SYSTEM OF LOCAL GOVERNMENT AN APPRAISAL OF THE ACCOUNTING

  • Type: Project
  • Department: Accounting
  • Project ID: ACC0058
  • Access Fee: ₦5,000 ($14)
  • Chapters: 5 Chapters
  • Pages: 96 Pages
  • Methodology: chi saqure
  • Reference: YES
  • Format: Microsoft Word
  • Views: 1.9K
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SYSTEM OF LOCAL GOVERNMENT AN APPRAISAL OF THE ACCOUNTING
CHAPTER ONE

INTRODUCTION
1.1      BACKGROUND OF THE STUDY
 Local government is the third tier of government in Nigeria.  It has administrative structure, statutorily assigned functions, social commitments and financial arrangement necessary for it to maintain itself and perform statutory functions to its citizen.
The ideal of making local government a third tier of government Nigeria was recognized during the nation wide local government reform launched 1976.  However, it was given full legal recognition by the 1979 Constitution of the federal republic of Nigeria.  This recognition ever since then has enhanced the grass root participation at local level of government authorities.
The roles of local government council as put out in the fourth schedule of the 1979 constitution by the Federal Republic of Nigeria and as specified degree No. 12 of 1989 are as follows: the consideration and making of recommendations to a State Commissioner on economic planning or any similar body on the economic development of the State, particularly in so far as the areas of authority of the council and of the State are affected.
Apart from the aforementioned function assigned to local governments by the constitution, the local government in Nigeria (with effect from 1992) was made responsible for primary and adult education, primary health care and rural water supply.
To meet up with the enlarged responsibilities of local government, it is therefore, important that each local government explores and exploits potential continues for raising revenues.  Local government should in addition to their supplement any revenue sources such as government grants and statutory allocation, embark on profit yielding ventures in order to increase their revenue base.  An action in this direction is very necessary as it would enable the local government to discharge its responsibilities come out reducing the level and quality of its services to the people.  This would therefore ensure the attainment of objective of creating local government as a third of governments, which was to the local populace.
Furthermore, it should also be noted that local government should not only increase its revenue base on accommodate its enlarged responsibilities but should also install an adequate and accounting system to take care of both the existing and newly created revenue base.  Such accounting system should be capable of ensuring control of the local government’s revenues and expenditures.
1.2   STATEMENT OF THE PROBLEM
        First, the main problem of this study is to examine and x-ray the weakness and limitation that may exist in the accounting system of local government in Nigeria with particular reference to Enugu-North Local Government Area.
        Many scholars have criticized Nigeria local government accounting system following the inherent weakness in the system thus requiring a study of this nature to critically assess these weaknesses and highlight their attendant implications on financial statement of local governments in Nigeria.
        Secondly, local government in Nigeria have been facing the problem of presenting a financial statement that could succinctly reflect the true and fair view of their financial position.  This type of study therefore is needed to provide relevant information as to the structure of accounting system needed to arrest this problem.
        Thirdly, another problem of this study relates to the abominating inherent in Nigeria local government accounting practice.  One of such abnormities is the treatment of capital expenditure as recurrent expenditure.  In this practice, capital (long term) assets when purchased are written off entirely as expenses in the year of purchases irrespective of its long use in subsequent account years or periods. This does not recognize depreciation. Another abnormality in the system is the adoption of cash basis of accounting instead of the national accrual basis of accounting. This could be for the simple reason that cash basis is more convince and easier to operate. The third abnormality that attracts high criticisms in the practice is the use of in appropriate terms.  Wrong classification of balance sheet items in balance sheet or where local government accounting system is called statement of affairs.  These abnormalities readily renders the financial statements of local government greatly misleading. Such financial statement hide the inefficiencies or other wise of the people under whose custody the resources of the local government were entrusted.  Thus, the need to ensure proper public accountability especially at local government level.
1.3      OBJECTIVES OF THE STUDY
Considering the significance of public accountability, this research work is designed to accomplished the following:
1.     To evaluate the nature of accounting system in sampled local government.         
2.     To determine the adequacy of the accounting system operative in the sampled local government.
3.     To determine the factors that will promote or constrain the accounting system of the sampled local government.
