FINANCIAL CONTROL AND ACCOUNTABILITY IN THE PUBLIC SECTOR ( A CASE STUDY OF ABIA STATE MINISTRY OF FINANCE)
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FINANCIAL CONTROL AND
ACCOUNTABILITY IN THE PUBLIC SECTOR
( A CASE STUDY OF
ABIA STATE MINISTRY OF FINANCE)
ABSTRACT
The primary concern here is to identify
to what extent good accounting system in the Public Sector can ensure Financial
Control and Accountability in the Public sector Financial or is a critical
factor in management and therefore must be prudently handled and accounted for
if the public sector is to realize its goals and objectives. It is on
this account that this research work has been undertaken to try and unravel the
reasons why government ministries and department most times finds it difficult
to control and properly account for finances available to them. Subsequently, a
number of reasons have been deduced as being responsible for poor financial
control and accountability. They include; Poor implementation of financial
regulations, lack of effective internal control system, inadequate reward
system and sharp practices by public
servants.
The Abia State Ministry of Finance was used as case study, and information was
sourced through sampled population in the Ministry by means of questionnaire.
Data was collected, analyzed and interpreted using tables and chi-square.
Findings showed that unless financial regulations are strictly followed and
defaulters punished accordingly, financial control and accountably may still
elude the public sector.
TABLE OF CONTENTS
Chapter One
1.0
Introduction
1.1
Background of the
study
1.2
Statement of Research
problems
1.3
Objectives of the
study
1.4
Research
question
1.5
Research
Hypothesis
1.6
Scope of the
study
1.7
Limitation of the
study
1.8
Significance of the
study
1.9
Definition of
Terms
1.10
Theoretical
Framework.
Chapter two
2.0
Introduction
2.1
Financial Regulation in the Public
Sectors
2.2
Methods of financial control in the Public Sector
2.3
key officers in Government Accounting and
their
Responsibility
2.4
Objectives of financial control and accountability
2.5
problems of financial control and Accountability in
the Public
Sector.
2.6
Conclusion
Chapter three
3.0
Research Design and
Methodology
3.1
Study
Population
3.2
Sampling and sample techniques
3.3
Research
design
3.4
Sources of
Data
3.5
Research
instrument
3.6
Validity and
Reliability
3.7
Method of data analysis
3.8
Method of Data collection.
Chapter four
4.1
Data presentation and
Analysis
4.2
Background of sample
elements
4.3
Distribution of sample
element
4.4
Finding and Analysis of questionnaire
4.5
Testing of Hypothesis.
Chapter five
Introduction
Discussion of
Findings
5.1
Summary of Findings
5.2
Conclusions
5.3
Recommendations.
References
Appendices
CHAPTER ONE
INTRODUCTION
1.1
BACKGROUND OF THE STUDY
Government activities nowadays have
largely increase. The increase in government functions and activities come as a
result of the complex nature of the modern society. For government to live up
to its responsibility, care must be taken in the management of scare resources
available to achieve these laudable goals.
Other than maintenance of law and orders, peace and stability, government
is also involved in providing social services such as provision of good roads,
transport, portable drinking water, power and energy etc. All these
services need money (finance). It is also the duty of government to generate
revenue for the achievement of its set goals and objectives- creating social
welfare and harmony in the society.
Finance is a critical resource in the chain of production and therefore must be
prudently used to achieve results. It is on this premise that financial control
and accountability in public sector becomes imperative. This research work
attempts to discover the reason(s) behind poor performance by government in
relation to financial control and accountability in the public sector.
Government agencies or the public sector is very heterogeneous in nature and so
the nature of financial control is completely different from that of the
private sectors in so many ways. At one end we have government
owned companies that must be operated like private business, in the
middle, our parastatal, that are somewhat amorphous, often having conflicting
goals to achieve and then the government machinery itself which is a services
outfit, (Azubuike and Njemanze 2006, 15)
Consequently upon the heterogeneous nature of the public sector, the financial
regulations guiding the activities or financial transaction in public sector is
contained in the law setting it up. Some of such financial statutory
regulations are:
a.
Finance (Control an Management) Act 1958
b.
The Nigerian Constitution
c.
Financial Memorandum
d.
Financial Regulation
e.
Gazette
f.
Treasury and circular Letter
g.
Accounting manual.
These regulatory framework of
public sector accounting mentioned above are applied in varied ways depending
on the mode of operation of the government agencies or ministry.
Amara (2009) sums up the benefit of financial control and accountability in the
public sector as follows:
-
It justifies the estimates of public sector.
-
It ensures and superintends the use of appropriated funds
-
It is device for timing the rate of expenditure and auditing of accounts
In the same vein, Johnson (1999) also
list a number of importance associated with financial control and
accountability to include the following.
1.
That it provides the broad and specific accounting system adopted in recording
financial transactions.
2.
Ensure that transactions remain within the framework of law and
further reduces the risk of fraud
3.
It provides the basis for financial management and control
The Abia state Ministry of finance is
one of the parent ministries in the Abia State Government. The state governor
is the chief accounting officer of the state. He is the executive head of
government and head of the executive council of the executive arm of
government.
As the minister of finance is the chief accounting officer in the federal
ministry, the commissioner is also the chief accounting officer in Abia State
finance Ministry outside the permanent secretary. The ministry has other
departments and units, some of which include Auditing department, board
of internal revenue, statistics and record, accounts unit, budget and
logistics among others.
The ministry of finance is in charge of rendering accounts and
controlling all financial transactions. The ministry through the
accountant-general of the state is saddled with responsibility of general
supervision of all the accounts of the different ministries and departments within
the state, and prepares the annual financial statement of account of the state
as required by the ministry.
