CHAPTER ONE
INTRODUCTION
- BACKGROUND OF THE
STUDY
In
most developing countries including Nigerian government participation in
economic activity is usually significant. One of the ways through which
government has intervened in Nigerian economy is through the establishment of
public enterprises and statutory bodies operating service of an economic or
social character on behalf of the government. After the colonial era,
especially after independence 1960, Nigerian public enterprises have witnessed
a steady growth unit recently, Olisa (1988) pet it. Beginning as a
trickle in the period between this era of the second world war and Nigeria
risen to flood level since independence the establishment of public enterprise
in Nigeria are many add to available rational capital for the support of
development and welfare programme, making to be controlled by a few
individual, it possible for important profitable enterprise to be controlled by
a few individual or group organization certain critical activities national
survival and economic stability and providing employment opportunities
(Ademolukun 1983). However, after a long period of
growing starts intervention in the Nigeria economy through public enterprises,
the 2015’s onward has sometimes been dramatic in public opinion therefore
public policy. This has been brought by the persistent losses which state
enterprises that trivet been running over fears. Consequently, there has been a
willingness to look at alternative policy strategies for the achievement of
economic development. At the forefront of these strategies is the minimization
privatization of public enterprises. Public Expenditures are incurred through
budget implementation. The macro-economic goals of the state budget are
administered in specific and complex systems which were developed in the
managerial information unit of the General Accounting department under the name
of “Budget Implementation macro system” The role of accounting in the control
of public expenditures relates mostly on setting of standards via budgeting and
ensuring that the standard set are adhered to. The accounting controls also
ensure the actualization of the macro-economic goals which are viz:
- Maintaining the total
framework of the planned expenses.
- Adjustment of
expenditure rate to the rate of the reception of incomes.
- Regular follow-up of
compliance with deficit goals.
- Planning of the
financing of the deficit in order to reduce the national debt-product ratio
etc.
In
Nigeria, public enterprises are engaged in a while spectrum of economic
activities including agriculture, mining, construction, manufacturing, commerce
and services. The classification of public enterprises in Nigeria has been made
according to varieties of criteria by different authorities. The public service
review commission (1975) classified public sector into.
- Public utilities
- Regulatory of service
body
- Financial
institutions
- Commercial and
industrial enterprises
Nigeria
being a mixed economy, individuals also own and operate private enterprises. A
firm classified as private enterprises when it is founded and managed by an
individual and or a group of individual. These firms are
expected to be registered in the local government within which they operate.
The rational for the establishment of private enterprises are numerous just
like establishment of public enterprises. They include amongst others;
provision of employment opportunities generating income for the owner of the
enterprises government interest in profit growth of the enterprises which
performance of the public sector through competition. Moreover, the general
public is concerned with contribution which makes towards social enlistment
which is exhibit to the environment in which the business is loaded and its
willingness to contribute to the development of the environment. The activities
of the public enterprises have been on the increase in recent times which
necessitated the introduction of the accounting practice to check and monitor
the financial activities of these enterprises. According to Bimage (1985),
Accounting is defined as a process by which data relating to the economic
activities of an organization are measured recorded and communicated to
interested parties for analysis and interpretation. The earliest methods of
accounting records were kept in physical quantities. These records came from
the Eastern (early) civilization which involved in the
countries around the Mediterranean Sea such as Mesopotamia, Egypt, Crete, Italy
etc. Money was recorded as soon as money took the place of barter as a medium
of exchange and unit of accounting practice has been closely related to the
economic development of the country. If the business organizations grows in
size and complexity management and outsiders groups which include owners of the
firm (stock holder) creditor, government, employer and the general public. The
differentiation necessitated the need to have accounting department in the
enterprises to give accurate financial of the management and to satisfy the
outside demands or the general public who are already interest on whether the
enterprises in growing or not. The role of accounting in Nigerian public sector
is primarily to ensure accurate accountability in these sectors and present the
time and fair financial position of the enterprises. The role is of utmost
importance in any organization. An organization can only grow or profit when
the resources can only be well managed if accounting department of the
organization give accurate financial information to know how much the
enterprises having. It only when this is done that the firm allocate its
resources and knows what is to be done. The role of accounting seems to be more
pronounced in public enterprises. In recent times, there are
cases of misappropriation of funds in the public enterprises and improper
accountability. These factors have led to a lot of public enterprises go into oblivion,
if the government has recognized the role of accounting, all most of the
problems witnessed would not have occurred. No enterprises can more forward
without having a well organized financial department to give accurate
financial, information about the firm. This is because if improper accounting
records are not minimized or where possible eradicated these is bound to be
cases of public enterprises failure.
