STRATEGIES FOR ENHANCING FINANACIAL ACCOUNTABILITY IN THE LOCAL GOVERNMENT SYSTEM IN NIGERIA. (A CASE STUDY OF IKWO LOCAL GOVERNMENT AREA, EBONYI STATE)
In Nigeria, local government reform has been a continues exercise. No
single regime-colonial or indigenous, civil or military, regional or
state government that came to power passed without making attempt of
reforming the local government system. Even though the 1976 reform has
surpassed all its predecessors, it was in fact part and parcel of the
continuing structural adjustment of the country’s political evolution
and development. On the whole, the 1976 reform was a major departure
from the previous practice of local government administration; for
introduce a uniform system throughout the country.
The reform was first and foremost aimed at giving local government a
definite role in the country by making it a functional thrift tier of
government. The 1979 constitution indeed assumed the existence of local
governments and provided adequately for its functions and powers in the
second republic. Nevertheless, both it’s existence and functions were
to be provided for in a law to be enacted by state government.
According to section 7(1) of the 1979 constitution.
Ikwo local government came into existence in the year 1979 under
Enugu state before the present mother state Ebonyi state were created in
Since then, they have had up to 7 chairman, 10 sole administrator and
6 care taker committee chairman, in total 23 of them among which Mr.
V.E Nwoo was the first (Sept. 19979) and Hon. David Onuoha the present
1.1. BACKGROUND OF STUDY
The subject, financial accountability is vital to any organization be
it profit oriented or non-profit oriented. Lack of financial
accountability results in embezzlement, fraud and misappropriation of
The peculiar nature of Nigeria economy has made any topic in
accountability, financial or otherwise worth discussing. The value our
society attach to wealth, which nobody is concerned to how wealthy one
is, has made many people to begin to pursue wealth by all means thereby
ignoring the fact that they are accountable tot he public for the public
funds and properties entrusted I their care.
It is due to the problems mentioned above which are associated with
lack of financial accountability in any organization that has motivated
the researcher to choose the topic “strategies for enhancing financial
accountability in the local government system in Nigeria through a
system of control” Ikwo local government area in Ebonyi state has been
chosen as a case study in trying to discuss how effective internal
control will achieve financial accountability.
Internal control system comprises the plan of organization and all
co-ordinating method and measure, adopted within the management to
safeguard the assets of the organization, check accuracy and reliability
of its accounting data, promote operational efficiency and encourage
adherence to prescribed managerial policies.
This research focus on finding if the reference organization has
installed this control system and if so, how effective it is as to
enhance early detection of mistakes, deliberate misappropriation and
equally checks collusion, fraud or embezzlement of funds through proper
authorization, reliability of financial records, safe guarding of assets
and hence maintenance of financial accountability.
However, the ability of any organization t enhance its financial
accountability depends mostly on the type and effectiveness of it’s
internal control system.
1.2. STATEMENT OF PROBLEM
Every policy formulated or constituted would have been a success if they are being carried out.
But adherence to planned policies by employees are the problems of
managing organization. The problem of policy execution is further
compounded by the evolution of large organizations. There is therefore,
the need for an internal control system. Internal control is such an
indispensable tool in the hard of management if it wishes to obtain
adequate and useful information, protect organization assets and control
successive operations which lead to enhancing financial
accountability. Many control procedure whose effectiveness on
segregation of duties are being circumvented by the collusion of the
employees is yet another problem. The degree of compliance with the
control procedures are often to deteriorate due to negligence of duty.
Carelessness, mistakes and even personal factors. These factors are
problems to the organization and eventually undermine the effectiveness
and efficiency of the internal control system if not taken are of:
- How adequately are subordinates adhering to the internal control measure?
- What measure should management adopt to test observance of internal control procedures?
- Should internal auditing be an adequate means of checking circumvention of internal control measure?
- Should management rely on internal auditing to appraise the efficiency and adherence to internal control?
- Should the effectiveness of internal control be relief on for adequate financial accountability?
These questions prompt the need for a research study of the kind
embarked upon ere, and they are further addressed in subsequent chapter
of the project.
1.3. OBJECTIVE OF THE STUDY
The objective of an organization that maintains a good internal
control system is to maintain efficiency, profitability apparatus,
viability prospects and of course accountability of the entire
organization. It is the purpose of this study therefore, to have a
close look and know if there is any system of internal control existing
in the Ikwo Local Government Area. If there is, to know to what extent
this has assisted in attaining financial accountability in the local
The important areas which the researcher want to look into are as follows:
- To ascertain the step taken, when inefficiency is dictated I the
internal control system and to know the effect on accountability of the
- To know whether there is a system of adequate authorization and
recording to provide reasonable accounting control over assets,
liabilities, revenue and expenditures.
- To ascertain whether there is adequate division or segregation of duties at various levels of management in the organization.
- To understand a critical appraisal of the system generally and suggest solutions where the system is find ineffective.
- To suggest ways of enhancing early detection of mistakes, deliberate
misappropriation, checks collusion, fraud or embezzlement of funds.
