Appraising The Financial Control Approaches In Local Government System
(A Case Study Of Enugu South Local Government Area)
Financial control approaches within local government systems are diverse, encompassing a spectrum of methodologies aimed at ensuring fiscal responsibility and accountability. These approaches typically include stringent budgetary oversight, transparent expenditure tracking, rigorous auditing procedures, and adherence to regulatory frameworks. Additionally, employing sound financial management practices, such as cost-benefit analysis and risk assessment, is imperative. Collaborative efforts with stakeholders and effective communication channels help streamline decision-making processes and foster public trust. Embracing technology for efficient financial data management and reporting enhances transparency and enables real-time monitoring of financial activities. Moreover, capacity building and continuous training of personnel on financial best practices bolster the efficacy of control mechanisms. By integrating these multifaceted approaches, local government entities can effectively navigate financial challenges and uphold sound fiscal stewardship.
In consonance with its transition of civil rule programme by the federal government this year, a lot of changes are being carried out tin the local government.
First was the election of the local government chairman and councilors on the 12th December 1987, followed by the appointment of sole administrators and replaced by the caretaker committee in 1990. The current changes include the elected councilors forming he legislature and the secretary appointed supervisory, education etc. as is obtained in the sate government.
These spectacular actions of the federal government has given credence to new directions in the operation of the local government system in Nigeria (Nzelibe, 1990).
It is further to be noted that the federal government from ten percent to twenty five percent, in addition to the ten percent state generated revenue and the internal sources available to them.
With all these funds now available to them and the increase in their responsibilities especially the funding of primary school education, it becomes more important than before that the accounts of the local government should be audited in order to ensure that the money is judiciously used and channeled to the projects meant for them.
In this direction, this research work tries to find out the problem associated with financial control in Enugu south local government so as to proffer solution in order to make the local government more efficient and capable of rendering the services for which it were established.
Title page
Approval page
Dedication
Acknowledgement
Abstract
Table of contents
List of tables
CHAPTER ONE
INTRODUCTION
1.1 Background of the study
1.2 Statement of the problem
1.3 Purpose of the study
1.4 Scope of the study
1.5 Research questions
1.6 Research hypothesis
1.7 Significant of the study
1.8 Limitation of the study
1.9 Definition of the terms
References
CHAPTER TWO
REVIEW OF RELATED LITERATURE
2.1 Literature review
2.2 Objectives of Local Government
2.3 Objectives of Local Government Research
2.4 Sources of revenue of Local Governments
2.5 Financial Control of Local Government
2.6 Local Government Finance
2.7 Area of Involvement of Local Government in Economic
Development
CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY
3.1 Research design
3.2 Area of study
3.3 Population of the study
3.4 Sample and sampling procedure
3.5 Instrument of data collection
3.6 Validation of the instrument
3.7 Reliability of the instrument
3.8 Method of data collection
3.9 Method of data analysis
CHAPTER FOUR
DATA PRESENTATION ANALYSIS
4.1 Presentation and analysis of data
4.2 Testing of hypothesis
4.3 Summary of results
CHAPTER FIVE
DISCUSSION, RECOMMENDATION AND CONCLUSION
5.1 Discussion of results findings
5.2 Conclusions
5.3 Implications
5.4 Recommendations
5.5 Suggestions for further research
BIBLIOGRAPHY
APPENDIX
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Nigeria local government system is as old as Nigeria creation. Even before the arrival of he British to Nigeria and introduction of modern system of local government, the traditional system of local governance exists. However, with the traditional system of governance, which was administered by the local people, the issue of financial control more often than not generates problems between the operators and the governed and atimes between the operators themselves.
During the colonial rule the British divided Nigeria into regions, districts and divisions. The districts were then like what we call today local government areas. While the central government controls the entire country, it gave the subordinate units some degree of independence in the control of its affairs and provision of certain amenities in the local areas.
Prior to the lunching of the 1976 local government reforms, all the regional (states) governments without excerptors created, modified and manipulated local government system and institutions as the considered expenditure. The practice was not suitable and this brought about for a uniform local government system. It is on this ground that a new local government system popularly called “1976 local government reforms” metamorphosed.
Ugwu, (1991:11) states that it is therefore the guest for effectiveness, good functioning and liability of our local government system that brought about this decentralization of the power of our federal government – by creation of a new uniform local government system with the 1976 local government reforms.
According to paragraph seven of the 1976 local government reforms, the term tier is designed as a set of local government with their own identity, powers and sources of revenue established under state legislation and with functions for which they have been responsible to the state. The guide line equal articulated the following objectives of the new local government reforms:
1. To enable the people to respond to service and development activities in their communities through their representative bodies.
2. To mobilize human and material resources through the involvement and participation of the people in the programme for the development of their communities.
3. To create favourable condition for democratic development initiative and qualities of among the people.
4. To enhance the sense of belonging and security through the effective communication between the local government communities and the three levels of government in Nigeria.
5. To provide a two way channel of communication between local communities and government (both state and federal).
6. To bring government nearer to the people and guarantee reasonably, adequate functions, financed resources and staff for local government.
It is important to state that despite the various reforms that were equally other structural led to the creation of local government in Nigeria from 229 in 1977 to 301 in 1987. In 1989 we had 589 and presently we have 774 local government areas in Nigeria. Enugu south local government areas which we used as a case study was created in 1991 by the General Ibrahim Badamosi Babangida led administration.
It is therefore, necessary to state that despite all the guidelines structural and managerial reforms, all the financial control approaches in the local government system have not achieved maximum result and it is in this basic that there is the need for the study.
