APPRAISAL OF THE ACCOUNTING FRAMEWORK IN THE LOCAL GOVERNMENT SYSTEM

ABSTRACT

The management of public resources has always been a turbulent issue. This is precisely the heart of any governmental administration. Government business in whatever for, be it policies, programmes, activities or function is run in accordance with the laid down formalities. These formalities in the area of government accounting and financial control and procedures may include laws, rules and accepted norms certain financial memorandum of the local government system. The accounting framework regulates the account format for the preparation of government account in local government system in an instrument for introduction of new policies and guide lines, before inclusion into the financial regulation as a part of a more permanent code of regulation. It is used to aid the achievement of probity and accountability in government. The frameworks specify action acceptable and those doomed unacceptable. The system is set to ensure uniformly and conformity of application.

This work examined the general background and concept of the research topic listing the aims, objectives, statements of problems and the scope and limitations of the research work. The existing literature on the accounting framework was examined so as to create in theoretical base for the study.

CHAPTER ONE

  • BACKGROUND OF THE STUDY

The peculiar nature of local government accounting transaction makes it desirable and indeed mandatory to treat it in accordance with specific, cohesive and standardize measurement such as the budgeting system and fiscal policy procedure. The local government financial framework measure all social activities with the control and stewardship of receipts, payment and related activities in the local government system in that the accounting system is maintained on cash basis. The system provides a satisfactory approach or matter of stewardship, accountability and cash programme accordingly. The balance sheet (known as monthly reconciliation of accounts surplus and deficit statement of local government) does not contain information on physical fixed assets, such as building.

In local government accounting framework, specific registers are taken on payment basis for the purpose of controlling fixed assets, such registers are referred to as plant registers or inventory control. The system of accounting principles which is double entry book keeping. They system requirement is that every debit entry be matched with a corresponding credit entry of similar amount. In the accounting system, after the approval of annual budget, the letters of authority are communicated to head of department vote controllers. In local government, transaction is recorded when cash is paid or received irrespective of when goods were supplied or services rendered. Some of such records include department vote expenditure account. This record gives accurate account of goods ordered but not yet paid. Similarly, the registers of bills received or bills issued are kept to show at any time what the local government aspects to receive from its debtors.

Some of the reasons why cash accounting is adopted in local government includes;

  • It is a non-profit oriented organization.
  • It operates an annual estimate of revenue and expenditure which constitute of basis necessary to meet the estimated expenditure during the financial year concerned.

 

1.2 STATEMENT OF PROBLEMS

There are many or numerous reasons for appraising (checking) the financial framework. Among the major reasons for appraising the financial frame work include:

  1. MISAPPROPRIATION OF PUBLIC FUND

Misappropriation according to oxford advanced learners dictionary is simply “taking somebody or money or property for yourself especially when they have trusted  you to take care of it”. This act is very common in most local government, where those “in-charge” use public funds for their personal motives. They sometimes tell a lie about the purpose they use the fund for by using the so called “shortcut” and diverting public money into their personal purpose.

  1. INADEQUATE FINANCIAL RECORD KEEPING.

This also is another problem encountered in checking the financial framework of local government. Funds are easily misused due to the fact that the financial record keeping are not enough and not also enough, hence a problem.

  1. LACK OF FINANCIAL PROBITY

It is rare mostly in the local government to see someone who has the quality of being completely honest especially in terms of finance. They mostly use public funds for personal motives. Hence this call for checking the structure of the financial system.

If the guidelines for the management of local government finances are not strictly observed chances are those misappropriations will happen. It is reasonable to conclude that there will likely be a state of financial recklessness in the local government in Nigeria, this phenomenon cannot be allowed to continue indefinitely without caution, control or application of appropriate sanctions. It is in this respect that the financial framework in Nigeria is issued by the ministry for the financial business of local government. Finance is like a thread that runs around a cloth if the thread is pulled wrongly at one end, it will affect the design of the cloth. This is to say that finance is to an organization as thread is to cloth. It must be disbursed in accordance with financial regulations.

 

1.3.  OBJECTIVES OF THE STUDY

The intention is to reinforce the checks and balance in deliberate effort not only to enhance judicious utilization of public resources, but also to preserve the gains made in building the local government services. The study will specifically dwell on the following:-

  1. Determining the yardstick for achievement of probity and accountability in local government.
  2. Streamlining of duties and responsibilities of the arms of the local government executives and legislatures.
  • Determining the role of individuals key officers and other organs in the local government such as the executive committee.
  1. Ensuring strict adherence to estimates as any deviation may bring about unpalatable consequences.
  2. Providing financial accounting services by means of accurate and detailed analysis of expenses in the course of discharging the function of the local government.
  3. Strengthening control and accountability in the local government by way of highlighting to weakness with respect to financial matters. It is imperative to assert that is not the exclusive concern of any part of the organization or any one person or category of persons but rather the generality of individuals in the organization from the highest to the lowest to ensure financial regularity by way of ensuring that their field of operation and responsibility, proper value is obtained for money spent.

