ABSTRACT
The researcher has primarily examined some of the
expenditure control techniques that are and could be applied in government.
Noting the obstacles and their rate of effectiveness, emphasis are laid on the
techniques already in application.
Data for the research were gathered through
interviews, questionnaires and financial regulations. Percentages were used in
the data analysis. The following are the research findings.
Budgeting, expenditure control and audits are
commonly used by government in order to curb expenditures, cost benefits,
analysis and management audits that could be applied are not in use.
Variance analysis is the budgeting review technique
universally applied for analyzing budgeting estimates. The effectiveness of each
of these techniques are hindered by obstacles inherent in the implementation.
Government indicates the goals to be achieved with
a given outlay. It is therefore essential to control the expenditure to serve
the allowed purposes. Expenditure controls may be positive or negative.
Expenditure controls essentially reflect a managerial process that is both
political and administrative. The type of expenditure controls employed and
their effectiveness are dependent in the external and expenditure environment
of the government parastatals.
TABLE
OF CONTENTS
CHAPTER ONE
INTRODUCTION
1.0.
BACKGROUND OF THE STUDY
1.1 STATEMENT
OF PROBLEM
1.2
OBJECTIVES OF THE STUDY
1.3
SIGNIFICANCE OF THE
STUDY
1.4
SCOPE AND LIMITATION OF
THE STUDY
1.5
RESEARCH HYPOTHESIS
1.6.
RESEARCH QUESTIONS
1.7.
DEFINITION OF TERMS
CHAPTER TWO
REVIEW
OF RELATED LITERATURE
2.1
WHAT IS
REVENUE
2.2
WHAT IS
EXPENDITURE CONTROL SYSTEM
2.3
OBJECTIVES OF EXPENDITURE CONTROL SYSTEM
2.4
TYPES OF EXPENDITURE CONTROL SYSTEM
2.4.1
ADMINISTRATIVE CONTROLS
2.4.2 ACCOUNTING
CONTROLS
2.5 COMPONENTS
OF EXPENDITURE CONTROL SYSTEM
2.5.1 CONTROL
ENVIRONMENT
2.5.1.1 ORGANIZATIONAL
STRUCTURE
2.5.1.2 COMMITMENT
TO COMPETENCE
2.5.1.3 INTEGRITY
AND ETHNICAL VALUES
2.5.1.4 MANAGEMENT
PHILOSOPHY AND OPERATING STYLE
2.5.1.5 ATTENTION
AND DIRECTION PROVIDED BY THE BOARD OF DIRECTORS AND ITS COMMITTEES.
2.5.1.6 MANNER OF
ASSIGNING AUTHORITY AND RESPONSIBILITY
2.5.1.7 HUMAN
RESOURCE POLICIES AND PROCEDURES
2.5.2 RISK
ASSESSMENT
2.5.2.1 DETERMINE
GOALS AND OBJECTIVE
2.5.2.2 IDENTIFY RISK AFTER DEFINING GOALS
2.5.3 CONTROL ACTIVITIES
2.5.3.1 APPROVALS/AUTHORIZATION (PREVENTIVE)
2.5.3.2 RECONCILIATIONS (DEFECTIVE)
2.5.3.3
REVIEW
OF PERFORMANCE (DETECTIVE)
2.5.3.4 ASSET SECURITY (PREVENTIVE
AND DETECTIVE)
2.5.3.5 SEGREGATION OF DUTIES (PREVENTIVE AND
DETECTIVE)
2.5.3.6
INFORMATION
SYSTEMS
2.5.3.7 BALANCING
RISKS AND CONTROLS
2.5.4 INFORMATION
AND COMMUNICATION
2.5.5 MONITORING
2.6 FUNCTIONS OF
EXPENDITURE CONTROL SYSTEM
2.7 ROLES AND
RESPONSIBILITIES
2.8 EXPENDITURE CONTROL SYSTEMS AND THE AUDITOR
2.9 OPERATION OF
EXPENDITURE CONTROL SYSTEM AT GOVERNMENT OF NIGERIA
2.9.1 BASIC
CONTROLS
2.9.2 OPERATIONAL
CONTROLS
2.9.3 EXPENDITURE
AUDITING
2.9.4 ELECTRONIC
DATA PROCESSING MACHINES/COMPUTER SYSTEM
2.10 LIMITATIONS
OF EXPENDITURE CONTROL SYSTEM
CHAPTER THREE
RESEARCH
METHODOLOGY
3.1 RESEARCH DESIGN
3.2 SOURCES OF DATA
3.2.1 PRIMARY DATA
3.2.2 SECONDARY DATA
3.3 POPULATION OF THE STUDY
3.4 SAMPLE SIZE
3.5 DESCRIPTION OF QUESTIONNAIRE
3.6 METHOD OF DATA ANALYSIS
3.7 STATISTICAL TOOL FOR TEST OF
HYPOTHESIS
CHAPTER FOUR
DATA
PRESENTATION, ANALYSIS AND INTERPRETATION
4.1 DATA ANALYSIS AND INTERPRETATION
4.2 TEST OF HYPOTHESIS
4.2.1 HYPOTHESIS ONE
4.2.2 HYPOTHESIS TWO
CHAPTER FIVE
SUMMARY OF
FINDINGS CONCLUSION AND RECOMMENDATIONS
5.1 SUMMARY OF FINDINGS
5.2 CONCLUSION
5.3
RECOMMENDATIONS
5.4 SUGGESTIONS FOR FURTHER INVESTIGATION
BIBLIOGRAPHY
APPENDIX: QUESTIONNAIRE
CHAPTER ONE
INTRODUCTION
1.0.