The finance Ministry is vested with the statutory responsibility of auditing
the state accounts as provided by the financial regulations. The Auditor
–general is empowered by law to audit the account of all accounting officers
and all persons entrusted with the collection, custody, receipts, issues or
payment of public funds, (Adams 2001).
Ministry of finance in the Abia State government is populated with one hundred
employees who make up workforce of the ministry. These are the people
who are responsible for ensuring compliance with the laid down procedure for
financial transactions as contained in the financial regulations and legal
books
1.2
STATEMENT OF RESEARCH PROBLEM
Nigerian Public Sector is plagued with
a number of problems. These problems hinder it from discharging its duties and
responsibilities effectively and efficiently for the betterment of the people.
One of such problem is that of financial control and accountability.
Financial control and accountability becomes a problem when there is no strict
measure to ensure compliance with the laid down regulations guiding financial
transaction and accountability in public sector. In other words, the lack of
justification of estimate, superintending the use of appropriated funds and
timing the rate of expenditure and auditing of account constitute the problems
which triggers this investigation
In addition to the above mentioned problems, other problematic areas in the
public sector finance includes:
·
Fraudulent practices by public officer and agencies.
·
Maintaining and operating proper accounting system as required by
law.
·
Inadequate internal system in each unit.
·
Problem of poor coordination
1.3
OBJECTIVES OF THE STUDY
Within the ambit of this research topic, “Financial control and accountability
in Public Sector”, The purpose of study is not far fetched. The purposes
of the study can be summarized in these ways:
(a). To determine ways of checking
fraud.
(b). To ascertain to what extent
compliance with financial regulations can help government in achieving set
goals and objectives.
(c) To establish standard and
appropriate financial system for recording and extracting financial
information.
1.4
SIGNIFICANCE OF THE STUDY
This research work will be of immense
benefit to those in the top management cadre in the government ministries and
parastatals and to the general public. For top management, the information
gained from this work will help them streamline their financial regulation and
assist in fraud detection. Secondly, young researchers will also find the
result of this, work a very useful resources material for work. This is so
because the information have given them the basic knowledge needed to pursue
their work to a logical conclusion. On a more general note, the
research will also add to the existing body of knowledge in the subject matter.
Conclusively, this work will as a matter of fact help public organizations know
whether or not they have appropriate control mechanism in terms of recourse
management and fraud detection.
1.5
RESEARCH HYPOTHESES
Research hypothesis are tentative
statement of propositions made about the research in a testable or verifiable
manner. The term “verifiable” or “testable” as used here mean that
hypothesis can be accepted or rejected.
Therefore, the following research
hypotheses are formulated based on the research problems stated above:
Ho1:
Fraudulent practices by public servants is not a hindrance to achievement of
public sector goals and objectives.
H1:
Fraudulent practices by public servants is a hindrance to
achievement of public sector goals and objectives.
HYPOTHESIS II
Ho:
Maintaining and operating proper accounting system
as required by law is not a means of ensuring
financial
control and accountability.
H1: Maintain and
operating proper accounting system as
required by
law is a means of ensuring financial
control and
accountability.
HYPOTHESIS III
Ho:
Internal control system does not contribute to financial
control and
management.
H1:
Internal control system contributes in financial control and management.
1.6
THEORETICAL FRAMEWORK
The public sector accounting concepts
are numerous. For this research work, the most appropriate concept or
theory on which this research can be analyze is the matching concept of
government accounting.
Matching theory of government accounting holds that for any
accounting period, the earned revenue and all the incurred cost that
generate that revenue must be matched and
reported for the period (Oshisam 1992). This concept only applies to economic
unit in the public sector, which seeks the determination of profit or adopts
the accrued basis of accounting (Adams 2001)
In other words, the matching concept of government accounting means that cost
and expenses should be tied to the revenue and its associated costs and expense
are accounted for in the same accounting period. This concept succinctly
explains financial accountability in the public sector.
1.7
SCOPE OF THE STUDY
The research work is aimed at examining
the effect of financial control and accountability in the public sector. On
this account, a case study of Abia State Ministry of Finance is chosen.
Therefore is delimited to Abia State Ministry of Finance alone.
1.9
RESEARCH QUESTIONS
i.
To what extent strict compliance with financial regulations can help government
ministries in achieving goals and objectives.
ii.
How does financial control check fraud in government circles?
iii.
How can financial control and accountability aid in establishing appropriate
system for recording and extracting financial information.
iv.
To what extent does accountability ensure judicious use of public funds?
1.10
OPERATIONAL DEFINITION OF TERMS
According to Aguwa (2005), the primary
goal of operational definition is to remove ambiguity wherever it is likely to
occur in the research work. Therefore where there is no likelihood of ambiguity,
it becomes unnecessary to define terms. The technical or ambiguous
terms used in this work are the only ones being defined.
MANAGEMENT:
For the purpose of this research, management means or connotes ‘the condition
of being prudent in the use of scarce resources.
ACCOUNTABILITY:
Accountability in this research work is considered as the quality of being
answerable to one’s action or conduct.
CONTROL:
Control means ensuring that the functions of the different unit and agents in
the public sector do not work at cross purposes but in rhythm to ensure
achievement of corporate goals.
INTERNAL CONTROL:
Auditing guideline defines internal control as “the whole system of controls,
financial and otherwise established by management in order to carry out
government business”
GOVERNMENT FINANCES:
Government finance refers to the wide range of activities undertaken by
government in financial and economic matters (The new Encyclopedia Britannica
1988).
ETHICS:
Ethics simply put refers to what is ‘right’, just and what ‘just’
in the decisions and actions that affects other people as a
financial or accounting officer or manager in the public sector.
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