THE IMPACT OF FINANCIAL CONTROL INSTITUTIONS IN PROMOTING FINANCIAL ACCOUNTABILITY IN THE NIGERIA: A STUDY OF IMO STATE UNDER DEMOCRATIC REGIMES

  • Home
  • ACCOUNTING
  • THE IMPACT OF FINANCIAL CONTROL INSTITUTIONS IN PROMOTING FINANCIAL ACCOUNTABILITY IN THE NIGERIA: A STUDY OF IMO STATE UNDER DEMOCRATIC REGIMES

 

ABSTRACT

Financial matters are so important that they receive constitutional recognition. To avoid abuse, the 1999 Constitution of the Federal Republic of Nigeria, provides a series of checks and balances over public finance by sharing financial responsibilities among the Executive, the legislature and the Office of the Auditor-General. The research sought to evaluate the effectiveness of the checks and balances on public finance in IMO State. The research also set out to recommend measures that will enhance the discharge of financial accountability. In this research, four hypotheses were formulated and tested. The primary data was obtained through the administration of questionnaires, interviews and actual observation. This was supplemented with secondary data. The technique of simple random sampling was used in the questionnaire administration. The population of the study was 386 out of which a sample of 160 was studied. The chi-square (x ) test statistics was used to test the four hypotheses. Percentage analysis was used to investigate issues considered relevant to this research but were not covered by the hypotheses. The findings of this research indicate that the public budget is not a significant instrument of legislative control over public finance in IMO State; the reliance of Auditor- General on the financial statements prepared by the Executive arm of government does not significantly influence his performance; the quality of legislative financial oversight has a significant effect on the State Auditor-General and qualification of State Treasury staff is independent of the number of financial records kept by them. The research shows that budgetary non-compliance is quite common. Infringements on financial rules and regulations are also common. The Public Accounts

Committee of the State Legislature never met to consider the report of the Auditor- General between 1999 and 2003. The implications of these findings are that the legislature is unable to discharge its Constitutional responsibility using the public budget; the weakness of the legislature adversely affects the Auditor-General and poor financial record keeping is not solely attributed to the qualification of those who maintain them. The study recommends a balanced redistribution of financial powers among the Executive, the Legislature and the Auditor-General to promote the discharge of financial accountability in IMO State.

 

CHAPTER ONE INTRODUCTION

1.1BACKGROUND TO THE STUDY

Nigeria has been divided into six geo-political zones – South-South, South-West, South- East, North- East, North -West and North- Central. IMO State falls within the geo-political zone of North-Central. The State was first created as Benue-IMO in 1967. It later became IMO State with the creation of Benue State in 1976. Nassarawa State was also created out of IMO State in 1996.

The Nigerian public sector consists of the governments at the Federal, States, Federal Capital Territory, Local Governments and all government parastatals. The public sector plays an important role in economic development. It provides services which the private sector may not be willing or able to provide. Chan (1988:15) argues thatthe public sector provides many essential services to society. It plays an essentially compensatory function; that is, it performs those functions that the market economy does not do efficiently or lacks the incentive to do at all.

Musgrave and Musgrave (1976) classify these functions as

  1. Resource Allocation – the provision of public goods and services.
  2. Income Distribution – the adjustment of the distribution of wealth or income in the society to conform to some principle of fairness.
  3. c) Stabilization – the use of fiscal policies to achieve high employment, price stability and economic growth.

In a Federal system like Nigeria, the different tiers of government perform these functions in varying degrees. Governments at all levels desire to deliver good governance to all their citizens. This is because “good governance is central to creating and sustaining an enabling environment for development” (Asselin, 1995:3). A strong link exists between economic development and good governance, and between good governance and fiscal transparency.

The importance of good financial management in achieving the objectives of

government has not lost its relevance. Because of this, the financial accountability of

most countries is enshrined in the Constitution to facilitate the discharge of financial

accountability. Oshisami and Dean (1984:36) remark thatin recognition of the importance of finance as a basis for political power, and the opportunities which absolute control offers for its abuse, power over finance is divided, the division being formally recognized constitutionally in virtually all countries Global practice shows that power over finance is shared between the Executive and the legislature and in some cases with an independent body – the Supreme Audit Institution. Has this Constitutional sharing of power over finance achieved the desired result? In view of the enormous responsibilities placed on government for the welfare of its citizens, the public sector needs a lot of resources. In pursuit of this, the government needs to put up a framework for the management and control of the public purse. The formalities established in relation to accounting and financial control support the process of governance

GET THE COMPLETE PROJECT MATERIAL HERE