BACKGROUND OF THE STUDY
Every organization has a
purpose, which includes making some product and rendering some services at a
price. For normal operations of the Government, it is the product or services
of the firm that cause cash receipts (revenue) to flow into the firm. Revenue
is associated with products or service of a firm as source of expected cash
receipts. Revenue is an event; an increase that applies definitely to value
that is monetary. This increase occurs because the firm undertakes certain
activities or there is any performance by the firm.
Revenue therefore refers to the monetary event of
asset valves increasing in the firm due to the physical event of production or
sales of the firms’ products or services.
In Kam (1987:237), Financial Accounting Standard
Board(FASB) defines revenue as inflows or other enhancements of assets of an
entity or settlements of its liabilities (or combination of both) during a
period from delivery or producing goods, rendering service or other activities
that constitutes the entity’s ongoing major or central operations. In addition,
Hongreen et al (2002:568) described revenue as inflows of asset (almost always
cash or accounts receivables) received for products or services provided to
customers.
Her goals include:
I.
To continuously improve
her service to her customer.
II.
To realize full payment
for timely accurate and complete billing of electricity delivered.
III.
Institutionalise
business and commercial orientation among the work force.
IV.
Gradually aiming at
closing the gap between demand and supply by upgrading and expanding,
generating, transmission and distribution of infrastructure.
V.
To improve skills and
motivation of staff.
To achieve the above mission and goals, the
management of the establishment must adopt measures to ensure that available
resources are prudently used to obtain valve for money from resources allocated
to them. Management in turn should generate operational data with which they
evaluate the efficiency and effectiveness of their operation. It is fundament
aspect of management stewardship responsibility to provide interested parties
with reasonable assurance that their organisation is effectively controlled and
that the accounting data it receives on a timely basis are accurate and
dependable. Developing a strong system of expenditure control provides this
assurance.
Thus expenditure control is defined
as the whole system of control, financial and otherwise established by the
management in order to carry on the business of the enterprise in an orderly
and efficient manner to ensure adherence to management policies safeguard the
assets and secure as far as possible the completeness and accuracy of the
records. In addition the American institute
of Certified Public Accountants
in 1949 defined expenditure control as comprising the plan of organisation and
all the coordinate methods and measures adopted within a business (or non
profit making body) to safeguard its assets, check the accuracy and reliability
of its accounting data promote operational efficiency and encourage adherence
to prescribed managerial policies. A ‘system’ of expenditure control extends
beyond those matters which relate directly to the functions of the accounting
and financial department.
However, it is an established fact
that all the business units and service centre of Government of Nigerian in Enugu
state are often plagued by accounting and administrative control problems as it
affect revenue generation and other assets. As a result the establishment
revenue base has assumed a downward trend.
It has also been shown that despite considerable
investment, public service delivery by the establishment is widely perceived to
be unsatisfactory and deteriorating from bad to worse.
The complete dependence on capital grants allocation
from government is also known. What is not known is the degree to which expenditure
control weaknesses and reduced allocation from government contribute to the
problem.
The incidence of expenditure control weaknesses
unsatisfactory and deteriorating service delivery have the undesired effect of
not only weakening the establishment’s ability to provide services effectively,
but also encourages collusion, fraud, asset conversion, genuine and deliberate
mistakes, corruption, lack of transparency and accountability for revenue
collection and accountability for revenue collection and other assets. For the enhancement of the
attainment of the mission and goals, it is therefore necessary that these
hindrances be removed. It is against the above background and evaluate that
this research carried out to examine and evaluate the expenditure control
system in operation at holding Government of Nigeria in Enugu state.
