PROPOSAL
In recent
times some of the public organizations in Nigeria have been faced with cases of
financial crisis. Those of them that
survived more in a snail pace. Obviously
the causes of financial crisis in our public sector have been attributed to
total negligence of the roles of accounting in our public organizations.
This
research work looks into the role of accounting in the control public expenditure
in Nigeria. It analyzed the implications
of applying the accounting principles in our public organizations and how these
principles controls the operations of the public sector organizations in
Nigeria.
In
a bid to achieve a meaningful research study work, this research reviewed
related literatures on the role of accounting in the control of public sector in
Nigeria. Oral interview was also
conducted with the managers of the selected public organization in Nigeria.
Consequent
upon this, recommendations were made on how or the steps that will be taken to
eradicate these setbacks and deficiency in the system.
TABLE OF CONTENTS
Title page
Approval
page
Dedication
Acknowledgement
Proposal
Table of
content
CHAPATER ONE
1.1
Introduction
1.2
Historical Development of CBU (A Public company)
1.3
Statement of problem
1.4
Purpose of study
1.5
Research questions
1.6
Significance of study
1.7
Scope and limitations of the study
1.8
Definition of term
References
CHAPTER TWO
2.1
Literature Review
2.2
Historical development of Accounting in Nigeria
2.3
The nature of accounting principles
2.4
Types of accounting principles
2.5
Factors affecting accounting principles
2.6
Budgeting and budgetary control
2.7
Standard costing as a tool for control
References.
CHAPTER THREE
3.1
Research Methodology
3.2
Research design
3.3
Determination of sample
3.4
Area of study
3.5
Population study
3.6
Sample of study
3.7
Method of investigation
3.8
Method of data analysis
3.9
Development of research instrument
CHAPTER FOUR
4.1
Presentation of data & Analysis
4.2
Presentation of data
4.3
Analysis of data
CHAPTER FIVE
5.1
Summary of findings
5.2
Conclusion
5.3
Recommendations
5.4
References
CHAPTER ONE
1.1
INTRODUCTION
In most
developing countries including Nigeria, government participation in economic
activity is usually significant. One of
the ways through which government has intervened in Nigerian economy is through
the establishment of public enterprises and statutory bodies operating services
of an economic or social character on behalf of the government.
Since the
colonial era, especially after independence in 1960, Nigerian public
enterprises have witnessed a steady growth unit recently. Its Olisa (1988:133) pet it. Beginning as a
trickle in the period between this era of the second world war and Nigeria
attainment of independence the creation of public corporations had risen to
flood level since independence and his maintained a steady growth. The rational behind the establishment of
public enterprises in Nigeria are many.
Some of the reason include:
generating revenue, they would add to available rational capital for the
support of development and welfare programme, making to be controlled by a few individual, it possible for important
profitable enterprises to be controlled by a few individual or group,
organization certain critical activities national survival and economic
stability and providing employment opportunities (Ademolukun 1983). However, after a long period of growing,
starts intervention in the Nigerian economy through public enterprises, the and
of 1980’s onwards had witnessed a reversed which has sometimes been dramatic in
public opinion and therefore public policy.
This
has been brought by the persistent losses which state enterprises that have
been running over fears. Consequently, there has been a willingness to look at
alternative policy strategies for the achievement of economic development. At the forefront of these strategies is the
minimization privatization of public enterprises.
In
Nigeria, public enterprises are engaged
in a while spectrum of economic activities including agriculture, mining,
construction, manufacturing, commerce and services. The classification of public enterprises in
Nigeria, had been made according to varieties of criteria by different
authorities. The public service review
commission (1975:101) classified public sector int.
Public
utilities
Regulatory
of service body
Financial
institutions
Commercial
ad industrial enterprises
Being a
mixed economy, individuals also own and operate private enterprises. A firm classified as private enterprises when
it is founded and managed by an individual and Ora group of individual. These firms are expected to be registered in
the local government within which they operate.
The
rationale for the establishment of private enterprises are numerous just like
establishment of public enterprises. T hey include amongst other. Provision of employment opportunities. Generating
income for the owner of the enterprises.