- Statement Of Problem
There
is this expectation from the government and the people that the collection of
revenue in form of taxes from the public and earnings from other sources will
help to ameliorate the living condition of the people by raising the living
standard and providing employment to the unemployment youth Agara (2015).
However, in spite of all this generated income, the living standard still goes
down the drains as the dreaded unemployment continue to rise, and there are
increasing cases of financial mismanagement in virtually all the public and
private organization in Nigeria. Obviously, every privates and public
entries in Nigeria has their accounting department and there are increase cases
of financial mismanagement in virtually all the public and private organization
in Nigeria. The problem of this study lies on how the manages of these
enterprises are able to recognizes the role of accounting in their enterprises
so that these cases of improper accountability will be minimized or if possible
its total eradication in our society.
1.3 AIMS OF THE STUDY
The major
purpose of this study is to examine Accounting and
public expenditure. Other
general objectives of the study are:
- To
examine how government budgeting can regulate public expenditures and improve
the productivity of public expenditures.
- To
examine how effective and efficient accounting system in public institutions
can ensure accountability and transparency in the execution of public
expenditures.
- To
examine the impact of accounting on Nigerian public sector.
- To
examine impact of standard costing on the control of public expenditures.
- To
examine the relationship between accounting and public expenditure.
- To examine government policies that
will promote accountability in public enterprises in Nigeria.
1.4
RESEARCH QUESTIONS
- How
can government budgeting regulate public expenditures and improve the
productivity of public expenditures?
- How
does effective and efficient accounting system in public institutions ensure
accountability and transparency in the execution of public expenditures?
- What
are the impacts of accounting on Nigerian public sector?
- What
are the impacts of standard costing on the control of public expenditures?
- What
is the relationship between accounting and public expenditure?
- How will government policies promote
accountability in public enterprises in Nigeria?
1.5 RESEARCH HYPOTHESES
H01: There is no significant
impact of accounting on Nigerian public sector.
H02: There is no significant relationship
between accounting and public expenditure.
1.6 SIGNIFICANCE OF THE STUDY
In
this study, the researchers have set out to examine the role of accounting in
the public sector in this country. Nigeria with the aid of highlighting the
inherent problem encountered in the account department of most organizations.
It is expected that this work will be of interest to the owners of business
enterprises, the government, students and the general public. To shareholders,
owners of enterprise, interested persons and the government, this study is expected
to en kindle their interest the more and they will take note of various
recommendations mentioned here and help steer the management team towards
forming a study organizations to present an accurate financial information of
their firm. This study will also help to serve as literature
to individual or corporate bodies into want to carry on further research on the
role of accounting in the public sector in Nigeria.
1.7 SCOPE OF THE STUDY
The study is based on accounting
and public expenditure, a case study of Central Bank of Nigeria, Edo state.
1.8 LIMITATION OF STUDY
Financial constraint– Insufficient fund tends to impede the
efficiency of the researcher in sourcing for the relevant materials, literature
or information and in the process of data collection (internet, questionnaire
and interview).
Time constraint– The researcher will simultaneously engage in this study
with other academic work. This consequently will cut down on the time devoted
for the research work.
1.8 DEFINITION OF TERMS
Accounting: The
theory and systems of organising and summarising information about financial
and economic activities. Good accounting systems are essential for budget
management, financial accountability and efficient decision-making.
Central Bank: A public institution responsible for
performing monetary policy functions such as issuing currency, managing
international reserves, and accepting deposit liabilities to other banks. The
central bank also acts as the lender of last resort, and, frequently, provides
fiscal agent services to the central government (e.g. managing the government’s
treasury single account).
Expenditure: The term
“expenditure” is sometimes loosely used to refer to cash payments. However, a
strict definition is the cost of goods and services acquired, regardless of the
timing of related payments. Expenditures on goods and services occur at the
times when buyers incur liabilities to sellers, i.e. when either (a) the
ownership of the goods and services concerned is transferred from the seller to
the new owner; or (b) when delivery of the goods and services is completed to
the satisfaction of the consumer.
Public Expenditure:
Public expenditure studies the fundamental principles that govern the flow of
government funds into various streams. This is the most important component of
public finance as it determines the destiny of a nation, for generally it
involves heavy commitment of funds in long term projects; the failure of which
may turn out to be disastrous to the nation.
