ALLOCATION AND CONTROL OF FUNDS IN THE PUBLIC SECTOR WITH SPECIAL REFERENCE TO EXCESS EXPENDITURE (A CASE STUDY OF NNEWI NORTH L.G.A)

ALLOCATION AND CONTROL OF FUNDS IN THE PUBLIC SECTOR WITH SPECIAL REFERENCE TO EXCESS EXPENDITURE

(A CASE STUDY OF NNEWI NORTH L.G.A)

ABSTRACT

The project I have written brings out an attempt to study the allocation and control of funds in public sector with special reference to excess expenditure.

The research effort aimed at achieving the following objectives.

1. finding out that excess expenditure was due to improper maintenance of department votes expenditure analysis books (DVEAB)


2. ascertaining that the occurrence of excess expenditure is as a result of careful attitudes of the vote controller


3. having found the various ways of controlling excess expenditure which should depend on the academic background of those handling the vote book i.e if they are well trained in the are as of accounting as to understanding the various use the department vote expenditure analysis book.

The goals were achieve through a surviving of the local government revenue allocation and expenses with special refords to excess expenditure will be made and a sample size which was statically determined. Questionnaires instrument were used to collect the primary data for the studying the government financial and audit report served as useful sources of secondary data to solidify the reliability of the results of the questionnaire, interviews were conducted which finally confirmed the results got from the questionnaire.

CHAPTER ONE

• BACKGROUND STUDY 1


• INTRODUCTION 1


• STATEMENT OF PROBLEM 5


• OBJECTIVE OF STUDY 8


• STATEMENT RESEARCH QUESTIONS 9


• SCOPE OF STUDY 10


• DELIMITATIONS OF THE STUDY 11


• LIMITATIONS OF THE STUDY 11


• SIGNIFICANT OF THE STUDY 12


• DEFINITION OF TERMS 12

CHAPTER TWO

• OVER OF PUBLIC SECTOR –

ACCOUNTING IN NIGERIA                             14

2.1    REVIEW OF RELATED LITERATURE           17

• SOURCE AND STRUCTURE OF LOCAL –

GOVT. REVIEW                                                 18

• REVENUE ALLOCATION IN THE LOCAL

GOVERNMENT                                                           20

• AUTHORIZATION OF EXPENDITURE FROM GOVERNMENT FUNDS                    21


• LOCAL GOVERNMENT EXPENDITURE 23


• DISBURSEMENT OF FUNDS 24


• EXCESS EXPENDITURE IN VOTE

CONTROLLING                                                 29

• THE EXTENT OF EXCESS EXPENDITURE 29


• WHEN MAY A VOTE CONTROLLER DISHONOR GENUINE CLAIM                              35


• MANAGEMENT AND ACCOUNTABILITY 36


• EXPENDITURE CONTROL 39


• CLASSIFICATION OF CONTROL 44

CHAPTER THREE    

• RESEARCH METHODOLOGY –

AND TECHNIQUE                                             49

3.1    METHOD OF DATA COLLECTION                49

3.2    RESEARCH INSTRUMENTS                         50

3.3    METHOD OF DATA ANALYSIS                      53

3.4    STATEMENT OF RESEARCH QUESTION

TO BE TEST                                                      54

CHAPTER FOUR

• ANALYSIS OF DATA PRESENTATION 63
  
  
  
  • QUESTIONNAIRE DISTRIBUTION
  
  
  
  

AND COLLECTION TEST AND RESULT OF RESEARCH QUESTIONS                              63

 

CHAPTER FIVE

• SUMMARY OF FINDING, CONCLUSION AND RECOMMENDATION                              75
  
  
  
  • SUMMARY OF FINDINGS AND –
  
  
  
  

OBSERVATION                                                 75

• CONCLUSION 79


• RECOMMENDATIONS 79

CHAPTER ONE

• BACKGROUND OF THE STUDY

1.1     INTRODUCTION

Sequel to the economic and the financial policies of the federal republic of Nigeria in 1986, the government directed that the ministries palatals agencies and institutions must reap systematic records of their operation and activities for both policy planning and management they are also required to prepare and public their audited annual reports within six months of the end of each financial year. These government institutions are required to make brief quarterly reports to the presidency through their supervising organs, highlighting the significant development in the past quarter and their expectations for the next. To achieve this an analysis how

has a statically information culture must be within these agencies  and parastatals that a normal management habit must be sustained.