Control system is also to be designed to combat malpractice.

  • RESEARCH QUESTIONS

This research will examine the following questions with regards to an appraisal of the accounting framework in local government system. In Mbaitoli L.G.A.

Based on the definition, the following research question would be formulated to address the study.

  • Does public finance expert believe that a better way of eliminating the problem of accounting framework in our local government system is through operating a cash accounting systems?

 

  • Do you think that misappropriation of public fund in the local government system is a result of lack of proper financial record keeping?

 

1.4   RESEARCH HYPOTHESIS

  1. a) Proper financial record keeping does not lead to misappropriation of public fund in the local government system.
  2. b) Operating a cash account system is a better way of eliminating the problem of accounting framework in our local government system.
  3. c) An appraisal of the accounting framework in our local government system.

1.4.  SIGNIFICANT/JUSTIFICATION OF THE STUDY

The provision of the financial framework in the local government system is a unique feature in the administration of finance. Hence, this study will add to the effectiveness of the operators of the systems.

Information  contained in this work will serve as a very useful guide to executive council as well as various heads of units seeking to achieve better result. More importantly is the power of the council over the budget prepared and presented to it by the executive.

This study will also help internal auditors. Internal auditors are those who officially examine the financial records of a company within. It will help them evaluate the effectiveness and responsibility of the information they have.

In addition, supporting staff such as those on industrial training attachment, those of Youth services and also casual workers re to benefit immensely from the study.

 

1.5   SCOPES/DELMINATION OF THE STUDY

The study is limited to Owerri. Even though there are other local governments with similar problem, we decided to take Mbaitoli local government as our case study.

 

1.6   LIMITATIONS OF THE STUDY.

In the process of carrying out this study, we encountered some problems which militated against the research project and also the major constraint of the research time.

The slow time frame did not allow for proper coverage of a wide area.

Finance is another factor. The money needed for going thro and fro Mbaitoli Local Government.

Also, the money need to cover the area to administer questionnaire.

Another limitation is the level or degree of literacy of the respondent. Some of the respondent could not read and write hence a problem.

Also, it is the nature f the topic of study. We found it difficult to get information from sources like internet, newspaper, books etc. concerning the topic of the study.

Lastly, it is the problem of easy access to information from the local government. This is because those in authority who have the right to give out information were restrictive of management of information which is benchmark data for any meaningful research also posed a problem.

 

        DEFINITION OF TERMS

Some of the following terms relevant to the course of study are defined below:

  1. LOCAL GOVERNMENT:- This can be defined as a unit of government administration at the local level established by law to perform some specific function within a given area of jurisdiction.

 

  1. COUNCIL: According to advance learner’s dictionary. Council is of people elected to give advice, make rules and manage affairs.

 

 

  1. BUDGET: A budget is defined as a financial pal that serves as an expenditure for decision making. According to Abubakar 1998, he sees it as a conscious and systematic allocation of resources prepared and based on the forecast of key variables adopted to achieve certain policy objectives which may or may not set explicitly. Performance target for the achievement of objective relates anticipated revenue and form the basis against which all revenues can be measured.
  2. STRONG ROOM: This is a place in the treasury where all cash, monetary and other valuables are kept.

ACCOUNTING:- This is defined as the identification, collection measurement, processing, evaluation and communication of financial information to facilitate decision regarding activities and resources.

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Jul 24

Assessment of Factors Responsible for Budget Failure in Nigeria.

Assessment of Factors Responsible for Budget Failure in Nigeria.

Abstract

The main objective of this study is to assess the factors responsible for budget failure in Nigeria. To achieve this broad goal, the econometric model of Analysis of variance (ANOVA) regression test was employed for analysis and time series data span from 2010 to 2015. The finding shows that budget in the public sector of Nigeria has almost become a ritual or a yearly affair which though good in content but without appreciable result. The issue of budget failure in Nigeria is of concern to the general public. The dependent variable was represented by budgeted amount for the selected period, while the independent variable were gross domestic product (GDP) which represent the economic planning, and poverty index represents social development. The results revealed that budgeting has a strong relationship with Nigerian GDP. The results further showed a strong relationship between budgeting and poverty index (PI). The study recommends that government should enact an enabling law that will ensure the workability of its budgets according to plans and increase the proportion of capital expenditure to recurrent expenditure so that the budget can have impact on economic planning and social development; budget preparation should start in good time; more capital expenditure should be included in the budget plan to speed increase in the value of social development; money not accessed during the period of budget implementation could be moved to a more viable project

CHARPTER ONE

Introduction

In any modern state, for a meaningful national economic management and development, public budget is an important instrument. The state’s desire to be democratized, and having adequate civil society participation, prompt response to development and desire to eradicate or reduce poverty level in the country has altogether caused the focus on budget to assume a greater importance. The budget is the principal instrument of fiscal policy. Budget policy exercise control over size and relationship of government receipts (revenue) and expenditure (Edame, 2010). In Nigeria, return to civil rule has given budget its proper status, because the due process of articulating it is guided jealously by the legislature. During military rule budget is only prepared and read to the nation. But under civilian rule budgeting involved wider consultation because of its importance towards nation building and developmental issues.

