THE ROLE OF ACCOUNTING IN THE CONTROL OF PUBLIC EXPENDITURE IN NIGERIA
(A CASE STUDY OF CENTRAL BANK OF NIGEIRA [CBN])
In recent times some of the public organizations in Nigeria have been faced with cases of financial crisis. Those of them survived more in a snail pace. Obviously the causes of financial crisis in our public sector have been attributed to total negligence of the roles of accounting in our public organizations. This research work will look into the role of accounting in the control public expenditure in Nigeria. It will try to analyze the implications of applying the accounting principles in our public organizations and then look at how these principles controls the operations of the public sector organizations in Nigeria. In a bid to achieve a meaningful research study work, this research will review related literatures on the role of accounting in the control of public sector in Nigeria. Oral interview will also be conducted with the managers of the selected public organization in Nigeria. Other supplementary instrument will be data that will be collected from periodicals and existing literature. The data that will be collected will defines descriptively, with tables in these research work.
On the course of writing this project study, there are factors which should be considered like finance, Access to library facilities and limited time and difficulties in obtaining required information. In finance, our project used to be joint project but now it has to be an individual student. Atimes there is difficulties in obtaining the required information from the respondents of the company because of the current problem some of the company is going through. Consequent upon this, recommendations will be made in how or the steps that will be taken to eradicate these set backs and deficiency in the system.
TABLE OF CONTENTS
Table of content
1.1 Background of study
1.2 Statement of problem
1.3 Objective of study
1.4 Research question
1.5 Significance of the study
1.6 Scope and limitation the study
1.7 Limitation of the study
1.8 Definitions of terms
2.1 Historical development of Accounting in Nigeria
2.2 The nature of accounting principles
2.3 Nature of accounting principles
2.4 Types of accounting principles
2.5 Factors affecting accounting principles
2.6 Budgeting and budgetary control
2.7 Standard costing as a tool for control
3.1 Research Methodology
3.2 Research design
3.3 Determination of sample
3.4 Area of study
3.5 Population study
3.6 Sample of study
3.7 Method of investigation
3.8 Method of data analysis
3.9 Development of research instrument
4.1 Presentation of data & Analysis
4.2 Presentation of data
4.3 Analysis of data
5.1 Summary of findings
1.1 BACKGROUND OF THE STUDY
The formation of CBN started gradually in the early 1950’s but gathered momentum by the middle and towards the decade. Precisely CBN was established in 1958. Among the factors that led to the formation for an apese financial institution in the early “50s” were the dissatisfaction and short coming to the West African currency board. The WACB established in 1912 was playing the role for an apese monetary institution in the British West Africa especially in areas of the country.
The issue of West Africa Currency exchanging this with the existing currencies, investment of reserve mainly in London and the repatriation of existing currencies. However, because of the anomalies and short coming of the WACB especially as if could not perform the monetary management, Nigeria nationalist continued to amount pressure on the colonial administration for the establishment of a central Bank that should have all pioneers of a central bank, and not just a glorified currency exchange house.
In 1952 at the floor of federal house of Assembly (First sitting) Lagos-Chief Anthony Enahoro Summoned up courage and mored a private member motion calling for the establishment of central Bank for the purpose of rapid economic development in all its phases.
However, as result of the composition of he house then and lack of awareness of the importance of central bank on the part of some Nigeria members the bill failed. Even though the motion was not successful, it stirred the hornet comb. It gingered the colonial office in London Administration appointed Mr. Fisher, a Senior staff of Bank of England, to inquire into the desirability and practicability of establishing a Central Bank of Nigeria as an instrument for promoting the economic development of the country.
In the same year, while fisher was submitting his report to another independent term of financial expects were in Nigeria from world Bank (international Bank for reconstruction and development) with a mission like that of fisher at examining the desirability and practicability of establishing a central bank of Nigeria.
The World Bank missions were more objective in their report and less inclined to perpetual economic dependence. They really agreed with the recommendation of fisher on the instability of the financial environment as a result of weak money and market instruments but they were quick to add, that the continued political and economic advancement of Nigeria is bound to lead to the establishment of a central bank. In 1957, even though Nigeria had not totally got her indigence, but she gained the autonomy of self internal rule. The nationalists did not waste time in commissioning another financial expert from Bank of England J.B Loyness to advise then as:
i. The establishment of a federal institution to perform appropriate central banking functions.
ii. The introduction of Nigerian currency and the administration of such as currency so as to presence in external value and its acceptability within the country.
iii. The relationship of the federal institution to the federal and regional government, to government institutions, to the commercial Bank and to the public and
iv. The role of such an institution in the development of a local money and capital market. The report of JB Loyness led to establishment of the central Bank of Nigeria (CBN) by the Central bank of Nigeria ordinance of 17th March, 1959, The bank officially commenced business on 1st July, 1959.
OWNERSHIP AND CONTROL OF CBN
The 1959 Central bank ordinance of Nigeria established the CBN with an authorized capital of $1.5 million (123m) which was fully paid up by the federal government of Nigeria. The Bank was 100 percent a public company, and there was no provision in the ordinance of 1958 establishing the bank and subsequent amendments there of required the bank to maintain a general reserve fund from profit arising from its operation the rate of the reserve and was dictated by the prevailing economic condition at that point in time.
Furthermore., the 1958 central Bank ordinance provided that the Bank should transfer one eight (1/8) of the net profit made every year to the fund (general reserve) until the fund is equal to the paid up capital (the proceed should be used to pay the federal government for the amount contributed) and therefore only 1/16 of the profit for each year was to be transferred to the fund. Meanwhile the balance of the profit would be appropriated in the following manner.
i. 50% of the balance to be applied for retirement of any outstanding obligation of the federal Government to the Bank in respect of cost of printing, mining shipment of the initial of the Bank notes and coins.
ii. The remaining 50 percent as to be paid to the president appoints the governor of the CBN (on the advice of the senate 1979 constitution and 1995 draft constitution). Infact CBN is directly under the federal ministry of finance i.e. the governor who in turn reports to the president. This war amended by the military in 1997.
