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This research work is deliberately effort by the researcher to critically analyze and evaluate the system of accounting in the public sector of Nigeria local government vis-à-vis. The laudable objective for which this local government council of Edo North Senatorial district in view of the wide nature of this study. This project work was necessitated by the role in which local government play in the development of the grass root level, socio-economically and politically in providing a wide degree of service and execution of meaningful projects. The light degree of financial commitment has created the need for a sound system and techniques of accounting essential for a responsible and effective public administration. In doing so, the researcher used both primary and secondary method of collecting data required in ascertaining the effectiveness of the system of accounting in Etsako West Local Government Council. Both questionnaire and interview method were used. However, from the result of the findings and conclusion, it was observed by the researcher that the accounting system of Etsako West Local Government fall short to been effective. Thus, the local government of Etsako West Local Government has been caught in the cobwebs of inadequate functions of powers, inadequate finance, low administrative efficiency and poor budgeting control. Nevertheless, the researcher did make some far reaching and incisive recommendation which if adopted will immensely solve some of this teething problem in the preceding paragraph of the local government council.


Title Page                                                                          i

Project Topics

Certification                                                                      ii

Dedication                                                                             iii

Acknowledgement                                                        iv

Abstract                                                                       vi

Table of Contents                                                                  vii

Chapter One: Introduction                                          1

  1. Background to the Study                                                         1
  2. Statement of Problems                                                       3
  3. Research Questions                                                        4
  4. Objectives of the Study                                                      5
  5. Statement of Hypothesis                                                         6
  6. Significance of the Study                                                   7
  7. Scope of the Study                                                                  8
  8. Limitation of the Study                                                  9
  9. Definition of Terms                                                       9

Chapter Two: Review of Related Literature                         12

  1. Introduction                                                                            12
  2. Definition of Local Government                                    13
  3. Characteristics of Public Sector Organizations

compared to Private Sector Organization                      14

  1. An Overview of the Historical Development of Local

Government in Nigeria                                                  16

  1. The Structure And Scope Of The Financial

Memorandum                                                                21

  1. The Local Government Budgeting Procedures               22
  2. Financial Statement of Local Government Council                 27
  3. Why Government Funds are Segregated                        30

Chapter Three: Research Method and Design                      32

  1. Introduction                                                                            32
  2. Research Design                                                            32
  3. Description of Population of the Study                         33
  4. Sample Size                                                                             33
  5. Sampling Techniques                                                     34
  6. Sources of Data Collection                                            35
  7. Method of Data Presentation                                         36
  8. Method of Data Analysis                                                        36

Chapter Four: Data Presentation, Analysis and

     Interpretation                                       37

4.1     Introduction                                                                            37

4.2     Data Presentation                                                          37

4.3     Data Analysis                                                                37

4.4     Hypothesis Testing                                                        47

Chapter Five: Summary of Findings, Conclusion

    and Recommendations                                    52

5.1     Introduction                                                                   52

5.2     Summary of Findings                                                    52

5.3     Conclusion                                                                     53

5.4     Recommendations                                                         54

References                                                                      55

Appendices                                                                    56



  1. Background to the Study

The Nigeria public sector consist of three separate level of government whose status, powers ad relationship are defined and                                    guaranteed by the constitution. They are the federal government,              the state government and the local government.

Local government as the third tier of government play a very vi tal role in the development process of any country. It has a lot of responsibilities in terms of provision of social welfare service  to the people of the locality.

T hus, as an institution of government, it provides its citizen a sense of belongings in a political system which negates the concept  of apathy in the political process of a country.

A ghayere (1997) declared that the United Nation (UN) office fo r public administration defined local government as a political sub division of a constituted by law and its substantial control o f local affairs including the power to impose taxes and exact labo ur for prescribed purpose. The government body of such an entity I s elected of otherwise locally selected.

State  government has a considerable power over their local government  councils, the financial regulations applying to local government  councils are formulated by the relevant status.

Financ ial regulations provide a basis for internal control and external acco untability.

Despite  this, the question which has often arisen is the issue of local govern ment not really living up to expectation in the eye of the common  man and government.

Another  aspect which has drawn the attention of the researchers has b een the alleged lack of finance. Already a local government has b een identified as a veritable catalyst of socio-economic growth a nd development at the grassroots or rural area of any country such  as Nigeria. But this laudable council have been entrap in a vicio us cycle of poverty.

Adedeji & Rolan d (1992) refers to the cause of this vicious cycle of poverty on Ni geria local government administrative as inadequate functions and  powers, inadequate finance, low caliber and poorly paid staff, low  administrative efficiency and corruption, poor performance and  neglect of functions, transfer of functions to higher level of govern ment. Furthermore, the system of accounting and control in Nigeri a local government apparently leaves much to be desired.

In view of this appa rent laxities and deficiencies in local government councils, this study provide a deliberate attempt to apparent these questions with a view to taking a stand on some critical issues  and making recommendations on how to improve the exiting accounting system.

  1. Statement of the Study

Accountability in the public sector was necessitated by the need to collect and disburse funds for the need of the government. It is more necessary in relations to accounting and reporting for the collection and use of government fund which support the process of governance.