The annual budget is a document which contains the entire programmes of the government in a given fiscal year. It shows the expectations and intentions of the government in a particular fiscal year. Most importantly, it contains the expected revenue and expenditure of government within a given financial year. Olomola (2009), observed that the role of budget in an economy cannot be overemphasized. A budget is an important economic instrument of national resource mobilization, allocation and economic management. It is an important economic instrument for facilitating and realizing the vision of government in a given fiscal year. A budget has to be well- designed, effectively and efficiently implemented, adequately monitored and its performance well evaluated.

Statement of the Problem

Development in the public sector is attributed to the fiscal and monetary actions of the government. These actions propel the need for effective allocation of resources, social cohesion and fairness dealing with structural development at all unit of the society. But the Nigerian economy is faced with series of imbalances in their implementation of budget and economic policies, despite the availability of the various source of fund to the government. Several budgets have been designed with the sole purpose of economic planning and social development, but have not led to higher level of better service delivery, more accomplishment, more improvement or more resolution of public problems because there are so many variables such as resource leakage, poor management and contractors characteristics that militate against its success. This paper is designed to assess the causes of budget failure with the view to proffer policy recommendations on how to eliminate it.

Objectives of the Study

The objective of this study is to assess the causes of budget failure in Nigeria. Specifically, the study seeks to:

  1. determine the budgetary role in the economic planning of Nigeria;
  2. examine the effectiveness of budgeting in social development of the Nation.

The study tests the following hypotheses Hypothesis I

Ho: There is no significant relationship between budgeting and economic planning in Nigeria.

Hypothesis II

HO: There is no significant relationship between budgeting and social development in Nigeria.

Conceptual Issues

Ikelegbe (1996:164) define budget as a statement of purpose, anticipated revenue work proposed to be performed and money allocated to achieve work proposed. The public budget is a financial plan, a programme of action, a management planning and control technique, an evaluation technique and a performance improvement tool. Budget as a plan could be used for economic planning in specifying revenue and expenditure outlines, and as a programme it could be used to execute the social policies as what is to be done or achieved. Budget is the main instrument by which the state manages the economy to ensure growth and stability in the social circle. The fiscal and economic policies in the budget help to stimulate and direct economic growth and stability; it is the instrument by which government affects public welfare.

According to Uchendu (1998) budgets are economic tools deliberately designed through political process to aid in the allocation of available resources among competing demands. He further added that “a public budget is an economic tool deliberately fashioned through the political process to assist in the management of public sector”.

But Tosin, (2003:108) viewed budget as a financial and/or qualitative statement prepared and approved prior to a defined period of time of the policy to be achieved during that period for the purpose of attaining a given objective. According to Bello (2005:88), a budget is a plan of financial operation embodying an estimate in proposed revenue and expenditure as well as the proposed means of financing them for a given period usually a year. He explained further that budget can also be seen as an instrument of economic planning and implementation of social policy, which is to ensure that policies are translated into concrete and feasible objectives. Budget allows the government to decide about each individual revenue and expenditure throughout that period of the plan.

Edame, (2010) on the other hand; sees “Economic planning as a deliberate governmental attempt to coordinate economic decision making over the long run and to influence, direct and in some cases even control the level and growth of a nation’s principal economic variables (income, consumption, employment, investment, saving, exports, imports etc.) to achieve a predetermined set of development objectives. The budget then becomes a link between financial resources and human needs or behaviour. It becomes a means of meeting the people’s needs, that is, policy objectives and political development.

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Jun 15

CRITICAL SUCCESS FACTORS FOR ACCOUNTING INFORMATION SYSTEMS DATA QUALITY

CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND OF THE STUDY

Quality information is one of the competitive advantages for an organization. In an accounting information system, the quality of the information provided is imperative to the success of the systems. Accounting Information System (AIS) as one of the most critical systems in the organization has also changed its way of capturing, processing, storing and distributing information. Information has become a key resource of most organizations, economies, and societies. Indeed, an organization’s basis for competition has changed from tangible products to intangible information. More and more organizations believe that quality information is critical to their success (Wang, R.Y 2006).

