Public Sector Accounting in Nigeria

Public Sector Accounting in Nigeria

Accounting can be defined as a complex function of collecting, analyzing, recording, summarizing, reporting interpreting the financial transaction of government units.

According to frank wood, (1972) he said that accounting is often said to be the language of business. It used by the business world to describe the transaction entered into by all kind of government parastatals. In any office where money is used as a means of exchange, there is a need to record monetary transaction that took place in the office and this is done so that at any moment a reference could done to the records to find the effect of all transaction.

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The federal government has established several accounting principle and requirement to be followed by the government ministries and extra ministries department through using the treasuring circular and receive financial regulation of 1976, (MWE Quarter and B. Underdown 1991) define accounting in an age of rapid transaction, its environment has undergone vast changes in the last two decades and in accelerating rate of changes is a prospect for the future. Much of what is accepted as accounting today will not have been recognized as such fifty years ago and one may safely predict that in fifty years to come, the subject will bear little resemblance with what it is today.

According to (Roger H. Hermanson, P.H.D, CpA , 1989) ,

The user of the information defines accounting as the process of identifying, measuring and communicating economic information to permit infirmed judgment and decision. This information is primarily financial and generally stated in money terms. Accounting them is a fundamental measurement and communicable process use to report on the activity of a profit seeking business organization and not for profit organization.

Omolehenwa (1990) define accounting system as a set of rule, regulation and procedure, which are anticipated by appropriate theoretical force into a system. The definition of the accounting system is rather instructive. He maintained that accounting system process data into information which are received as input in the decision making process of the organization. Financial control is a process the inflow and outflow of revenue and safeguarding the asset and liability and ensuring that the resource is sufficient enough to implement the plans. Policies and generally ensuring value for money in terms of the organization resources management and application.

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PAUL H. Walgenbach (1991), he also defines accounting as the process of the (i) recording (ii) classifying (iii) reporting and interpreting the financial data of an organization. Once an accounting system has been design and installed, recording and classifying data may become somewhat routing and repetitive. While it is important for an accountant to have a sound knowledge of this phase of the accounting process. It is often a relatively minor part of the their total responsibility


There are the terms and terminologies that are used which make the study more understandable

  1. Budget: from a political point of view, budget represents a statement of activities. It is an annual exercise for the establishing organization revenue expenditure and income plans and also incorporate proposal for capital development.
  2. In the public sector, budget may be considered in term of three aspects, as a tool for accountability, as a toll for economic management and as tool for economic policy. As a toll for management, budget as an operational document specifies directly the cost, fine and nature of the expected result. Budget as an instrument of the economic policy has more carried function, it indicate the direction for the economy both at national and local level and express internationally
  3. Financial regulation: the part of the writing down rule laid by most authority to regulate their finance in term of hierarchy of rule that fall between the standing order which are the major formular rules of the authority and formular instruction which prescribe matter in final detail. Financial regulation are usually printed and are provided valuable guide for all officer and authority
  4. Cash accounting: this is accounting method whereby income and expenditure are recorded and reported in the period in which the related cash receipt and payment occurs. It is the principal method of recording the public expenditure. The wilspread use of cash accounting in the public sector result from the government historical based requirement for financial information that show fiscal compliance which is the major concern of cash accounting
  5. Conceptual framework: the constituent of accounting theories has always been contention. The accounting practice is made up of both the theoretical and practical aspect and both of them make the information got from the financial process relevant. Hence the accounting concept, rule, principles, standard and basis will make of the take of accounting theory. The accounting theory is a set of concept standard, which explain and guide the action of the accounting officers. In other word, it guides the application of skill in the processing and analysis of financial data into information.
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The CIDFA is of the opinion that there are advantage in applying the statement of standard accounting of the public sector organization in the interest of the good accounting practice and general movement toward increasing the standardization of the accounting information.

Accounting practice provides a framework for those compiling the accounts item should treat decision about how. The basic structure of financial account and their treatment item, which go into them, have been developed over many years as part of the accounting practice for much of the public sector. The professional accountant derives the framework from accepted practice. According to the American Accounting Practice Board (AAPB) (1970) said that the financial historian should keep the history of the decide system. The AAPB statement explained that the organization gathered by the accountant should serve the common need of several classes of user and that the information should be reliable, relevant, and adequate and also be provided in time.


What made the function for the reform local government unique was the mere fact that they were constitutionally mandated and their performance and non-performance primarily depends on the availability of time and not on the personal whims and caprice of the state executive, as was the case in the past. Moreover, the reform was uniform nation wide. it is also expected that the reform of the local government will be a continued process until and pure democratized, viable , efficient , and effective local governed system that will satisfy the interest of the grass root is found.

At the state of the modern local government in the Nigerian government were not found from the federal treasury. Local government was strictly perceived as part of the state government. Whatever finical assistance the local government received where part of the revenue to which there state were entitled and to which there state was ablate raised.

The 1976 local government reform and the 1988 implementation of the guideline on the application for the civil service reform in the local government service, established a standard or uniform multi – purpose single tie government structure throughout the federation hence each local government accounting system is a public of the other in term of the personal position, function, financial information flow, budgeting and budgeting control system. A provide source of revenue and general administration.

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Out of the six departments in the local government, only the finance department headed by the treasury of the local government is authorized to collect and keep all the revenue. The 1976 financial regulation was issue empowering all officers responsible for collection and disbursement of public fund to comply with the rules for the operation of the various funds and to render the stewardship of the revenue generated. They are to ensure that adequate control is exercise over the receipt, cushy and that all transaction are properly recorded and that all document and record relating to financial transaction are produced as required by the auditor or the external auditor. An internal audit is responsible for carrying dependent appraisal of the financial accounting and other process for the local government with specific objective, which are enumerated in the financial memorandum.

Under the section 83 of the financial memorandum edit, the local government inspector may be appointed by the governor to introspect of any local and to make sure that the local government is discharging its responsibility for the supervision of its finance as detailed in the financial memorandum. He also draw the intention of the auditor that is, the director for the audit for any matter relating to the accounting which he considered needed specific examination.

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