The Role of Accounting in the Control of Public Expenditure in Nigeria

The Role of Accounting in the Control of Public Expenditure in Nigeria

Over the years, the Nigerian public sector has increased greatly in important and this necessitated to many people writing on the role of accounting in this sector.  Dule, E. 1965 in his book titles management theory and practice, describes the roles of accounting in the public and private sectors as the factor which to plan, organize direct and control their financial resources and represent the organization to the third parties.

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He further stated that a reflection reveals that each of these approach contains a significant financial dimension for instance, important financial techniques can be used to measure whether resources are being effective utilized and co-ordinated in order to express organization plans and control activities to the third parties.  In addition to this sheared 1974 shares, the view that accounting plays an important and inevitable role of recording and managing funds in any public organizations in most suitable manner, using this funds as profitability as possible.  Planning future operations  and controlling financial accounting, cost accounting, budgeting, statistical analysis and sheared arrived at the same views but sees the role of accounting in different direction.  In short, it can be said that sheared view is as follow up of Dule’s 1965 idea on the role of accounting in any organization.  Kolade, O. and Peter M. Dean 1987 in third book, financial management in the Nigerian public sector looked at the role on the number of staff employed by these sector to facilitated the work of accounting  in an organization.  They said that the role of accounting in the public sector have become so important that the number of people employed to carry out these accounting function in an organization are very few compared to their work perform.

However, they maintained that public sector strive to recruit, train and develop accounting, sector with disproportional large number of the experience, and unqualified accounting staff.  At the same time, the small number of qualified experienced accountants remaining in the service have been rotated too frequently in a vain attempt to plug grabs left by defection to private sector.  They therefore suggest at a solution to the manpower problem in this sector by advocating the proper recognition of professional accounting levels and constitution of services designed to retain accounting in sufficient number and of significant quality in the public sector.

John and puge said that the accounting Apartment of any firm is the body that effect very utilize and coordination resources such as  capital, plant material and labour to achieve defined objective with maximum efficiency.

Bank describes this   role as a collective terms refers to the system, function process or office planning , providing co- ordination directing, evaluating and controlling of all available efforts and resources of an organization for the accomplishment of the objectives and policies which are designed  by and  handed down from the top executives of the organization.

These two people believed that the traditional role of accounting particularly in Nigeria public sectors has been neglected.  The financial function has been concerned with the routine task of controlling, authorizing, recording and reporting the lack of total view of the role of the financial function almost exclusively with middle – level managers and the lack of good financial managers.  Within top level management have predictable result in our public enterprises future.

The  effects of this defects are:

  1. Management information system of which accounting is a part, have been neglected:  Accounting has been more convened with the compliance and regulations than with serving management or other user needs.
  2. Methods of evaluating investment and performance have been inadequate with the result that management have been deprived at useful information and utilization of information has been poor.
  3. Policies have been evolved without proper consideration of their financial effects and implications.
  4. Accountability and control have been inadequate because of lack of innovation in financial sphere:

Okafor on his own view classified the role of accounting in the public enterprises  into four categories:

  1.                The owners of the business are primary states holders.  The financial information  obtain from the accounting departments determines how much the owner of the enterprises will earn.
  2.               It is also from this information that the enterprises determines how many people the enterprises will employ and how much each person will earn.
  3.                Creditors supply funds or services to the business.  Their state is in the ability to the organization to generate enough fund to enable it meet its contractual payments obligations to the creditors. Sit is from this financial department that determines how much the organization earns as their profit and finally how they will take their payment to their creditors.
  4.             The government is interested in profit performance which determines the tax liability of the business.  It is  from the accounting departments that the financial positions of the firm are known and this enables the firm to know whether they are making profit or not.  The government then tax the enterprises if they are making profit.