Government interest in profit growth of the enterprises which determine
the tax liabilities of the firms, improve the performance of the public sector
through competition. Moreover, the
general public is concerned with the contribution which makes towards social
upliftment which is exhibited to the environment in which the business is
loaded and its willingness to contribute to the development of the environment.
The
activities of the public enterprises have been on the increase in resent times
which necessitated the introduction of the accounting practice to check and
monitor the financial activities of these enterprises. In this book, titled principles of
accounting, by Bimage (1985) accounting is defined as a process by which data
relating to the economic activities of an organization are measured, recorded
and communicated to interested parties for analysis and interpretation.
The
earliest method of accounting records were kept in physical quantities. These records came from the Eastern (early)
civilization which involved in the countries around the Mediterranean sea such
as Mesopotamia, Egypt, Crete, Italy etc.
money was recorded as soon as money took the place of barter as a medium
of exchange and unit of accounting practice has been closely related to the
economic development of the country. If
the business organization grows in size and complexity, management and
outsiders became more clearly differentiate from the outside groups which
include owners of the firm (stock holder) creditors, government employer and
the general public.
The
differentiation necessitated the need to have accounting department in the
enterprises to give accurate financial of the management and to satisfy the
outside demands or the general public who are already interested on whether the
enterprises in growing or not.
The role of
accounting in public enterprises in Nigeria is primarily to ensure accurate
accountability in these sector and present the time and fair financial position
of the enterprises. The role is of
utmost importance in any organization.
An organization can only grow or profit when the resources are well
managed and effective observed over expenditure. These resource can only be well managed if
accounting department of the organization give an accurate financial
information to know how ,much the enterprises having. It is only when this is done that the firm
allocate its resources and knows what is to be done.
The
role of accounting seems to be more pronounced in the public enterprises. In recent time there are cases of
misappropriation of funds in the public enterprises and improper
accountability. These factors have led
to a lot of public enterprises going into oblivon. If the government has
reorganized the role of accounting, all these febles should not have
arisen. No enterprises can move forward
without having a well organized financial departments to give accurate
financial; information about the firm.
This is
because if improper accounting records are not minimized or where possible
eradicated these is bound to be cases of public enterprises failure. Consequently, staff of such enterprises will
forced out of their job. This will
result to economic and social; activities in the society.
1.2
HISTORICAL
DEVELOPMENT OF CBN (A PUBLIC COMPANY)
The
formation of CBN started gradually in the early 1950’s but gathered momentum by
the middle and towards the decade. Precisely
CBN was established in 1958. Among the
factors that led to the formation for an apese financial institution in the
early “50s” were the dissatisfaction and short coming to the west African
currently board. The WACB established in
1912 was playing the role for an apese monetary institution in the British West
Africa especially in areas of the country.
The
issue of West Africa Currency exchanging this with the existing currencies,
investment of reserve mainly in London and the repatriation of existing
currencies. However, because of the anomalies and short coming of the WACB
especially as if could not perform the monetary management, Nigeria nationalist
continued to amount pressure on the colonial administration for the
establishment of a central Bank that should have all pioneers of a central
bank, and not just a glorified currency exchange house.
In
1952 at the floor of federal house of
Assembly (First sitting) Lagos-Chief Anthony Enahoro Summoned up courage and
mored a private member motion calling for the establishment of central Bank for
the purpose of rapid economic development in all its phases.
However,
as result of the composition of he house then and lack of awareness of the
importance of central bank on the part of some Nigeria members the bill
failed. Even though the motion was not
successful, it stirred the hornet comb.
It gingered the colonial office in London Administration appointed Mr.
Fisher, a Senior staff of Bank of England, to inquire into the desirability and
practicability of establishing a Central Bank of Nigeria as an instrument for
promoting the economic development of the country.
Fishers in
his report as an agents of colonialism and on orthodox bank stated that central
Bank cannot be established in a financial environment where all factors that
make a central Bank perform are not existent.
In the same
year, while fisher was submitting his report to another independent term of
financial expects were in Nigeria from world Bank (international Bank for
reconstruction and development) with a mission like that of fisher at examining
the desirability and practicability of establishing a central bank of Nigeria.
