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.