PROBLEM OF MANAGEMENT PUBLIC ENTERPRISES IN NIGERIA: “A CASE STUDY OF PHCN” OWERRI DISTRICT.

ABSTRACT

 

This project is written as a result of properly carried out research work based on problem of managing public enterprises in Nigeria most especially he power holding company of Nigeria (PHCN) owerri district. This project is designed to provide adequate and reliable information toward a thorough understanding of the problem of managing public enterprises in Nigeria. it also highlights the concepts of management principle of  management problems of the power holding company of Nigeria (PHCN) as a public enterises in Nigeria likewise ways of improving the nature of public enterprises and other related issues.

This project will be helpful to meet the needs of student in polytechnic and universities who are offering course in Public Administration or public enterprises Management as well as those carrying out research projects.

 

CHAPTER ONE

 

1.0  INTRODUCTION

 

1.1  BACKGROUND OF THE STUDY

 

A     public enterprises like Power Holding Company Nigeria (PHCN) is an organized set up as a cooperate body and as part of the government apparatus for an entrepreneurial or entrepreneurial like objectives (Laleye in Adsamolekun, 2002:28).

But the public service represents the institutional framework for administration of the state. It comprises of the civil service, the legislature, Judiciary, the school system. These parastatus and the local government system, the public service provide s the structural framework for the formulation and implementation of government policies and programmes.

There it is imperative to note here that the civil service and the public service (Adebayo, 1995:940) the public enterprises combines the features of the public administration with the key of attributes of a private enterprises. The establishment of these enterprises or parastatal results from the desire to infuse more flexibility transparency and more government activities and this has virtually become the feature of every modern state generally speaking the Power Holding Company Nigeria which was established in 1957 for the purpose of providing constant power supply nation wide.

But prior to the establishment of PHCN was in existence, the electricity corporation of Nigeria (ECN). The current managing director (MD) of PHCN in the whole federation is Engineer  Joseph  makoju, while the business manager of power holding company of Nigeria (PHCN) Owerri district is made up of different staff or nonce’s basic on the specific functions they perform. PHCN Owerri district has a total of seven hundred and fifty (750) workers.

Power Holding Company of Nigeria being a public enterprises ha hierarchical system of administration like wise upward and downward system of communication.

 

• STATEMENT OF PROBLEMS

PHCN is know and regarded as office of the important of public enterprises and as public enterprises, it is posed with many problematic situation on their course of providing constant electricity generation nation wide or within area of district. Most of the problems faced by PHCN department or office in Owerri are as follows

1. problem of monopoly
2. bribery and corruption
3. Abnormality in perpetual billing
4. There is misuse of facilities available to the corporate
5. True are of inefficiency
6. Problems of vanadalization of PHCN’s equipment
7. The collapse of the nation grid system

 

• OBJECTIVE OF STUDY

The objectives and purpose of the study is a reflection of concern of may workers in public enterprises and student on how effectives and efficient management can be improved in an enterprises.

To enable it positively effect organization performance action towards the welfare of enterprise

The objective of this project into the management behavior of workers on the subject matter.

1. The objectives of this study is direct towards determining job satisfaction and good understanding between the employee and their management.
2. It is directed towards determing effectiveness and efficiency in public enterprises like wise other enterprises.
3. The objective of this study shows clearly communication in public enterprises and how this communication helps in planning and decision making.
4. It also shows effective communication persuades workers to put more effort o their duties.
5. Finally, the objectives also directed towards applying Fayol’s 14 principles of management in order to achieve organizational goals.

1.4                      SCOPE AND LIMITED OF STUDY

This study covers the following department Power Holding Company of Nigeria namely:

1. personal department
2. finance and accounting department
3. production department
4. Administrative department
5. Sales/commercial department
6. Workers department
7. Records and statistical department
8. Drawing department etc.

LIMITATION OF THE STUDY

A proper carried out study of this nature cannot be actualized without some form of constraints.

Below are the constraints of difficulties which researcher consider pertinent to mention as

1. Time constraints
2. High cost of printing materials
3. Data collected/finance
   • SIGNIFICANCE OF THE STUDY

 

Public enterprises is very important in the country. It leads to the development of the country.

This significant of the study lays in the ability to highlight the constraints of public enterprises. As a matter of fact, a study of the factor, which made these public enterprises rough, nail contribute to better understanding of the problem.

In this regard, these study nails on doing to educate and include the Nigeria  public enterprises.

It is believe that this research nail do not add to the existing. Literature on public enterprises in this country.

