due to the insignificant relationship internal control has on total expenditure.
- Management should establish and implement periodic review of internal audit performance to ensure that its performance and value to the Institution is maximized and to ensure compliance with appropriate standards and guidance.
Data Presentation and Analysis
The presentation of data collected means the way of presenting and arranging the different forms of data obtained through various data collecting techniques to enable the researcher perform analysis and exact new meanings from it. The data collected will be presented in simple table. The data analysis was based on the answers to the key questions received from the various departments. The key questions in the questionnaires will be analyzed by the use of simple percentage. A total of 89 questionnaires were distributed and all were returned. So the analysis of data will be based on the returned questionnaires.
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