AN INVESTIGATION OF LOCAL GOVERNMENT FINANCES AND ACCOUNTING SYSTEM

AN INVESTIGATION OF LOCAL GOVERNMENT FINANCES AND ACCOUNTING SYSTEM

BACKGROUND TO THE STUDY

The local government is the third level of governance. State governments have significant control over local government councils, however the constitution now recognizes the activities of local government councils independently (Oshinsami, 2009).

Both public and private organizations must deal with the issue of fund availability, use, and accountability. With the local government now having democratically elected administration and the rising discussion on its autonomy, an organization must be supported to be able to carry out its objectives at the lowest possible cost. It became important to investigate the finances of the local government in order to determine their readiness for the task at hand (Bra, 2010).

Most states in the union have implemented local government legislation to regulate and manage the operation of their local governments. As part of their responsibilities, local government account – for their income and expenditure in order to: Demonstrate compliance with established laws and other controls, local government account – for their income and expenditure in order to: Demonstrate compliance with established laws and other controls, Provide proof of judicial stewardship accountability. Summarize and report on each function's financial operations. Explicitly matching the stipulated income and spending (Bush, 2011).

The local government is the closest level of government to the people, and only proper financing and efficient use of finances will allow her to have an influence on local governments and communities. The study of finance accounting systems at the local government level is being deemed fairly relevant and timely in light of the falling revenue paired with their rising duties in light of this relevance.

1.2 STATEMENT OF PROBLEM

Local governments in Nigeria are often financially poor. According to Omapariola, there are three key reasons for this (1990).

The country's inequitable income sharing mechanism among the three tiers of government.

The 1976 local government reforms, as ratified by the presidential constitutions of 1979 and 1989, which gave the local government a wide range of tasks but failed to equip them with the financial means to carry them out. Internal revenue production and collection techniques are inefficient.

The internal and external sources of local government funds are revealed in the literature on public finance.

1.3 OBJECTIVE OF THE STUDY

The purpose of this study is to critically appraise the various sources of finances available to Aniocha south local government council and ascertain the efficacy of its revenue yielding machinery.

To provide insight into the current accounting system carried on at the local government level this way we shall examine the appropriateness of the present system of local government accounting.

It is also the aim of this study to review the much debated revenue allocation formula as used in the country.

The present finance regulations as product of a commission set up by the federal government to formulate such regulation for the whole local   government systems in the country. To this end the study will examine the effect of these regulations on the local   government. By also attempting to undertake a comparison of the effect so far on the desired hopes aspirations of the government that making the local government autonomous will make it function effectively as a third tier of government .

This study shall also examine the utilization of local government finances after a careful examination of the various sources of the council’s finances and determination of proportion of internally generated revenue to total revenue of the council and trend of the statutory allocation over a period of years  with a view to determining whether these allocations on the increase or on the decrease.

1.4 RESEARCH QUESTION

Consequently this attempts to provide question to this study; Determining how well the accounting system in operation in the local government caters for and meet the need of the internal administration of the council?

How can the local government council ascertain and evaluate allocation? And what are the method of data collections and who are those qualified personnel.

1.5 HYPOTHESIS

For the purpose of this current study the following hypothesis has been formulated. Also this hypothesis is going to be stated in the null and the alternative form that is

Null hypothesis (Ho)

Alternative hypothesis (Hi)

Hypothesis I

Null hypothesis (Ho);  Method of collection is not responsible for the poor revenue generation of the council.

Alternative hypothesis (H1): Method of collection is response able for the pure revenue generation of the council.

Hypothesis II

Null hypothesis (Ho); The  present finance of their council is adequate to meet her financial and budgeting requirement.

Alternative Hypothesis (Hi):  The present finance of the council is adequate to meet or financial and budgetary requirement

Hypothesis III

Null hypothesis (Ho); Lack of qualified personnel is not responsible for the poor system of book-keeping in the local government treasury.

1.6 SIGNIFICANT/JUSTIFICATION OF THE STUDY

The provision of the financial framework in the local government system is a unique feature in the administration of finance. Hence, this study will add to the effectiveness of the operators of the systems.

Information  contained in this work will serve as a very useful guide to executive council as well as various heads of units seeking to achieve better result. More importantly is the power of the council over the budget prepared and presented to it by the executive.

This study will also help internal auditors. Internal auditors are those who officially examine the financial records of a company within. It will help them evaluate the effectiveness and responsibility of the information they have.

In addition, supporting staff such as those on industrial training attachment, those of Youth services and also casual workers re to benefit immensely from the study.

1.7 SCOPES/DELMINATION OF THE STUDY

The study is limited to Owerri. Even though there are other local governments with similar problem, we decided to take Aniocha south local government council as our case study.

1.8 LIMITATIONS OF THE STUDY.

In the process of carrying out this study, we encountered some problems which militated against the research project and also the major constraint of the research time.

The slow time frame did not allow for proper coverage of a wide area.

Finance is another factor. The money needed for going thro and fro Aniocha south local government council.

Also, the money need to cover the area to administer questionnaire.

Another limitation is the level or degree of literacy of the respondent. Some of the respondent could not read and write hence a problem.

Also, it is the nature f the topic of study. We found it difficult to get information from sources like internet, newspaper, books etc. concerning the topic of the study.

Lastly, it is the problem of easy access to information from the local government. This is because those in authority who have the right to give out information were restrictive of management of information which is benchmark data for any meaningful research also posed a problem.

1.9 DEFINITION OF TERMS

Some of the following terms relevant to the course of study are defined below:

a)LOCAL GOVERNMENT:- This can be defined as a unit of government administration at the local level established by law to perform some specific function within a given area of jurisdiction.

b)COUNCIL: According to advance learner’s dictionary. Council is of people elected to give advice, make rules and manage affairs.

c)BUDGET:  A budget is defined as a financial pal that serves as an expenditure for decision making. According to Abubakar 1998, he sees it as a conscious and systematic allocation of resources prepared and based on the forecast of key variables adopted to achieve certain policy objectives which may or may not set explicitly. Performance target for the achievement of objective relates anticipated revenue and form the basis against which all revenues can be measured.

d)STRONG ROOM: This is a place in the treasury where all cash, monetary and other valuables are kept.

e)ACCOUNTING:- This is defined as the identification, collection measurement, processing, evaluation and communication of financial information to facilitate decision regarding activities and resources.

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