The reason behind the choice of the subject matter is the lack of understanding to date about public sector accounting in Nigeria local government. Most thought that accounting and all its system is only applicable to the private sector, they reasoned that government work, assets and liabilities belong to no one and also coupled with the absence of an international accounting standard for public sector entities.

Rushed (2001) state that the lack of knowledge about accounting application in the public sector is not in the best interest of the sector. It is in view of the above that I have decided to do this project work on evaluation of public sector accounting in Nigeria local government council. At the end of the work, the need and ways of effective and sound system in Nigeria local government council would be appreciated.

  1. Research Questions

To answer questions within the context of evaluation of public sector accounting in Nigeria in this study we need to address the following issue as a question in the local government council;

  1. Who is the chief accounting officer of the local government council?
  2. Which type of accounting basis does the local government uses?
  3. Does the local government have financial statement?
  4. Does the account of the local government show efficiency?
  1. Objectives of the Study

Government performs a wide range of services and activities involving sizeable public fund. This high degree of financial commitment has created the need for sound system and techniques accounting essential for responsible and effective public administration through the examination of accounting records. It can be assessed how effective the resources of a nation have been managed.

The process and structure of any accounting system are related to the needs of the people who use the information obtained. Hence, the objective of this research includes:

  1. To evaluate and assess the existing system of accounting in the third tier of government.
  2. To emphasize the need for an effective and sound system of accounting in the local government council.
  3. To ascertain the usefulness of local government and financial data.
  4. To emphasis the need for public officers at the grassroots level of local government council to give evidence of accountability for their stewardship.
  5. To provide useful information for the good control and efficient management of government operation.

In conclusion, emphasis shall be given more significant to;

  1. The financial accounting system will include:
    1. The system of recording and bookkeeping of financial matters.
    2. The type of accounts and return prepared base on the underlying record and information.
  2. The management aspect which include:
    1. The internal control system.
    2. The preparation of annual estimate. As a basis of increasing the effectiveness and efficiency of the services provided by the local government council.
    3. Statement of Hypotheses

For the purpose of this study, the researcher adopted the following hypothesis:

Hypothesis One

Ho:   Local government council has no accounting records.

Hi:    Local government council has accounting records.

Hypothesis Two

Ho:   The preparation of the account does not show efficiently.

Hi:    The preparation of the account does show efficiently.

Hypothesis Three

Ho:   Local government accounts are not prepared in compliance with the applicable financial guidelines.

Hi:    Local government accounts are prepared in compliance with the applicable financial guidelines.

  1. Significance of the Study

In the light of the present economic recession in Nigeria and the need to bring government closer to the people at the grassroots level, the federal government has deemed it imperative to develop some of its responsibilities to the local government councils.

The second work will help to bring to the fore some of the teething problems encountered by local government authorities in effectively having a system of book keeping and sound system of accounting. Thus, this research will be significantly useful in the following ways:

  1. To the administrators and politicians: They will find this project valuable as it compels the need on the part of local government chairman and their councilors to evolve a system of accounting, which provides a suitable evidence of their stewardship.
  2. To locate personnel it serves as an opener on the by the local authorities to put in place an efficient and sound system of accounting which provide financial data that will enable them appraise the activities and performance of local government authorities vis-à-vis the expectation.
  3. The government will also find this project interesting as it throws more light into the grassroots development and the need for effective supervision of local government authorities.
    1. Scope of the Study

In view of the diverse and wide nature of this research work, the researcher has focused his research study within the geographical area of Etsako West Local Government Council, Auchi in Edo North senatorial district.

In order to adequately cover this research work, personal interviews and well structured questionnaires were suitable administered to the staff of Etsako West Local Government to extract relevant information necessary for the purpose of this study.

As a result, it was expedient on my part to embark upon frequent visits to the office of the local government council to spread information in relation to my research work. The scope of this study also covers such other issues as the financial processes subsisting in the local government.

  1. Limitation of the Study

Basically, the research study was at the evaluation of public sector accounting in Nigeria local government councils but for the time factor, financial constraint, inaccessibility to certain fact coupled with classroom academic engagement were the major limitation in carrying out the research work.

  1. Definition of Terms

Public Sector Accounting

This is a process of recording communication, summarizing, analyzing and interpreting government financial statement in aggregate and in details.

Cash Basis

This is when revenue are recorded when cash is received and expenditure recorded when cash is paid in respective of the accounting period in which the services was rendered.

Consolidated Revenue Fund (CRF)

This is where all revenue accruing to the government from whatever sources is paid into payment also made out of the consolidated revenue fund.

Budgeting Administration

This is the process of planning, organizing, coordinating, directing and controlling budget activities.

Financial Memoranda

The financial memoranda set the basis of accounting and reporting principles of the local government accounting and management.

Budget Manual

This is a document expressing goals and objectives, procedures authority and responsibility and it saves as a rule book that tells what to do how to do it, in summary the manual represent a programme for budgeting.

The Budget Committee

This usually comprises the budget officer and permanent members who are usually drawn from top management of division in the organization as well as those co-opted to advice on particular aspects of the budget where their expertise may be necessary.

Fiscal Year

This is the government financial year it runs for a period of twelve months starting on the first of January each year.

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