CHAPTER ONE INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Public sector is that sector of the economy established and operated by government and its agencies distinguishable from the private sector and are organized on behalf of the whole citizens while Public sector accounting is the process government agencies and municipalities use to record financial transactions.
Mathias, (2004:78). Said, similar to private sector accounting in theory, the focus of public sector accounting is somewhat different. Most government agencies and municipalities need to track funds generated from tax revenues and expenditures related to projects or appropriations. In addition, nations may need to follow a set of standard of accounting principles different from private sector accounting rules. The creation of an international accounting standard helps nations to follow similar rules in other to present information in a similar manner.
Government accounting typically uses a set of rules that tracks financial information. Rather than attempting to determine how much money a public sector entity has made, the entity must report financial information to interested parties, primarily constituents. The separation of money into these funds makes it difficult for government agency or municipality to spend money on unauthorized purposes. Elected officials or legislatures must create appropriations or spending authorizations to transfer funds amongst government fund accounts. This process attempts to restrict the spending of money on a free-will basis that will quickly deplete an agency’s resources
Similar to private sector accounting, public sector accounting principles often seek to lay a framework for accounting practices.
Afolabi,( 2004:320). Said rather than creating a hard set of rules to follow, the principles allow for an application of basic principles to either large and small entities or municipalities. An international set of accounting principles is also necessary for smaller nations to learn and adopt rules that will enhance their internal national accounting process. Most times, developing nations cannot or do not have the resources capable to create and instil a framework for their public sector accounting practices. Adopting an international set of accounting rules will help them overcome this problem and typically helps them start on the path better infrastructure development.
Another purpose of public sector accounting is to create a standard expectation of ethics and accountability for a nation’s financial information. Standard public accounting principles will also make it easier for a nation to undergo an audit. it is also harder for countries to hide inappropriate financial transactions when using public sector accounting principles. This research study will therefore appraise the impact of public
sector accounting in Nigerian financial control system focusing on Esan
South East local government.