FINANCIAL CONTROL AND MANAGEMENT OF RESOURCES IN THE PUBLIC SECTOR (A CASE STUDY OF FEDERAL CAPITAL TERRITORY ABUJA
FINANCIAL CONTROL AND MANAGEMENT OF RESOURCES IN THE PUBLIC SECTOR (A CASE STUDY OF FEDERAL CAPITAL TERRITORY ABUJA
ABSTRACT
We recognize that financial control is aimed at the attainment of optimum efficiency in the performance of public service, and one of the merits of the planning-programming-budgeting system (PPBS) is the fact that it emphasizes objective criteria of effectiveness and efficiency by forcing policy maker to examine simultaneously a wide range of alternative options in meeting an objective.
The level of government spending depends not only upon the scope and extent of various functions performed, but also upon the efficiency with which these public goods are delivered. As with programme development, the persons in the best position to increase efficiency are those in direct control of the conduct of particular public services. But these public functionaries often lack incentives to perform, or knowledge of how to do so, or they may for personal reasons prefer certain lines of actions contrary to the efficient goal, particularly that of carrying out as large a “bureaucratic empire” under their own domain as possible.
On the whole, the maintenance of maximum efficiency in government operation in order to obtain value for money is a task requiring vigilance and continuous improvement. For this methodology to be carried out, there is need to formulate an acceptable measure that will constantly be examining the relationship from time to time this research project therefore examines the development and application of financial control in the management of resources in the public sector.
CHAPTER ONE
INTRODUCTION 1
REFERENCES 21
CHAPTER TWO
REVIEW OF THE FINANCIAL FUNCTIONS 22
REFERENCES 67
CHAPTER THREE
RESEARCH METHODOLOGY
REFERENCES 78
CHAPTER FOUR
PRESENTATION AND ANALYSIS OF DATA 79
QUESTIONS 87
CHAPTER FIVE
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
SELECTED REFERENCES AND BIBLIOGRAPHY 100
LIST OF TABLES
TABLE 3.7: ADMINISTRATION OF QUESTIONNAIRES
TABLE 4.1: FACTS ABOUT THE STUDY
TABLE 4.2.1: AGES OF RESPONDENTS
TABLE 4.2.2: ACADEMIC QUALIFICATION OF RESPONDENTS
TABLE 4.2.3: GRADE-LEVEL OF RESPONDENTS.
LIST OF FIGURES
FIG. 2.4: FEDERAL FINANCIAL CONTROL SYSTEM
FIG. 2.5: FINANCIAL CONTROL STRUCTURE
FIG. 4.2.1: BAR CHART OF RESPONDENTS’ AGES
FIG. 4.2.2: PIE CHART OF RESPONDENTS’ QUALIFICATIONS
FIG. 4.2.3 BAR CHART OF RESPONDENTS’ GRADE-LEVEL.
CHAPTER ONE
INTRODUCTION
Financial control and management of resources are important in the public sector because funds must be utilized properly. Following trends of event in various administrations in this country, there have been many cases of corruption, frauds, mismanagement and misappropriation of government funds by officials. These happenings makes one wonder whether there is anything like financial control in the public sector.
Notwithstanding, finance remains one of the major sources of power for any government and it can rightly be said that without adequate funds, government cannot achieve its desired objectives. Hence the government guards against anything that can threaten its access to sources of revenue and ability to allocate its revenue to different used through some financial control instruments.
The 1979 constitution (S75 – 82) provides certain guidelines by which the consolidated fund is guarded and the full extent of the division of financial powers.
The Annual Estimates and Appropriation Act are designed to arrange and control the disbursement of the federal government funds through specific financial authority (warrants) issued by the minister of finance. After passing of the appropriation bill into law, the minister of finance signs the general warrants and passes it to the Accountant General of the Federation (AGF) who then notifies all the accounting officers of the signing of the Warrant. On no account should any accounting officer spend from his allocation for the financial year until the Warrant has been signed.