In 1997, with the presidentialization of key ministries in Nigeria, the CBN has been sent the presidency, and the governor who is solely appointed by the military president reports directly to him (the president). The board of Director of the bank under this system is equally appointed by the president.
In 1999, when democracy returned Back to the state/country (Nigeria). The president appointed the Governor of the CBN, but the Governor report to the ministry of finance. The CBN governor Mr. Solud Economist by profession. The ministry of finance is Mrs. Ngozi Okonjo Iwuani, Doctor by profession.
The central Bank of Nigeria took after the British pattern (the Mother of all central Banks) in many respects especially in organization and management. Infact, the first governor of the bank in British Mr. Fanton, was seconded from the bank of England.
To cope with defects of the economic development couple with the recommendations of the international finance experte the CBNs Board was re-organized for more efficiency. In order to be able to face the challenge of the time, the membership of the Board was enlarged to thirteen, the Governor, the Deputy Governor, three executive Directors and eight part-time Directors, (The central Bank of Nigeria Decree No 24) of 1991 went further to enlarge the Board by increasing the member to eleven made up of a Governor, five Deputy Governors and five Directors, while the Decrease (1991) assigns the responsibilities of policy and general administration of he affairs and business of the Bank to the Board, the fire major department see figure 1.1 below. The decree also stipulate that the governor and the Deputy Governor should be appointed by the president in the first instance for a term of five years and each should be eligible for re-appointment for another not exceeding 5 years.
Moreover, the Apex policy making body of the bank is the board of directors. At the incept, the enabling law establishing the bank shall comprise seven members, the Governor (who is the chairman) the Deputy Governor and five party –time directors. The ordinance went further to stipulate that it was the responsibility of the Governor General to appoint the Governor and the Deputy Governors of the bank while the appointment of the part-time directors was responsibility of the prime minister.
Some of the activities of the bank as we shall see are decentralized while others are not, while the ministry and policy formulations are done at the Bank lead office in Lagos (now Abuja), the banking operations of the Bank is decentralized. To facilitate the efficient execution of the bank functions over the Nigeria’s vast territory, some central banking activity are decentralized and operate through four zones. Bauchi, Enugu, Ibadan and kano. In addition to the zonal centres, there is a branch network whereby each state capital in the federation has a CBN Branch.
The 1958 Central Bank ordinance placed the bank CBN under the federal ministry of finance and Development so that the Board of Directors reported to the Minister who in turn reported to the head of state. However, in 1988, as part of the military re-organizations in the country aimed placed under the presidency. This arrangement is still stating under this arrangement CBN is independent of the Federal Ministry of finance and report directly to the president. This nites has been reserve again in 1997.
ORGANIZATIONAL CHART OF THE CBN
Board of Director
Source: CBN BREIFS: JUNE 2011
1.2 STATEMENT OF PROBLEM
Obviously, every private and public enterprise in Nigeria has their accounting department. And there are increasing cases of financial mismanagement in virtually all the public and private organization in Nigeria.
The problem of this study lies on how the managers of these enterprises are able to recognize 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 OBJECTIVE OF THE STUDY
This study includes investigate the role of accounting in the control of public expenditure in Nigeria. The purpose of this study include among other others.
i. To determine the extent to which accounting is generally affects the economic activities of the public section in Nigeria
ii. To examine how managers adequately and efficiently apply the role of accounting in their organizations.
iii. To disseminate certain factors that affects the accounting departments of most organizations which makes them not to function as expected
iv. To determine government policies which aid to promote accounting in all public enterprises in Nigeria.
1.4 RESEARCH QUESTIONS
1. To what extent do accounting records generally affect the economic activities of public enterprises?
2. Do managers adequately and efficiently apply the role of accounting in their organization?
3. What are the factors that have negative effect on accounting departments of most organizations which make them not to function effectively as expected?
4. What are those government policies which aid to promote accounting in Nigerian public enterprises?
1.5 SIGNIFICANCE OF THE STUDY
In this study, the researchers have set out to examine the role of accounting in the public sectors in this country. Nigeria with the aid of highlighting the inherent problem encountered in the account departments 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 shareholder, owners of enterprises, interested persons and the governments, this study is expected to enkindle their interest the more and they will take note of various recommendations mentioned here and help steer the management team towards forming a sundry organizations to present an accurate financial information on their firm. This study will also help to serve as literature to individual or corporate bodies who want to carry on further research on the role of accounting in the public sectors in Nigeria.
Grossarchive.com will only provide papers as a reference for your research. The papers ordered and produced should be used as a guide or framework for your own paper. The contents of the papers should be able to help you in generating new ideas and thoughts for your own project.
It is the aim of grossarchive.com to only provide guidance by which the paper should be pursued. We are neither encouraging any form of plagiarism nor are we advocating the use of the papers produced herein for cheating.
TERMS AND CONDITIONS
Using our service is LEGAL and IS NOT prohibited by any university/college policies
You are allowed to use the original model papers you will receive in the following ways:
1. As a source for additional understanding of the subject
2. As a source for ideas for you own research (if properly referenced)
3. For PROPER paraphrasing (see your university definition of plagiarism and acceptable paraphrase)
4. Direct citing (if referenced properly)
Thank you so much for your respect to the authors copyright.
For more project materials
Log on to www.grossarchive.com