Accounting System and Financial Controls in Nigeria: A Study of Local Governments in Rivers State



ABSTRACT
This research project investigated the relationship between accounting system and financial control in Emohua local government. In order to achieve the objectives of the study, three hypotheses were proposed and data collected throguh the issue of structured questionnaires to 56 staff/respondents at the local government. Data collected was analyzed using Pearson Correlation. From the data analyses, the following findings were made: There is a positive relationship between accessibility of accounting information and financial controls, there is positive and statistically significant relationship between flexibility of the accounting system and financial controls, there is a positive and significant relationship between reliability of accounting information and financial controls. Based, we conclude that: Accessibility of accounting system contributes to financial controls in Emohua local government area of the state, flexibility of the accounting system has lead to a significant improvement in the financial control activities. Finally, we conclude that reliability of the accounting system aids in financial controls in Emohua local government area of Rivers State. We thus recommend that: There is need for the local government administration to educate its staff on the importance of ensuring the accounting system has the good attributes of reliability, flexibility and accessibility in order to improve financial controls in the LGA, We also recommend that the local government provide training to its staff on the strategies that can be deployed to ensure that the local government’s accounting system can be amenable to financial controls. Finally, we recommend that regulators and standard setters make policies that will ensure that local government accounting systems improve in the area of financial controls.

62 Pages

Project Reference Code: C053
  

CHAPTER ONE
INTRODUCTION
1.1   BACKGROUND TO THE STUDY
Local Government which are the third tier of government organized as close as possible to the people  at the grassroots and vested with power and rights to perform defined functions both naturally pertaining and to attribute  to assign. The success of any government in the field of political, social and economical development and advancement lies in the development ofan official and democratic system of the local government. Since this is a set up which will involve some accounting information for its financial control process.
Financial control which is the choice between future alternative course of action, financial controllers in very organization rely on Accounting information as the basis for most of their financial control. The administrators must be able to distinguish between relevant and irrelevant information. The need for accounting system for the local government area is very important which will enable them to control and comply with reports restored, which will provide the needed information for administrators to make effective control of finance.
Accounting has been defined by various bodies at different times accounting to “Gray Jack and Johnson S. Kenneth: Accounting and management action McGraw-U.S.A. the Athenians, early Egyptian, and others of the early Egyptian, and others of the early times, where they said accounting is that of recording business transaction”
Even in the late 19th century, it is regarded as the simplified balance sheet or list design for the benefit of bankers and creditors. This committee of terminology of American institute of certified public Accounting formulate this definition in 1961.Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money transactions’ and even which are in part at least of a financial character.
The more recent definition given by the American Association of Accountants (2006) is less restrictive and regards accounting as; The process of identifying, measuring and communicating economic information to permit information judgments and decision by the user of the information.
Accounting now includes the development and analysis of data, testing of their validity and reliance and the interpretation and communication of the resulting control to intended users. This data may be express in monetary or other quantitative terms or symbols or in verbal forms. In this broad context accounting as the science which deals with the designs, management, and evaluation of information system as they rate to accounting system and financial control to government and enterprise goals. It can now seen from the onset that the basic objective of accounting is to approved and analyze economic information to aid in financial control. It also facilitates the effective allocation of resources in the local government areas.
This research will mainly concern itself with the use of accounting system or information in local government areas and financial control process. The branch of accounting which provides information for accounting system or information and financial control is called financial accounting. This provides accounting/economic information usefully aiding managerial part planning, directing and controlling the local government operation.
A good accounting information is therefore needed for proper and adequate data gathering and analysis to facilitates sound financial control. The accounting system is face with the challenge of catching up with all information of our growing activities.
Accounting apart from providing the frame work however can be regarded as the blood in business system process without this no organization will function properly.

1.2   STATEMENT OF PROBLEM
More often than not, local government financial control does not involve adequate use of accounting information with the result that financial are really accurately made. However, the problems associated with the presentation of this needed information to financial control are. The problem of reporting the reports structure and prepare as to give clear understanding to the recipient.
How effective is the communication of accounting system or information and financial control at all levels and function of the local government.
Furthermore the structural weakness naturally pertaining to the organizational and financial control arrangement for the accounting function in the local government system.
This essentially relates to the distinctionality which might arise when the accounting functions are wrongly placed within the legislative and control process, which will not provide the needed accurate information.
Another problems is focused with the financial memoranda which do not state clearly how the various local government transaction are to be recorded in the appropriate account books which will not provide the needed adequate accounting system for its financial control are “The general accounting rules and procedure, receipts, the main Accounting”.