The appropriations to the various ministries and departments are not made in terms of cash allocation unlike in other supply systems the allocation is done by the issue of Warrants as the first part and the supply of cash follows as the need arises. This should be subject however to the limitation of the appropriation.
The following measures are taken for control purposes in the disbursement of fund by various organs of government establishments:
Over recent times, the activities of the government has increased tremendously from general administration and the maintenance of law and order to include the provision of essential services alongside with the formulation and implementation of social and economic programmes aimed at promoting the welfare of its citizens (Anyafo, 1996:3). Government requires sufficient fund to perform these functions efficiently and effectively. In essence, it is faced with the problem of
Hence this research work is centred on “b” and “c” above.
I most governments where separation of power exist between the executive and the legislature, it becomes imperative to discuss some of the control measures that are in existence in the public sector. They comprise of
No doubt, healthy financial administration in government rests on two prerequisite systems. Accounting and financial control; these two systems in turn rest squarely on the budgetary process; i.e. the continuum of budget preparation, approval, execution reporting, audit and review concordantly. Budgeting in government encompasses two phases of the financial management cycle. The first being the creation of a budget expressing in monetary terms; the short-term plans of government in terms of the yardsticks for effecting operations against which the numerous activities of government’s operation are to be measured. The second consists of execution, accounting and internal control in which all plans are executed and internally controlled.
Putting budgetary control in perspective (Oshisami, 1992:54), first phase begins when the president-in-council articulates government’s objectives in terms of economic, social and other welfare parameters. The priorities and the expected levels of achievement are also indicated. These are made known to the ministry of budget and the council of economic advisers. Based on this information and other data available, the ministry of Budget then issues the “call circular” inviting ministries, departments and their agencies to submit “Advance proposals”. There organizations are expected to submit these in accordance with the principles and guidelines set in the circular. Where new staff proposals are involved these require prior clearance with the Establishments Department. Where new capital projects are involve, these are to be cleared with the Department of National Planning, if not already part of the National Plan. The various proposals are then exhaustively discussed at a series of Budget committee meetings. The committee(s) often presided over by very senior members of the Budget Ministry, consists of the nominees of the Treasury Department, Establishments Department, Department of National Planning and the Federal Ministry of Works. These are Administrative hearings, held to effect reconciliation of each agency’s request and the Budget Ministry adjustments. An interactive process arrives at the Budget Ministry’s position. Normally, the total allocation in the National plan of an agency should bear close semblance to its total capital expenditure for the period while its recurrent expenditure should be sympathetic to this. If the plan has been well thought out in terms of the desired objectives, the annual budget request should be sufficient to assure delivery of part of that objective during the budget year under consideration. It is this consistency in addition to its own allocation criteria, which forms the basis of the Budget ministry’s position on each agency’s request. At the end o this, a submission is made to the president-in-council for consideration.
This includes:
After this, the president’s draft budget is put together ad presented to the legislature.
The second phase involves legislative consideration and enactment. In this phase more political factors are brought to bear on the draft budget. What then are the capabilities in terms of the knowledge and information, which are needed by each legislator to enable him perform is very important? At the reading of the Bill, the debate revolves around the macro effects of the proposed budget, the effect of government expenditures on the economy; and the need to balance the budget; on the priorities accorded various programmes and on other political and social controversies over alternative fiscal and monetary policies. The position and posture of a legislator’s political party on some or many of these issues would affect his/her input in the debate. The legislator’s personal awareness of possible effects of alternative government spending, of the fiscal responsibility of the legislature and a clear articulation of the fiscal responsibility of the legislature and a clear articulation of the interest which he is supposed to represent will also affect his/her voting. The role of the legislature in budgeting derives from three main influences.
