Local
government is a government at the grassroots level. According to Ojofeitimi
(2008), the word “local” connotes that councils are meant for small communities
and the word “government” means that they have certain attributes of
government. Thus, local government can therefore be defined as “… a political
sub-division of a nation (or in a federal system, a state) which is constituted
by law and has substantial control of local affairs including the power to
impose taxes or to demand labour for prescribed purposes. The main
responsibilities of local governments in Nigeria as noted by Obinna (2012)
include mobilization of local resources, promotion of social and economic
improvement and development as well as national unity. They are also expected
to carry out regional policies with respect to agriculture and selected
industries, thereby helping to ameliorate unemployment. Part of the
responsibilities of local governments includes revenue generation, budgeting,
development planning, provision of services and community mobilization. Given
these multifarious responsibilities, local governments were equally bestowed
with many sources of revenues to cope with these demands. Unfortunately, many
local governments in Nigerian have taken this to be a filial responsibility as
many local governments lack basic social amenities like pipe borne water, good
road, recreational facilities etc.
An
incisive look into local government administration in Ebonyi state is
nonetheless different, as development in the rural and urban areas continue to
remain a major challenge to the government of the state. Located in the south
east region, Ebonyi state boast of 13 local governments evenly spread to
accelerate socio-economic development within its local jurisdictions. Despite
this measure, most of the local government areas are far from the dream land.
Faced with many challenges, the major challenge of local government
administration in Ebonyi state and Nigeria at large is finance. Finance as noted by Amujuri (2014: ) is the
brain as well as the central nervous system of any organization. It is the
lubricant that makes administrative machinery especially of formal
organizations work. Although, local governments require finance to perform
their statutory duties, the need for efficient management of available funds
cannot be overemphasized. Financial management has to do with the efficient use
of funds. It is a method of showing and ascertaining the financial position of
government or business from time to time. Buoyed by the need to enthrone
development within the local government areas in Nigeria, various financial
regulations have been put in place to enhance good governance, accountability
and transparency. But sadly enough, these regulations are rarely adhered to, as
funds mend for development initiatives, most times end up in private accounts
or pockets of principal officers of the local governments through various forms
of corruption.
Local government as a third tier of government was
established with specific functions to assist the federal and state governments
in enthroning effective rural development and good governance at the grassroots
level (Nwankwo, 2014). However, the local governments system in Nigeria has
failed to accelerate socio-economic and human development, mainly because of
inadequate funding. Adebayo (2013) argues that inadequate funding has
contributed immensely to the failure of local governments to perform their primary
functions. Apart from generating funds through local taxes, the major source of
revenue is through statutory allocations from the Federal and state
governments. To this effect the federal government is mandated to remit 20%
from the Federation Account on a monthly basis to local governments through
State Joint Local Government Account while each state is expected to pay 10% of
its internally generated revenue to its local government councils (Okafor,
2010). This financial arrangement is often distorted by the lack of genuine
autonomy of local governments as their funds are rarely provided state
governments. Nwankwo (2014) observed that local governments in Nigeria do not
have substantial degree of financial autonomy to engage in any meaningful
development. Local governments have over the years suffered from the continued
whittling down of their powers as state governments have continued to encroach
upon what would normally have been the exclusive preserves of local governments
and consequently there has been a divorce between the people and government at
their most basic levels. Nwakwo (2014) blamed the lack of development in rural
areas on poor financial management, which has over time hampered the completion
of public projects, especially those that has to do with the provision of
social welfare services. Most public projects in Nigeria are abandoned because of
corruption. According to Aghayere (2007) corruption has for a long time has
rendered local government administration inactive and devoid of concrete
development activities.
Corruption
is predominantly wide spread, undiluted and unambiguous in the local
government. It is a statement of fact that in the local government system,
corruption has become all pervading, unabashed, uncontrolled and persistent.
Corruption within the local government system is mainly perfected through;
inflation of prices; ghost workers syndrome; award of contracts and subsequent
abandonment; and outright payment of huge sums of money to political
godfathers, etc. In enthroning financial
prudence and effective management of local government funds, a financial
memoranda was developed. The financial
memoranda is an internal control mechanism aimed at guaranteeing accountability
within the local government system. Due to poor supervision, socio-economic
factors, biting inflation and sapping conditions etc, most local governments
are not financially accountable and do not adhere strictly to the provisions of
the financial memoranda (Agu, 2014). The
implications of poor management of local government funds cannot be
overemphasized. Presently local government councils exist only in name not in
service delivery as many local governments lack basic infrastructure such as;
electricity, water, hospitals, roads and schools. Mismanagement of resources in
the local government has also heightened; poverty, illiteracy, unemployment,
crime etc. Considering these aforementioned problems, this study poses the
following objectives
The
objectives of this study is to investigate and evaluate the internal control
system in the Local Government and their adequacy to enhance efficient and
effective financial management and overall accountability on the Local
Government sectors in Izzi Local Government of Ebonyi State and include;
1) To ascertain and evaluate the internal control system in
Izzi Local Government Area of Ebonyi state.
2) To ascertain possible weakness in the internal control
system of Izzi Local Government Area of Ebonyi State
3) To ascertain the factors that impede the effective
management of funds at the local government level in Izzi Local Government Area
of Ebonyi state .
