APPRAISAL OF THE ACCOUNTING SYSTEM IN NIGERIAN PUBLIC SECTOR

(A CASE STUDY OF SELECTED GOVERNMENT ESTABLISHMENT IN ENUGU)

By

UGWU IFEYINWA

Presented To

Department of Accounting

ABSTRACT

Accounting can be defined as the recording summarizing analyzing and interpretation of an organization.

Accounting system is a set of rules regulations and procedures which are articulated by a appropriate theoretical force into a system. Ti process data into information which are required as input in the decision making system of the organization.

Based on these definitions accounting of public sector involves activities of collecting analyzing recoding summarizing reporting and interpretation of transaction of government units.

The objective of the study is to determine he effectiveness of the existing system of accounting of government units to appraise the system and ascertain their suitability to analyze the problem associated with the system of accounting adopted (if any) by these organization and to identify future improvement.

Both primary and secondary sources of data were used in this research. Research question were formulated and a questionnaires comprising statement drawn form the research question were prepared as well.

Interviews as a primary sources and textbooks as a secondary sources were also used.

Some of the major finding form the analysis of data collected are appointment of unqualified accountants to act as accounts supervisor negative attitude of most accountants towards accountability resulting to inadequate keeping of records and accounts the effect of self accounting system which is now used as an act for embezzlement/ self enrichment by the public sector accountants inadequate training and development of public sector accountants which results to lack of proficiency of public sector accounting system incompetent among accountants in the public sector and the delay is presenting and preparation of annual financial statement in the public sector.

On the basis of these finding the following recommendation are made viz.

- Adequate internal control system has to be institute by the management for the prevention and detection of fraud and irregularities is the public sector

- Training of the account personnel should be adopted in the public sector service.

- Financial statement must be prepared and present to members annually to have the related information on their loopholes and area to improve on.

- The above recommendation of fully implemented will enhance government accounting system and records and also stimulated improved financial reporting system in the public sector

TABLE OF CONTENT

Cover page

Title page

Approval page

Dedication

Acknowledgement

Abstract

Table of content

CHAPTER ONE

1.0 Introduction

1.1 Background of the study

1.2 Statement of problem

1.3 Purpose of the study

1.4 Significance of study

1.5 Statement of hypothesis

1.6 Scope and limitation of study

1.7 Summary of methodology

1.8 Brief history/background of the study

1.9 Definition of term

Reference

CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

2.1 Who is an accountant

2.2 Accounting defined

2.3 Book-keeping and accounting differentiated

2.4 Government accounting is the public sector

2.5 Basis of the accounting and legal basis

2.6 Objective of accounting in the public sector

2.7 The nature of Nigerian public sector accounting

2.8 The scope of public sector accounting

2.9 Government and commercial accounting compared

2.10 Some identified problem of the Nigerian public sector accounting.

2.11 Reference

CHAPTER THREE

RESEARCH METHODOLOGY

3.0 Introduction

3.1 Method and sources of data

3.2 Research population

3.3 Research instrument

3.4 Sampling method

3.5 Data analysis technique

CHAPTER FOUR

Data presentation and analysis

4.0 Introduction

4.1 Data analysis

4.2 Data presentation

4.3 Test of hypothesis

4.4 Major finding

CHAPTER FIVE

Summary recommendation and conclusion

5.0 Summary of finding

5.1 Recommendation

5.2 Conclusion

Bibliography

Appendix

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

Accounting system is an organization has a significance impact is the efficient management and administration of the organization accounting has been called the "language of business and financial decision" because it provide management with data needed for decision making and for efficient operation of the firm

Walgenbach Dlttrich and Hanson defined accounting as the process of recording classifying reporting and interpreting the financial data of an organization

Once an accounting system has been defined and installed recording and classifying data become some what routine and repetitive Accounting is a dynamic profession like language it does not stay static it grows embrace additional rolls in its development trail