The standing committee in charge considers the estimates of the relevant ministries departments and agencies; and in accordance with their duties they normally invite Chief Executive of these agencies to defend or throw more light on their budget request. After full deliberations and certified approval, the legislature passes the Appropriation Bill into Law. Ideally this phase is expected to be concluded before the beginning of the budget year. In reality, this hardly over happens in Nigeria, in particular under civil rule. In the last civilian regime there was a year in which the appropriation Act was not enacted till May. The constitution however has provision, which enables governmental operations to continue when the Approved Budget is late in coming into existence. The case of military administration is slightly different. The strong affinity between the president-in-council, the council of state and the Armed Forces Ruling council (in fact the leader (s) are the same in all the council) enables the appropriation process to move very fast. There was a record set in March 1979, when the draft budget passed through the three council within a week. Whether this short period allowed for consideration of the Draft estimates contributed to efficient allocation was another matter entirely. The third process refers to the period in which the appropriations are used in incurring expenditure, delivery services and accounting for the transactions and events relating thereto. Since the Annual Estimates and the Appropriation Act, which follows from the budget process stipulates and arranges the disbursement of the public funds of the Federal Government; no expenditure is incurred except on the authority of a duly signed Warrant issued by the Honourable Minister of Finance, authorizing the Accountant General of the Federation, as the Chief Accounting Officer of the country to release funds from the Consolidated Revenue Fund.
Each Ministry or extra-ministerial department has finance and Accounts Department and an internal Audit unit. The former which non incorporates the Budget unit and stores branch, together with the internal audit, represent the arms of the accounting and financial control system in these agencies. The internal audit unit reports directly to the chief Executive. The reporting channel in the case of the finance and Accounts Department is through the Director-General (Formerly Permanent Secretary). The Public Service Review exercise in 1974 – 5 created a new functional post labeled secretary for finance and Administration, in a number of ministries. The expressed intention was to coordinate the administrative and financial function of the ministry to enable easy management control for the Chief Executive. Wherever this post existed, the head of the Accounts and Finance Division was expected to report this officer to the Chief Executive. However, the Holders of such post had always been found to be administrative officers who seldom possessed minimal if any knowledge and skill in finance and virtually no idea of what accounting is about; little wonder the quality of financial advice many Chief Executive of ministries and extra-ministerial departments received to help them discharge their onerous responsibilities. The financial regulations however, enjoin the chief executive of each ministry to ensure that the accounting and finance function and the internal Audit function are placed under the direct control of suitably competent accountants (FR1203 and 2202). The 1988 Reforms attempted to correct this anomalous situation but the mode of appointing the Director of Finance and Accounts is beginning to give room for some concern.
The Finance and Accounts Department has the following responsibilities:
The responsibilities of the Internal Audit can be regarded primarily to two-fold. The first is to review, evaluate and report on the adequacy or otherwise of the financial control framework existing in the ministry and its efficiency in assuring the propriety, security, completeness and accuracy of the ministry’s activities and transactions. The second is to carry out a complete and continuous audit of the accounts and records of revenue expenditure, plant, stores and other property, to evaluate whether actual performance is within the established financial control framework. These responsibilities are to be discharged within the operational framework of establishing whether;
The secondary responsibilities relate to the modern concept of internal audit as a major management control tool and these are also two-folds. The first is to provide an assurance to management that the financial information furnished to management to aid decision making is reliable, accurate and based n reliable records. The second is to draw the attention of management to deficiencies in the organization or system of internal control and to highlight areas of management practices requiring corrective action.
In carrying out the accounting and financial control functions in each ministry, the regulations recognized financial post, which also carry specific responsibilities. These positions are also in hierarchical form in reporting or controlling relationship. At the head of this hierarchy is the accounting officer who upon receiving an appointment as a permanent secretary or head of an extra-ministerial department is consequently designated and appointed accounting officer for his ministry or department by the minister of finance. The 1988 Civil Service Reforms now confer on the minister in each ministry; the role of Chief Executive Accounting Officer. The term itself is inherited from the British system, which has “an Accounting officer for every vote Account” (A Vote Account is the head of expenditure forming the basis of parliamentary budget approval to ministries and departments). This system stresses the responsibility of an Accounting Officer for the safeguarding of public funds and the regularity and propriety of the expenditure under his control. Thus the Accounting Officer is the responsible officer in terms of stewardship and not in terms of account keeping.
