AN APPRAISAL OF THE ACCOUNTING SYSTEM OF LOCAL GOVERNMENT

By

OKOLI AUGUSTINE O

Presented To

Department of Accountancy

ABSTRACTS

This project work was focused on the appraisal of the accounting system of local government.

This took off by evaluating the structure of the accounting system of local government. This was done together with the appraisal of the effectiveness of the operation of the different components of the account system. It went further to critically assess the overall effectiveness of the accounting system with a view to finding out how appropriate the financial statement produced from the system approximate the true financial position of local government.

From the critical assessment above, it was concluded that the financial statement attempt to satisfy the need for both internal and external user in business and government organization.

Finally, by a way of recommendation from this study that the treasury department and reorganize the component of their accounting system enhance the completeness and accuracy of accounting records secured in respect of their financial operations.

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND

Local government is the third tier out of the three tier of government in Nigeria and in this way, part of the framework of Nigerian administrative authorities it has administrative structure like any level of government, statutory assigned function, social commitment and financial argument needed for it to maintain itself and perform its statutory function to its citizenry.

According is defined as the act and science of recording business transaction in a systematic manner, so as to show the true state of affairs of a business during a specific period usually called according period.

A system on the other hand, is a whole unit made of inter related element working together to achieve the objective of the whole unite.

Accounting in the government setting tends to satisfy the specialized needs of the government, it is aimed at demonstrating the propriety of transaction and their conformity with established rule to give evidence of accountability for the stewardship of government resources and to provide useful information for good control and efficient management of government operations.

1.2 STATEMENT OF THE PROBLEM

This study entitled appraisal of the accounting system of local government attempt to determine the problem involved in establishing and applying standard accounting system in local government with practical reference to Okigwe local government area of Imo state, Nigeria some of the problem facing the local government are; that the accounting system installed in the local government is not fully effectively operated. Also, the accounting system of the local government is inadequate in design. As a result of these, the financial statement as prepared by the local government does not reflect or show its true financial positions.

1.3 PURPOSE OF THE STUDY

The purpose of this study is:

v Identify the problem inherent in accounting system of local government.

v Keep the local government concerned, learn how to keep proper accounting statement

1.4 SIGNIFICANCE OF THE STUDY

There are three categories of people that are going to benefit from this study

They are

v The chief accounting officers

v Financial officers

v Auditor general

During this study, it indicated that majority of local government in Enugu, Imo and Abia state particularly, and so many other places in Nigeria, are not aware of the legal requirement for recording, processing and presenting information about the transaction carried on in business they are managing, some do not keep proper accounts for their business.

Therefore, statutory requirement for financial accounting system are carefully set out in this study.

Having a well defined system of recording, processing and presentation of financial transaction that took place in any business will enable the making of appropriate decision for development and continuous existence. It will also help in safe guarding assets and properties, and in preparing financial statement and complying with legal requirements.

The governments need the final account or financial statement of every entity, for tax purposes.

1.5 LIMITATION OF THE STUDY

For a research work to be proper and meaningful, it has to cover a wide ground, but it is quite unfortunate that lack of resource such as finance time and other resources, limited the study to a manageable proportional.

1.6 DEFINTION OF TERMS

The following definition are given for reference purposes;

Accounting

Is the process of identifying measuring and communicating economic information to permit informed judgment and decision by users of the information's.

Accounting standard

These are standard issued by professional accounting bodies in Nigeria to regulate the practice of accountancy professional, such as the statement of accounting standard (SAS)

Financial statement

These are trading, profit and loss accounts, balance sheet, sources and application of fund statement; value added statement and cash flow statement

Financial accounting system

This is the whole system of control, recording and processing transaction and assessing it adequacy as a basis for the preparation of financial statement.

Legal requirement

These are legal requirement as provided by the company and allied matters decree 1990 (CAMD 1990), statement of accounting standard and other guide linessioned by the professional bodies

Cash basis

This is the basis of accounting under which revenue are recorded only when cash is received, and expenditure recorded only when cash is paid, irrespective of the accounting period in which the service was rendered or the benefit revived. This is the basis upon which the preparation of government account in most countries including Nigeria lies.

Accrual basis

This is were are recorded when earned and expenditure are recorded as the result in liability are know or when benefit are reviled not withstanding the fact that the receipt or payment of cash could take place wholelly or partly in another period.

Commitment basis

This the basis that records an anticipated expenditure evidenced by a contract or by a purchase order to determine by administrative.