 

However, not many of them have turned this belief into effective action. Poor quality information can have significant social and business impacts (Strong, Lee and Wang, 1997). There is strong evidence that data quality problems are becoming increasingly prevalent in practice (Redman, T.C 1998). Most organizations have experienced the adverse effects of decisions based on information of inferior quality (Huang, Lee and Wang, 1999). It is likely that some data stakeholders are not satisfied with the quality of the information delivered in their organizations. In brief, information quality issues have become important for organizations that want to perform well, obtain competitive advantage, or even just survive in the 21st century.

 

 

 

In particular, Accounting Information Systems (AIS) maintain and produce the data used by organizations to plan, evaluate, and diagnose the dynamics of operations and financial circumstances (Anthony, Reese and Herrenstein, 2005). Providing and assuring quality data is an objective of accounting. With the advent of AIS, the traditional focus on the input and recording of data needs to be offset with recognition that the systems themselves may affect the quality of data (Fedorowicz and Lee, 1998). Indeed, empirical evidence suggests that data quality is problematic in AIS (Johnson, Leith, and Neter, 1981). AIS data quality is concerned with detecting the presence or absence of target error classes in accounts (Kaplan, Krishnan, Padman and Peters, 1998).

Thus, knowledge of the critical factors that influence data quality in AIS will assist organizations to improve their accounting information systems’ data quality. While many AIS studies have looked at internal control and audit, Data Quality (DQ) studies have focused on the measurement of DQ outcomes. It appears that there have been very few attempts to identify the Critical Success Factors (CSFs) for data quality in AIS. Thus, there is a need for research to identify the critical success factors that affect organizations’ AIS DQ.

Information technology has changed the way in which traditional accounting systems work. There is more and more electronically captured information that needs to be processed, stored, and distributed through IT-based accounting systems. Advanced IT has dramatically increased the ability and capability of processing accounting information. At the same time, however, it has also introduced some issues that traditional accounting systems have not experienced. One critical issue is the data quality in AIS. IT advantages can sometimes create problems rather than benefiting an organization, if data quality issues have not been properly addressed. Information overload is a good example. Do we really need the quantity of information generated by the systems to make the right decision? Another example is e-commerce. Should the quality of data captured online always be trusted?

Data quality has become crucial for the success of AIS in today’s IT age. The need arises for quality management of data, as data processing has shifted from the role of operations support to a major operation in itself (Romney, M. and Steinbart, P. J., 2009). Therefore, knowledge of those factors impact on data quality in accounting information systems is desirable, because those factors can increase the operating efficiency of AIS and contribute to the effectiveness of management decision making.

 

  • STATEMENT OF THE PROBLEM

The proliferation of computerized database with relative increase in errors of such stored data base in organizations which depend on them to support business process and decision making has been questioned by many analysts.

The number of errors in stored data and the organizational impact of these errors is likely to increase (Klein 1998).

 

Also, inaccurate and incomplete data may adversely affect the competitive success of an organization (Redman 1992). Indeed, poor quality information can have significant social and business impacts. For example, NBC News reported that “dead people still eat!” Because of outdated information in US government databases, food stamps continued to be sent to recipients long after they died. Fraud from food stamps costs US taxpayers billions of dollars.

 

Equally, losses in millions incurred by business organizations who were caught unawares by dramatic changes in interest rates is of great concern to both owners and management.

In particular, there are consequences of poor data quality in AIS. For example, errors in an inventory database may cause managers to make decisions that generate overstock or under-stock conditions (Bowen 1993). One minor data entry error, such as the unit of product/service price, could go through an organization’s AIS without appropriate data quality checks, and cause losses to an organization and / or harm its reputation.

 

More so, most of the information system research into data quality focuses on the theoretical modeling of controls and measurement while few studies have attempted to understand what causes the difference in AIS data quality outcomes, and what should be done to ensure high quality accounting information.

 

Most organizations have experienced the adverse effects of decision based on information of inferior quality. However, not many of them have turned this belief into effective action. Poor quality information can have significant social and business impacts.

 

Therefore, there is lack of knowledge of the CSF for data quality in AIS that can assist organizations to ensure and improve accounting information quality.

These has necessitated the conduct of this research.

1.3       OBJECTIVES OF THE STUDY

The main objective of this study is to examine the critical success factors for accounting information systems data quality. The subsidiary objectives include the following:

  • To determine the factors that affects the variation of data quality in accounting information systems.
  • To ascertain the variations with regard to the perceptions of importance of those factors that affect data quality in accounting information systems.
  • To examine the stakeholder perceptions on importance of critical factors for accounting information systems.
  • To investigate the factors that are critical success factors to ensure a high quality of data in accounting information systems
  • To examine the organizations perspective in the importance and performance of critical success factors for accounting information system data quality.

 

1.4       RESEARCH QUESTIONS

In order to explore the research problem, the focus of this project is on five research questions which reflect on the objectives of the study are fielded.

