ABSTRACT
This research aims at
providing an insight of the accounting system in the public sector, a study of
Board of Internal Revenue of Enugu state. The purpose of this research is to
examine the Board whether it is efficient and effective. The method employed
for data collection in this study is survey method which include:
questionnaires direct interview and the methodology used to determining the
sample size is sample percentage. The statistics were employed to analyze
method employed for data collection in which 34 questionnaires were distributed
among the accounting personnel of the board of internal revenue of Enugu state.
And all were returned the major finding were that out of the total population
of 37, the sample related was 34 accounting staff, the researcher found out
that accounting system in the public sector is not effective and dose not
provide for proper financial control and accountability. The study recommend
that the Board Of Internal Revenue of Enugu State should set up efficient
financial control system and organize in-service training programmers for its
staff in order to make them familiar with the accounting system or procedure of
the Board. Based on this employment of staff who have prior knowledge of
Government accounting will no doubt help to ascertain the adequacy and
effectiveness of the accounting system in the public sector.
TABLE
OF CONTENTS
Title page
Abstract
CHAPTER
ONE:
1.1
BACKGROUND OF
THE STUDY
1.2
STATEMENT OF THE
PROBLEM
1.3
Objectives of
the study
1.4
Research
Questions
1.5
Research
Hypotheses
1.6
Significance of
the study
1.7
Scope and
Limitation of the study
1.8 Definition of terms
CHAPTER TWO: REVIEW OF LITERATURE
2.1 Theoretical
Review
2.2 Conceptual
Review
2.3 Historical Development
of Government Accounting
2.4 Financial
Information
2.5 Sources of Cash and Recording Media
2.6 Nature and Purpose of Government Accounting
2.7 Fund Accounting Classification
2.8 Basis of Accounting
2.9 Depreciation
2.10 Summary Review
CHAPTER
THREE: RESEARCH METHODOLOGY AND DESING
3.1 Research design
3.2 Population of the study
3.3 Determination of sample size
3.4 Sources of data
3.5 Method of date collection
3.6 Procedure of date analysis
CHAPTER
FOUR: DATA PRESENTATION AND ANALYSIS
4:1 Introduction
4.2 Data presentation
4.3 Hypotheses Test
4.4 Discussion of Results
CHAPTER FIVE:
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
5.1 Summary of Findings
5.2 Conclusion
5.3 Recommendation
References
Appendix
CHAPTER ONE
INTRODUCTION
1.1
Background
of the study
The
practice accountability for public funds dates back to the history of the
ancient Greece. As old as theory is, it would not be erroneous to say that the
idea has been equally lost to antiquity although not much is known about it,
this makes the subject, government accounting to remain a myth.
However,
there is general awareness all over the world of the need to pay greater
attention to the development of government accounting and financial control.
The reason is obvious, government, in most , if not all nations constitute the
economy. Government in any society is basically for maintaining law and order.
With changes and the complete nature of the society, government responsibility
has automatically changed from the role of maintaining law and order to
business like nature in the modern era. The enormous activities of government,
equally call for enlarged government accounting in order to accommodate the
innense task. As a result of this development, the traditional cash procedures
of accounting can hardly meet the demands of reasonable accounting for modern
government in providing necessary for information. Therefore there is need for
government accounting to be dynamic in order to accommodate both the
fundamental roles and the developments.
Government accounting is the process of
recording, analyzing, classifying, summering, communicating and interpreting
financial information about government in aggregate and in detail, reflecting
all transactions involving the receipts, transfer and disposition of government
funds and property. The purpose are to demonstrate the propriety of
transactions and their conformity with established rules to give evidence of
accountability for the stewardship of government resources and to provide
useful information for the good control and efficient management of government
operation.
Financial
management in public services as can be observed has failed to encourage and
promote the efficient utilization of public funds or serve as effective basis
for planning and decision making as well as to ensure proper accountability.
Besides, it does not mean that financial irregularities being detected in
public sector at large is basically based on traditional cash procedure of
accounting but it dose arouse a question whether the modern system of accounting
will make both modern management and financial management viable.
1.2 Statement Of The
Problem
The problem of this research is to identify
these weaknesses and limitations inherent in the cash accounting system of the
public sector ( in relation to the accounting system of the sample ministry).
This
is with a view to propose means of eliminating them completely or at least
reducing them to the barest minimum. Put in question from, what are those
weaknesses and limitation that militates against adequate and efficient
accounting system and financial reporting in the public sector and how can they
be eliminated?