Extensively accounting records has to be maintained not just because these records are required by law but to avoid confrontation with a multitude of complex variables Accountants cannot just observe the daily operation instead he must depend on the accounting process to convert business transaction into statistical data that can be abstracted and summarized in accounting reports

It is a thing of joy that an accounting body in Nigeria the institute of chartered accountants of Nigeria (ICAN) has lately accredited two institute as recognized training countries for the purpose of training accountants solely for the public sector though the curriculum for government accounting yet to be fully developed and integrated into the accountancy programmes of our institutions Based there is also a great search of textbook on governmental accounting is the country these are problem that must be promptly tacked

Government establishment are set up to provide social goods and service for public welfare These establishment finance their activities principally from government subventions which are derived directly or indirectly form government various sources in come (such as fees charges central or local taxation and borrowing) the need for a good book-keeping and accounting system together with proper accountability for public fund cannot be over accounting officers operate as an internal security men and through records control what goes on inside the business

They have to preserve the company's property form loss by embezzlement fraud or carelessness

Pandy state that about two decades age the scope of the financial management was circumscribed to the raising of funds whenever needed and no significant use attached to day-to-day financial decisions making and problem solving'²

In other words mangers and accounting officers entrusted with public funds must ensure that such funds are properly distributed and adequate accounted for They should also exercise due care skill diligence and prudence in the management of public funds

In the light of this it is necessary for an investigation to be conducted to find out the problem often encountered by operators of government establishment in maintaining a good accounting system with a view enhancing accountability and the prospects of accounting in these establishments

12 STATEMENT OF PROBLEM

It is worthy to note that accounting information often suffer lots of distortion due clerical technical and non-professional errors Accounting process as an information system serve persons both inside and outside an organization but most operators/ practitioners of government accounting are unable to produce perfect accounting information desired by user

Although theses problem are common to the private and public sectors it appears that the public sector suffers more

Among the common problems of the government unit accounting are:

a Inconsistency in government accounting system comparison impossible

b Delay in presentation and preparation of annual financial statement

c Ineffective control systems

d Lack of proper and suitable accounting system

e Using untrained personnel to do accounting work

f Delay in receiving report from out stations with subsequent delay in preparing financial reports

g Untimely reconciliation of accounts

h Inefficiency of accounting and internal control

i Negative attitude of government functionaries towards accountability

On this background the researchers intends to find appropriate answers to these problems by understanding their root caused so as to find a lasting solution if possible or ameliorate the incidence of inaccurate accounting is government establishments

13 PURPOSE OF THE STUDY

The aims of this study includes:

1 To determine the effectiveness of the existing system of accounting of government units

2 To appraise the systems and ascertain their suitability

3 To identify and analyze the problem associated with the system of accounting adopted by these organization examine their root causes and based on the outcome of the analysis draw conclusion

4 To undertake a prospective view of government accounting need and identity possible future improvement of its application by the public sector

14 SIGNIFICANCE OF THE STUDY

The significance of the study it that it will nightlight the consequences of not having adequate accounting system is a pubic sector organization

Having identified the problems and consequences this will pave was for preparation and presentation of improved quality of accounting by government accounting personnel practitioners

It will also highlight the benefits a public sector organization will derive if and when a good accounting system is efficiently and adequately applied

This project work will enhance decision making of user of accounting information The following group of user will benefit from this research work

a Staff and practitioners of government accounting who would need the information for improving their job

b It will serve as a reference material to accounting students lectures and researcher that might lay their hand on a copy in the library for academic and research purpose is the future

c Moreover the success of this work could be of immense benefit to the operators of government establishment who need financial information for decision making and also help them to understand the concept of stewardship accounting Millchamp define stewardship accounting as "the process whereby the managers of a business accounts or report to the owners of the business"

d Finally the public also sand a ground to benefit from this work in various ways

15 STATEMENT OF HYPOTHESIS

H0: Self accounting system introduced is government accounting do not help

to make accountability more efficient?

H2: Extensive accounting training is the public sector enhance the

performance of government accountants

H0: Extensive accounting training is the public sector do not enhance the

performance of government accountants

H3: The existing problems of accounting is the public sector the product of

human deficiency?

