Project – The accounting system in local government – A case study of Nsukka Local Government of Enugu State.

CHAPTER ONE

INTRODUCTION

• Background to the Study

The accounting system in local government, particularly in the case of Nsukka Local Government of Enugu State, is a critical aspect of public administration that ensures the efficient management of public funds. The system is designed to promote transparency, accountability, and effective financial management (Adeyemo, 2012). However, the effectiveness of this system is often challenged by various factors such as corruption, lack of skilled manpower, and inadequate funding (Ogbonna & Ebimobowei, 2012).

The accounting system in Nsukka Local Government is primarily guided by the Financial Memoranda, a document that provides guidelines for financial transactions in the local government (Adeyemo, 2012). This system is characterized by the use of cash basis accounting, where transactions are recorded when cash is received or paid. However, this method has been criticized for not providing a complete picture of the financial position of the local government (Ogbonna & Ebimobowei, 2012).

A study by Ezeani and Oladele (2013) revealed that the accounting system in Nsukka Local Government is plagued by several challenges. These include inadequate accounting records, lack of qualified accounting personnel, and poor internal control systems. These challenges have significantly affected the effectiveness of the accounting system and have resulted in financial mismanagement and corruption.

Despite these challenges, there have been efforts to improve the accounting system in Nsukka Local Government. For instance, the government has invested in training and development programs to enhance the skills of accounting personnel (Ezeani & Oladele, 2013). Additionally, the government has implemented stricter internal control measures to prevent financial mismanagement and corruption.

However, these efforts have not been entirely successful. According to a study by Ogbonna and Ebimobowei (2012), the accounting system in Nsukka Local Government is still characterized by poor financial management and lack of transparency. The authors argue that for the accounting system to be effective, there needs to be a complete overhaul of the system, including the adoption of accrual basis accounting and the implementation of a comprehensive internal control system.

The accounting system in Nsukka Local Government of Enugu State is a critical aspect of public administration that is faced with numerous challenges. While efforts have been made to improve the system, more needs to be done to ensure transparency, accountability, and effective financial management. Future research should focus on identifying effective strategies for improving the accounting system in local government.

• Statement of the Problem

The accounting system in local government is a critical component of public administration, particularly in the case of Nsukka Local Government of Enugu State. However, there are several issues that have been identified with the current system. The first problem is the lack of transparency and accountability in the accounting processes. This has been highlighted in several studies, such as the one conducted by Ezeani and Oladele (2013), who found that there is a significant lack of transparency in the financial management of local governments in Nigeria.

The second issue is the lack of adequate financial controls. According to a study by Okoli (2015), there is a significant lack of internal control systems in the local government accounting system in Nigeria. This has led to instances of financial mismanagement and corruption. The third problem is the lack of capacity and skills among the accounting staff. A study by Eze and Eze (2016) found that many local government accountants in Nigeria lack the necessary skills and training to effectively manage public funds.

The fourth issue is the use of outdated accounting methods. According to a study by Nwobu and Faboyede (2017), many local governments in Nigeria, including Nsukka, still use manual accounting systems, which are prone to errors and inefficiencies. The fifth problem is the lack of adherence to accounting standards. A study by Okafor and Otalor (2018) found that many local governments in Nigeria do not adhere to the International Public Sector Accounting Standards (IPSAS).

The sixth and final issue is the lack of public participation in the budgeting process. According to a study by Udeh and Ugwu (2019), there is a significant lack of public participation in the budgeting process of local governments in Nigeria. This has led to a lack of trust and confidence in the local government accounting system. These issues highlight the need for reforms in the accounting system of local governments in Nigeria, particularly in Nsukka Local Government of Enugu State.

• Aim and Objectives of the Study

The study examines the accounting system in local government. The specific objectives are:

1. To examine the current state of the accounting system in Nsukka Local Government and identify any existing gaps or inefficiencies.
2. To understand the impact of the accounting system on the financial management and overall performance of Nsukka Local Government.
3. To investigate the challenges faced by the accounting department in Nsukka Local Government and how these challenges affect the overall accounting process.
4. To evaluate the effectiveness of the current accounting practices in promoting transparency and accountability in Nsukka Local Government.