  • What factors affect the variation of data quality in accounting information systems?
  • Are there any variations with regard to the perceptions of importance of those factors that affect data quality in accounting information systems?
  • What are the perceptions of stakeholder groups in importance of critical factors for accounting information systems?
  • Which of these factors are critical success factors to ensure a high quality of data in accounting information systems data quality?
  • What are organizations perspective in the importance and performance of critical success factors for accounting information system data quality?

 

1.5       RESEARCH HYPOTHESES

In analyzing the critical success factors for accounting information systems’ data quality, some tentative statements were formed to help answer the research questions hence the following hypotheses that have to be tested were put forward for this study.

 

Hypothesis One

Ho:      There are no significant factors that affect the variation of data quality in   accounting information system.

H1:      There are significant factors that affect the variation of data quality in         accounting information system.

 

Hypothesis Two

H0:      There are no significant differences between the perceptions of importance           of critical factors for accounting information systems’ data quality, and             actual             performance of those factors.

H1:      There are significant differences between the perceptions of importance of            critical factors for accounting information systems’ data quality, and actual performance of those factors.

Hypothesis Three

H0:      There are no significant differences between different stakeholder groups in their perceptions of importance of critical factors for accounting information systems’ data quality.

H1:      There are a significant difference between different stakeholder groups in their perceptions of importance of critical factors for accounting information systems’ data quality.

 

Hypothesis Four

H0:      There are no significant critical success factors to ensure a high quality of data in accounting information systems.

H1:      There are significant critical success factors to ensure a high quality of data in accounting information systems.

 

Hypothesis Five

H0:      Different organizations have the same perspective in the importance and performance of critical success factors for accounting information systems data quality.

H1:      Different organizations have different perspective in the importance and performance of critical success factors for accounting information systems data quality.

 

1.6       SIGNIFICANCE OF THE STUDY

Identifying the critical success factors for AIS could enhance the ability of AIS’s to gather data, process information and prepare reports. Outcomes of this research will contribute to the body of knowledge both in AIS and data quality field, and it may benefit other research into these areas. For example, it can help arouse the awareness of data quality issues in AIS field, and to make it possible to establish the linkage of the identified CSFs with the existing data quality dimensions for outcomes assessment.

Thus, understanding how these factors affect organizations’ AIS performance may be useful to practitioners. Focusing on those factors that are more critical than others will lead to efficiency and effectiveness AIS’s procedures. In brief, the results from this research are likely to help the academic community for future researchers, organizations’ top management, accountants, and IT managers obtain better understanding of AIS DQ issues.

 

1.7       SCOPE OF THE STUDY

This study is limited to four Nigerian companies selected for the case study in this research. Two of them were chosen from banking industry, and two from manufacturing industry. As there is no one set of criteria to distinguish banking industry and manufacturing industry for the purpose of the case study analysis of this research, employee number was use to define the size of the organizations. Although criteria defining organizations as bank, manufacturing vary, in this research organizations with more than 1000 employees were categorized as manufacturing companies while those organizations with fewer than 1000 employees were categorized as banking industries. In order to respect the privacy of the participating organizations and individual interviewees they were not identified by their real names or actual position titles.

 

 

1.8       LIMITATIONS OF THE STUDY

As part of the research experience by researchers all over the globe; certain limitations hindered the effective and smooth collection of data for the work. These in specific terms include: inadequate working fund, lack of time and difficulties (minimal) in obtaining needed data relevant to the subject matter of critical success factors for accounting information systems data quality.

 

Financial Constraint: The finance needed to carry out this work is too much and cannot be afforded by the student. This to an extent hampered the success of this work.

Time Constraint: Time was really a big constraint in carrying out this research study. The researcher had to combine the collection of materials for the study with other academic activities. The study was not easy to carryout due to distant part of the organizations and the huge financial burden involved.

Non-Challant Attitude of Respondents: Another limitation in the course of carrying this study was the non-chalet attitude of the respondents in supplying the necessary information. This was probably due to their ignorance of the main purpose of the study. Also many refused to grant interviews or answer question bordering on the activities of the organizations.

Scope of the Research: The study was constrained to Nigerian organizations; therefore, the conclusions drawn from this study may have a potential problem on generalization.

 

 

 

1.9       OPERATIONAL DEFINITIONS OF KEY TERMS

This section develops the definition of core terms for this research because precise definitions of core terms are the foundation of any research project.

 

Accounting Information System: Accounting information system (AIS) is a system of records, usually computer based, which combines accounting principles and concepts with the benefits of an information system and which is used to analyze and record business transactions for the purpose to prepare financial statements and provide accounting data to the organizations studied.

 

Critical Success Factor: Critical success factor (CSF) is the term for an element that is necessary for an organization or project to achieve its mission.

 

Data Quality: Data Quality (DQ) is the state of completeness, validity, consistency, timeliness and accuracy that makes data appropriate for a specific use.