4.     To ascertain the implication of the accounting in use in the sampled local government.
1.4      RESEARCH QUESTIONS
(i)     Why is local governments in Nigeria practice cash basis of accounting instead of normal accrual basis.
(ii)    Local government accounting system does not recognize depreciation why?
(iii)   What can be done to improve accountability and transparency in local government accounting system?
1.5      HYPOTHESIS
Consequent upon the above-mentioned objective, which this study is set out to achieve, the following hypothesis were postulated and should be tested in course of this study.
The hypothesis are as follows:-
Hypothesis 1:   Ho – The accounting system of local government (using Enugu-North Local Government Area) does not allow for the preparation of financial statements that reflect the true financial position of local government.
Hypothesis II:   Ho – The accounting system of local government (with particular reference to Enugu-North Local Government Area) is not adequate in design.
                        H1 – The accounting system of local government (with particular reference to Enugu-North Local Government Area) is adequate in design.
Hypothesis III:  Ho – The accounting system of local government (using Enugu North Local Government) is not effective in operation.
                        HI – The accounting system of local government (using Enugu North Local Government) is effective in operation.
1.6      SCOPE OF THE STUDY
In order to achieve less time consuming and cost efficient research.  This research is limited to Enugu-North Local Government Area of Enugu State.
1.7   SIGNIFICANCE OF THE STUDY
        This research work, if carefully pursued will be found intellectually appealing and pragmatically stimulating as it suggests a new dimension in the accounting system of local governments in Nigeria. The study will make readers appreciate the importance of a good accounting system as it relates to monitoring of inflow and outflow of the resources of an entity.
        Therefore, this study be found valuable to students of public and local government administrations particularly those whoa re involved in finance planning and management and staff of revenue unit of treasury department (now called finance and supplies department) of local government.
1.9   DEFINITION OF TERMS
1.     Trial Balance: Is the record in which shall be listed at the end of every month, the balances of all accounts kept in the main ledger in order to prove the accuracy of the postings made under the double entry system of book keeping.
2.     Financial Statement: This is made up of balance sheets, profits and loss accounts statements of source and application of funds, notes and other statements, which collectively are intended to give a true and fair view of the financial position and profit or loss.
3.     Revenue Collector: Any person who is authorized to receive revenue or other monies payable to the local government.
4.     Treasury: It is the department of the local government set up to administer the finances and funds of the local government.
5.     Cash Basis Accounting: This is a method of keeping accounts  whereby revenues and expenses are recorded on the books of accounts when received and paid respectively without regard to the period to which they apply.
6.     Accrual Basis Accounting: This is a method of accounting whereby revenues and revenues and expenses are identified with specific periods of time, such as a month or year and are recorded as incurred, along with acquired assets without regard to the date of receipt or payment if cash.
7.     Commitment Basis Accounting: This is a method of government accounting whereby an anticipated expenditure which is evidence by a contract or a purchase order issued to an outside is recorded on the books of accounts with effect from time at which the obligation is entered into.
8.     Fixed Assets: These are asset of material value that are long life, are held to be used in the business and are nor primarily for resale or for conversion into cash.
9.     Depreciation: This is the part of the cost of the fixed assets consumed during its period of use by the firm.
10.   Balance Sheet: Statement of assets and liabilities or capital balances.
11.   Recurrent Expenditures: These are expenditures incurred in an establishment in running the day-to-day affairs of the establishment.
12.   Budget: This is a plan expressed in quantitative and usually monetary terms covering a specified period of time. Normally one year.
13.   Capital Expenditure: All expenditures incurred on the construction or extension of projects in acquisition of lands and buildings and on the purchase of plant or equipment (but exclusively the cost of repairs and maintenance).
     


SYSTEM OF LOCAL GOVERNMENT AN APPRAISAL OF THE ACCOUNTING
For more Info, call us on
+234 8130 686 500
or
+234 8093 423 853

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  • Type: Project
  • Department: Accounting
  • Project ID: ACC0058
  • Access Fee: ₦5,000 ($14)
  • Chapters: 5 Chapters
  • Pages: 96 Pages
  • Methodology: chi saqure
  • Reference: YES
  • Format: Microsoft Word
  • Views: 1.9K
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    Details

    Type Project
    Department Accounting
    Project ID ACC0058
    Fee ₦5,000 ($14)
    Chapters 5 Chapters
    No of Pages 96 Pages
    Methodology chi saqure
    Reference YES
    Format Microsoft Word

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