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PROJECT TOPIC AND MATERIAL ON FUND ACCOUNTING IN THE LOCAL GOVERNMENT SYSTEM (A CASE STUDY OF NSUKKA LOCAL GOVERNMENT OF ENUGU STATE)
The Project File Details
- Name: Fund Accounting In The Local Government System (A Case Study Of Nsukka Local Government Of Enugu State)
- Type: PDF and MS Word (DOC)
- Size: [70 KB]
- Length:  Pages
1.0 RESEARCH BACKGROUND
The term “fund accounting” is as old as the world itself. The origin of fund accounting could be traced to the parable of talents in the holy Bible (Mathew 25: 14-30) about a man who delivered his goods to three of his servants and traveled to a far country two of them traded with their and made profits while the third went and buried his in the ground. When the time for accounting for the fund came they all rendered their accounts for the activities to their master accounting has been defined as a discipline concerned with identifying analysis forecasting of income and expenditure and recording of financial information” generally , it records in monetary terms the flow of economic value between or within entities.
The term “fund accounting’s often associated with either government accounting or non-profit making entities such as clubs societies and churches “ fund” in accounting may connote different meanings. In private sector it may be used to describe net current asset (current assets less current liabilities) as when used in the statement of sources and application of funds” it may also be used to describe an asset set aside for particular purpose it may also denote cash or securities.
A very fundamental point to note is that a fund is an accounting entity. A successful organization whether private public profit or non profit making needs to keep proper account of cash inflows and outflows. Therefore the importance of fund accounting in public sector including local government cannot be over-stressed local government by their nature an concerned with the provision of prescribed services at local level and carrying out certain local functions thus the accounts kept by the local governments is designed to,.
- Provide an analysis of the revenue and taxes raised by the local government and;
- Provide an analysis of the extent to which such revenue has been used in providing each separate service and sub-service for which the local government is responsible. Therefore the accounting procedures must be directed towards ensuring that maximum possible benefit is obtained from the limited resources it owns.
The essence of the foregoing is that a local government should be able to demonstrate sound stewardship in the conducts of the financial affairs of the community which is serves. Factually the accounting arrangement of the local government are some times described as stewardship accounting this term dues not however imply and different objectives and emphasis form those of a business organization. Nevertheless local governments accounting is as deeply rooted in the double entry system as business accounting. Books of prime entry and ledgers are maintained trial balances are regularly prepared and these lead on the preparation of summary accounts of revenue and expenditure for the appropriate period and a statement of affairs at the end of that period.
In conclusion since the local government is duty bound to report all its financial activities to higher echelons government and the general public the account must be comprehensive enough to enable people to know how public funds entrusted in the hands of the government have been utilized.
1.2 STATEMENT OF PROBLEMS
Local government system has many problems that hinder their accounting system.
Some local government system does not have qualified staffs that take proper account of their revenue and expenditure therefore they do no keep proper book of account.
More so, they do not public their financial statement to the public or to the state and federal government since improve book of account are being kept by them. some qualified staffs may conceal some material facts when preparing the financial statement therefore the account will not show the true and fair view of their financial statement since some material fact were not disclosed.
1.3 PURPOSE OF THE STUDY
The financial memoranda which governs the local government accounting spells out the rules and regulations which the financial activities of the local government must conform with in order to produce a true and fair view of the local government statement of affairs. In spite of these rules and regulation there are some constraints or weakness that hinder its effectiveness.
The purpose of the study is therefore to pin-point those problems and proffer means of eradicating them completely or at least reducing them to the nearest minimum.
1.4 OBJECTIVES OF THE STUDY
The obejcttives of the study are:
- To determine the extent to which the selected local government has installed a fund accounting system.
- To ascertain the adequacy and effectiveness of the fund accounting system of the local governments.
- To evaluate the fund accounting method adopted by the selected local government.
- To evaluate the accounting procedure of the selected local government
- To determine the factors that promote or hinder the accounting system of the selected local government.
- To offer suggestions on how to improve the accounting of the said local government.
