Accounting in the Nigeria Public Sector- Problems and Prospects

Accounting in the Nigeria Public Sector- Problems and Prospects

An accountant is a person whose profession is keep and examine business accounts with a view to reporting iness accounts with a view to reporting on them for the benefit of all the interested.

          These grounds of interested persons include manager, owners or shareholders, investors, creditors, employees and even government.

The accountant therefore, occupies a place of pride and responsibility. He is found in all human organizations including clubs and societies, business enterprises and government. Indeed where financial matters arise, the accountant is indispensable.

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Remember that even Jesus Christ has an ‘accountant’ among the disciples, his name is Judas Iscariot who keeps their funds.


An accounting in a language listed to communication financial and other information to all the interested parties.

Business enterprises use accounting to plan and control their business activities and to report the results of these activities to share holders, creditors, labour unions and government agencies, Non-profit organisation for planning, conducting and full reporting activities. Federal, state, local government and other government agencies use accounting information in similar ways. We can therefore, see that accounting persuades all aspects of our social life. ( Godson s Nnadi, ACA).

The American institute of certified public accounting defines accounting as a discipline which provides financial and other information essential to the efficient conduct and evaluation of the activities of any organisation.

The American accounting association (AAA) (1966), defined accounting AS A PROCESS OF Identifying, measuring and communicating economic information, which permit informed judgment and decision by the users of accounting information,

Sidney, D and co. (1985), defined accountant as a system of measuring results of business activities and communicating those measurement to interested users. Accordingly, accounting was discussed under the following sub-heading:

  1. Management accounting, which is concerned with preparation of report for use by professionals and person within the firm on organisation.
  2. Financial accounting, which is concerned with the preparation of report for use by persons outside the organisation.

Mayo associates (1993) compared the difference between management accounting and financial accounting by saying that finacancial accounting   is the recording of  historical events is money terms, which developed from the need of managers of business to their owners (Stewardship accounting)

Hoverer, it further stated that the accounting would be of interest to many parties, which include government, potential, investors, loan creditors, trade unions and the public at large.

The function of management accounting is to present higher management with reliable and stimulating financial utilization (Nnamdi 1991).


It is necessary to distinguish between book-keeping and accounting from the onset as both are often confused and some times interchanged

According to Mr, Sanni (1994) Book-keeping is the act of recording the day to day financial transactions of any organization buys an item by cash, the transaction is recorded both in the cash account and in the item’s account concerned. All transaction for the day, week and every month are so recorded by a designated officer who know as a book-keeper.

According to Mr Douglas Gruff in carter’s   advanced account’’ defined book-keeper as the science and art of correctly recording in the books of all those business transitions that result in a transfer of money money’s worth within or between entities.

On the other hand accounting is defined in item 2.2 above is ‘the process of recording, analyzing, classifying, summering, communicating and interpreting financial information about an entity, in aggregates and in details reflecting all transfer action involving the receipts, transfer and disposition of the entity’s funds and property.

Thus, while a book-keeper knows the amount of debt owned by the organization, an accountant may concern himself with the proportion of such debts to the owner’s contributions (capital or equity) . He may want to know the proportion of a single debt to total obligations.


Hay (1986) described government accounting as the composite of analyzing, recording, summarizing, reporting and interpreting the financial transaction of the government units.

Another more comprehensive definition was developed by Oshisamin in (1985)  as the process of recording, analyzing, classifying ,summarizing, communicating and interpreting financial information about government in aggregates and in detail reflecting all transactions involving the receipt transfer and disposition of government funds and property.

From the above definition, government accounting can be summarized as primarily being responsible for the effective and efficient utilization of reliable financial information for the production of reliable financial information in respect of governmental activities.