Recently, as observed by (Mr. Omi, 1992 1- 20) management and control of public fund constitute the centre ground which government administration revolves. Due to the limited available resources, allocation and control of resources in form of funds cannot be over looked in governmental activities. In the content of this project, allocation and control of find will be discussed as it relates to disbursement of public funds.

Allocation of fund steps on the fact that the nature of government business relates to be provision of infrastructure facilities to the public these therefore generate problems that are mostly of grest complexity. Profits are most times their target, recognizing that the cost of performance is of significant interest and importance which is primarily used as a measure of operational efficiency to which planned programme results are achieve using the available fund.

This implies that in the absence of allocation of funds, there be no adoption of an of account basis such as basis, accrual basis commitment basis and budgetary accounting. these were there would be no accounting for and disbursement of funds and the issue of control will not come up to the surface.

Control of funds in the public sector is defined as a procedure, which gives the assurance that financial resources are obtained economically and efficiently used in the accomplishment of desired goals. When viewed within the content of financial control system, financial control forms part of planning, budgeting, accounting, reporting  and review. (OMI 1992). Most decision for government activities have financial implications which is due to the fact that they directly or indirectly result in expenditure either by consumptions or disposals pf effects, all of which have bearing on cost.

Revenue, allocation and control of funds are aimed at ensuring that financial decision are co-ordinate in such ways that  are mutually consistent, bearing in mine the overall objective of the government.

The question then rises, how are these funds allocated to the  various units and su–heads of the local government? To insurer this question it may be necessary to entire a title bit into the preparation of estimates in the local government levels (Acleyemo 1982: 54 – 59).

Budgeting during the presidential system of government. By Adepoju I.O. 1981. The  estimates are metamorphosed through the following stages vi2:

• department estimate committee


• Treasury committee


• Estimate committee


• State house of assembly

The budget estimate are collected from the different department units of the local government and presented  to the state house of assembly for approval when the budget is finally approved, officer through his accounting officer (treasurer) then allocation then allocates the funds as approval by the state house of assemble to different units and set tools of expenditure.

The makes sure that the revenue allocated for each unit is properly accounted for in the course of his administration. He also make sure hat does not exceed the available fund but this is not so in most cases. These and other causes of excess expenditure and its control are what we are going to discuss through out the course of this research study.

 

• STATEMENT OF PROBLEM

It can be expressed without mistaking that Nigeria as a country is not turning short of plans and prospects which when put into action would give a wonderful sting of local government providing viable avenues for rapid political and economic progress.

The problems of revenue allocation and control of funds in Nnewi North government can be located in the following factors:

1. inter –government relations – conflicting interest in the system of local government administration poses a major seems to have its own idea of how to make the system of local government work. This is has made it difficult for them to build on the gains of their predecessors – resulting in consistency, instability and conflicting demands for political participation and control


2. structural organization ostensibly the structure of the new local government takes the form of the 1976 reform by having a chairman president orer the meetings unlike the 1985 reform which attempted to create a system of separation of power between legistvie council and the executive arms. A good example of the structural defect of the present system is the appointment of portfolio councilor   for education excluding the local government form the responsibility o administration for primary school. This is the argument of the national economic intelligence of Nigeria NEIC report July 1 1999 headed by  ALUKOE, they said ”it is intently wrong for the federal government to be responsible running of primary school education which enhances attendant failure to enlist in the involvement of people. This however in the 2001 budget of the federal republic of Nigeria has been reviewed and have object of being though and hoping for a better organization


3. finance most often the local government depends on the federal government to survive apart from the external source, the local government have no other viable source of internal revenue and there is no urge to improve internal source. They also spend heavily on recurrent expenditure to the detriments of capital expenditure, which is meant to provide welfare services to the people. Other problem include man power and excutive capacity, citizen mobilization and participation. These problems amongst other prompted me to carry out this study with a view of finding ways of studying and sowing them.