Data Suppliers: Data suppliers are those who provide raw, un-organized data to the accounting systems which include both internal and external such as, other departments within the organization (internal), and trading partners (external).

 

Information Users: Information users are the users of the accounting information which include both internal and external users. Such as: top management and general users within the organization (internal), banks and government (external).

 

Middle Management: is responsible for implementing the strategic decisions of top management. Middle managers make tactical/short-range decisions.

 

Non-management Employees: who include production, clerical, and staff personnel.

 

Stakeholder: Stakeholder is a person, group, organization, or system who affects or can be affected by the organization’s actions

 

Small to Medium Organizations: Small to medium organizations (SMEs) are companies whose headcount or turnover falls below certain limits.

Top Management: Executive or senior management includes the highest management positions in an organization.

 

1.10    PROFILE OF THE ORGANIZATION USED FOR THE STUDY

1.10.1 First Bank Plc

First Bank Plc is one of the oldest financial institutions in Nigeria and was the first bank to be established in West Africa. The bank was incorporated as a limited

liability company in March 1894 and was listed on The Nigerian Stock Exchange in March 1971. Following the Central Bank of Nigeria’s (“CBN”) induced industry-wide consolidation in 2005, the bank acquired its merchant banking subsidiary, FBN (Merchant Bankers) Limited and MBC International Bank Plc. The bank offers a wide array of financial services to a diverse customer base through its local and offshore offices, including 465 branch offices country wide and 532 ATM’s. In addition to growing organically through new products and branch development, other viable domestic acquisitions are being explored as the Bank marked its 110 years of existence during which it pioneered the art and science of modern banking in the country.

 

First Bank of Nigeria maintains a subsidiary in the United Kingdom, FBN Bank (UK), which has a branch in Paris. The bank also has representative offices in South Africa and China. In October 2011, the bank acquired Banque International de Credit (BIC), a leading bank in the Democratic Republic of Congo (DRC).  (http://www.firstbanknigeria.com/Portals/2/pdf/Rating_rep/FirstBank%20-%20GCRFinal%20%20rpt%2008.pdf)

 

1.10.2     Zenith Bank Plc

Zenith Bank was established in May 1990. It became a public limited company in July 2004, and had an initial public offering on the Nigerian Stock Exchange (NSE) on October 21 of that year. Also in 2004, credit rating agency Fitch Ratings identified its credit as AA- on their long-term scale.

Zenith Bank Plc is a Nigeria-based commercial bank engaged in the provision of universal banking services to corporate, commercial and individual customers. The Bank provides services as savings and current accounts, treasury and financing services, investment banking, mortgage loans, trade financing, fund management and investment banking, import and export finance, and cash and liquidity management services to the wholesale and retail market, among others. In addition, various types of credit and debit cards, Internet and telephone banking, as well as money transfer services. The Company operates a number of subsidiaries include, among others, Zenith Realtors Ltd, Zenith Registrars, Zenith General Insurance, Zenith Pension Custodian, Zenith Securities, Zenith Life Assurance, Zenith Capital, Zenith Medicare and Zenith Trustees Limited.

 

1.10.3   Nigeria Breweries Plc

Nigerian Breweries Plc (NB), incorporated in 1946, is the pioneer and largest brewing company in Nigeria with current annual production capacity estimated at 10 mn hectolitres. The company is engaged in brewing, marketing and selling of alcoholic and non-alcoholic products such as lagers, stouts, non-alcohol malt drinks and soft drinks. Nigerian Breweries Plc (NB) is a subsidiary of Dutch brewer, Heineken N.V. and distributes its products across Nigeria. NB offers beer under the Star and Gulder brands, lager under the Heineken brand, malt drinks under the Maltina and Amstel Malta brands, premium stout under the Legend brand, and sparkling soft drinks under the Fayrouz brand. The company operates five breweries in Lagos, Aba, Kaduna, Ibadan and Ama regions in Nigeria, as well as a malting plant in Aba region providing a geographical spread across the country, albeit bias for cities in the southern part of Nigeria. It classifies its sales regions into six units namely, Lagos, Central, East, West, North, and South. The company is headquartered in Lagos, Nigeria. Listed on the Nigerian Stock Exchange in 1990, NB is one of the most capitalized and actively traded companies outside the banking and insurance sectors.