1.3   AIM AND OBJECTIVES OF THE STUDY
1.4   RESEARCH QUESTIONS
1.5   RESEARCH HYPOTHESES
1.6   SIGNIFICANCE OF THE STUDY
1.7      SCOPE AND LIMITATION


CHAPTER TWO
LITERATURE REVIEW
2.1   BACKGROUND TO THE STUDY
The role of accounting system and financial control have been in the literatureof financial accounting for a long time.  The main concern is t .se of accounting  data for the removal  of uncertainties  in projecting future.  This research will base it attention to the local government needs of accounting system for its control process, it will not fail to mention the relevant accounts which will provide the needed information for the administrators for its controls process such as the revenue abstract and the balance sheet of the local. This review is therefore aimed at analysing available literature and to the issues relevant to the subject matter of the research study.
2.2   INFORMATION NEEDS OF USERS OF FINANCIAL INFORMATION
2.3   THE TECHNIQUE FOR GENERATING ACCOUNTING SYSTEM
2.4   PRESENTATION OF INFORMATION     
2.5 THE UNDERSTANDABILITY CONCEPT OF THE USERS   OF   THE FINANCIAL STATEMENT
2.6     WHAT IS ACCOUNTING INFORMATION
2.7   IMPORTANT OF ACCOUNTING INFORMATION
2.8   LOCAL GOVERNMENT REVENUE AND EXPENDITURE ABSTRACT
2.9   THE BUDGETING SYSTEM IN LOCAL GOVERNMENT
2.10   REQUISITION AND ISSUE OF VOUCHERS
2.11 EXPENDITURE AND GOVERNMENT
2.12 STATEMENT OF ASSETS AND LIABILITIES
CHAPTER THREE
RESEARCH METHODOLOGY
3.1   RESEARCH DESIGN
Basically, there are two types of research design, the experimental and quasi-experimental or survey research design. For the purpose of this study, the appropriate research is the quasi-experimental or survey research design. This design is chosen because the variables under study as well as the population from the data will be collected are not under the control of the researcher.
3.2   POPULATION OF THE STUDY
The total population for the study includes all the staffs of Emouha local government area of River State.
3.3   SAMPLE DESIGN AND SAMPLING TECHNIQUE
The Judgmental method was used to select the appropriate sample for the study. Thus, the sample of the study are 56 staff of Emohua LGA comprising twenty two (22) senior staffs as well as thirty four (34) junior staffs of Emouha local government area from questionnaire administered and to eliminate bias and inconsistency on the part of the respondents.
3.4.    NATURE AND SOURCES OF DATA

3.5   METHOD OF DATA COLLECTION
3.6     METHOD OF DATA ANALYSIS
3.8     VALIDITY AND RELIABILITY OF INSTRUMENT


CHAPTER FOUR
DATA PRESENTATION ANALYSIS AND INTERPRETATION
41.   INTRODUCTION
This chapter concentrates on the analysis and discussion of data derived from responses to the questionnaires which disclosed facts about the subject matter. The questionnaire were  intended  to  be  distributed to those who  are involved in the accounting system of local government and those who supply the needed information for effective financial control process of this only few about ten were filled and returned. This number through small forms the basis on which the analysis is made.
4.2  DATA PRESENTATION ANALYSIS AND INTERPRETATION
4.3   DATA ANALYSES AND HYPOTHESES TESTING
HYPOTHESES TESTING
4.4   DISCUSSION OF FINDINGS
In the course of this research, it is revealed that there is a positive relationship between accessibility of accounting information and financial controls of Emohua Local Government Area of Rivers State. This result implies that making the local government’s accounting system more accessible will lead to improvement in financial controls. This will obviously lead to reduction in fraud and fraudulent activities in the local government. We however noted that the finding was not statistically significant indicating making the accounting system more accessible cannot be completely relied on for effective financial control.
Furthermore, the findings show that there is positive relationship between Flexibility of the accounting system and financial controls in Emohua Local Government Area of Rivers State. The implication of this result is that making the accounting system in the local government more flexible and responsive to changes in the environment will lead to improved financial controls in the local government. The finding was also shown to be statistically significant with the implication that making the accounting system more flexible can be relied on for effective financial controls.
Finally, the findings show that there is a positive relationship between reliability of the accounting system in the local government and financial controls. This means that that making the accounting system more reliable will lead to improved


CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
5.1   Summary
This research was conducted to investigate the relationship between accounting system and financial controls in Emohua local government area of Rivers State. The findings of the research among other things revealed that:
i.             There is a positive relationship between accessibility of accounting information and financial controls in Emohua local government area of the state. However, this finding was not statistically significant.
ii.             We also find that there is positive and statistically significant relationship between flexibility of the accounting system and financial controls in Emohua local government area of the state.
iii.             Finally, the findings show that there is a positive and significant relationship between reliability of accounting information and financial controls in Emohua local government area of Rivers State. The finding was not statistically significant in explaining financial controls in the local governemtn.
5.2   Conclusion
5.3   Recommendation



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QUESTIONNAIRE


Reference Code: C053

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