1.1
STATEMENT OF PROBLEM
The incidence of expenditure control weaknesses,
unsatisfactory and deteriorating service delivery have the undesired effect of
not only weakening the Government’s ability to effectively provide services but
also encourages collusion, fraud, embezzlements, loss of cash (revenue), assets
conversion genuine and deliberate mistakes, corruption, lack of transparency
and accountability for revenue collection and other assets. Despite
considerable investment, public service delivery is unsatisfactory and
degenerating. The Government is not able to break even and sustain itself from
the revenue obtained there from. This impacts so negatively on the Government’s
existence.
For the enhancement of the attainment of the mission
and goals of the Government, it is therefore necessary that these hindrances be
removed. The management of the Government should familiarize themselves with
expenditure control procedures that will ensure effective service delivery and
the desired revenue generation.
Unfortunately, there has a dearth of adequate
information in this regard. No determined effort has been made to investigate
the problem of weak expenditure control over service delivery and revenue
generation. Therefore the main motivating factor underlying this study is the
desire to break new grounds with the intent of shedding more light on this
problem and seeking avenues for solving it.
Thus, the purpose of this study is to examine and
evaluate the expenditure control system in operation of Government of Nigeria
in Enugu state with a view of knowing its impact on revenue generation in the
state.
1.3
OBJECTIVES OF THE STUDY
The main objective of this study is to
evaluate, the expenditure control system in operations at Government of Nigeria in Enugu state.
Other objectives of the study are:
I.
To examine the types
and techniques of expenditure control system for revenue generation adopted by Government
of Nigeria in Enugu state.
II.
To determine the impact
of expenditure control system on revenue generation.
III.
To identify the
strengths and weaknesses of the system of expenditure control in all
departments in Government of Nigeria
in Enugu state.
1.6
SIGNIFICANCE OF THE STUDY
This
study is significant for the following reasons:
i.
These studies will
highlight the accounting and administrative control problems plaguing Government
of Nigeria
in Enugu state.
ii.
It will enable managers
of services, organizations and government owned public utility establishments
to bring the accounting and the expenditure control procedures inherent in them
in conformity with expenditure accounting standards and practises.
iii.
It will help government
owned establishments to assess then expenditure control measures and make
amends where necessary.
iv.
The study could arouse
further research into some other further research into some other functional
areas in the Government by students and accountants. It will also help to broaden
(my) researchers’ knowledge.
1.7
SCOPE AND LIMITATION OF THE STUDY
Although the study was to evaluate the expenditure
control system in operation at Government of Nigeria in Enugu state, to ensure
accurate and reliable data collection it was limited to the study of the
expenditure control measures at the Enugu district unit of Government of
Nigeria. This covers expenditure control as it affects revenue generation
(handling of cash) assets control administrative control and manpower control
as well.
The researcher due to the following could not take a
wider range of study:
i.
Inability to have
access to some relevant documents from the officials in the Government.
ii.
Financial and time
constraint, which confined the researcher to only Enugu destruct unit.
1.8
RESEARCH HYPOTHESIS
Based on the objectives of this study the following
null and alternative hypotheses were developed.
Ho1`: Effective expenditure control does
not ensure effective service delivery and desired revenue generation.
HA1: Effective
expenditure control system ensures effective service delivery and desired
revenue generation.
Ho2; Weak expenditure control system does
not encourage collusion, fraud, embezzlement, loss of revenue, assets
conversion and computation in Government of Nigeria.
HA2: Weak expenditure control system
encourages collusion, fraud, embezzlement, and loss of revenue, assets
conversion and computation in Government of Nigeria.
1.8.
RESEARCH QUESTIONS
The
following are a few of the questions, which were asked in the questionnaire in
the carrying out of this research work.
1.
Does the expenditure control system ensure
that operations comply with set policies and promote accuracy and reliability
of transactions?
2.
Are expenditure
/external auditors independent of those whose functions they appraise?
3.
Based on the evaluation
of the expenditure control system, is it effective and efficient?
4.
Is the accounting and
operational routine sit out in an accounting Manuel?
1.9.
DEFINITION OF TERMS
REVENUE:
This describes the amount of money a Government generates in a set period of
time through the sale of products or services.
EXPENDITURE
CONTROL SYSTEM: This is the whole system of control, financial and otherwise
established by the management in order to carry on the business of the
enterprise in an order to carry on the business of the enterprise in an orderly
and efficient manner.
AUDITING:
An activity earned on by the auditor when he verifies or examines accounting
information determines the accuracy and reliability of the accounting statement
and reports and then expresses his opinion.
CONTROL
ACTIVITIES: Policies and procedures that management has established
AUDIT:
An independent examination of and the subsequent expression of opinion upon the
financial statements of an organization.
EXPENDITURE
CHECK: This is the allocation of authority and work in such a manner as
to afford checks as the routine transactions of day to day work by means of the
work of one person are being proved independently by another or the work of a
person being complementary to that of another.
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