Johnson (1992) outlined the objectives of accounting and financial reporting for government unities as following

  1. To provide financial information useful for determining and predicting the flows, balances and requirements of the government unit.
  2. To provide finacancial information useful for determining and predicting the economic condition of the government ubit and changes there in
  3. To provide finacancial information useful for monitoring performance under terms of constructional, legal, and fiduciary requirements.
  4. To provide finacancial information useful for planning and budgeting and for predicting the impect of the acquisition and allocation of resources on the achievement of operational objectives
  5. To provide financial information useful for evaluation managerial and organizational performances.
    1. For determining the cost of programme, functions and activities in a manner, which facilitates analysis and valid comparisons, with established criteria among time periods, and with other government units.
    2. For evaluating the efficiency and economy of operations of organizational units, programmes, activities and functions.
    3. For evaluating the result of programmes, activities functions and their effectiveness in achieving their goals and objectives
    4. For evaluating the equality with which the burden of providing resources for government operations is imposed.

On the other hand, the Australian accounting association (A.A.A) (1970) stated that the primary objectives of accounting in the public sector organisation are as follows;

  1. To provide information necessary for faithful, efficient, effective and economical management of an operation and of the resources entrusted to it. This objectives relates to management control.
  2. To provide information to enable manager to report on the discharge of their responsibilities to administer faithfully and effectively the programme and use of the resources under their direction, and to permit all public officials to the public on and the use of public funds.

This objectives is referred to as accounting. The united state general accounting association officer (G.A.A) (1980) Stated that the primary objectives of accounting and finacancial reporting. In the federal government is to provide useful information for assessing management performance which involves determining, and what it can achieve in the future.

In assessing part performance, information must provide indication on the following.

  1. Financial viability. The ability of the entity to provide the same level of resources.
  2. Programme activity .– The degree of activity under various programme including cost of inputs and value of outputs.
  3. Fiscal compliances ;- whether financial and related laws and regulations were followed.

Therefore, the basic objectives of government accounting could be summarized as to provide relevant, useful, timely and cost effective financial information to enable government units plan, direct and control, decision making and appraise performance of the government.

2.6     LEGAL BASIS   

According to Odesomi (1992) in his article highlighted on the legal basis of the Nigerian public sector accounting(N.P.S.A) To him, accounting  means the operation government by certain rules and regulations which are subject to review or amendment in line with political social or economical changes.

  1. CONSTITUTION The 1999 constitution of the federal republic of Nigerian is a legal  document that regulates into only government but the whole aspects of finacancial management in government. Certain reverent sector of the different types of government funds. at the same, time, the constitution makes provision for budgetary procedures accounting systems and audit review process.
  • Finance control and management act 1958 (as amended ). This is an act of governs the management and operation of government funds. it also regulates the accounting system, the books of account to be kept and the procedures to be followed in the preparation of account and financial statements.
  • Audit Act 1985 (as amended). This act covers the areas of audit and accountability within the government.
  • Appropriation Act, An appropriation bill is made for the payment, issue or with drawl of money from the consolidated revenue fund (C R F ) and any other government fund. An appropriation bill when passed into law by the legislatives is called an appropriation act. The appropriation act are enacted annually to regulate finacancial and accounting matters.
  • The finacancial regulations, the civil services being a larger and complex organisation needs predetermine standards for uniformity in order to achieve the set financial objectives of the government. It deals mainly with financial and accounting matters of  the government. It sets out the procedures for revenue collecting, security of cash and properties as well as the categories of officers that are suppose to be responsible for each actions.
  • Treasury and finacancial circular are administrative tools which are used to amend the existing provision of finacancial regulation, civil services rules etc. they are issued by the civil services commission ministry of establishment general of the federation.


According to Koleede Oshiami E.S.Q. A.C.A.(1993). Accounting for government and public sector socio-economic unit is as old as accounting for private organizations. Nearly all resources, energy and society’s attention have been directed at the training and development of private sector accounting to the near-complete exclusion of public sector accounting.