 

1.7         STATEMENT OF HYPOTHESIS

For the reasons of gaining a better insight into this study, few hypotheses are hereby adopted to the question already posed and the following hypothesis are started to be rejected or accepted.

H_o:      That PHCN owerri zone has adequate motivational management skills interims of delivering effective and efficient administration function to it’s customers or consumers.

H₁:    That PHCN Owerri zone has no adequate motivation management skills interims of delivery management skills in terms of delivering effective and efficient administrative function it’s customer or consumers.

 

1.8         DEFINITION OF TERMS

This has to do with brief definition of some terminologies used by research while writing this project.

Public corporations or statutory could also be defined as these enterprises with legal or corporate identity which are established either by the federal or state government under specific statutes, Act of parliament, Decrees or Edicts for particular business or financial purpose. They ar3e corporate bodies created by the legislature, each with definite powers and function and financially independent, and having a clear-cut Jurisdiction over a specified area or over a particular type of commercial undertaking.

The statutory corporation or government parastatal as it is commonly called in Nigeria applies when government assumes responsibility for the management of an economic and social pursuit through a special entity that has it’s own legal personality and still keeps some of the special prerogatives or privileges associated with a government organization (Laleye inAdamolekun, 2002:30).

ABNORMALITY IN BILLING

This has to do with wrong systematic approach used by PHCN officials toward billing their customers that is : they don’t care about whether you have light or not rather all they used is pay bill or you face the written of being disconnected.

EFFICIENCY

This is a patent right given to a company corporation or

public enterprises  as the sole producer or market of a particular product or service in the country.

INEFFICIENCY

This is the inability to manage ones own resource effectively, the power holding company of Nigeria (PHCN) has been known over the years for its inefficiencies and mismanagement in the supply of power. Their level of incompetence and inefficiencies manifested in 1997 with regards to a nation wide blackout that lasted for ten hours.Download Full Material-N5000

 ABSTRACT

In the tax administration of any country, in-depth knowledge of tax paying attitude is very pertinent. This is very consistent with this study the determinants of tax payers attitude in Nigeria and whose purpose was to examine the variables that account for the attitudes of tax payers and to ascertain whether or not such determinants allow for the payment compliance, in view of tax assessment. A sample size of 320 taxable adults were selected from four (4) states in Nigeria as representative of the taxpayers population. Chi-square tool of analysis was adopted to test the hypotheses. As a consequence, a significant relationship was revealed between religious beliefs and willingness to honour tax obligation. Also, it as found that family pressure has a relationship with taxpayers’ attitude, while compliance was shown between tax assessment and the Nigeria tax law. On discussion of these findings, it was recommended that government should ensure equitable distribution of the nation’s wealth to justify the money collected from tax and that government should equally provide meaningful social infrastructure to reflect the money paid; moreover, government was expected to give adequate attention to financing education, to eradicate illiteracy and create employment. Finally, an ethical element in tax planning has been suggested for further study to stress the effect of tax avoidance and tax evasion.

CHAPTER ONE

INTRODUCTION

 

 

• BACKGROUND OF THE STUDY

 

          In developed economies of the world, taxation provides the bulk of government revenue for administration and development. Some goods and services that are consumed by private sector cannot be equal amount. These include social and economic infrastructures like health services, basic education, motorable roads, the maintenance of law and order and the provision of public utilities. These are goods which structure is such that the consumption of the products by various individuals is non-rival in the sense that one person’s partaking of the benefits does not reduce the benefit available to another (Musgrave:1985:10). That is, the benefit derived by one person is externalized, in that. It becomes available to another person at the same time (Umoh:1997:24).

The private sector cannot provide these types of goods (social goods), the structure of the goods provided by them is internalized, and the benefit of consumption excludes consumption by another… “the market mechanism is well suited for the provision of private goods” Musgrave (1985:10). It is based on exchange and this can occur only where there is an exclusive title to property, which is to be exchanged. It furnishes a signaling system where by procedures are guided by consumer demands.

On the other hand, it is inefficient to exclude any consumer from partaking of the benefit of social goods when it is quite obvious that participation would not reduce consumption by another regardless of earning differential. However, the provision of these social and economic infrastructures and other complementary facilities obviously requires financial resources and supply of which is from the imposition of tax.

Inspite of the multiple benefits of taxation creation amongst the populace, taxable persons are still cajoled and compelled to pay their taxes. They seem to put up resistance that create the impression that they are not happy paying the tax or that they are paying more than they are receiving in terms of social amenities.