H0: The existing problems of accounting is the public sector is not the product of human deficiency?

16 SCOPE AND LIMITATION OF STUDY

For the purpose of time and cost involved is this research work the study is limited to selected government establishment is Enugu (Enugu state capital)

Moreover is carrying out the research certain category of people which include accountants other account personnel audit and stores personnel is these organization were selected for interview I feel that these selected ones are best suited for a research work of this kind

Other limiting factors which might further create some constraints includes:

1 Resources at the researcher's disposal

2 Availability of relevant data/ information

3 Financial constraints involved is gathering the data and other important documents necessary for smooth work

17 SUMMARY OF METHODOLOGY

The method of data collection obviously suggests the method of analyzing it In the course of preparing this work the researcher used primary and secondary sources of data but reliance was placed more on the primary sources This is due to its relatively factual nature

PRIMARY SOURCES

Consisted of questionnaires and direct interview with staff the firms

SECONDARY SOURCES

In the secondary sources of data collection newspaper magazines and textbook were extensively used

18 BRIEF HISTORY/ BACKGROUND OF THE STUDY

This research study followed a case study approach But because of time effort and finance which it will taken to study all the government establishment in Enugu hence the selection of three government establishment in Enugu Enugu state

These are Nigeria telecommunications Ltd (NITEL) national electric power authority (NEPA) and Nigeria postal service (NIPOST)

Nigeria telecommunication came into existence is 1985 as a result of emergence between post and telecommunication (NET) with a staff strength of 16000 then

It operates three- tier organizational structure as follows:

1 The corporate headquarter

2 Zonal which is six is number

3 Territorial which is forty is number

Nigeria telecommunication Enugu is Enugu state is one of the territorial Ti has a staff strength of about 400 and it is located at Okpara Avenue Enugu the capital of Enugu state

National electric power authority (NEPA) is located along Okpara Avenue Enugu It came into existence is 1972 due to amalgamation of Niger Down and electricity corporation of Nigeria The two emerged and became national electric power authority (NEPA) it has district and zones Each district is dependent on imprest as approved by the corporate headquarters at Abuja and the revenue generated is remitted to the corporate headquarters It operation is mainly based on remittance and imprest account

Nigeria postal service which was together with Nigeria telecommunication was spitted out to start and stand on its own is 1976 it become independent and there is no working together and transfer of staff with Nigeria telecommunication It is located long Okpaar Avenue Enugu It render both local and international service to the pubic

19 DEFINITION OF TERMS

ACCOUNTING:

Is the act of recording classifying and summarizing reporting and interpreting in a significant manner the finance data of an organization

FINANCIAL STATEMENT

A summary of figure and facts showing the financial condition of a business It is also an itemized list of assets liabilities and net worth of capital account

PUBLIC SECTOR

By definition public sector include all organizations not privately owned not privately owned which are operated or established by government on behalf of the public

ACCOUNT OFFICE

The title of the post held by the minister as the head of a central government department He is responsible for the general supervision of the accounts of his ministry and is expected to observe and comply fully with the checks and balances spelt out is the existing guidelines and financial regulations

He is also responsible fro the fund voted to his department by national assembly

PUBLIC SECTOR ACCOUNTING

Is the composite activity of collecting analyzing recording summarizing reporting and interpreting the financial transaction of government units

SELF ACCOUNTING UNIT

Is a unit entrusted with the receipt custody and disbursement of public money rendering monthly account to the accountant general

STEWARDSHIP ACCOUNTING

Is the process whereby the managers of a business account or report to the owners of the business

INTERNAL CONTROL

It is the measures used by the management to regulate and control the affairs of the business which includes day to-day transactions

FRAUD

Is defined as misappropriation of cash or goods and also intentional falsification of book of account

FUND

It relates to a sum of segregated for he purpose of carrying on specific activities or attaining certain objective in accordance with special regulation restrictions limitation and constituting an independent fiscal and accounting entity