This situation is however, more pronounced in developing countries. In Nigeria, efforts to train and develop practioners of public sector accounting at places like, ASCON, the university of lagos and the treasury school in Lagos are relatively recent. The institute of chartered accounting of Nigerian (ICAN). The professional body with the responsibility of regulating accountancy practice and certificate qualified parishioners has only just introduced the subject of curricular. As a result of all these, only few insiders can claim to understand and fully appreciated how government records are kept and why where as a professional qualified accountant can be picked from the street and be entrusted with the accounting work in private sector organization, the same thing can be done if he is required for government accounting work. As a consequence, a hardly recognized but never the less important barriers to entry has been created for the or the odox or conventionally trained accountant that may desire to work in the civil service. And this explains why you never fund an advertisement calling for application for the post of an accountant –general of a starter, on that of the federation where as, firms in the private sector regularly advertised for financial controllers, directors or head of the accounting division or section

In his work Oshisami Koleede appears to confirm the generally held view of the man-on the street of government financial accounting that lack flexibility, which inevitably kills initiatives, and inhabit the development of the government accounting system. this is the impression created by his statement these rules are not expected to be varied under any circumstance  basis of and the legal procedure for government financing. In support of this impression, he went further, by saying that the civil service being a complex and larger organization, requires set standard in order to ensure uniformity and conformity of application.

IF This government accounting system is to develop and more importantly meet adequately and appropriately, the information needs of the different users of government financial statement. This desirable change can be achieved if public sector accounting practioners take to heart a statement once made by the minister of financial regulation.

The regulations are not meant to transform officers to robots’


Odesomi (1992). He said that government accounting can be referred to as financial management of government resources, covers a wide range of activities that can be symmetrical as follows:

  1. Planning and programming – The budget officer under the ministry of finance is charged with the responsibility of financial planning for the whole economy based on the policy guild lines issued by the presidency.
  2. Budgeting – Budgeting which is an annual routine event, is a routine further step on the financial plans already drawn. The preparation of annual estimates of capital and recurrent expenditures and revenues for the budget department. This is done, by collecting the draft estimates submitted by all ministries / department into only one consolidate estimate of revenue and expenditure.
  3. Legislative Approval- In line with the provision of the 1999 constitution, approval must be granted by the legislative body on both the capital and recurrent expenditure and revenue estimates before any fund expended or collected.
  4. Budget Exacution/Accounting – The execution of the budget in relation to the collection of revenues and disbursement of public funds is undertaken by the executive managers. In performing these functions, necessary record of accounts are kept to records the transactions  the type of record on books of accounts maintained and the system of records or books maintained and system accounting employed, must be in compliance with constitutional provisioned.
  5. Audit – The accounts prepared by the accountant general of the federation are submitted to the auditor general of the federation for audit.
  6. Compliance with rules and regulations, this including the following-1 maintenance of proper book for account.
  7. Adequate security of public funds and properties.

111 Review by legislatures and public account committee.

The auditions response on the accounts prepared are submitted to the legislature for review and consideration, and any adverse report is sent to the PAC for through investigation.

The PAC represents the interest of the general public and its entrusted with the necessary power to adequately carryout its functions. Oshiasmi (1991) wrote that the first phase, planning and programming, attempt to establish economic and social welfare goals for development ,the conversion of these goals into objectives programmes and project and the laying out of the programmes that will achieve the objectives over time and within the limits of long –term resources avialiability. According to him, government financial management cycle could be illustrated as show below.

Budgeting which is the second phase involve the qualification in monetary terms of the overall objectives which the government has set for itself and for affecting and controlling the numerous activities from its operations. It forms a yearly allocation, within the overall availability  of annual event, its influence is short-term, hence tactical in nature.

The third phase deals with budget execution and control. This is the phase in which all plans, long- term or short term are expected to be executed. It involves the implementation of the various plans, directing activity towards achievements and monitoring compliance of actual achievement with pre-determined expectation. Its nature is of action internally imposed control.

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This article was extracted from a Project Research Work Topic



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