1.5 SIGNIFICANCE OF THE STUDY
This study is important in many respects especially now that there is an increase in the number of local government created by the federal government. Since the local government owes the duty to report its financial activities to the general public and to the federal and state governments proper books of account must be kept in order to a achieve this objective at any particular time.
The study attempts to give an insight in to the fund accounting system of the local government and the management of such funds.
1.6 SCOPE OF THE STUDY
Though the power and the method of accounting or public funds are entrenched in the financial memoranda of the local governments the problem of proper receipts custody and disbursement of funds have remained unsolved in the local governments. The scope of the study is to look in to all areas of sources of revenue and expenditure of the local governments as contained in the financial memoranda and the method of accounting adopted to records its financial transactions and activities.
1.7 LIMITATIONS OF THE STUDY
There is no research study no matter how well conducted that is free form certain limiting factors. This study therefore is no exception to this assertion. Apart from the limiting factors within the reach of researcher herself there are some other imposed in her by the nature of the society and the laid down polices in the government establishment. The greatest identifiable limiting factors are shown below;
Time: Time constituted a major limiting factors approval of this work and the start of the second semester examination. I have in addition to this project work six other course to this project work six other course to compete. These limitations should not however be misconstrued as a justification for any short coming (if at all).
Secondary the research was conducted in Nsukka local government of Enugu state a place far away from the place he researcher usual place of residence. This means that the researcher had to travel all the way form Enugu to Nsukka to conduct the study. Time loss in terms of lectures missed is a big cost in itself.
Finance: Money is hard to come by especially in this hard biting economic condition for this reason there is hardly any student who can effectively carryout a research work if the needed finances cannot be provide. In my own case, because of financial constraints I was forced to limited the scope of my study to Nsukka local government of Enugu state. A lot of money is needed for typing and running of questionnaires but despite these impediments the author was able to obtain the information she needed the research.
Dearth of literary material: There are few literary publications on this subject and so the researcher was limited to researcher was limited to reviewing only.
Bureaucracy: Government establishments are well know operations more so when it is a study that concerns their financial operations . the researcher waited for a long time before securing the consent by the powers that be in the sample local government. The permission for the study to proceed was never a triumph for it turned out to be an open invitation to a more tasking handle. Some of the officials refused to grant interviews while those official that granted interview were reservedly unco-operative
1.8 DEFINITION OF SPECIAL TERMS
Allocation: Amount approved under recurrent and capital expenditure
Control: It refers to financial controls is the constitution provision rules and regulations.
Warrants: Authority to incur expenditure usually signed by the appropriate authorities to enable disbursements of public funds.
Accounting records: These are cash book vote book and ledgers etc.
Fund accounting: Accounting arrangement where self balancing set of accounts are provided for specific purpose.
Cash basis accounting: The recoding of financial transactions in the accounts of an organization only at the time of the receipt and payment for transaction. It is the basis of accounting under which revenues are recorded only when cash is received and expenditure recorded only when is paid irrespective of the accounting period in which the service was rendered or the benefit received.
Commitment basis accounting: The recording of all claims and obligations actual and contingent at the time they arise. It is a basis that records an anticipated expenditure evidenced by a contract or by a purchase order or determined by administration.
Accrual basis accounting: revenues are recognized when earned or due for collection and costs when resources are consumed or delivered or benefits are received not with standing that the receipt or payment of cash may take place wholly or partly in another accounting period. It permits a factual recording and matching of all revenue against the corresponding expenditure.
Department Vote Expenditure Analysis book (DVEA): This is a records of expenditure and liabilities incurred in respect of votes of funds at the disposal of a department or ministry. Its principal purpose is to facilitate vote watching and ensure that subheads for which the vote books are kept do not exceed their authorized limits.
Revenue: The total money collected by the government through taxes fees and other sources.
Expenditure: This is the disbursement of funds by the government.
1.9 STATEMENT OF HYPOTHESIS
For the purpose of this study the following hypothesis are formulated;
Hi: Proper books of accounts have been kept by the local government and;
Ho: Improper books of account have not been kept by the local government.