As a further measure to reduce the assumed tax burden and motivate the people to be tax-active, the Federal Government in the 1998 budget announced tax relied and allowances packages whose entitlement does not discriminate against gender, provided there is no two allowance claim by husband and wife on the same child for children allowance; exemption of the capital gains tax on gains from worker whose total annual income is below N30,000 from paying tax, abrogation of disposal of the scope of graduate rates; taxing gas development projects under companies income tax Act of petroleum profit tax act; the extension of gas utilization down stream operations to industrial projects, extension of the initial tax holiday period of three years to five years; transmission of gas at zero percent Petroleum Profit Tax (PPT) and zero percent royalty etc.

These fiscal measures enunciated have not only the potential of reducing tax burden but also to stimulate production and generate employment thereby fostering economic advancement. But this requires the voluntary compliance, no matter how reduced the burden is whether at the individual or at the corporate level.

Most people take pleasure in evading tax, others exhibit recalcitrant disposition when it comes to fulfilling their tax obligation, a situation which Naiyeru in his article titled “Taxation and Economic Development” attributed to value orientation (Naiyeru 1988). According to Brain and Paul (1996:269-287) “the lack of adequate and imperfect information process is responsible for this situation (i.e. Tax agent, tax payer of conflict). He further asserts that the tax agent is ignorant of what the taxpayer is to pay, since he or she cannot capture a complete and accurate assessment of what he owed. Corporate taxpayers have elaborate records which are simply too voluminous to analyze completely and individual taxpayer may have no records at all. Situations like this compel the revenue agent to look beyond the superficial appearance as presented in the tax forms and the supporting documentation. Records can be forged and books can be cooked, so the revenue agent must adopt a skeptical stance that gives to the informal motto of the tax examination division (Audit the taxpayers not the return” Brain (1996:15).

Inspite of the aforementioned and bearing in mind several investigations already conduct on issues relating to taxation in Nigeria, a missing link which is very conspicuous has been a complete lack of an empirical perception or study on the determinants of tax payers behaviour. It is based on this premise that the study anchors. Therefore, attempts shall be made to adequately delve into these determinants to unravel how they influence attitudes of taxpayers’ payments.

 

• STATEMENT OF THE PROBLEM

The provision of social and economic infrastructure and other complementary facilities requires financial resources, the supply of which is from tax imposition (which is a compulsory levy on persons residing in a country). But a baffling situation is revealed in the attitude of most people to tax payment. Inspite of the obvious benefit, some people’s actions tend to imply that they do not believe in the reasons for tax imposition. But if we may ask, is it that the government is not doing enough to reassure the masses on the use to which tax is put? Or that the government is biased in its application? Why? Could it be that it is an inherent desire to be fraudulent? Some commentaries appear to allude the instinct to evade or avoid tax to be attributed to either individual or situational pressures on the tax payer and not on the degree of business specialization, investment or capitalization of the taxpayers, neither is it caused by the weakness of the law (Buba and Oyedele 1994:4). The general outcry is that the problem or attitudinal problems associated with payment of tax might be conjectured on: family pressure, peer group pressure, financial status, religious beliefs, educational level, and willingness to comply to tax law. What we are not sure however is which of these reasons explain the prevailing attitude to tax by persons, residing in Enugu, Imo, Anambra and Ebonyi State of Nigeria. The need arises for a fact-finding activity in this respect.

 

1.3    OBJECTIVES OF THE STUDY

The aim of this study is to analyze the determinants of taxpayer’s in some selected states and also to analysis the situational and individual variables like income, education level etc. more specifically, we scruntize or examine the relative effects of the situational variables and individual variables on an individual behaviour (or attitude) and how it can mingles to spur them to be tax complaint or not.

 

1.4    RELEVANT RESEARCH QUESTIONS

In order to give direction to and shed more light on the study, the following research questions were formulated:

1. Does family pressure affect attitude to pay tax?
2. How does income level influence attitudes to pay tax?
3. Does the level of Education determine pay attitude?
4. To what extent do religious beliefs attitude to pay tax?
5. What is the procedure of tax assessment in Nigeria?
6. What are attitudinal problems of taxpayers?

 

1.5    STATEMENT OF HYPOTHESES

The following hypotheses have been tested in the course of this research work.

Ho₁:  There is no significant relationship between religious beliefs

and   willingness to honour tax obligation.

Ho₂:  There is no significant relationship between tax paying attitude

and   the level of education attained by taxpayers.

