IMPACT OF ACCOUNTING AND FINANCIAL CONTROL SYSTEM ON PUBLIC SECTOR FUND MANAGEMENT (A CASE STUDY OF EBONYI STATE UNIVERSAL BASIC EDUCATION)
BACKGROUND OF THE STUDY
Public sector is the sector of the economy established and
operated by government and its agencies as distinguishable from the private
sector. Public sector accounting on the other hand is the process that the
government agencies and its municipalities use to record its financial
transactions. The financial control of the Public Purse is in the hands of
Government administration. Government business whether in form of policies, programmes,
activities or functions, are formalities that become rigorous especially in
relation to the accounting and reporting for the collection and use of
government fund which supports the process of governance. Public accountability
is not a new phenomenon it is old as man in his social relations with his
fellowman. This is because in ancient times, the Accounts of estate domain or
manor were examined by reading them out by those compiled them to the persons
in the authority. Thus, there was an element of answerability in government.
Today, however, public accountability involves the addition
to stewardship assessing whether the uses of allocation of resources yield more
benefit than another, this makes public accountability more complex with
various consequences especially when decisions taken by public officers are
brought under open and public scrutiny. The scrutiny is often being done by
people who are not involved in making such decisions and/or those capable of
understanding the intricacies of such decision, therefore, public
accountability can be vague articulate depending on the understanding and
ethical standards of the group defining it. According to Mathias (2004), the
focus of public sector accounting is somewhat different from the private sector
accounting theory. He opined that most government agencies and municipalities
need to track funds generated from tax revenues and expenditures related to
projects or appropriations. He added further that nations may need to follow a
set of standard of accounting principles different from the private sector
accounting rules. It must be recognized that the creation of an international
accounting standard helps nations to follow similar rules in other to present
accounting information in a similar manner. Government accounting and financial
control system typically uses a set of rules that track financial information.
Rather than attempting to determine how-much money a public sector entity has
made, the entity must report financial information to interested parties,
primarily constituents. The separation of money into these funds makes it
difficult for government agency or municipality to spend money on unauthorized
purposes. Appropriation or spending authorization must be created through
legislation to transfer funds amongst government fund accounts. This process
attempts to restrict the spending of money on a free will basis that will
quickly deplete an agency’s resources.. Looking at government and public sector
accounting and financial control, public sector which is that sector of the
economy established and operated, by the government and its agencies, this
distinguished it from private sector and it is organised on behalf of the whole
citizens as they are expected to make minimum profit from their operations.
Orewa (1978), emphasized that one of the main reasons why local government
council exists is to collect various forms of revenue from its citizens or the
federal government and then use the collected revenue to provide social
services in an efficient manner as possible. The plan of expected cost of
various services has to be prepared periodically and be provided on the coming
year. The circle of poverty in Nigerian local government Adedeji (1972),
referred to as due to inadequate functions and powers, inadequate finances, low
calibre and poorly paid staff, corruption and poor performances of the employed
staff and members of the local government council. The scope of services
classified as being in the public sector will vary slightly from one country to
another, and most will include services that are freely available to all
citizens, even those who do not contribute to the upkeep and maintenance of
those services. This means that services considered within the public sector
benefits virtually everyone, even those who do not directly make use of the
services. Education is another example of service provided in a public sector.
Nations that support a public school system typically do so without requiring
students to pay tuition or fees to take advantage of learning opportunities
found in a primary education system. In addition, individuals who are not
directly involved with the system still benefit from the presence of the
schools, since graduates are better equipped to function in the community in
terms of securing employment and participating in activities that help to
improve the quality of life in that community.
1.2 STATEMENT OF THE PROBLEM
It is argued that there may be failures to understand the
impact of internal control system in public sector until the public sector runs
void of financial controls. The absence of adequate financial control measures
exposes the financial management of public sector to certain threats such as
incorrect financial statements, loss of government assets, mismanagement of
government vital documents, incorrect and unreliable financial records which
may lead to loss of government integrity, and implementation of accounting
policies inconsistent with the applicable legislation.
However, there is a general perception that institution and
enforcement of proper internal control systems may lead to improved financial
management. It is also a general belief that properly instituted systems of
financial controls improve the reporting process and also give rise to reliable
reports which enhances the accountability function of management of an entity.
Nevertheless, available literature indicates that in spite of elaborate system
of controls in organizations, financial management has been elusive in most of
these organizations (OAG, 2010). Therefore, all aspects of financial management
in public sector organizations should operate in an environment where there is
confidence in the veracity of the financial information being used. Hence, the
public sector requires robust systems of financial controls supported by
effective audit and assurance arrangements. This necessitated this study which
sought to establish the effect of internal controls on financial management in
AIMS OF THE STUDY
The major purpose of this study is to examine the impact of
accounting and financial control system on public sector fund management. Other
general objectives of the study are:
1. To examine the extent to which control activities affect
financial management in the public sector.
2. To examine how accounting and financial control affects
effective use of public funds.
3. To examine the impact of accounting and financial control
system on effective management of public funds.
4. To examine whether effective and efficient accounting and
financial control system in public institutions can ensure accountability and
transparency in the management of public funds.
5. To examine the relationship between accounting and
financial control system and management of public sector fund.
6. To examine ways for implementing effective accounting and
financial control system on public sector fund management.
1.4 RESEARCH QUESTIONS
To what extent do control activities affect financial
management in the public sector?
How does accounting and financial control system affect
effective use of public funds?
What are the impacts of accounting and financial control
system on effective management of public funds?
How does effective and efficient accounting and financial
control system in public institutions ensure accountability and transparency in
the management of public funds?
What is the relationship between accounting and financial
control system and management of public sector fund?
What are the possible ways for implementing effective
accounting and financial control system on public sector fund management?
1.5 RESEARCH HYPOTHESES
H01: There is no significant impact of accounting and
financial control system on effective management of public funds.
H02: There is no significant relationship between accounting
and financial control system and management of public sector fund.
1.6 SIGNIFICANCE OF THE STUDY
The findings of the current study may help identify gaps
within the systems of financial controls in public sector organizations.
Consequently, the research findings may be important in addressing these gaps.
The findings may also be of invaluable benefits to the management and those
charged with public sector governance since they are bound to enable them
streamline the systems of financial controls. Ultimately, the findings are
likely to ensure improved financial management and also attainment of the public
sector organizations’ objectives. The study may also add to the existing
knowledge regarding accounting, financial controls and financial management
particularly in the public sector. The study may generate knowledge to link
accounting, financial controls and financial management which may guide policy
makers in the planning for the public resources. The findings of the study may
be helpful to all academicians in finance and accounting, management, legal,
and other pertinent fields.
1.7 SCOPE OF THE STUDY
The study is based on the impact of accounting and financial
control system on public sector fund management, case study of Ebonyi state
universal basic education.
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
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
Public Sector: This is an area which belongs to the
government which deals with the production, ownership, sale, provision,
delivery and allocation of goods and services by and for the government or its
citizens, whether national, regional or local municipal.
Internal Control System: Internal controls are policies,
procedures, practices and organizational structures implemented to provide
reasonable assurance that an organization’s business objectives will be
achieved and undesired risk events will be prevented or detected and corrected,
based on either compliance or management initiated concerns.