The main purpose of this project is to research into;
The data used in this study is derived from primary sources i.e. oral interviews and questionnaires as well as secondary sources comprising of published materials from textbooks, the Nigerian Constitution Financial Regulation and Government Gazette.
The researcher is expected to cover account offices of the ministries, departments and parastatals within the federation, but owing to time and financial constraints, only ministries and departments within the Federal Capital Territory were examined.
The researcher amongst other things will:
It is important to give the meaning of terms as they are used in this study.
Public Sector: This refers to Government Ministries, Extra-ministerial Departments, Government Agencies and Parastatals.
Financial Control: It is defined by the finance control and management Act (1956) as the system which assures efficiency and effectiveness in the accomplishment of set goals. This means that financial control is aimed at maintaining and achieving a desired objective. Financial control therefore includes sources and application that is revenue control and expenditure control. Revenue control ensures timely collection of revenue due, actual collection and accounting for what is collected. Expenditure control, on the other hand, seeks to ensure that the outflows from the officers are strictly followed in the laid down procedures, especially in cases of authorization and disbursement.
In order to provide solutions to problems of this study, the researcher during the survey addresses the following questions:
REFERENCES
Anyafor, A. M. O. (1996) Public Finance in A Developing Economy: The Nigerian Case, Enugu, B & f Publication UNEC.
The Civil Service (Re-organization) Decree 1998 – Decree No. 43 Official Gazette No. 79 vol. 75 of 30 November 1988, Federal Government Press, Lagos.
Constitution of the Federal Republic of Nigeria (1989) Federal Republic of Nigeria Gazette No. 29, vol. 76 Lagos Government Press.
Federal Republic of Nigeria: The Revised Financial Regulations – Federal Government Printer (1976).
Oshisami, K. (1992) Government Accounting Financial control, Ibadan, Spectrum Books Ltd.
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ABSTRACT
We recognize that financial control is aimed at the attainment of optimum efficiency in the performance of public service, and one of the merits of the planning-programming-budgeting system (PPBS) is the fact that it emphasizes objective criteria of effectiveness and efficiency by forcing policy maker to examine simultaneously a wide range of alternative options in meeting an objective.
The level of government spending depends not only upon the scope and extent of various functions performed, but also upon the efficiency with which these public goods are delivered. As with programme development, the persons in the best position to increase efficiency are those in direct control of the conduct of particular public services. But these public functionaries often lack incentives to perform, or knowledge of how to do so, or they may for personal reasons prefer certain lines of actions contrary to the efficient goal, particularly that of carrying out as large a “bureaucratic empire” under their own domain as possible.
On the whole, the maintenance of maximum efficiency in government operation in order to obtain value for money is a task requiring vigilance and continuous improvement. For this methodology to be carried out, there is need to formulate an acceptable measure that will constantly be examining the relationship from time to time this research project therefore examines the development and application of financial control in the management of resources in the public sector.
