AN APPRAISAL OF REVENUE COLLECTION METHODS IN GOVERNMENT ESTABLISHMENT

(A CASE STUDY OF UNTH ENUGU)

By

AHONSI .I. SABBATH

Presented To

Department of Accountancy

ABSTRACT

Revenue collection method in most government establishment has over the years been the bane of the old Anambra State government in achieving optimum internally generated revenue for both recurrent and capital development. This forced the government to dissolve most of her boards and commissions in 1981 as well as set Revenue Commission and of investigation and recovery of government funs and property in 1984. Even this system were also upheld by present Military Government in the effort to increase the revenue base of the government.

Sequel tot he economic hardship affecting the budget speech emphasized that each sate government should diversify its revenue sourange.

Hence, new revenue source were identified such as introducing new products in the catering department, contractors fees, suppliers non-refundable fees, while old revenue sources was increased to meet up with the economic trend. The hospital hopes to collect millions of naira annually from the collection of hospital fees and others from patients.

The survey area was University of Nigeria Teaching Hospital, where 150 questionnaires were administered to the revenue clerks and accounting officers in the hospital. The questionnaire collected information in personal data, maturational devices method of revenue collection.

This study therefore was an attempt to find out how far the university of Nigeria Teaching Hospital, Enugu method of revenue collection achieved the objectives of the hospital. The study sought answers to questions on the methods of collections.

Based on the findings, the following recommendations were made amongst others:

1. Employment of enough qualitative accounting and revenue clerks

2. Improvement of the accounting system

3. Provision of security escort during lodgments

4. The system of supervisory checks and the role of the internal audit in issuing receipts should be continued.

TABLE OF CONTENT

PAGE

Title page i

Approval page ii

Dedication iii

Acknowledgement iv

Abstract v

List of tables

Table of contents

CHAPTER ONE: INTRODUCTION

11 Background of the study

12 statement of problem

13 Objective of study

14 Scope of study

15 Research questions

16 significance of the study

17 Definition f terms

CHAPTER TWO: REVIEW OF RELATED LITERATURE

11 Introduction

22 Hospital Accounting system

23 Operation f the system

24 Revenue assessment and collection methods in the University of Nigeria Teaching Hospital (UNTH)

25 Registrations and out-patients procedures

26 In-patients assessment and collection methods

27 Assessment and collection methods with respect to patient s who died in the Hospital

28 Revenue collection methods for staff and other special cases

12 Ministerial accounting system

13 Accounting records kept by UNTH in relations to revenue collections

14 Strategies to ensure effective revenue collections

15 The role of Internal Audit in enhancing revenue collections

CHAPTER THREE: RESEARCH METHODOLOGY

31 Research design

31 Instrument for data collections

32 Validity and reliability of measuring instruments

33 Population of study

34 Sample and campling procedures

35 Method of analysis of data

CHAPTER FOUR: PRESENTATION, ANALYSIS AND INTERPRETATIONOF DATA

CHAPTER FIVE

51 Summary of findings,

52 Recommendation

53 conclusion

REFERENCES:

QUESTIONNAIRE:

LIST OF TABLES

1 DIAGRAM OF DAILY REVENUE CASH BOOK

2 DISTRIBUTION ON EDUCATIONAL QUALIFICATION

3 DISTRIBUTION OF SALARY GRADE LEVEL

4 DISTRIBUTION ON DESIGNATION OR RANK

5 DISTRIBUTION ON RISKINESS OF CARRYING CACH

6 DISTRIBUTION ON THE MEDIUM OF PAYMENT

7 DISTRIBUTION ON PAYMET INTO THE BANK

8 DISTRIBUTION ON ACCOUNTING TO THE MAIN CAHIER

9 DISTRIBUTION ON JOB SATISFACTION

10 DISTRIBUTION ON ACCOUNTING EXPERIENCE

11 DISTRIBUTION ON TRAINING PROGRAMME AND FACILITIES

12 DISTRIBUTION ON THE EFFECTIVENESS OF THE COLLECTION SYSTEM

13 DISTRIBUTION ON SECURITY ESCORT

14 DISTRIBUTION ON ACCOUNTING RECORDS

15 DISTRIBUTION ON SUPERVISORY CHECKING

16 DISTRIBUTION ON FINANCIAL MALPRACTIES

CHAPTER ONE

10 INTRODUCTION

1 1 BACKGROUND OF THE STUDY

There is no doubt that Nigeria is blessed with abundant human and material resources, but the problem with the country is the fact, that is various government since its independence in 1960, some 44 years ago have either inadvertently or otherwise refused to utilize these resources to its benefit

Unfortunately, the abundance human and material resources of the country was mismanaged and the country thrown into foreign debts today Since 1984 emphasis has shifted from external borrowing to local or internal sourcing of the country's revenue for both capital and recurrent expenditure of the government; Federal, States and Local governments