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Jul 22

FINANCIAL RECORD KEEPING IN RELIGIOUS ORGANIZATIONS IN NIGERIA

FINANCIAL RECORD KEEPING IN RELIGIOUS ORGANIZATIONS: A CASE STUDY OF CATHOLIC CHURCH IN ENUGU DIOCESE

 

 

ABSTRACT

This research project concerned a study of the financial record keeping of religious organizations: A Case Study of Catholic Churches in Enugu Diocese. A sample of sixty-three parishes was made from the diocese. Investigations were carried on their financial control used both internally and externally, the accounting system and financial decisions/reporting adopted. This showed whether there was an efficient and effective financial record keeping in the church. Since the research aimed at investigating existing financial record keeping or practice the employment of descriptive method of research was found adequate. The main instruments used for the collection of primary data were the structured libraries and other research units served as secondary data. The researcher ensured that the questionnaire possessed to a large extent the characteristics necessary and adequate for the purpose of validity and reliability. Data collected were analyzed and presented with percentages and tables and hypothesis were tested with the chi-square (X2) statistics and the following results emerged.

The study revealed that the church keeps proper record of its accounts and that there is accountability and responsibility, every member of the finance council has to give account of the money entrusted to him. It also showed that the church makes yearly budget before expenses are incurred and that authorization and control of church expenditure is vested on the management team.

Based on the finds, both short and long term measures were recommended as ways of enhancing financial record keeping in religious organizations.

CHAPTER ONE

INTRODUCTION

  • BACKGROUND OF THE STUDY

Every organization both business and non-business requires and uses finance for its various activities. The business organizations are set up primarily for profit making like banks, companies and other related ventures while the religious organizations are not meant for profit making but for rendering services and winning souls to God. Religious organizations can come from inform of Christianity, Islam, Buddhism, Hinduism and other religious sectors of organizations. The religious organization of interest is Christian religion and indeed Catholic Church.

Since finance is very vital for the welfare and growth of these organizations, its administration has to be well accorded financial records keeping. Finance at the macro level is the study of financial planning, assets management and fundraising for business, while macro is te study of finance institution and finance market and how they operate within financial system (Anyafo, 2000:3). In view of Emekekwue (1993:1), finance is primarily concerned with money and momentary matters. In general, finance can be taken as a body of principles and theories dealing with raiding, investing, managing and employing funds by individual and organizations in private and public sectors (Oye: 2002:7).

According to Osisioma (1996:63), a system is a complete array of an ordered arrangement of interdependent elements, with a common goal, related by a network of relationships. Such a system has input process-output component, and it is in itself an information system.

Financial systems are subsystems in a business organization whose responsibility is to ensure that business transactions are recorded in proper books of account on the basis of recognized accounting practice, analyzed, interpreted and presented to the users of accounting information (Ubesie, 1998:97). He further stressed that financial system consists of financial intermediaries, financial market, financial instruments, rules and norms that facilitate and regulate the flow of funds through the macro economy.

In essence, Catholic Church as one of the religious organizations is not meant for profit making but for bringing souls to Christ. The church requires fund to administer its affairs and to carry out its daily religious obligations. The funds are not necessarily adequate to meet up to its numerous demands, though there are various sources of generating income. It is then necessary to determine the financial income being used by the churches whether there are proper record keeping, the financial decisions and reporting made and the accounting system or procedure adopted. There arises the need for the church to keep track of its financial operations, this helps form an adage for it to control its income against its expenditure. Thus, a house built on a solid foundation remains a strong house but that whose foundation is shaky can crumble at any time. In the same way, a good financial background of a church can be said to be the foundation on which the church is built.

Therefore, the importance of finance, its adequacy to the church and how these are managed and controlled has led to the topic of the study financial record-keeping of religious organizations, a case study of Catholic Church in Enugu Diocese.

 

1.2    STATEMENT OF THE PROBLEM

          Many religious organizations are now being faced with the problem of finance, the inadequacy of funds to carry outs their religious rites. Catholic churches are not an exception as most of the churches are incapacitated in terms of fund, yet there are several sources of finance but the church seems not to meet up its financial demand. For good financial records, there must be a well developed financial decision and reporting procedures and financial control being used or operated.

It is based on this, that the researcher topic is chosen to asses the financial record keeping of religious organizations taken into consideration, Catholic Church in Enugu Diocese so as to know how the church manages and controls its fund and to suggest ways they can be improved for a better result.

 

1.3    OBJECTIVES OF THE STUDY

The main purpose of this research work is to determine the financial record keeping in use for Catholic Churches in Enugu Diocese and appropriateness of the financial management and control. The research work will attempt to provide an in-depth information on the financial record-keeping of religious organizations of the Catholic Churches in Enugu Diocese. Specifically, the study is intended to find the followings:

  1. Whether there is effective financial control or not.
  2. To know the financial decision making procedure and who takes the responsibility.     
  3. To find the financial reporting and accounting records being used by the Catholic Churches in Enugu Diocese.

 

  • RESEARCH QUESTIONS

In the course of solving the problem of insufficient fund for the churches, the following questions arose:

  1. How are the accounting procedures being used?
  2. Are proper accounting records being kept?
  3. Is the church observing any accounting manual?
  4. Who are responsible for taking financial decisions and plans?