CHAPTER ONE
INTRODUCTION 1
- BACKGROUND OF THE STUDY 1
- PURPOSE OF THE STUDY 17
- METHODOLOGY 17
- SCOPE AND LIMITATIONS 18
- SIGNIFICANCE OF THE STUDY 18
- DEFINITION OF TERMS 18
- RESEARCH QUESTIONS 19
REFERENCES 21
CHAPTER TWO
REVIEW OF THE FINANCIAL FUNCTIONS 22
- FINANCIAL CONTROL 28
- TYPES OF FINANCIAL CONTROL 31
- FINANCIAL CONTROL INSTRUMENTS 36
- FEDERAL FINANCIAL CONTROL SYSTEM 45
- FINANCIAL CONTROL STRUCTURE 53
- CONTROL IN KEY RESULT AREAS OF ACCOUNTING 57
REFERENCES 67
CHAPTER THREE
RESEARCH METHODOLOGY
- PROBLEMS OF THE STUDY 69
- RESEARCH DESIGN 70
- AIMS 71
- INSTRUMENT OF RESEARCH 71
- IDENTIFICATION OF POPULATION 73
- SELECTION OF SAMPLES 74
- ADMINISTRATION OF QUESTIONNAIRES 75
- DATA ANALYSIS METHOD 77
REFERENCES 78
CHAPTER FOUR
PRESENTATION AND ANALYSIS OF DATA 79
- FACTS ABOUT THE CASE STUDY 79
- PRESENTATION AND ANALYSIS OF BIO-DATA 82
- RESPONDENTS’ VIEWS ON PAYROLL CONTROL
QUESTIONS 87
CHAPTER FIVE
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
- SUMMARY 91
- FINDINGS AND CONCLUSIONS 96
- RECOMMENDATIONS 96
SELECTED REFERENCES AND BIBLIOGRAPHY 100
LIST OF TABLES
TABLE 3.7: ADMINISTRATION OF QUESTIONNAIRES
TABLE 4.1: FACTS ABOUT THE STUDY
TABLE 4.2.1: AGES OF RESPONDENTS
TABLE 4.2.2: ACADEMIC QUALIFICATION OF RESPONDENTS
TABLE 4.2.3: GRADE-LEVEL OF RESPONDENTS.
LIST OF FIGURES
FIG. 2.4: FEDERAL FINANCIAL CONTROL SYSTEM
FIG. 2.5: FINANCIAL CONTROL STRUCTURE
FIG. 4.2.1: BAR CHART OF RESPONDENTS’ AGES
FIG. 4.2.2: PIE CHART OF RESPONDENTS’ QUALIFICATIONS
FIG. 4.2.3 BAR CHART OF RESPONDENTS’ GRADE-LEVEL.
CHAPTER ONE
INTRODUCTION
- BACKGROUND OF THE STUDY
Financial control and management of resources are important in the public sector because funds must be utilized properly. Following trends of event in various administrations in this country, there have been many cases of corruption, frauds, mismanagement and misappropriation of government funds by officials. These happenings makes one wonder whether there is anything like financial control in the public sector.
Notwithstanding, finance remains one of the major sources of power for any government and it can rightly be said that without adequate funds, government cannot achieve its desired objectives. Hence the government guards against anything that can threaten its access to sources of revenue and ability to allocate its revenue to different used through some financial control instruments.
The 1979 constitution (S75 – 82) provides certain guidelines by which the consolidated fund is guarded and the full extent of the division of financial powers.
The Annual Estimates and Appropriation Act are designed to arrange and control the disbursement of the federal government funds through specific financial authority (warrants) issued by the minister of finance. After passing of the appropriation bill into law, the minister of finance signs the general warrants and passes it to the Accountant General of the Federation (AGF) who then notifies all the accounting officers of the signing of the Warrant. On no account should any accounting officer spend from his allocation for the financial year until the Warrant has been signed.
The appropriations to the various ministries and departments are not made in terms of cash allocation unlike in other supply systems the allocation is done by the issue of Warrants as the first part and the supply of cash follows as the need arises. This should be subject however to the limitation of the appropriation.
The following measures are taken for control purposes in the disbursement of fund by various organs of government establishments:
- Cash backing for specific expenditures
- Monthly cash allocations to Federal pay offices
- Creation of special impress backed with cash conducting the transaction through the current accounts maintained with the various state governments.
Over recent times, the activities of the government has increased tremendously from general administration and the maintenance of law and order to include the provision of essential services alongside with the formulation and implementation of social and economic programmes aimed at promoting the welfare of its citizens (Anyafo, 1996:3). Government requires sufficient fund to perform these functions efficiently and effectively. In essence, it is faced with the problem of
- How and where to obtain money
- How to keep money and
- How to spend money.
Hence this research work is centred on “b” and “c” above.