Also Achebe, Chunua (1985:10) maintained that the dwindling receipt from Federal account owing to sharp drop in the price of crude oil, as a result of global oil glut Fall in total export earnings from about N41 billion in 1980 to N105 billion in dwindling export earnings and foreign exchange disbursement on imports escalated

This resulted in a decrease in the federal government revenue allocation in the states and local governments In te old Anambra State in particular, the inheritance of a huge debt of about N183 billion from he civilian administration made local sourcing of revenue temperature The situation compelled the military governor of Anambra state group captain Alison Madueke (1984) to suggest the acquisition of revenue locally as the only means of raising enough fund for capital development As a result of that the government then commissioned on the 20^thJanuary, 1984, the Anambra state final and revenue commission which assessed the effectiveness of the existing systems of internal revenue collection and recommended improvements

Revenue collection in the University of Nigeria Teaching Hospital is the responsibility of the accounting department of the hospital They are responsible for the recording in financial terms, day to day transactions of the hospital These transactions and records mainly relates to the receipts and payments, income and expenditure and assets and liabilities of the hospital and usually cover transactions within a particular financial year or other periods such as months or quarters within a financial year as may be required

The financial year of the hospital follows the government fiscal year which is from 1^st January to 31^st December of each year This study is therefore carried out to assess the revenue generation machinery of government establishment UNTH Enugu

12 STATEMENT OF PROBLEM

Specifically, the research intends to provide answers to the following questions;

i Are accounting records adequately and properly kept in conformity in with the objectives of government and accounting standards?

ii Who are the accounting staff of the Hospital and how were they recruited or appointed?

iii What are the accountability methods or who is accountable for what?

iv What are the financial implications of the findings and how on its knowledge help to the University of Nigeria Teaching Hospital, Enugu?

The study will examine the hospital as an enterprise and a very big one in this state for that matter The head of the accounts department is the assistant director, finance who has the overall responsibility for the effective running of the department He reports tot he Chief Executive of the hospital, the Chief Medical Director

13 OBJECTIVE OF THE STUDY

In the study, we intend to trace the extent of contribution of the University of Nigeria Teaching Hospital in the internally generated revenue of the Federal Ministry of Health The study will equally provide answers tot he underlisted problem of the teaching hospitals as it concerns revenue collection method and investigating why there;

i Is decreasing revenue collection in government owned establishment?

ii Is poor quality of accounting and revenue staff in those establishment,

iii Are inadequate accounting system in those government parastatals?

14 SCOPE OF THE STUDY

The researcher earlier had the intention of covering all the government owned establishment in Enugu state of Nigeria, however, time and financial constraints have hindered this intention The study is limited to University of Nigeria Teaching Hospital, Enugu it is believed by the researcher that the method used by the hospital closely approximate the general practices

For the purpose of this study, the researcher will make a brief mention of revenue allocation in Nigeria, the role of internal audit in relation to revenue and then pay special attention to internally generated revenue

15 RESEARCH QUESTIONS

The following are the research questions to be used in the study

i What are the methods of revenue collection being applied by the government owned establishment?

ii How effective are these methods being used?

iii What are the main obstacles militating against its effective application?

16 SIGNIFICANCE OF STUDY

It is hoped that the study will be valuable to the hospital management and in fact any other government establishment for that matter, to appreciate the deficiency inherent in the present method of revenue collection in our teaching hospitals The government following the recommendation will modify same to achieve better results

This will ensure a better results This will in turn save the government huge financial losses There fairness will be ignored by the actors in the accountability process

It is also believed that if the method are effective in controlling fraud, every naira collected by the government will be adequately accounted for Thus, the government objective of health for all by the year 2000 might be a reality

For the citizens, who pays the hospital bills, the study will lead, it is believed to the justification of the revenue being collected which they pay as they will not go into the hands of wrong persons

Finally, this research report will enable students of management especially the accountancy students to have an indebted knowledge of the methods of collecting revenue available to non- profit making organization especially those funded and controlled by the government It will help them to understand the audit of government organization when the government relinquishes such audits over to certified public accountants

17 DEFINITION OF TERMS

For the purpose of this work, an accounting staff or officer is used here to mean any person employed by the hospital to perform the duties of a finance officer In the hospital irrespective of the person's rank or designation A revenue clerk is used here to mean any person delegated to collect hospital bills and other fees whether the person is an accounting officer or not

Revenue here means total annual income of the hospital generated from hospital bills and charged

A self-guaranteed patient is one who is accepted as a reputable and will known in the community and on balance of reasoning is allowed on personal recognition to guarantee himself

A staff-guaranteed patient arises where a number of the staff of the hospital agree to be responsible for the payment of the patients bills in case the patient fails to pay

MAC means Medical Advisory Committee Pauper means a very wretched patient