AN EVALUATION OF THE EFFECT OF PUBLIC SECTOR ACCOUNTING IN NIGERIA FINANCIAL CONTROL SYSTEM
(A CASE STUDY OF SELECTED LOCAL GOVERNMENT IN PLATEAU STATE)
BACKGROUND OF THE STUDY
The quest for an effective, accountable and transparent public sector accounting in Nigeria financial system has made the adoption of the international public sector accounting standards (IPSAS) an issue of global relevance and concern.
Public sector is that sector of the economy established and operated by government and its agencies distinguishable from the private sector and organized mainly for the citizens. R. A .Adams (2004), defined public sector accounting as the process of recording, communicating, summarizing, analyzing and interpreting government financial statement and statistics in details. The actual receipt and disbursement of public funds by Ministries, Departments and Agencies (MDAs) is the main area of concern in public sector accounting where proper financial control system is expected to be put in place.
An effective and efficient public sector is dependent on how transparent, accountable and effective the accounting system is. This also can only be achieved when a sound financial control system is put in place regulated by sound and effective rules, procedures and regulatory standards on all financial transactions and information’s of government.
To portray the usefulness of financial control system in public sector, its accounting information should be relevant and reliable with strict adherence to established rules and standards. To be relevant, public sector accounting information must be timely with predictive or feedback value. To be reliable, public sector accounting information should be faithfully represented, verifiable and should be in compliance with the constitutional and regulatory framework of public sector accounting in line with the requirements and provisions of international federation of accountants (IFAC) policy position 4 (2002) on public sector financial management transparency and accountability on the use of international public sector accounting standards (IPSAS), which mandates government to implement the necessary institutional arrangements required to enhance public sector financial management transparency and accountability. This led to the recommendation of the accrual – based accounting system for use as an integral and essential part of the international requirement, and the adoption of the international public sector accounting standards (IPSAS) becomes necessary to promote greater transparency and accountability in public sector finances and allows for enhanced monitoring of government debts and liabilities having in mind their true economic implications for control and decision making.
The primary objective of international public sector accounting standards (IPSASs) is to ensure quality information. Khanagha (2011), opined that the value and quality of accounting information are determined by how well it meets the needs of its users. This view was criticized by Chen et -al. (2010), who described accounting information quality as the extent to which the financial statements information reflects the underlying economic situation.
In recent years, growing attention has been directed to the role of government in meeting the needs of the people and taking up its public responsibilities efficiently, where governance in general and corruption in particular are the main issues of concern in the public sector and the financial control system in Nigeria. An effective, efficient and accountable public sector accounting is characterized by faithful participation of all authorities involved with the motive of transparency, responsiveness, and compliance to governing rules and laws with commitment to quality service delivery.
Financial control system is an overall management functional framework designed to achieve absolute control of public funds through planning, organizing, directing and control of all financial activities of public funds such as procurement and the utilization of such funds by applying the general management principles, statutory laws and guidelines as required by law to achieve control and transparency.
1.2. STATEMENT OF THE PROBLEM
Financial control system in public sector is an essential requirement of government accounting which is aimed at logically and systematically planning, organizing, directing and controlling the use of public funds through estimates and compliance to statutory laws and guidelines authorizing the sourcing and expenditure of public funds within the three tiers of government which includes both the federal, state and local government respectively in the case of Nigerian. The third tier of government which is the local government will be the main area of attention by the researcher which is concerned majorly with the provision of public goods to the populace at the grass root. The creation of local governments all over the world stems from the need to facilitate development at the grass root (Agba ,Akwara,& Idu, 2013). All political systems are aimed at achieving an effective and efficient service delivery at the grass root through the local government which affects the day-to – day activities of all citizens at the grass root. Local government has been essentially regarded as a path to and generator of national integration, administration and development (Arowolo 2008).
The main objective of public sector is effective and efficient service delivery which has not been achieved absolutely and has failed to yield the desired results as expected. The expectation gap between the public and government is still wide and increases day-by day as a result of inefficiency, mismanagement and poor control measures from the entire financial control system of the public sector on public funds and finances by authorities responsible and accountable for the sourcing and disbursement of those funds.
An in depth examination of public sector accounting In Nigeria with specific reference to the local government areas reveals a great failure in the area of effective public service delivery as a result of so many factors. In a study conducted by Bello-Imam and Robert ( Bello-Imam & Roberts, 2001), identified the some of these factors responsible for the inefficiency and ineffectiveness of local governments in their service delivery to include revenue in adequacy, the erosion of local functions particularly in the revenue yielding areas by state government and their agencies, political administration problems such as inadequacy of skilled and technical man power , lackadaisical attitude of existing local government staffs, official corruption, variable structure/size of local government among others, and the lack of integration of the relevant communities in the execution of the local services.
According to some scholars such as (Eboh & Diejomoah, 2010; Adeyemi,2013; Agba, Akwara, & Idu, 2013; Ibok,2014; Bolatito & Ibrahim, 2014; Chukwuemeka, 2014), all in the field of public administration and local government studies identified the following factors affecting service delivery of local government administration in Nigeria to include lack of funds ( financial constraints ), corruption, undue political interference /lack of autonomy, lack of qualified professional staff/ unskilled workers, leadership problem, and poor work attitude among others.
1.3. OBJECTIVES OF THE STUDY
Generally, this study seeks to evaluate the effect of public sector accounting in Nigeria financial control system, and to achieve the following specific objectives:
- To examine how the bureaucratic process involved in raising and spending public funds could affect the entire financial control system in the public sector.
- To examine whether the adoption of the international public sector accounting standards will reduce the rate of corruption in Nigeria.
- To examine the level of compliance with the statutory laws and authorities on raising and expending public funds.
- To examine whether the sources of revenue available to Jos south and North local government areas of Plateau state Nigeria are sufficient enough to achieve their statutory objectives.
- To determine whether the financial control system of public funds in Jos South and North local government of plateau state is appropriate.
1.4. RESEARCH QUESTIONS
The following questions will guide the researcher in finding solutions to the problems identified in the study
- How can the bureaucratic process involved in raising and expending public funds affect the entire financial control system in public sector accounting?
- How will the adoption of international public sector accounting standards reduce the rate of corruption and misappropriation of public funds in Nigeria?
- How will compliance to statutory laws on the raising and disbursement of public funds enhance financial control in Nigeria?
- Does the availability and sufficiency of revenue for public expenditure reduce corruption and misappropriation in Nigeria?
- Does financial control system on public funds reduce corruption?