I most governments where separation of power exist between the executive and the legislature, it becomes imperative to discuss some of the control measures that are in existence in the public sector. They comprise of
- Budgetary control
- Legislative control
- Treasury control and
- Departmental Vote Expenditure Allocation (DVEA) control
No doubt, healthy financial administration in government rests on two prerequisite systems. Accounting and financial control; these two systems in turn rest squarely on the budgetary process; i.e. the continuum of budget preparation, approval, execution reporting, audit and review concordantly. Budgeting in government encompasses two phases of the financial management cycle. The first being the creation of a budget expressing in monetary terms; the short-term plans of government in terms of the yardsticks for effecting operations against which the numerous activities of government’s operation are to be measured. The second consists of execution, accounting and internal control in which all plans are executed and internally controlled.
Putting budgetary control in perspective (Oshisami, 1992:54), first phase begins when the president-in-council articulates government’s objectives in terms of economic, social and other welfare parameters. The priorities and the expected levels of achievement are also indicated. These are made known to the ministry of budget and the council of economic advisers. Based on this information and other data available, the ministry of Budget then issues the “call circular” inviting ministries, departments and their agencies to submit “Advance proposals”. There organizations are expected to submit these in accordance with the principles and guidelines set in the circular. Where new staff proposals are involved these require prior clearance with the Establishments Department. Where new capital projects are involve, these are to be cleared with the Department of National Planning, if not already part of the National Plan. The various proposals are then exhaustively discussed at a series of Budget committee meetings. The committee(s) often presided over by very senior members of the Budget Ministry, consists of the nominees of the Treasury Department, Establishments Department, Department of National Planning and the Federal Ministry of Works. These are Administrative hearings, held to effect reconciliation of each agency’s request and the Budget Ministry adjustments. An interactive process arrives at the Budget Ministry’s position. Normally, the total allocation in the National plan of an agency should bear close semblance to its total capital expenditure for the period while its recurrent expenditure should be sympathetic to this. If the plan has been well thought out in terms of the desired objectives, the annual budget request should be sufficient to assure delivery of part of that objective during the budget year under consideration. It is this consistency in addition to its own allocation criteria, which forms the basis of the Budget ministry’s position on each agency’s request. At the end o this, a submission is made to the president-in-council for consideration.
This includes:
- Review of the economy
- Legislative initiatives for the budget year
- Expected revenues for the budget year
- Tentative proposal of ministries
- Recommendations on the overall priorities and
- Suggested budget ceilings.
After this, the president’s draft budget is put together ad presented to the legislature.
The second phase involves legislative consideration and enactment. In this phase more political factors are brought to bear on the draft budget. What then are the capabilities in terms of the knowledge and information, which are needed by each legislator to enable him perform is very important? At the reading of the Bill, the debate revolves around the macro effects of the proposed budget, the effect of government expenditures on the economy; and the need to balance the budget; on the priorities accorded various programmes and on other political and social controversies over alternative fiscal and monetary policies. The position and posture of a legislator’s political party on some or many of these issues would affect his/her input in the debate. The legislator’s personal awareness of possible effects of alternative government spending, of the fiscal responsibility of the legislature and a clear articulation of the fiscal responsibility of the legislature and a clear articulation of the interest which he is supposed to represent will also affect his/her voting. The role of the legislature in budgeting derives from three main influences.
- The legislature’s right to review, adopts the programmes, which the executives proposes.
- The internal organization of the legislative body, which determines the importance to be attached to budgetary actions and the relationship between budgetary and other legislation, and
- The legislators themselves and their individual and collective interest and abilities in fiscal affairs.
