CHAPTER ONE
INTRODUCTION
1.0 BACKGROUND TO THE STUDY
The essence of public accountability in the present dispensation demands a great attention of which the promptitude of producing accurate and comprehensive financial statement cannot be dispensed with. Government accounting system particularly those found in ministries have been designed primarily to achieve accountability and control, for instance, to ensure that expenditure conforms with authorization and that financial transactions are conducted in accordance with established rules, such arrangement satisfy some of the basic control needs of the executives and the legislature, but they do not themselves guarantee efficient operation. In 1988, the civil service reform was undertaken to bring about standard result by putting life into professionalism of the service such government undertaking are normally concerned with how, efficient a local government makes use of its available means in pursuit of its innumerable ends.
Obviously, the aim of creating local government is to make sure that grass root development (villages) are properly taking care off with their available financial and material and support from federal. The objective of the 1976 reforms was to create a local government system with complete and self-contained budget that would be effective and effectual. Before the reforms, Nigeria local government councils from their inception had suffered serious problem of improper accounting and internal control system (Wawhoop, 1979 : 16). One of the commonest methods of measuring performance and result in organization is accounting system. If local government account is not properly checked through internal control, grass root development will be hindered. This is because it provides information to the management to enhance proper administration.
The America Association of Accountants, defines accounting as the process of identifying, measuring and communicating of economic information to permit information judgment and decision by users of the information the American Institute of Certified Public Association (AICPA) (1961), defines accounting as the art of recording, classifying and summarizing in a significant manner and in terms of money, transaction and events which are in part at least of a financial character, and interpreting the result thereto. The author of the project defines accounting as the art of recording, classifying and summarizing, analyzing, interpreting and reporting on financial transactions and position of an organization to the interested persons or bodies. This last definition by the author, is because whenever two or more persons come together to form a union or an organization, the next thing is that money must be involved, local governments, administration and many organization desiring more effective use of causes means are at great advantage in the use of information made available by accounting system. Such information includes costs analysis in relation to output and objective and control which involves setting of budget. Analysis variance between actual and budgeted. There is also anticipation managing liquidity and making forecast of each flow and strategic decision making which involves appraising investment proposal and allocation of resource between task-cost benefit analysis. Smith defines local government account as the art of systematically recording in money transactions undertaken by a person or body.
The local government accounting has been restricted to a “process of recording, analysis, classifying, communicating, summarizing and interpreting the financial information or transaction about government in aggregate and in details reflecting all transaction of government funds and properties. The day to day conduct of a local government financial activities is guided by the financial memorandum which provides detailed instruction and guidance on the financial memoranda is charged with among other thing” the prescription of certain financial arrangement of local government and procedures in collection and accounting for revenue and controlling and accounting for expenditure. Finally, there can be a local government where there is an affective accounting system without an efficient and effective internal control instituted to check the excess of the accounting officials in local governments.
In Enugu south local government, internal control system helps in prevention of frauds among the executive and account officers. Majority of the staff that is working under treasury department, tax department, revenue department has at least two cars. They enjoy government cars and buy first class cars for they personal use. This is because many of them embark on fraudulent act coupled with embezzlement and this brought about late payment of staff salaries. In order to stop this, Enugu south introduced proper internal control, which help them to trace down those executives who have criminal mind. Their bad character causes a lot of problems. The accounting system and method of internal control is very important in local governments and because of its important. Luttleton (1953) defines accounting system as the control purpose of accounting to make possible the periodic matching of costs and revenues. Also internal control is define as the whole system of controls, financial or otherwise, established by management n order to secure as far as possible, the accuracy and reliability f the records, run the business in an orderly manner and safeguard the company’s asset this definition is by Osita Aguolu in his book fundamentals of auditing (1998).