1.0 BACKGROUND TO THE STUDY
The essence of public accountability in the present dispensation
demands a great attention of which the promptitude of producing accurate
and comprehensive financial statement cannot be dispensed with.
Government accounting system particularly those found in ministries
have been designed primarily to achieve accountability and control, for
instance, to ensure that expenditure conforms with authorization and
that financial transactions are conducted in accordance with established
rules, such arrangement satisfy some of the basic control needs of the
executives and the legislature, but they do not themselves guarantee
In 1988, the civil service reform was undertaken to bring about
standard result by putting life into professionalism of the service such
government undertaking are normally concerned with how, efficient a
local government makes use of its available means in pursuit of its
Obviously, the aim of creating local government is to make sure that
grass root development (villages) are properly taking care off with
their available financial and material and support from federal. The
objective of the 1976 reforms was to create a local government system
with complete and self-contained budget that would be effective and
effectual. Before the reforms, Nigeria local government councils from
their inception had suffered serious problem of improper accounting and
internal control system (Wawhoop, 1979 : 16).
One of the commonest methods of measuring performance and result in
organization is accounting system. If local government account is not
properly checked through internal control, grass root development will
be hindered. This is because it provides information to the management
to enhance proper administration. The America Association of
Accountants, defines accounting as the process of identifying, measuring
and communicating of economic information to permit information
judgment and decision by users of the information the American Institute
of Certified Public Association (AICPA) (1961), defines accounting as
the art of recording, classifying and summarizing in a significant
manner and in terms of money, transaction and events which are in part
at least of a financial character, and interpreting the result thereto.
The author of the project defines accounting as the art of recording,
classifying and summarizing, analyzing, interpreting and reporting on
financial transactions and position of an organization to the interested
persons or bodies.
This last definition by the author, is because whenever two or more
persons come together to form a union or an organization, the next thing
is that money must be involved, local governments, administration and
many organization desiring more effective use of causes means are at
great advantage in the use of information made available by accounting
Such information includes costs analysis in relation to output and
objective and control which involves setting of budget. Analysis
variance between actual and budgeted. There is also anticipation
managing liquidity and making forecast of each flow and strategic
decision making which involves appraising investment proposal and
allocation of resource between task-cost benefit analysis.
Smith defines local government account as the art of systematically
recording in money transactions undertaken by a person or body. The
local government accounting has been restricted to a “process of
recording, analysis, classifying, communicating, summarizing and
interpreting the financial information or transaction about government
in aggregate and in details reflecting all transaction of government
funds and properties.
The day to day conduct of a local government financial activities is
guided by the financial memorandum which provides detailed instruction
and guidance on the financial memoranda is charged with among other
thing” the prescription of certain financial arrangement of local
government and procedures in collection and accounting for revenue and
controlling and accounting for expenditure.
Finally, there can be a local government where there is an affective
accounting system without an efficient and effective internal control
instituted to check the excess of the accounting officials in local
governments. In Enugu south local government, internal control system
helps in prevention of frauds among the executive and account officers.
Majority of the staff that is working under treasury department, tax
department, revenue department has at least two cars. They enjoy
government cars and buy first class cars for they personal use. This is
because many of them embark on fraudulent act coupled with embezzlement
and this brought about late payment of staff salaries. In order to stop
this, Enugu south introduced proper internal control, which help them
to trace down those executives who have criminal mind. Their bad
character causes a lot of problems.
The accounting system and method of internal control is very important in local governments and because of its important.
Luttleton (1953) defines accounting system as the control purpose of
accounting to make possible the periodic matching of costs and revenues.
Also internal control is define as the whole system of controls,
financial or otherwise, established by management n order to secure as
far as possible, the accuracy and reliability f the records, run the
business in an orderly manner and safeguard the company’s asset this
definition is by Osita Aguolu in his book fundamentals of auditing
1.1 STATEEMNT OF PROBLEMS
PROBLEMS OF LOCAL GOVERNMENT ACCOUNTING SYSTEM
The local government accounting system is being complicated by
several problems. These problems hinder the effective accounting
system. Some of these problems are discussed below.
1. The local government accounting does not allow the
publication of local government account. This is a problem to the local
government accounting system because there will be no object of
comparison between two local governments and thus see how it stands.
There is a lack of competition between local governments (especially
Enugu South) as provision of services and revenue generation. This
prevents local government indigenes of improved services, and the state
and local government lack sound criteria for allocating funds to local
2. The record keeping are seriously limited to mere clerical
staff. Even the senior staff of the local government are being
restricted from the records of the local government the clerical staff
find it difficult to pint out the areas, that need adequate attention.
The implication of this is that the strategic aspect of managing local
government such as alternative source or revenue, performance appraisal,
future development project, staff straining do not get the adequate
managerial attention they deserve.
3. A few information is being provided for decision and
planning. For example comparable information on ratio of capital to
recurrent expenditure, or revenue and various analysis of such cost
revenue over many years is not usually available in Enugu south local
government this is why it is difficult to set down criteria evaluating
the effectiveness of a particular course of action or for that matter
for the effectiveness of the local government.
4. Staff are frequently accused of mismanagement of funds. Due
to lack of published account by the local government, staffs are being
accused of living above their means. The indigenes of local government
lack proper information as to the local government spend, and this will
give rise to rumour managing and trouble within the local government.
5. Inadequate care over control and record keeping. This may
mean that fraud, theft, over invoicing and other irregularities may not
be detected since accordingly. This may also head to a tendency for
ignoring the implication of such, records for the effective utilization
of resource. In Enugu south local government.
1.2 PURPOSE OR OBJECTIVES OF THE STUDY
- To bring to focus the objective of internal control
- It examines the accounting system in the local government and the method of internal control obtainable in it.
- It examines the difficulties an problems encountered in carrying out basic accounting system in a local government.
- It examines the different boos of accounts and principle adopted in the records.
- It provides information needed by the management for sound decision.
1.3 SCOPE OR DELIMITATION OF THE STUDY
The scope mainly cover the accounting system and method of internal
control in local government with particular reference to Enugu south
local government area in Enugu state.
Due to financial and time constraints, this study has been limited to
a particular government that is Enugu south local government in Enugu
1.4 SIGNIFICANCE OR RATIONALE OF THE STUDY
At the end of the study, we will be able to explain the benefits to
be gained by the local government from the findings of the study and
also whether accounting system is important to local government.
There appears to be a large gap between the public expectation that
accounting system and internal control should be implemented in local
government. It is hoped that the study will solve the issues of the
completion of this study.
DEFINITION OF TERMS
SYSTEM: This is defined by advanced learner dictionary as a set of
ideas, theories, principles or as a group of thing or parts working
together in a regular basis.
ACCOUNTING: This is defined by the American Association of
Accountant as the process of identifying, summarizing, communicating
economic information to permit informed judgment and decisions by users
of the information.
CONTROL: This is the power or authority to direct information or activities over people.
INTERNAL CONTROL: This involve the whole system of controls,
financial or otherwise established by management in order to secure, as
far as possible, the accuracy and reliability of the records, run the
business in an orderly manner and safeguard the organization or company
ACCOUNTING SYSTEM IN LOCAL GOVERNMENT: Is a process of recoding,
analyzing, classifying, summarizing, communicating and interpreting all
financial information about government in aggregate and in detail
reflecting a transaction involving receipt, transfer and disposition of
government funds and properties of the local government.