Topic: STRATEGIES FOR ENHANCING FINANACIAL ACCOUNTABILITY IN THE LOCAL GOVERNMENT SYSTEM IN NIGERIA. (A CASE STUDY OF IKWO LOCAL GOVERNMENT AREA, EBONYI STATE)

Chapter One

INTRODUCTION

1.1 Background of the Study

The subject, financial accountability is vital to any organization be it profit oriented or non-profit oriented. Lack of financial accountability results in embezzlement, fraud and misappropriation of funds. The peculiar nature of Nigeria economy has made any topic in accountability, financial or otherwise worth discussing. The value our society attach to wealth, which nobody is concerned to how wealthy one is, has made many people to begin to pursue wealth by all means thereby ignoring the fact that they are accountable tot he public for the public funds and properties entrusted I their care. It is due to the problems mentioned above which are associated with lack of financial accountability in any organization that has motivated the researcher to choose the topic “strategies for enhancing financial accountability in the local government system in Nigeria through a system of control” Ikwo local government area in Ebonyi state has been chosen as a case study in trying to discuss how effective internal control will achieve financial accountability. Internal control system comprises the plan of organization and all co-ordinating method and measure, adopted within the management to safeguard the assets of the organization, check accuracy and reliability of its accounting data, promote operational efficiency and encourage adherence to prescribed managerial policies. This research focus on finding if the reference organization has installed this control system and if so, how effective it is as to enhance early detection of mistakes, deliberate misappropriation and equally checks collusion, fraud or embezzlement of funds through proper authorization, reliability of financial records, safe guarding of assets and hence maintenance of financial accountability. However, the ability of any organization t enhance its financial accountability depends mostly on the type and effectiveness of it’s internal control system.

1.2 Statement of Problem

Every policy formulated or constituted would have been a success if they are being carried out. But adherence to planned policies by employees are the problems of managing organization. The problem of policy execution is further compounded by the evolution of large organizations. There is therefore, the need for an internal control system. Internal control is such an indispensable tool in the hard of management if it wishes to obtain adequate and useful information, protect organization assets and control successive operations which lead to enhancing financial accountability. Many control procedure whose effectiveness on segregation of duties are being circumvented by the collusion of the employees is yet another problem. The degree of compliance with the control procedures are often to deteriorate due to negligence of duty. Carelessness, mistakes and even personal factors. These factors are problems to the organization and eventually undermine the effectiveness and efficiency of the internal control system if not taken are of: 1. How adequately are subordinates adhering to the internal control measure? 2. What measure should management adopt to test observance of internal control procedures? 3. Should internal auditing be an adequate means of checking circumvention of internal control measure? 4. Should management rely on internal auditing to appraise the efficiency and adherence to internal control? 5. Should the effectiveness of internal control be relief on for adequate financial accountability? These questions prompt the need for a research study of the kind embarked upon ere, and they are further addressed in subsequent chapter of the project.

1.3 Aim and Objectives of the Study

The objective of an organization that maintains a good internal control system is to maintain efficiency, profitability apparatus, viability prospects and of course accountability of the entire organization. It is the purpose of this study therefore, to have a close look and know if there is any system of internal control existing in the Ikwo Local Government Area. If there is, to know to what extent this has assisted in attaining financial accountability in the local government area. The important areas which the researcher want to look into are as follows: 1. To ascertain the step taken, when inefficiency is dictated I the internal control system and to know the effect on accountability of the organization. 2. To know whether there is a system of adequate authorization and recording to provide reasonable accounting control over assets, liabilities, revenue and expenditures. 3. To ascertain whether there is adequate division or segregation of duties at various levels of management in the organization. 4. To understand a critical appraisal of the system generally and suggest solutions where the system is find ineffective. 5. To suggest ways of enhancing early detection of mistakes, deliberate misappropriation, checks collusion, fraud or embezzlement of funds.

Get Full Access Now!