Pragmatically,
this study will help in recognizing more powerful ways of inculcating effective
and efficient methods of control mechanism in the management of funds of local
governments in
Nigeria. More so, it is equally hoped that this study will help
local government functionaries and other political office holders in the
effective management of funds. And it is also hoped that this study will
contribute to the body of literatures on this subject. This study will also be
of benefit towards the rural development through effective fund management.
The scope
of this study is limited to Izzi Local Government Area of Ebonyi state and it
focuses on control mechanisms and management of public funds in the local
government system in Nigeria,
particularly Ebonyi state. The outcome of the research work is assured to be
applicable to all the thirteen local government areas of Ebonyi State
since the mode of operation is the same in all the local government areas of Ebonyi State
and throughout the federation.
For the
purpose of carrying out this study effectively this research work will
endeavour to provide answers to the following research questions;
1) To what extent is evaluation and internal control systems
available in Izzi Local Government Area of Ebonyi State?
2) To what extent are weaknesses in the internal control
system Izzi local government area of Ebonyi
State?
3) To what extent does management of funds impede the
effective management of funds at the local government level in Izzi Local
Government Area of Ebonyi state?
FORMULATION
OF HYPOTHESIS
The hypotheses that will
be tested in the course of the study are mainly derived from the research
questions and they are:
a. Ho: There is no
efficient funds management and control in Local Government Area
Hi: There is efficient funds management and
control in Local Government Area
b. Ho: The poor funds
management and control in Local Government Area is as a result of weak internal
control system.
Hi: The poor funds management and control in
Local Government Area is not due to weak internal control system
c. Ho: There is no
adequate control over expenditure pattern of the Local Government Area
Hi: is adequate control over expenditure pattern
of the Local Government Area
This
study was constrained by the inability to get specific requisite reference
materials and the unwillingness of most local government operatives to divulge
certain information that would have helped the course of this study
considerably. The study was also faced with the overwhelming task of convincing
most of the sample population to participate in this study by filling
questionnaires distributed. Other limitations are finance and time,
unwillingness of the officials to divulge information for fear of their job
security, inability of the researcher to have access to some relevant documents
because such documents have been classified as “Top Secret” Because of this, the
researcher decided to limit the study to Izzi Local Government Area of Ebonyi
state.
Meaning of Local
Government:
Local
government refers to a political authority set up by a state by a subordinate
authority for the purpose of dispersing or decentralizing political power as
well as promoting local initiative and response to local needs’. The United
Nations Office for Public Administration defines local government as a
political subdivision of a nation or (in a federal system) State, which is
constituted by law and has substantial control of local affairs including the
powers to impose taxes or to exact labour for prescribed purposes. Local
government is a government at the grassroots level. According to Ojofeitimi
(2008), the word “local” connotes that councils are meant for small communities
and the word “government” means that they have certain attributes of government.
Thus, local government can therefore be defined as “… a political sub-division
of a nation (or in a federal system, a state) which is constituted by law and
has substantial control of local affairs including the power to impose taxes or
to demand labour for prescribed purposes. The main responsibilities of local
governments in Nigeria
as noted by Obinna (2012) include mobilization of local resources, promotion of
social and economic improvement and development as well as national unity.
Revenue
It refers
to the amount of memories or cash that is received by way of statutory or
during specific period of allocation, loans and change? which enable the
government to carry on their day-to-day function includes capital expenditure
programmes. It means “the different way, the government get is money” (Ezanyagu
2000:).
Expenditure
It refers
to all cost incurred and paid for in order to carry on the operation of the
local government i.e. Those cost of
recurrent of the capital. According to Ezeayagu, (2000) it is defined as the
total amount expended by the government as essential for its administrative and
infrastructural services.
Funds
This is refers to a separate fiscal and accounting unit in
which financial resource are held or governed by special regulation segregated
from other Finds and established sources.
Internal control
Internal control is defined as a systemtic measure or, financial
or otherwise, established by management for checks and balances of methods and
procedures, the accuracy and reliability of the records, to run the business in
an orderly manner and safeguard the company’s assets, its objective being the
prevention or early detection of errors and fraud(Agud 1998:36)
Budget
According to Anyigbo(2000), a budget is a nairalised plan”
it is a formed plan expressing chosen a
course of action in qualitative terms and usually in monetary terms. It is a
qualitative expression of a plan of action and an aid to co-ordination and
control.
It may be formulated for the organization as a powerful tool
for controlling the organization as a powerful tool for controlling the
organization . budget show planned revenue from all sources and estimated
expenditure for the in coming fiscal year budget is a financial or qualitative
statement, containing estimates prepared and approved prior to the period of
time to which it relater, it the policies of an organization to achieve stated
objective (Ezanyagu 2000).
Estimation
An estimation is a proposed budged, which is yet to be
approved. It is a statement of planned revenue and expenditure of the
government establishment for the coming year. An estimate is usually expressed
in monetary terms it is the main instrument given for both legal and financial
effects to the nations development plans year to year.
It is that which provides a financial plan of action. It
provides legal authority for incurring expenditure. An estimate is a mechanism
for ensuring that adequate control are maintained over expenditure and revenue.
It established the government financial position?
Management
This at the defined
as a group of peoples that are at the running the affairs of an
organization that set the good goal of an organization. Management plans for an
organization is a group of people that organize the resources available to the
organization and tailor them to the plans. Management control the management
are those who work with and through other towards the realizing organizational
goals management, finally is the process through which organizational resources
of man made material and money combined in such a way that the goals and
objective of the organization are realized in an efficial and effective manner (Onodugo
2000).
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