Some
of these problem witnessed in the public sector includes: the lack of
accountability and abuse of delegated authority by the officers in authority,
fraud and misappropriation of governmentfunds, as well as lack of expertise and
business acumen on the part of those officers. Due to the fact that government
operation have been termed “Non-profit oriented operations”, there is no
pressure on the part of these government officers to preformup to optimum
expectation, accounts are kept in messy shape while the officers get away with
lack of proper accountability.
This research is carried out in order to examine the extent to which
proper accounts are being kept in the public sector and to offer solution to
the inherent problem discovered. The Enugu State Board Of Internal Revenue has
been used as a sample ministry for this research for this work.
1.2
Objectives
Of The Study
This
cardinal objective of this study is to determine strength of the accounting
system existing in the public sector.
The
specific objective include the following.
1.
To determine the extent to which the sample ministry has installed an
accounting system.
2.
To determine the factors that promotes or constrain the accounting system of
the sample ministry.
3.
To determine the impact of the accounting procedures of the sample ministry
upon its financial reporting.
1.3
Research
Questions
Three
dominant questions being reviewed by this research include;
1 Is
the accounting system in the public sector effective and adequate?
2 Does
the accounting system in the public sector provide for proper financial control
and accountability of stewardship?
3 Does
the accounting system in the public sector provide useful information for the
effective control and management of government operations?
1.5
Research Hypothesis
H0
The accounting system in the public sector is not effective and adequate.
H1
The accounting system in the public is effective and adequate
Ho
The accounting system in the public sector does not provide proper financial
control and accountability of
stewardship.
H1
The accounting system in the public sector porvied proper financial control and
stewardship
Ho
The accounting system in the public sector does not provide useful information
for the effective control and management of government operation.
H1
The accounting system in the public sector provide uesfu information for the
effective control and management of government operation.
1.6 Significance Of The Study
This research paper is intended to
examine the accounting system common in public sector with a view to exposing
and highlighting the inherent limitation in the system. Therefore the research
paper will be of interest and useful to the general public the government as
well as the governed.
Government
entrust public funds in the hands of its officials hence government reporting
has traditionally stressed stewardship. Original accounting emphasis has been directed
towards measuring the public funds generated and expended by the government
programmer or activities. The traditional reporting approach is filled with
many weaknesses of what it is hope that this study will make useful
recommendation on how to improve upon the accountability and financial
reporting system of the government.
The
duty to report all its financial activities to the general public is a debt
that government must pay. Such report will enable the people know how public
funds entrusted in the hands of the government have been utilized, this type of
report is very sensitive and useful to the public but very few of them ( the
public) can understand it. This study will serve as a useful medium to such
member of the public who find government financial reporting very ambiguous and
hard to understand.
In
many institution of higher learning the accounting curriculum offered is
tailored specifically to provide students with an understanding of financial
reporting as it relates to profit oriented enterprises. For the purpose.
Students are frequently surprised to discover that the basic framework of
financial accounting is significantly altered when the profit motive is
removed. Though the accounting terminology may initially appear to resemble
foreign language to all students of accountancy, and related professions who
always depraved of knowledge of accounting system of the public sector this
study will be very useful.
Moreover, potential researcher in this
aspect of accounting will fine this research paper a very reliable reference
base.
1.7
Scope and Limitation Of The Study
As the research topic would suggest at
a glance, the scope of this is essentially focused on the accounting system of
the sample department as a general overview sample study of the accounting in
the public sector.
Therefore, this study will look into the nature of the accounting system of the
sample ministry; how the system operates, the relevance of the system to the
environment problems and prospects of the system.
.
Limitations
This aspect of accountancy ( as pointed out
above ) has received very little attention from scholars despite its long
historical age. Consequently, there is few literary publication on the student;
the researcher was therefore limited to reviewing few literature which are
mostly in origin, through relevant to the study.
Government
establishment are well known for maintaining utmost screening as regard their
operations, more so, where its is a study that concerns their financial operation
the researcher found it difficult to obtain material relating to the study
(that is literature) and some officials who have been very elusive and
uncooperative. More so the bureaucracy and protocol the research went through
to obtain material and an appointment has been very discouraging.
Due
to all this constrains, the researcher cannot say for certain whether the study
has covered very rutty gritty of the sample ministry as regards its accounting
systems and procedures, but one thing is certain, enough materials have been
gathered to help express an opinion as to the operation of the sample ministry.
Apart from the above listed limitations
witnessed by this researcher is time constraint. This is a major limiting
factor as the time between approval of the study and the deadline for
submission was very short. The researcher relied heavily on the good will of
the research supervisor because he understand my plight. Again lack of
sufficient funds to conduct an extensive study was another handicap.