 

1.3    PURPOSE OF STUDY

Regardless of the calculated stages of funds allocation in to the three tires of  government especially the local government,  there still exist continuously, case of excess expenditure which are being incurred over the supplementary budget of the local civil service which are submitted prior to the preparation of the annual budget for a particular financial year.

The purpose of studying is to investigate in to the cause of excess  expenditure.

 

1.4    OBJECTIVE OF STUDY

the vital objectives of this study to reckon that”

1. there is appropriate information dissemination with regards to handing over of facts and figure which exists in the local government of Nnewi North between the present chairman and his predecessors.


2. funds are channeled to most pressing units


3. there are proper measures of appraisal of funds management in other to dictate variance on time


4. that both capital on recurrent expenditure are made effecting the grass root need of the people residing in the geographical territory of Nnewi North L.G.A


5. there is proper organization structure which enhance separation of power which exists in the local government


6. To make recommendations based on the finding

 

• STATEMENT OF RESEARCH QUESTIONS

The research set out to find the answer to the following question.

(1)     The necessary documents used in recording receipt and disbursement of funds in the local civil services

(2)     To find out whether these is proper authorization of vouchers and proper supervision on who should prepare and authorized endorse payments in the vouchers

(3)     HOW IS THE AUTHORITY ON INCUR EXPENDITURE TOWARDS IN DVEA BOOK?

(4)     To ascertain the control measures existing in each of the subdivision that is directly involved with funds in the local governments.

(5)     what are the disciplinary procedure approach taken by the account offer to caution vote controllers and department heads for unnecessary expenditure or excess expenditure over and above their approved estimates?

(6)     How often do the account section and the central pay office meet together to reconcile their account in our to ensure consistence and adherence?

(7)     finally, to find out whether federal allocation has been fastened enough to accommodate local government expenditure.

• SCOPE OF THE STUDY

This is intended to corer capital expenditure, recurrent expenditure and revenue allocation of department and units in the local government Uril services for the following year 2003

 

1.7    DELIMITATIONS OF THE STUDY

considering the vast nature of this topic the  researcher is going to touch the allocation and control of funds with special reference to excess expenditure in all public sector but will narrow it down to the local government and Nnewi – North L.G.A. Anabmbra Sate.

 

1.8    LIMITATIONS OF THE STUDY

Some of constraints, which limited the study include.

1. limited access to official financial document on the subject.


2. limited adequate and relevant literature on the theme of the s

study.

3. lack of material or financial report for some years due of frequent changes in government and local government edict or reforms.


4. This study is limited to excess expenditure in Nnwi North


5. the study will primarily be concerned on the vote controller and the various treatments in the DVEA which are under the control of all heads of accounts.

 

1.9    SIGNIFICANT OF THE STUDY

The out one of this research study will be beneficial to student, who were interested in public financial and public sector, institutions, government and particularly the local government for rescheduled of their expenditure control measure and tailored their revenue down to the  local need  of the people who are yearning for accountability and transparency form the chairman.

It will also help government and its agencies to revenue problems or conflicts arising on allocation of funds and also suggests the best way to administer revenue.

 

1.10  DEFINITION OF TERMS

ALLOCATION: amounts approved under recurrent and capital expenditure

ONTROL:         this is the constitutional provision rules regulations guiding expenditure

ESTIMATE:      annual recurrent and capital expenditure estimates, annual revenue  estimate of local government for a particular year

FUNDS:            Are in expenditure fiscal and accountant ending a self belonging set of accounts together with al related liabilities, obligation revenue and equities which are segregated for the purpose of caring of special activities

APPROACH     special measure taken by government to reward or discipline heads of department

INTER DISCIPLINARY

COMMITTEE:  Specialist staff of all discipline (accounting and administration etc) of knowledge working together as a corporate term in an effort to optimize the budget

DVEAB:            Department vote expenditure analysis

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