The
world Bank mission were more objective in their report and less inclined to
perpetual economic dependence. They
really agreed with the recommendation of fisher on the instability of the
financial environment as a result of weak money and market instruments but they
were quick to add, that the continued political and economic advancement of
Nigeria is bound to lead to the establishment of a central bank. To postponed the day when functions of
currency issue and the management of foreign assets are performed in Nigeria
will also postponed the day when trained Nigeria will be able to perform these
functions responsible by themselves.
In
1957, even though Nigeria had not totally got her indigence, but she gained the
antonomy of self internal rule. The
nationalists did not wash time in commissioning another financial expert from
Bank of England J.B Loyness to advise then as:
i.
The establishment of a federal institution to perform
appropriate central banking functions.
ii.
The introduction of Nigerian currency and the
administration of such as currency so as to presence in external value and its
acceptability within the country.
iii.
The relationship of the federal institution to the
federal and regional government, to government institutions, to the commercial
Bank and to the public and
iv.
The role of such an institution in the development of
a local
money and
capital market. The report of JB Loyness
led to establishment of the central Bank of Nigeria (CBN) by the Central bank
of Nigeria ordinance of 17th March, 1959, The bank officially
commenced business on 1st July, 1959.
OWNERSHIP AND CONTROL OF CBN
The 1959
Central bank ordinance of Nigeria established the CBN with an authorized
capital of $1.5 million (123m) which was fully paid up by the federal
government of Nigeria. The Bank was 100
percent a public company, and there was no provision in the ordinance of 1958
establishing the bank and subsequent amendments there of required the bank to
maintain a general reserve fund from profit arising from its operation the rate
of the reserve and was dictated by the prevailing economic condition at that
point in time.
Furthermore.,
the 1958 central Bank ordinance provided
that the Bank should transfer one eight (1/8) of the net profit made
every year to the fund (general reserve) until the fund is equal to the paid up
capital (the proceed should be used to pay the federal government for the amount
contributed) and therefore only 1/16 of the profit for each year was to be
transferred to the fund. Meanwhile the
balance of the profit would be appropriated in the following manner.
50% of the
balance to be applied for retirement of any outstanding obligation of the
federal Government to the Bank in respect of cost of printing, mining shipment
of the initial of the Bank notes and coins.
ii. The remaining 50 percent as to be paid to
the president appoints the governor of the CBN (on the advice of the senate
1979 constitution and 1995 draft constitution).
Infact CBN is directly under the federal ministry of finance i.e. the
governor who in turn reports to the president.
This war amended by the military in 1997.
In
1997, with the presidentialization of key ministries in Nigeria, the CBN has
been sent the presidency, and the governor who is solely appoint by the
military president reports directly to him (the president). The board of Director of the bank under this
system is equally appointed by the president.
In
1999, when democracy returned Back to the state/country (Nigeria). The president appointed the Governor of the
CBN, but the Governor report to the ministry of finance. The CBN governor Mr. Solud Economist by
profession. The ministry of finance is Mrs. Ngozi Okonjo Iwuani,
Doctor by profession.
ORGANISATION
The central
Bank of Nigeria took after the British pattern (the Mother of all central
Banks) in many respects especially in organization and management. Infact, the first governor of the bank in
British Mr. Fanton, was seconded from the bank of England.
The
apex policy making body of the Bank is the Board of Directors. At the incept,
the enabling law establishing the bank shall comprise seven members the
governor (who is the chairman), the Deputy governor and five part time
Directors. The ordinance went further to
stipulate that it was the responsibility of the governor general to appoint the
governor and the deputy governor of the bank while the appointment of the part
– time director was responsibility of the prime minister.
To
cope with defects of the economic development couple with the recommendations of the international
finance experte the CBNs Board was re-organized for more efficiency. In order to be able to face the challenge of
the time, the membership of the Board was enlarged to thirteen, the Governor,
the Deputy Governor, three executive Directors and eight part-time Directors,
(The central Bank of Nigeria Decree No 24) of 1991 went further to enlarge the
Board by increasing the member to eleven made up of a Governor, five Deputy
Governors and five Directors, while the Decrease (1991) assigns the
responsibilities of policy and general administration of he affairs and
business of the Bank to the Board, the fire major department see figure 1.1
below. The decree also stipulate that the governor and the Deputy Governor
should be appointed by the president in the first instance for a term of five
years and each should be eligible for re-appointment for another not exceeding
5 years.