To earliest method of accounting in Nigeria was the use of memory to record the amount of Agricultural commodities like yam, Cassava, and livestock which passed from one person to the other, both the giver and receiver, relied on the retentive memories of their sons, daughters and wives.  This was a unique blend of oral accounting with the change  and  discharge system, from this early practice the natives moved on to record by the use of pierces of sticks, pebbles of strokes made on the walls of their buildings, the goals or monies exchange in stored. Cowries are often counted in tens and twenties, and a stroke on the wall or pebble thrown into a pit could represent a receipt of 10 cowries.  Where a payment of a similar amount is made then a pebble would be thrown away or a stroke cleared off.  At any time the number of pebbles, sticks or strokes remaining would signify the amount of money or commodity left.  The increasing business contract between Nigerians and the European countries make the beginning of modern accounting in Nigeria.  While the British merchant brought girl, guns and clothes in Nigeria, they took away palm oil and other agricultural raw materials needed by European industries, Between 1890 and 1914, these increased trading activities led to the introduction of British banks as well as the transporting of British system of Book keeping to Nigeria.  The delacted accounting records occasioned by the emerging economic  followed the pattern transplanting from Europe

The development of the nation’s financial system had a definite impact on the growth of the accounting profession.  The banks require from their customer.  Statement of accounting pre-requisite for considerations for financial accommodation.  The Lagos stock exchange was established in 1961 by an Act of parliaments and its regulations have been geared towards the encouragement of professional accounting practice.  In 1965, the Nigerian parliaments enacted an Act establishing the institute of chartered Accountants of Nigeria.  This bestowed professional status and statutory recognition to accounting practice in Nigeria.  In a similar vein, the Nigerian companies and Act of 1968 and new the companies and Allied matters Decree No 1 of 1990 required that every company shall cause to be kept proper books of account.  It  further require that accounts of public companies must be subject to statutory audits carried out by professional qualified chartered accountants.  These legal and professional development encouraged the formation of firms of chartered accountants.

On September 9, 1982, a Nigerian Accounting standard Board was established to regulate standards and practices in the profession.  Today, Nigeria has two well developed bodies of accountants, the ICAN and the Association of National Accountants of Nigeria (ANAN).  Most of the higher institution in Nigeria after degree courses in accountancy.  Thus accountancy in Nigeria has followed the international pattern.


          Accounting principles are the guidelines, laws or rules adopted by the accounting profession to serve as guide to accounting practices. Accounting principles includes the accounting and reporting assumption, standards and practices that a company must use when preparing external financial statement.  One objective of accounting principles is to reduce the differences and inconsistencies in accounting practices, there improving the comparability and credibility of financial reports.

The term General Accepted Accounting principles are procedures that guide and regulate accepted accounting practice at a certain period of time.  It is the collective opinion of what the professionals consider good accounting practice and procedure.

GAAP are recommended by the authoritative bodies of each country.  The term does not imply a rule of law which there can be not deviations.  Or exception?  The application of accounting principles in each country requires the accounting principles in each country requires the professional judgement of an accountant, and their principles are applied primarily to material and significant items. Items which have little or no importance on the financial statement can be dealt with on the basis of their necessity or application.  The Accounting principles Board (APB) state that “Generally accepted accounting principle.  Incorporate the consensus at a particular should be recorded as assets and liabilities should be recorded.  When these changes should be recorded, in them should be measured, what information should be disclosed and which financial statement should be prepared.


The term generally accepted accounting principles has long been used in

accounting profession and entered into the public domain.  These principles were not all written down in one day, they evolved over several decades.  These principles are supported and justify by institutions legal authority and acceptability.

It present, there exist certain accounting principles that all accountants recognizes and applied in practices.

They among others;


financial accounting distinguishes the business entity from the individuals connected with or coming into contact with the business, including the owners and managers of business. Therefore, accounts maintained for employers, employees, customers and other parties connected with the business. The law regards an in-corporated company as a separate legal entity from its members.

The Shareholders, debenture holders, creditors seen as merely contributing the financial resources entrusted as the directors of the company to manage the company in the over all interest of the owners of the business. The system of financial accounting is designed to report on the stewardship of the directors. This stewardship function would effectively isolates vales belonging to the company from those belonging to the parties in order to enable it ascertain the position of the business at a given time.


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  1. Tihtia Pawlos says:

    I have get this document very important!

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