Ho₃:  There is no significant relationship between family pressures

and   attitude to tax.

 

1.6    SCOPE AND LIMITATIONS OF THE STUDY

The determinants of taxpayers attitude is wide and therefore cannot be covered in this research. Because of this, this research is going to restrict itself to some selected states in Nigeria.

Time constraints dearth of data and financial constraints to enable the research extent beyond the aforementioned will limit the extend of this research.

 

1.7    SIGNIFICNACE OF THE STUDY

This work will be of much significance to the Federal Inland Revenue Services Staff, the entire taxpayers and to employers. It is also of much relevance to scholars, academics and students.

All companies would want to be adjudged as tax complaint and therefore would persuade their employees by whatever incentive to see that they comply so as to enhance their image. This study would therefore help them to know how to relate more with their staff and the limit within which they could persuade their staff to be tax complaint.

 

1.8    ORGANIZATION OF THE STUDY

This research is arranged into five parts or chapter. Chapter one contains introduction to the research work, made up of Background of the study, statement of the problems, objective of the study, relevant research questions, statement of hypotheses, scope and limitations of the study, significance of the study and organization of the study. Chapter two contains the Review of related literature.

Chapter three provides a conceptual framework of the entire research design, sampling procedure/sample size determination, data collection methods, and operational measures of the variables and data analysis techniques.

Chapter four deals with presentation and analysis of data. Finally chapter focuses on findings, discussion of findings, conclusions and recommendations.

 

1.9    DEFINITION OF TERMS 

Tax Audit:  Is the examination of and investigation of the field company tax return to ascertain the truth in the amount asserted.

Tax Avoidance: It is defined as a deliberate and legal act of the taxpayer to pay less than the ought to pay.

Tax Delinquency:  This refers to a failure to pay taxes on the due date.

Tax Evasion:  This is usually a fraudulent effort by a taxpayer to escape his legal tax obligations.

Tax Capacity: Is the extent to which the tax basis can bear the burden of taxation without a rupture of the fiscal symbiosis.

Tax Compliance:  Is the act or process of subjecting oneself, one’s incomes, business asset or expenditure to the demands of the tax law.

Tax Consultant:  Are private agent contracted by the government to collect taxes.

Tax Incentive:  Is all the measures adopted by government to motivate taxpayers to respond favourably to their obligations.

Tax Policy Strategy: Is the Pathway to the achievement of maximum tax compliance from taxpayer.

Best of Judgement (BOJ):  This is the use of tax agent initiatives in

determining the estimated amount of tax payable.

 Download Full Material-N5000

CHAPTER ONE

1.0  INTRODUCTION

1.1 BACKGROUND OF THE STUDY

History has it that the concept of accountability of public funds dates backs to the history of ancient Greece.  As old as theory is, it would not be enormous to say that the idea has been equally lost to antiquity although not much is known about it, this makes the subject, government accounting to remain a myth.

Accounting in the public sector has received such a wide attention from scholars that the field of public sector accounting scans to be neglected.

However, there is general awareness all over the world of the need to pay greater attention to the development of government accounting and financial control.  The reason is obvious, government, in most, if not all nations constitute the largest single business entity in many places, the core of the economy.  Government in any society is basically for maintaining law and order.  With changes and the complete nature of the society, government responsibility has automatically changed from the role of maintaining law and order to business like nature in the modern era.  The enormous activities of government, equally call for enlarged government accounting in order to accommodate the immense task.  As a result of this development, the traditional cash procedures of accounting can hardly meet the demands of reasonable accounting for modern government in providing necessary services or information. Therefore, there is need for government accounting to be dynamic in order to accommodate both the fundamental roles and the developments.

Government accounting is the process of recording, analyzing, classifying, summarizing, communicating and interpreting financial information about government in aggregate and in detail, reflecting all transactions involving the receipts, transfer and disposition of government funds and property.  The purpose are to demonstrate the propriety of transactions and their conformity with established rules to give evidence of accountability for the stewardship of government resources and to provide useful information for the good control and efficient management of government operation.

Financial management in the public services as can be observed has failed to encourage and promote the efficient utilization of public funds or serve as effective basis for planning and decision making as well as to ensure proper accountability.  Besides, it does not mean that financial irregularities being detected in public sector at large is basically based on traditional cash procedure of accounting but it does arouse a question whether the modern system of accounting will make both modern management and financial management viable.

 

1.2 STATEMENT OF THE PROBLEM

          The problem of this research is to identify these weaknesses and limitations inherent in the cash accounting system of the public sector (in relation to the accounting system of the sample ministry).