Some
of he activities of the bank as we shall see are decentralized while others are
not, while the ministry and policy formulations are done at the Bank lead
office in Lagos (now Abuja), the banking operations of the Bank is
decentralized. To facilitate the
efficient execution of the bank functions over the Nigeria’s vast territory,
some central banking activity are decentralized and operate through four
zones. Bauchi, Enugu, Ibadan and kano. In addition to the zonal centres, there is a
branch network whereby each state capital in the federation has a CBN Branch.
However,
in the newly-created states currency centers are set up by CBN, pending the
time full-fledged branch as could be established the respective heads of each
zone, branch controller and the currency officer respectively. As at the end of
1992, the CBN had in operation four zonal officer, 15 branches and 6 currency
centres. As at May 1993, the CBN had
19777 members of the staff comparising 23, executives of whom 22 were
departmental director 2581 senior and 6965 Junior staff
THE
1958 CENTRAL Bank ordinance placed the bank CBN under the federal ministry of
finance and Development so that the Board of Directors reported to the Minister
who in turn reported to the head of
state. However, in 1988, as part of the
military re-organizations in the country aimed placed under the
presidency. This arrangement is still
stating under this arrangement CBN is independent of the Federal Ministry of
finance and report directly to the president.
This nites has been reserve again
in 1997. CBN Government now reported to
the federal ministry of finance
ORGANIZATIONAL CHART OF THE CBN
Board of
Director
Deputy
Governor General administration
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1.
Administration
2.
Special duties
3.
Building & Eng. Services
4.
Medical service
5.
personnel
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Source: CBN BREIFS:
JUNE 1996
HISTORICAL BACKGROUND OF GOLDEN GUINEA BREWERIES (AS A
PRIVATE COMPANY)
Golden
Guinea Breweries limited was conceived by the Okpara Government of the former
Eastern region in July 1961. The Brewery
was computed in September, 1963 and under the name of independence Breweries
produced the first bottle of Golden Guinea larger the same year. At this stage, the brewery capacity was
50,000bl per annum-a small brewery.
After a few years of some Ups and downs, the brewery looked ready to
take off and a second product eagle stout was introduced and proved popular in
the stout market. But unfortunaately, the civil war was shut
down the growing hopes and eventually, shut down the brewery itself.
After
the war, there was shortage of money and materials. Then the East central Government could only
minter as an initial Brewery reconstruction fund, the sum of $50(100) But they
were also to help with a subsequent interest-free loan of N160,000, the first
bank of Nigeria then offered an over draft facility, the federal ministry government
followed with a loan of $500,000. In 1971, with the name of company completely
change to Golden Guinea Brewery limited, Golden Guinea larger and Eagle stout
reappeared on the market.
In
August 1974, the first major expression project took place and triple
production from 50,000bl to 150,000bl.
After consultation with the authorities, the expansion was eventually
sited away from Umuhia to help market coverage.
Golden Guinea was to be produced in Onitsha. The brewery went up on schedule then fate
intervened again. In March 1976, the
state was divided into two Imo and Anambra states, and the new brewery stood on
the other side of the division. It
become premier Brewery and golden Guinea’s expansionist hope were dashed.
Golden
Guinea Breweries did not give up. The
following year, initiatives were again developed for a new expansion project. Meanwhile in December, 1978, the company voluntarily went public becoming, with
characteristic pace-setting the first indigenous brewery to be quoted in the
stock market indeed, no other public quoted company of any sort has a Nigerian
ownership approaching that of GGB & a full 90%. Furthermore, the breweries own staff were
encourages to become shareholders, thereby increasing participation and
responsibility in the overall activities of the company.
On
28th November, 1981, the 600,00bi expansion project was officially
commissioned by his excellency the governor of Imo state, chief Samuel Onunaka
Mbakwe with the latest brewing technology, two separate bottling a brand new
fully equipped and expertly staffed quality control department substantial new
malt storage silos, capacious Largering talks, new fresh water boreholes and
water treatment plants: Golden Guinea can be called truly modern. Over
350,000 bottles of “liquid’ come off the bottling lines everyday.