1.4. SIGNIFICANCE OF THE STUDY
Financial accountability through different effective control has been
much discussed in the recent days in Nigeria. Every programme and
policy of organization has accountability as nor of the things that is
to be achieved. Due to lack of internal control system, most people
that were entrusted with public funds on many occasions embezzle them
without being held accountable for the sum.
Many has led to the folding up of some private and public
enterprises, which local government areas also suffer. To save these
ugly situations, investigations and corrections are to be made as regard
those things that cause ineffective internal control.
This is because the effect of ineffective internal control is lack of
accountability, increased losses and eventually reduction in the
organizations level of profitability. A control are therefore devised
and is this research, the importance of effective internal control
system is emphasized to enhance financial accountability in the local
government areas in Nigeria using Ikwo local government area as a case
Effective internal control system, I believe will enhance financial accountability.
This is because effective internal control system which
involves proper authorization that help management in planning,
segregation of duties which leads to early detection of mistakes and
deliberate misrepresentation, adherence tot he laid down policies of the
organization which lead to an effectiveness, regular checks and
supervision which make for proper accountability and adequate
competitive measure will go a long way towards preventing some refarious
activities. Such activities s fraud, misappropriation, embezzlement
and other social ills being perpetrated by some of the worker in the
local government area.
1.5. RESEARCH QUESTIONS
Based on the problem and objectives of this research the following questions abounds:
- Is effective internal control system possible control to enhance financial accountability?
- Can effective internal control system eliminate fraud and enhances a prudent allocation of an organization resources?
- Has Ikwo local government area being maintaining adequate division or segregation of duties at various levels of management?
- Can Ikwo local government area boast of adequate authorization and
recording to provide reasonable accounting control over assets and
liabilities, revenue and expenditure?
- Does effective internal control system enhance early detection of
mistake; deliberate misappropriation fraud and/or embezzlement of
1.6. RESEARCH HYPOTHESIS
The researcher has been able to formulate the following hypothesis from the above questions:
- Ho: (Null hypothesis) effective internal control system does not enhance financial accountability.
Hi (alternative bypothesis0 effective internal control system enhances financial accountability.
- Ho: effective internal control system cannot eliminate fraud and enhance prudent allocation of an organization resources.
- Ho: Ikwo local government has not being maintaining adequate division or segregation of duties at various levels of management
Hi: Ikwo local government has being maintaining adequate division or segregation of duties at various levels of management.
- Ho: Ikwo local government does not maintain adequate
authorization and recording to provide reasonable accounting control
over assets and liabilities, revenue and expenditure.
Hi: Ikwo local government maintained adequate authorization and
recording to provide reasonable accounting control over assets and
liabilities, revenue and expenditure.
- Ho: Effective internal control system does not enhance early
detection of mistakes, deliberate misappropriation, fraud and/or
embezzlement of management fund.
1.7. SCOPE OR DELIMITATION OF THE STUDY
Internal control is made up of administrative internal control and
accounting financial control. The former refers to the decision-making
process leading to the management authorization’s objective.
It is also basis of establishing accounting or financial control.
This is because the administrative control sees to the employment of the
right people and makes sure that they do their normal work assigned to
their the safeguarding of assets and the reliability of financial
records to ensure that transactions are executed with management
The areas the researcher covered include all the local
government activities especially those that can be reduced to financial
terms. The scope of the research is the accounting (financial) internal
control maintain accountability, as the topic suggests. Ordering of
revenue receipts and embarking on project revenue and expenditure
Though internal control is based concepts, the control
measures will be the only one to be computed for analytical purposes.
Respondents to the study will be spread over all the departments and
even beyond the organization. However, a certain sampling procedure as
will be seen later, is adopted to achieve a certain level of reliability
a concerned with those who can provide financial instructions on
information. The financial records will be studies to know the
effectiveness of the internal control system in Ikwo local government
1.8. DEFINITION OF TERMS
There are many variables that need definition under this heading. It
will however amount to exercise in question to use discernment to know
in advance which words and phrases will occur in the process this
research. Others will be added as they occur in the research findings
and literature review.
ACCOUNTABILITY: This is defined as the obligation
which one has to answer for one’s action in the process of discharging
his duties. This means that one is held to account or be answerable for
anything that is entrusted to his care anytime the need arises.
This is used to check the exercise s of the employees in an
organization as they are made answerable, accountable to their immediate
head or any others assigned to conduct the check.
ADMINISTRATIVE INTERNAL CONTROL: This is
concerned with the management process leading t authorization of
transaction and seeing that they are carried out. This management
function is aimed at achieving the objectives of the organization. It
is the starting point for establishing accounting control of
ACCOUNTING INTERNAL CONTROL: Financial
(accounting) internal control is concerned with the reliability of
financial records. The safeguarding of assets and provision of
reasonable assurance that there is accountability. This is done to be
in accordance with General Accepted accounting Principles (GAAP). This
is used for internal assessment and of help to find out variances.