This is with a view to propose means of eliminating them completely or at least reducing them to the barest minimum.  Put in question form, what are those weaknesses and limitation that militates against adequate and efficient accounting system and financial reporting in the public sector and how can they be eliminated?

Some of these problem witnessed in the public sector includes: the lack of accountability and abuse of delegated authority by the officers in authority, fraud and misappropriation of government funds, as well as lack of expertise and business acumen on the part of those officers.  Due to the fact that government operation have been termed “Non-profit oriented operations”, there is no pressure on the part of these government officers to perform up to optimum expectation, accounts are kept in messy shape while the officers get away with lack of proper accountability.

This research is carried out in order to examine the extent to which proper accounts are being kept in the public sector and to offer solution to the inherent problem discovered.

The Enugu State Ministry of Finance and Economic Development is used as a sample ministry for this research work.

 

1.3 OBJECTIVES OF THE STUDY

          The objectives of this research work/study include the following:

• To determine the extent to which the sample Ministry has installed an accounting system.
• To determine the factors that promote or constrain the accounting system of the sample ministry.
• To determine the impact of the accounting procedures of the sample ministry upon its financial reporting.
• To make recommendations based on my findings.

 

 

 

1.4 IMPORTANCE OF THE STUDY

This research paper is intended to examine the accounting system common in public sector with a view to exposing and highlighting the inherent limitations in the system.  Therefore, the research paper will be of interest and useful to the general public’s, the government as well as the governed.

Government entrust public funds in the hands of its officials hence government reporting has traditionally stressed stewardship.  Original accounting emphasis has been directed towards measuring the public funds generated and expended by the government’s programme or activities.  The traditional reporting approach is filled with many weaknesses of which it is hoped that this study will make useful recommendation on how to improve upon the accountability and financial reporting system of the government.

The duty to report all its financial activities to the general public is a debt that government must pay.  Such report will enable the people know how public funds entrusted in the hands of the government have been utilized, this type of report is very sensitive and useful to the public but very few of them (the public) can understand it.  This study will serve as a useful medium to such member of the public who find government financial reporting very ambiguous and hard to understand.

In many institution of higher learning the accounting curriculum offered is tailored specifically to provide students with an understanding of financial reporting as it relates to profit oriented enterprises.  For this purpose, students are frequently surprised to discover that the basic framework of financial accounting is significantly altered when the profit motive is removed.  Though the accounting terminology may initially appear to resemble foreign language to all students of accountancy, and related professions who always depraved of knowledge of accounting system of the public sector, this study will be very useful.

Moreover, potential researcher in this aspect of accounting will find this research paper a very reliable reference base.

 

RESEARCH QUESTIONS

          Three dominant questions being reviewed by this research include;

• Is the accountancy/accounting system in the public sector effective and adequate?
• Does the accounting system in the public sector provide for proper financial control and accountability of stewardship?
• Does the accounting system in the public sector provide useful information for the effective control and management of government operations?

1.5 SCOPE AND LIMITATION OF THE STUDY

As the research topic would suggest at a glance, the scope of this, is essentially focused on the accounting system of the sample ministry as a general overview sample study of the accounting in the public sector.

Therefore, this study will look into the nature of the accounting system of the sample ministry; how the system operates, the relevance of the system to the environment, problems and prospects of the system.

LIMITATION

• Scarcity of material:

This aspect of accountancy (as pointed out above) has received very little attention from scholars despite its long historical age.  Consequently, there are few literary publication on the student; the researcher was therefore limited to reviewing few literature which are mostly in origin, through relevant to the study.

–        Bureaucracy:

Government establishment are well known for maintaining utmost screening as regards their operations, more so, where it is a study that concerns their financial operation the researcher found it difficult to obtain material relating to the study (that is literature) and some officials who have been very elusive and uncooperative.  More so the bureaucracy and protocol the research went through to obtain material and an appointment has been very discouraging.

Due to all this constrains, the researcher cannot say for certain whether the study has covered very rutty gritty of the sample ministry as regards its accounting systems and procedures, but one thing is  certain, enough materials have been gathered to help express an opinion as to the operative of the sample ministry.

Apart from the above listed limitations witnessed by this researcher is time constraint.  This is a major limiting factor as the time between approval of the study and the deadline for submission was very short.   The researcher relied heavily on the good will of the research supervisor because he understands my plight.  Again lack of sufficient funds to conduct an extensive study was another handicap.