The standing committee in charge considers the estimates of the relevant ministries departments and agencies; and in accordance with their duties they normally invite Chief Executive of these agencies to defend or throw more light on their budget request. After full deliberations and certified approval, the legislature passes the Appropriation Bill into Law. Ideally this phase is expected to be concluded before the beginning of the budget year. In reality, this hardly over happens in Nigeria, in particular under civil rule. In the last civilian regime there was a year in which the appropriation Act was not enacted till May. The constitution however has provision, which enables governmental operations to continue when the Approved Budget is late in coming into existence. The case of military administration is slightly different. The strong affinity between the president-in-council, the council of state and the Armed Forces Ruling council (in fact the leader (s) are the same in all the council) enables the appropriation process to move very fast. There was a record set in March 1979, when the draft budget passed through the three council within a week. Whether this short period allowed for consideration of the Draft estimates contributed to efficient allocation was another matter entirely. The third process refers to the period in which the appropriations are used in incurring expenditure, delivery services and accounting for the transactions and events relating thereto. Since the Annual Estimates and the Appropriation Act, which follows from the budget process stipulates and arranges the disbursement of the public funds of the Federal Government; no expenditure is incurred except on the authority of a duly signed Warrant issued by the Honourable Minister of Finance, authorizing the Accountant General of the Federation, as the Chief Accounting Officer of the country to release funds from the Consolidated Revenue Fund.
Each Ministry or extra-ministerial department has finance and Accounts Department and an internal Audit unit. The former which non incorporates the Budget unit and stores branch, together with the internal audit, represent the arms of the accounting and financial control system in these agencies. The internal audit unit reports directly to the chief Executive. The reporting channel in the case of the finance and Accounts Department is through the Director-General (Formerly Permanent Secretary). The Public Service Review exercise in 1974 – 5 created a new functional post labeled secretary for finance and Administration, in a number of ministries. The expressed intention was to coordinate the administrative and financial function of the ministry to enable easy management control for the Chief Executive. Wherever this post existed, the head of the Accounts and Finance Division was expected to report this officer to the Chief Executive. However, the Holders of such post had always been found to be administrative officers who seldom possessed minimal if any knowledge and skill in finance and virtually no idea of what accounting is about; little wonder the quality of financial advice many Chief Executive of ministries and extra-ministerial departments received to help them discharge their onerous responsibilities. The financial regulations however, enjoin the chief executive of each ministry to ensure that the accounting and finance function and the internal Audit function are placed under the direct control of suitably competent accountants (FR1203 and 2202). The 1988 Reforms attempted to correct this anomalous situation but the mode of appointing the Director of Finance and Accounts is beginning to give room for some concern.
The Finance and Accounts Department has the following responsibilities:
- The making of day-to-day financial decision or recommendation to the Chief Executive for necessary actions;
- The control of expenditure and the general surveillance of the progress of actual expenditure in relation to total allocation;
- The safeguarding of public moneys and property and the due collection and accounting for revenues and other receipts due to government responsibility for which has been given to the ministry.
- The maintenance of an adequate system of books and accounts and the preparation of these as may be required.
- The maintenance of the following records, among others as prescribed by FR 1204;
- Abstract of Expenditure and Revenue;
- General ledger and subsidiary ledger;
- Journal
- The payment of salaries and wages; the payment for services, procurements and construction work as authorized by other arms of the ministry;
- The operation of controls, financial security arrangements and internal checks to prevent fraud and eliminate abuse;
- The maintenance and dissemination of vote control information to appropriate users and in the most useful firm practicable; and
- The rendition of financial statements to the Treasury in the form required and the reconciliation of ministry’s below-the-line accounts balance with Treasury’s corresponding balances.
The responsibilities of the Internal Audit can be regarded primarily to two-fold. The first is to review, evaluate and report on the adequacy or otherwise of the financial control framework existing in the ministry and its efficiency in assuring the propriety, security, completeness and accuracy of the ministry’s activities and transactions. The second is to carry out a complete and continuous audit of the accounts and records of revenue expenditure, plant, stores and other property, to evaluate whether actual performance is within the established financial control framework. These responsibilities are to be discharged within the operational framework of establishing whether;
- The safeguards introduced for the prevention or prompt detection of fraud or cost of cash or stores or plant are adequate;
- The system for the control of the collection of revenue is adequate;
- The system for the control of expenditure is adequate and that all payments made and promptly authorized are correct;
- The system for the control of the issue and consumption of property; and
- The accounting records are adequate.
