PURCHASE FULL WORK -3500

THE EFFECT OF VALUE ADDED TAX ON PRICE STABILITY IN NIGERIAN ECONOMY

ACCOUNTING PROJECT TOPICS AND MATERIALS

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

In most developing countries including Nigeria government participation in economic activity is usually significant. One of the ways through which government has intervened in Nigerian economy is through the establishment of public enterprises and statutory bodies.

In Nigeria, public enterprises are engaged in a wide spectrum of economic activities including agriculture, mining, construction, manufacturing, commerce and services. The classification of public enterprises in Nigeria has been made according to varieties of criteria by different authorities.

The public service review commission (1975:101) classified public sector into Public utilities, Regulatory body and financial institutions. The rational for the establishment of public enterprises are numerous just like establishment of private enterprises. They include amongst others; provision of employment opportunities, generating income for the owner of the enterprises etc.

The activities of the public enterprises have been on the increase in recent times which necessitated the introduction of the accounting practice to check and monitor the financial activities of these enterprises. In his book, titled principles of accounting, by Bimage (1985) Accounting is defined as a process by which data relating to the economic activities of an organization are measured recorded and communicated to interested parties for analysis and interpretation.

The earliest methods of accounting records were kept in physical quantities. These records came from the Eastern (early) civilization which involved in the countries around the Mediterranean Sea such as Mesopotamia, Egypt, Crete, Italy etc. Money was recorded as soon as money took the place of barter as a medium of exchange and unit of accounts, accounting practice has been closely related to the economic development of the country. This study looks at the role of accounting in the control of the expenditures of government particularly at the local government level. The Nigerian government practices a three tier governmental system.

The most important of these tier is supposed to be the local government been the closest to the common man hence the need to take a critical evaluation and review of the activities of the local government and her expenditure profile with a view to providing possible ways by which its spending derives maximum benefit for the good of all.

The role of accounting in the public sector and particularly in local governments is primarily to ensure accountability in the sector and present the true and fair financial position of the entity. An organization can only grow or profit when its resources are well managed. In recent times, there have been cases of misappropriation of funds in the public enterprises and lack of accountability.

This scenario is even worse at the local government level as the only thing they do is to share money at the end of the month once the fund allocated from the federal purse arrives. No organization can move forward without having an organized accounting department to give accurate financial information about her financial activities. This is because if proper records of transactions are not kept, management is then incapacitated as regards planning and control as well as decision making. Proper accounting records and practice therefore is sine qua non to the success of public enterprises and particularly local government administration. This study looks at the role of accounting in the control of the expenditures of government particularly at the local government level. One of the veritable tools for the control of expenditure in all organization and most often than not by the three tiers of government is the budget.

The institute of cost and management accountant (ICMA) defined budget as a financial or quantitative statement prepared and approved prior to defined period of time of the policy to be pursued during the period for the purpose of attaining a given objective. It may include income, expenditure and the employment capital. Therefore in order to achieve these objectives or goals, the organization must economize resources and discover the means of achieving these goals. Budget as a financial plan sets out anticipated revenues and estimated expenditures over a certain period of time.

The various kinds of budget have long been in use since their inception in the 1920 and every serious organization has made them the central part of their planning and control system. heir ability to coordinate the allocation of resources through internal communication while at the same time serving as a means of expenditure authorization and evaluation base has made them the most important tool that is at managers’ disposal today. It is exactly the importance that has contributed to its longevity and caused them to remain relatively unchanged since the first days of their existence.

1.2 STATEMENT OF PROBLEM

Obviously, every privates and public entity in Nigeria has their accounting department and there are increased cases of financial mismanagement in virtually all the public and private organization in Nigeria. The problem of this study lies on how the managers of these enterprises are able to recognize the role of accounting in their enterprises so that these cases of lack of accountability will be minimized or if possible its total eradication in our society. The specific problems of local government as it relates to its activities and expenditure control are as follows · The budget and budgetary systems in the local government are faced with serious challenges. · The expenditure profile of public entities and particularly local governments in Nigeria are witnessing unjustifiable increments. · The conducts of personnel at the local government level aids the possibility of fraudulent practices.· Lack of budget in planning and control has resulted in the indiscriminate use of fund meant for more viable activities.

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