This was part of the reason why I had to limit my work to fewer staffs than was earlier planned.

 

 

1.6 DEFINITION OF TERMS

                    Every field, discipline or profession has its terminology.  Therefore, government accounting can never be an exception.  In order to ensure easy understanding by the users of this work in relation to government accounting which are extensively applicable in public sector and or which have different meaning from private sector interpretation and usage are here by define below:

(1)     Accounting Entity:  Clearly defined economic unit which (a) Engages in identifiable economic activities

(b) Controls economic resources (for which accounting records are maintained and periodic financial statement is prepared.

(c) is distinct from the personal dealings of its owners or employees.  To ensure that the fundamental accounting equation always refers to the same distinct entity the boundaries of the unit, once established, must not be managed arbitrarily also called reporting entity.

Accounting entity is in the accounting and auditing, banking, commerce and finance and corporate, commercial and general law subjects.

Accounting entity appears in the definition of the following terms; accounting change, reporting entity, combination, fund and accounting policies.

(2)     Accrual Accounts:  The principles of “accruals” makes a distinction between the receipt of cash and the right to receive it, and the payment of cash and the liability to pay it, stressing the importance of the right to the assets or the legal obligation in favour of the movement of the cash.

(3)    Annual Appropriations:  These are issues required to meet the expenditure of the state other than those covered by direct issues from the consolidated Revenue Fund.

(4)     Capital:  Is a plan of action quantified usually in monetary units to serve as a guild for the achievement of government objectives.

(5)     Cash accounting; the recording of the transaction in which revenue and expense are reported (cash inflow and outflow) in the period in which the related cash receipts and payment occur.  The wide spread use of cash accounting in public sector results from the government’s historically based requirement for financial information that shows fiscal compliance.

(6)     Capital Budget:  This is the budget that sets out the proposed acquisition of fixed (long-term) assets or projects and their finance.

(7)     Depreciation:  A non cash expense that reduces the value of an asset as a result of wear and tear, age, or obsolescence.  Most assets lose their value over time (in other words, the depreciated), and must be replaced once the end of their useful life is reached.  There are several accounting methods that are used in order to write off an asset’s depreciation cost over the period of its useful life.  Because it is a non-cash expense depreciation lowers the company’s reported earning while increase free cash flow.  Although, government accounting does not recognize depreciation and this is one of the criticisms of the system.

(8)     Encumbrance:  Is an expense, which  is both contingent and estimated.  Obligations in the form of purchase order, contact or salary commitments which are chargeable to an appropriation and for which a part of the appropriation is reserved.  These obligations cease to be encumbrances when paid or when paid or when the actual liability is recorded.  This term has no equivalent in the private sector accounting since unperformed portions of executing contracts are not recognized in the accounts.

(9)     Estimated Revenue (Budget):  If the accounts are kept on the accrual basis, this term designates the amount of revenue estimated to accrue during a given period regardless of whether or not it is all to be collected during the period.

(10)   Expenditure (Actual Expenses):  this is expenditure chargeable to an appropriation.

(11)   Fixed Assets:  A long – term, tangible assets held for business use and not expected to be converted to cash in the current or upcoming fiscal year, such as manufacturing equipment, real estate, and furniture (also called plant)

(12)   Functional Budget/Programme Budget:  A budget that allocates costs (or inputs) to particular functions or activities.

(13)   Fun Accounting:  This is basically operated on cash basis.  It is an accounting arrangement whereby self-balancing set of accounts are provided for specific purpose.  This system of accounting is usually used by non-profit organization and by the public sector.

(14)   Fund balance; the excess of assets of a fund over its liabilities are reserves, except in the case of funds subject to budgetary accounting where prior to the end of a fiscal period.  It thus represents the excess of the fund’s assets and revenues for the period over its liabilities reserves, and appropriations for the period.

(15)   Historical cost Accounting; the traditional system of accounting that is based on valuations made in terms of the price ruling when transactions take place.  In practice, this is modified by the concept of prudence and the possible revaluation of fixed assets.

(16)   Revenue (Actual Revenue): is that revenue which are recorded on accrual basis, this term designates additions to assets which:

–        Do not represent the recovery of the expenditure

–        Do not represent the cancellation of certain liabilities without a corresponding increase in other liabilities or decrease in assets.

(17)   Warrant:  Authority for expenditure from the consolidated Revenue fund covered by the appropriation law in respect of recurrent budget or from the capital development fund is the case of a capital budget.Download Full Material-N5000