• Research Questions

The research questions are buttressed below:

1. What is the current state of the accounting system in Nsukka Local Government and what gaps or inefficiencies exist?
2. How does the accounting system impact the financial management and overall performance of Nsukka Local Government?
3. What challenges does the accounting department in Nsukka Local Government face and how do these challenges affect the overall accounting process?
4. How effective are the current accounting practices in promoting transparency and accountability in Nsukka Local Government?

• Research Hypothesis

The hypothetical statement of the study is buttressed below:

Ho: Accounting system has no significant impact on the financial management and overall performance of Nsukka Local Government.

H1: Accounting system has significant impact on the financial management and overall performance of Nsukka Local Government.

• Significance of the Study

The study of the accounting system in local government, specifically focusing on the Nsukka Local Government of Enugu State, holds significant importance for several reasons. Firstly, it provides an in-depth understanding of the financial management practices within the local government. This understanding is crucial for ensuring transparency and accountability in the use of public funds. It also helps in identifying any potential areas of inefficiency or mismanagement that may be present, thereby providing a basis for improvement.

Secondly, the study serves as a benchmark for other local governments, not only within Enugu State but also across Nigeria. By examining the accounting system of Nsukka Local Government, other local governments can gain insights into effective financial management practices and possibly adopt similar strategies. This could lead to improved financial management across local governments, which would ultimately benefit the citizens they serve.

Thirdly, the study contributes to the body of knowledge in the field of public sector accounting. It provides empirical evidence from a local government context, which can be used to inform and enhance theoretical frameworks. This is particularly important in a Nigerian context, where research in public sector accounting is still developing.

Fourthly, the study has implications for policy-making. The findings could be used to inform the development of policies aimed at improving financial management in local governments. This could include policies related to budgeting, financial reporting, internal controls, and audit practices.

Fifthly, the study could also have educational implications. It could be used as a case study in accounting and public administration courses, helping students to understand the practical application of accounting principles in a local government context. This could enhance their learning experience and prepare them for their future careers.

Lastly, the study could stimulate further research in this area. By identifying gaps in the current accounting system, it could pave the way for future studies aimed at addressing these gaps. This could lead to continuous improvement in the accounting practices of local governments, which would ultimately contribute to better public financial management.

• Scope of the Study

The study examines the accounting system in local government – A case study of Nsukka Local Government of Enugu State.

• Operational Definition of Terms

The accounting system: The accounting system refers to the structured process used by a business or organization to track its financial transactions. This system encompasses all the procedures, records, and methods used to collate, categorize, analyze, interpret, and present accurate and timely financial data. It includes the recording of financial transactions, the preparation of financial statements, and the auditing of these records and statements.

Financial management: Financial management refers to the strategic planning, organizing, directing, and controlling of financial undertakings in an organization or an institute. It involves applying management principles to the financial resources of an organization to maximize economic value. It includes tasks like budgeting, financial forecasting, cash management, and funds procurement.

Overall performance: Overall performance, on the other hand, is a broad term that refers to the total effectiveness of an organization. It is a measure of how well an organization is managed and how effectively it operates to achieve its objectives. This can be evaluated through various metrics such as profitability, efficiency, market share, and customer satisfaction. In the context of an individual, it could refer to the sum of their achievements or output in a given period.

Local government: Local government, on the other hand, refers to the administration of a particular district, town, city, or state that acts independently of the federal or central government. Local governments are responsible for managing and providing services within their jurisdictions, such as education, healthcare, and public transportation. They are also responsible for the collection of local taxes and the allocation of these funds to various public services. The accounting system in local government is crucial as it ensures transparency, accountability, and efficient management of public funds.

Project – The accounting system in local government – A case study of Nsukka Local Government of Enugu State.