 

  • STATEMENT OF HYPOTHESES

The researcher formulated the following hypotheses:

Hi:     There is a significant relationship between the proper financial records and accounting records of the catholic churches as a means of controlling expenditure.

H2:    Budgetary accounting records are effective management strategy.

H3:    The Catholic Church accounting records keeping is in conformity with the Diocesan Accounting Manual.

H4:    Authorization and control of Catholic Church expenditure are vested on the church management team.

 

  • SCOPE OF THE STUDY

Any analysis of the appropriateness of financial management and control and how the funds are being administered and its adequacy to the individual churches form the basis for research work.

However, the scope of inquiry for this study is based on the Catholic Diocese of Enugu and some selected parishes like St. Jude Jude’s Catholic Church Parish 9th Mile Corner, Ngwo and Our Lady of Lourdes, Imezi Owa for the analysis. The reason being that Catholic Churches are the same everywhere and indeed in all the parishes and they also follow the same doctrine and system of operation, therefore covering all the parishes will be a waste of time and will make no difference.

 

1.7    LIMITATIONS OF THE STUDY

One of the limitations of this study is the transportation cost incurred in visiting the Dioceses, as most times, the priest or the financial administrators of the dioceses were met absent, therefore, the researcher has to repeat the visit so as to get the information required.

Also, much time were wasted in the process of collecting the necessary data for the study as those responsible to divulge the information were so reluctant, therefore the researcher/writer waited for some information that could be gotten concerning the study. Those times wasted in waiting for the collection of data would have been used by the researcher to meet up or acquire knowledge on the study in view or related study.

Besides, the greatest limitation to the study has been the inability to collect data for the study. Apart from having no related work done on the topic, the researcher could not easily get the information for the study. Though, some of the data were gotten later, the researcher did not find it easy, but managed to get small data for the analysis.

 

1.8    SIGNIFICANCE OF THE STUDY

          The study is set out to determine the ”financial records keeping of religious organizations”: A Case Study of Catholic Churches in Enugu Diocese. It shows at a glance and most importantly, the overview of the financial records, the financial control, the accounting system and procedure and indeed financial decision and reporting of the catholic churches. There is no doubt that the study will benefit not only the Catholics but also other Christians and other religious organizations to borrow a leaf from the church so as to maintain a sound financial system in their various religious groups. Also, the study will help to remove the misconception from the minds of some people that church leaders spend church’s fund anyhow. Also, the analysis and recommendations on this study will go a long way to alleviate this.

In essences, the study will be beneficial to students of finance and accounting so as to enlighten them more on finance and accounting system of religious organizations. It will also serve as a reference point for further studies.

 

 

1.9    DEFINITION OF TERMS

  1. FINANCE: A body of principles and theories dealing with raising, investing, managing and employing funds by individuals and organizations in the private and public sectors. Financial managers can take three main decisions; finance, investing and dividend decisions.
  2. FUNDS: This is regarded as cash or its equivalent, example cheques, drafts, money orders, etc. The term may be used to include securities which have a ready market and can be quickly liquated.
  3. FINANCE COMMITTEE: This is an association where those involved or are specialized in finance shall have power to supervise the financial affairs of the corporation or organization and shall report to the board from time to time whenever it shall be called upon to do so.
  4. APOSTOLIC SEE: This sometimes was a see ruled by one of the apostles but now it refers for Rome, the city of the Pope, which her rules as Bishop of the Diocese of Rome. This term also applies to governing bodies of the church with official governing bodies in the Vatican, the branch of the Roman Curia which cut only under the authority of the Pope.
  5. ECCLESTICAL: This adjective simply means ”of pertaining to the church” thus, there are ecclestical courts, calendars, honours, laws (of Canon Law) jurisdiction, studies and others. It is derived from the Greek word “ecclesia”
  6. TEMPORAL GOODS: This are created materials and extended to creatures and possession that can acquire such as money, precious items. Temporal goods are used only for those purposes to the teaching of Christ the Lord.
  7. JURIDICAL PERSONS: This is the public power granted by Christ or by His Church Canonical Mission of favoring the baptized. This power is referred to that belonging to the church as a perfect society, whereby the church affects a rule for the spiritual goods of its members. In matters referring to salvation, it is the right of a person or agency, to pass or apply a given law in a specific situation.
  8. PRESCRIPTS: This is a written reply of a religious supervisor to a request report or question. In the make of it, it repeats the request and facts together with the reasons and then offers the answers with the conditions. It is the usual form through which dispensation are granted or derived.
  9. CLERGY: Any clerical person but not reverend sisters.
  10. DIOCESAN BISHOP: Bishop of the Diocese is different from Monks and Abbot e.g. M.U Eneje.
  11. EPISCOPAL CONFERENCE: Conference of the Popes.

13.    MENDICANT RELIGIONS:  Religions that live on begging.

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