Presently,
three brands are produced, namely Golden Guinea, Eagle stout, and
Bergedof. Also a major investment in
Agriculture has been planned whereby the company is expected to be self
sufficient in adjuncts, making use of local raw materials like sorgum, maize
and rice. One of such farm is at Aduchi,
Lafia district of Nassarawa state.
It
account department is organized under three section product and cost. Cost/management accounting techniques in use
include budget and budgetary control system, standard and sited along
costing. Golden Guinea Breweries is
sited along Aba road in Africa Ukwu Umuahia.
It is opposite the timber market and beside Aloma specialist Hospital
1.3
STATEMENT
OF PROBLEM
Obviously,
every private and public enterprises in Nigeria has their accounting
department. And there are increasing
cases of financial mismanagement in virtually all the public and private
organization in Nigeria. The problem of
this study lies on how the managers of these enterprises are able to recognize
the role of accounting in their enterprises so that these cases of improper
accountability will be minimized or if possible its total eradication in our
society
1.4
PURPOSE OF
STUDY
This study
include to investigate the role of accounting in the control of public enterprises in
Nigeria. The purpose of this study
include among other others.
i.
To determine the extent to which accounting is
generally affects the economic activities of the public section in Nigeria
ii.
To examine how managers adequately and efficiently
apply the role of accounting in their organizations.
iii.
To disseminate certain factors that affects the
accounting departments of most organizations which makes them not to function
as expected
iv.
To determine government policies which aid to promote
accounting in all public enterprises in Nigeria.
1.5
RESEARCH
QUESTIONS
1.
To what extent do accounting records generally affect
the economic activities of public enterprises?
2.
Do managers
adequately and efficiently apply the role of accounting in their organization?
3.
What are the factors that have negative effect on
accounting departments of most organizations which make them not to function
effectively as expected?
4.
What are those government policies which aid to
promote accounting in Nigerian public enterprises?
1.6
SIGNIFICANCE
OF THE STUDY
In this
study, the researchers have set out to examine the role of accounting in the
public sectors in this country. Nigeria
with the aid of highlighting the inherent problem encountered in the account
departments of most organizations. It is
expected that this work will be of interest to the owners of business
enterprises, the government, students and the general public.
To
shareholder, owners of enterprises, interested persons and the governments,
this study is expected to enkindle their interest the more and they will take note of various recommendations
mentioned here and help steer the management team towards forming a sundry
organizations to present an accurate financial information on their firm. This study will also help to serve as
literature to individual or corporate bodies who want to carry on further
research on the role of accounting in the public sectors in Nigeria.
1.7
SCOPE AND
LIMITATION OF THE STUDY
Scope of the study shows extent of coverage done in
the study. The research topic suggest a
study on the role of accounting in the public enterprises in Nigeria. The focus of the study is on central bank of
Nigeria (CBN). I take this to be a fair
representative of Nigerian public enterprises that is either avoidable or hand
to come by
There are
factors as constraints that are normally follows this research work, some of
them are
1.
TIME: this which
was a major problem was adequate not
managed by
the researcher. There was not enough
time for the researcher to get the project topic, get it approved and within a
short time we will be talking about our exams assignment and quiz.
2.
LACK OF
MATERIALS: the unco-operative of most
people
working in the library and other offices where the researcher needed to get
materials posed great problem to the researcher. Some
of the staff do not feel safe letting have access to some materials
while other will change you more than double the cost of Photostat before one
can get what he wants.
3. FINANCE: Before now our project use to be a joint
project of a group of four-ten people but now it has to be on individual
student. So finance hinder the projects
in one way or the other. Either by transportation to where to get the materials
or where to obtain the necessary information.
1.8
DEFINITIONS
OF TERMS
MANAGEMENT: Its function centre on decision
for planning and guiding the operation that is going on in the enterprises.
ACCOUNTING: accounting is the act of recording,
classifying and summarizing in a significant manner and in terms of money,
events and transactions which are in part at least financial character and
interpreting the result thereof.
FINANCIAL STATEMENT: These are
accounting reports issued by a business to described its financial affairs and resuslts of the operations. The financial statements are the end product
of the general financial accounting activity.
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