The secondary responsibilities relate to the modern concept of internal audit as a major management control tool and these are also two-folds. The first is to provide an assurance to management that the financial information furnished to management to aid decision making is reliable, accurate and based n reliable records. The second is to draw the attention of management to deficiencies in the organization or system of internal control and to highlight areas of management practices requiring corrective action.
In carrying out the accounting and financial control functions in each ministry, the regulations recognized financial post, which also carry specific responsibilities. These positions are also in hierarchical form in reporting or controlling relationship. At the head of this hierarchy is the accounting officer who upon receiving an appointment as a permanent secretary or head of an extra-ministerial department is consequently designated and appointed accounting officer for his ministry or department by the minister of finance. The 1988 Civil Service Reforms now confer on the minister in each ministry; the role of Chief Executive Accounting Officer. The term itself is inherited from the British system, which has “an Accounting officer for every vote Account” (A Vote Account is the head of expenditure forming the basis of parliamentary budget approval to ministries and departments). This system stresses the responsibility of an Accounting Officer for the safeguarding of public funds and the regularity and propriety of the expenditure under his control. Thus the Accounting Officer is the responsible officer in terms of stewardship and not in terms of account keeping.
- PURPOSE OF THE STUDY
The main purpose of this project is to research into;
- Causes of non-compliance with financial control measure of officers;
- Financial control failures;
- Poor keeping of financial records and
- The effects of the problems stated above.
- METHODOLOGY
The data used in this study is derived from primary sources i.e. oral interviews and questionnaires as well as secondary sources comprising of published materials from textbooks, the Nigerian Constitution Financial Regulation and Government Gazette.
- SCOPE AND LIMITATIONS
The researcher is expected to cover account offices of the ministries, departments and parastatals within the federation, but owing to time and financial constraints, only ministries and departments within the Federal Capital Territory were examined.
- SIGNIFICANCE OF THE STUDY
The researcher amongst other things will:
- Explore for further research on the subject: Financial Control in the Public Sector.
- Create awareness for accounting officers in financial control and improved control habits and
- Broaden knowledge in this area of finance.
- DEFINITION OF TERMS
It is important to give the meaning of terms as they are used in this study.
Public Sector: This refers to Government Ministries, Extra-ministerial Departments, Government Agencies and Parastatals.
Financial Control: It is defined by the finance control and management Act (1956) as the system which assures efficiency and effectiveness in the accomplishment of set goals. This means that financial control is aimed at maintaining and achieving a desired objective. Financial control therefore includes sources and application that is revenue control and expenditure control. Revenue control ensures timely collection of revenue due, actual collection and accounting for what is collected. Expenditure control, on the other hand, seeks to ensure that the outflows from the officers are strictly followed in the laid down procedures, especially in cases of authorization and disbursement.
- RESEARCH QUESTIONS
In order to provide solutions to problems of this study, the researcher during the survey addresses the following questions:
- What are the causes of financial control?
- Who is responsible for poor record keeping?
- Do we need Chartered Accountants in place of Public Accountants?
- How do we prevent financial failure in the public sector?
REFERENCES
Anyafor, A. M. O. (1996) Public Finance in A Developing Economy: The Nigerian Case, Enugu, B & f Publication UNEC.
The Civil Service (Re-organization) Decree 1998 – Decree No. 43 Official Gazette No. 79 vol. 75 of 30 November 1988, Federal Government Press, Lagos.
Constitution of the Federal Republic of Nigeria (1989) Federal Republic of Nigeria Gazette No. 29, vol. 76 Lagos Government Press.
Federal Republic of Nigeria: The Revised Financial Regulations – Federal Government Printer (1976).
Oshisami, K. (1992) Government Accounting Financial control, Ibadan, Spectrum Books Ltd.
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