This was part of the reason why I had to
limit my work to fewer staffs then was earlier planned.
1.8 Definition Of Terms
Every field, discipline or profession has
its terminology. Therefore, government accounting can never be an exception. In
order to ensure easy understanding by the users of this work in relation to
government accounting which are extensively applicable in public sector and or
which have different meaning from private sector interpretation and usage are
here by define below:
(1)
Accounting entity: clearly defined
economic unit which
(A)
Engages in identifiable economic
activities
(B)
Control economic resources (for which
accounting records are maintained and periodic financial statement is prepared.
(C)
Is distinct from the personal dealings
of its owners or employees. To ensure that the fundamental accounting equation
always refers to the same distinct entity the boundaries of the unit, once
established must not be managed arbitrarily also called reporting entity.
Accounting entity is in
the accounting and auditing, banking commerce and finance and corporate,
commercial and general law subjects.
Accounting
entity appears in the definition of the following terms; accounting change,
reporting entity, combination fund and
accounting policies.
(2)
Accrual accounts: The principles of
“accruals” makes a distinction between the receipt of the cash and the right to
receive it, and the payment of cash and the liability to pay it, stressing the
importance of the right to the assets or the legal obligation in favors of the
movement of the cash.
(3)
Annual Appropriations: These are issues
required to meet the expenditure of the state other than those covered by
direct issues from the consolidated Revenue Fund
(4)
Capital: is a plan of action quantified
usually in monetary unit to serve as a guild for the achievement of government
objectives.
(5)
Cash accounting the recording of the
transaction in which revenue and expense are reported ( cash inflow and outflow
) in the period in which the related cash receipts and payment occur. The wide
spread use of cash accounting in public sector result from the governments
historically based requirement for financial information that shows fiscal
compliance.
(6)
Capital Budget: this is the budget that
sets out the proposed acquisition of fixed (long term) assests or project and
their finance.
(7)
Depreciation: a non-cash expense that
reduces the value of an asset as a result of wear and tear, age or
obsolescence. Most asset lose their value over time (in other words, the
depreciated), and must be replaced once the end of their useful life is
reached. There are several accounting methods that are used in order to write
off an assets depreciation cost over the period of its useful life. Because it
is a non-cash expense depreciation lowers the company’s reported earning while
increase free cash flow. Although, government accounting does not recognize
depreciation and this is one of the criticisms of the system.
(8) Encumbrance:
is an expanse, which is both contingent and estimated. Obligation in the from
of purchase order contact or salary commitments which are chargeable to an
appropriating and for which a part of the appropriation is reserved. These
obligations ceases to be encumbrance when paid or when paid or when the actual
liability is recorded. This term no equivalent in the private sector accounting
since unperformed protions of executing contracts are not recognized in the
accounts
(9) Estimated
Revenue (Budget) if the accounts are kept on the accrual basis this term
designates the amount of revenue estimated to accrue during a given period
regardless of whether or not it is all to be collection during the period.
(10)
Expenditure (Actual Expenses) : this is
expenditure chargeable to an appropriation.
(11)
Fixed Assets: A long- term tangible
assets held for business ues and not expected to be converted to cash in the
current or upcoming fiscal year, such as manufacturing equipment real estate
and furniture (also called plant)
(12)
Functional Budget/programme Budget: a
budget that allocates costs (or inputs) to particular functions or activities.
(13)
Fun Accounting: this is basically
operated on cash basis it si an accounting arrangement whwereby self-balancing
set of accounts are provided for specific purpose. This system accounting is
usually used by non-profit organization and by the public sector.
(14)
Fund balance; the excess of assets of a
fund over its liabilities are reserves, except in the case of funds subject to
budgetary accounting where prior to the end of a fiscal period. It thus
represents the excess of the funds assets and revenuesfor the period over its
liabilities reserves, and appropriatios for the prriod.
(15)
Historical cost Accounting; the
traditional system of accounting that is based on valuations made in terms of
the price ruling when transactions take place. In practice this is modified by
the concept of prudence and the possible revaluation of fixed assets.
(16)
Revenue (Actual Revenue); is that
revenue which are recorded on accrual basis, this term designates additions to
assets which. Do not represent the recovery of the expenditure. Do not
represent the cancejjaton of certain liabilities or without a corresponding
increase in other liabilities or decrease in assets.
(17)
Warrant: Authority for expenditure from
the consolidated Revenue fund covered by the appropriation law in respect of
recurrent budget or from the capital development fund is the case of a capital
budget.
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