APPRAISAL OF ACCOUNTING INFORMATION SYSTEM IN THE PUBLIC SECTOR
(A CASE STUDY OF BOARD OF INTERNAL REVENUE LAGOS STATE)
This write up is the result of a studying of the accounting process in the public sector. The work is principally aimed at providing an insight into the accounting system of Board of Internal revenue Lagos State, its inefficiency, problems and ways these problems could be effectively be managed. This work is divided into five chapters namely;
The first chapter which is the introduction of the topic, the researcher defined public sector accounting, the purpose and objective as well as the significance of the study. In chapter two, the researcher focuses on the review of related literature as it is related to the research topic and such review include historical development of government accounting, Basis of accounting and sources of cash and recording media. In chapter three, the researcher indicated the research method used in detail; also it was in chapter four that the data used were collected, presented, analyzed and show the responses to the area being investigated which were documented along with their percentage relating to the question asked. In the last chapter, the researcher discussed the result obtained from data analysis in chapter four and also a useful and constructive suggestion was put down as that any interested party may be wee guided.
1.1 BACKGROUND OF THE STUDY
History has it that the concept of accountability of public funds dates backs to the history of ancient Greece. As old as theory is, it would not be erroneous to say that the idea has been equally lost to antiquity although not much is known about it, this makes the subject, government accounting to remain a myth.
Accounting in the public sector has received such a wide attention from scholars that the field of public sector accounting scans to be neglected.
However, there is general awareness all over the world of the need to pay greater attention to the development of government accounting and financial control. The reason is obvious, government, in most, if not all nations constitute the largest single business entity in many places, the core of the economy. Government in any society is basically for maintaining law and order.
With changes and the complete nature of the society, government responsibility has automatically changed from the role of maintaining law and order to business like nature in the modern era. The enormous activities of government, equally call for enlarged government accounting in order to accommodate the immense task. As a result of this development, the traditional cash procedures of accounting can hardly meet the demands of reasonable accounting for modern government in providing necessary services or information. Therefore, there is need for government accounting to be dynamic in order to accommodate both the fundamental roles and the developments.
1.2. STATEMENT OF THE PROBLEM
The problem of this research is to identify these weaknesses and limitations inherent in the cash accounting system of the public sector (in relation to the accounting system of the sample ministry).
This is with a view to propose means of eliminating them completely or at least reducing them to the barest minimum. Put in question form, what are those weaknesses and limitation that militates against adequate and efficient accounting system and financial reporting in the public sector and how can they be eliminated?
Some of these problem witnessed in the public sector includes: the lack of accountability and abuse of delegated authority by the officers in authority, fraud and misappropriation of government funds, as well as lack of expertise and business acumen on the part of those officers. Due to the fact that government operation have been termed “Non-profit oriented operations”, there is no pressure on the part of these government officers to perform up to optimum expectation, accounts are kept in messy shape while the officers get away with lack of proper accountability.
1.3. OBJECTIVES OF THE STUDY
The objectives of this research work/study include the following:
- To determine the extent to which the sample Ministry has installed an accounting system.
- To determine the factors that promotes or constrains the accounting system of the sample ministry.
- To determine the impact of the accounting procedures of the sample ministry upon its financial reporting.
- To make recommendations based on my findings.
1.4. IMPORTANCE OF THE STUDY
This research paper is intended to examine the accounting system common in public sector with a view to exposing and highlighting the inherent limitations in the system. Therefore, the research paper will be of interest and useful to the general publics, the government as well as the governed.
Government entrust public funds in the hands of its officials hence government reporting has traditionally stressed stewardship. Original accounting emphasis has been directed towards measuring the public funds generated and expended by the government’s programme or activities.
1.5. RESEARCH QUESTIONS
Three dominant questions being reviewed by this research include;
- Is the accountancy/accounting system in the public sector effective and adequate?
- Does the accounting system in the public sector provide for proper financial control and accountability of stewardship?
- Does the accounting system in the public sector provide useful information for the effective control and management of government operations?
1.6. SCOPE AND LIMITATION OF THE STUDY
As the research topic would suggest at a glance, the scope of this, is essentially focused on the accounting system of the sample ministry as a general overview sample study of the accounting in the public sector.
Therefore, this study will look into the nature of the accounting system of the sample ministry; how the system operates, the relevance of the system to the environment, problems and prospects of the system.
- Scarcity of material:
This aspect of accountancy (as pointed out above) has received very little attention from scholars despite its long historical age. Consequently, there are few literary publication on the student; the researcher was therefore limited to reviewing few literature which are mostly in origin, through relevant to the study.
Government establishment are well known for maintaining utmost screening as regards their operations, more so, where it is a study that concerns their financial operation the researcher found it difficult to obtain material relating to the study (that is literature) and some officials who have been very elusive and uncooperative. More so the bureaucracy and protocol the research went through to obtain material and an appointment has been very discouraging.
DEFINITION OF TERMS
Every field, discipline or profession has its terminology. Therefore, government accounting can never be an exception. In order to ensure easy understanding by the users of this work in relation to government accounting which are extensively applicable in public sector and or which have different meaning from private sector interpretation and usage are here by define below:
(1) Accounting Entity: Clearly defined economic unit which
- Engages in identifiable economic activities
- Controls economic resources (for which accounting records are maintained and periodic financial statement is prepared.
- Is distinct from the personal dealings of its owners or employees. To ensure that the fundamental accounting equation always refers to the same distinct entity the boundaries of the unit, once established, must not be managed arbitrarily also called reporting entity.
Accounting entity is in the accounting and auditing, banking, commerce and finance and corporate, commercial and general law subjects.
(2) Accrual Accounts: The principles of “accruals” makes a distinction between the receipt of cash and the right to receive it, and the payment of cash and the liability to pay it, stressing the importance of the right to the assets or the legal obligation in favour of the movement of the cash.
(3) Annual Appropriations: These are issues required to meet the expenditure of the state other than those covered by direct issues from the consolidated Revenue Fund.
(4) Capital: Is a plan of action quantified usually in monetary units to serve as a guild for the achievement of government objectives.
(5) Cash accounting; the recording of the transaction in which revenue and expense are reported (cash inflow and outflow) in the period in which the related cash receipts and payment occur. The wide spread use of cash accounting in public sector results from the government’s historically based requirement for financial information that shows fiscal compliance.
(6) Capital Budget: This is the budget that sets out the proposed acquisition of fixed (long-term) assets or projects and their finance.
(7) Depreciation: A non cash expense that reduces the value of an asset as a result of wear and tear, age, or obsolescence. Most assets lose their value over time (in other words, the depreciated), and must be replaced once the end of their useful life is reached. There are several accounting methods that are used in order to write off an asset’s depreciation cost over the period of its useful life. Because it is a non-cash expense depreciation lowers the company’s reported earning while increase free cash flow. Although, government accounting does not recognize depreciation and this is one of the criticisms of the system.