1.2 STATEMENT OF THE PROBLEM
According to Odenigwe (1977:19) local government is defined as a system of local administration under which local communities and towns are organized to maintain law and order, provide limited range of social services, public amenities and encouragement co-operation and participation of the inhabitants in joint and endavours towards the improvement of their condition of living. Form the above definition which is widely accepted, one would at a glance observe that the Nigeria local government system are based with varieties of problem.
The provision of social services, public amenities could only be achieved when there is availability of funds and good management of fund.
It is therefore, not of place to state that the problems of financial control in the local government system in Nigeria is attributed to poor planning, insufficient funding, structural design, mismanagement, misappropriation of funds, corruption and lack of qualified personnel on the local government operators.
The researcher therefore identified the expediently necessary to appraise the financial control approaches in Nigeria local government system with a case study of Enugu South Local Government area of Enugu State.
1.3 PURPOSE OF THE STUDY
The purpose of this study is to highlight some of the problems that inhibit the viability of local government financial control approaches and to look for the solutions.
1.4 SCOPE OF THE STUDY
The researchers work is to appraise the financial control approaches in Nigeria local government system (a case study of Enugu South Local Government Area).
This work investigates the control mechanism in the public service with particular emphasis on Enugu south local government in distribution of dividend of the government.
1.5 RESEARCH QUESTIONS
To help in the analysis, the following research question were put forward?
a. What are the problems of financial control in Enugu south local government area?
b. What is the impact of local government administration in economic development of Enugu south local government area?
c. Does the source of fund available to local government responsible for poor financial control of local government finance?
d. What are the causes of low performance of the local government?
e. What are the areas of direction of economic development of Enugu south local government?
1.6 RESEARCH HYPOTHESIS
Ho: The financial control approaches in Nigeria local government system does not contribute to a greater revenue income.
Hi: The financial control approaches in Nigeria local government system contributes to a greater revenue income
Ho: Financial control approaches in Nigeria local government system does not improve the management of finance and as well does not maintain meaningful development.
Hi: Financial control approaches in Nigeria local government system improve the management of finance and as well maintain meaningful development.
1.7 SIGNIFICANT OF THE STUDY
Finance is not a rite peculiar to the finance department, nor is financial administration. Financial factors have to be considered along with others not independently of them, the financial work will be dispersed throughout the whole organisation, and neither the most efficient finance department of which will avail unless those responsible for directing the operations of the authority interest themselves in finance control and management.
It is also important to note that unless problem associated with financial control in the local government are identified, useful suggestions cannot be made on how to improve the management of finances and as well maintain meaningful development, such words as over-invoicing, inflation of contracts, gifts, embezzlement have entered the vocabulary of governance.
According to Olewe B. N. (1996:337) the need for using a centralized financial administration to strength rather than weaken the sense of financial responsibility of the departments, the desirability of a proper distinction between the “control” and service aspect of the work of the accountant, financial officer and the need of inter departmental co-operation will be created.
From the above analysis the researcher will attempt to highlight the impact of financial control in local government administration.
1.8 LIMITATION OF THE STUDY
There are a number of constraints that the researcher encountered in carrying out this research work. Some of these obstacles are highlighted below.
Owing to lack of forcible logistics to carryout compressive study of the operations of the whole local government under study a number of communities were selected.
Another important problem is the uncooperative attitude of the local government official, others are the perennial attitude to work in the public service. Sometimes when one called to get vital information on facts, the key officers may not be met to supply information needed.
Another important factor is the time constraint within which to complete the project work and bureaucratic procedure in public services to grant interview.
Also one of the constraint the researcher encountered is the limited literature of this particular logic.
1.9 DEFINITION OF THE TERMS
It is imperative at this juncture to defined some key words that form the concept to enable the reader appreciate the meaning and usage.
1. Local Government: According to Umebali, E. E. (2000:4) Quoting Odenigwe define local government as the system of local administration under which local communities and towns are organized to maintain law and order, provide limited range of social services, public amenities and encourage cooperation and participation of inhabitants in joint endeavours towards the improvement of their condition of living.
2. Appraise: According to the Standard Collins English Dictionary, appraise means to evaluate or estimate value.
3. Finance: This simply means the money available for the organisation to perform its function.
4. Control: Collins English Dictionary defined control as giving of command, dominate, regulate or direct.
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Appraising The Financial Control Approaches In Local Government System:
Appraising the financial control approaches in a local government system is a crucial aspect of ensuring transparency, accountability, and effective management of public funds. Local governments play a pivotal role in delivering essential services to their communities, and proper financial control mechanisms are essential to prevent mismanagement, corruption, and financial instability. Here’s an overview of the key approaches to appraise financial control in a local government system:
- Budgeting and Planning: A strong financial control approach starts with effective budgeting and planning. Local governments should develop clear and realistic budgets that align with their priorities and goals. Regularly reviewing and comparing actual expenditures against the budgeted amounts can help identify discrepancies and potential issues.
- Internal Controls: Robust internal controls are essential to safeguard assets and prevent fraud. This includes segregation of duties, requiring multiple approvals for financial transactions, and implementing checks and balances in financial processes.
- Financial Reporting and Transparency: Local governments should provide timely and accurate financial reports to the public, detailing their revenue sources, expenditures, debts, and assets. Transparent financial reporting enhances accountability and allows citizens to understand how their tax dollars are being used.
- Audit and Oversight: Regular internal and external audits play a critical role in evaluating financial control effectiveness. Internal audits help identify operational inefficiencies and process gaps, while external audits provide an independent assessment of financial statements and controls.
- Compliance with Laws and Regulations: Local governments must adhere to relevant laws, regulations, and accounting standards. Compliance ensures that financial transactions are conducted legally and ethically, reducing the risk of financial mismanagement.
- Risk Management: Identifying and managing financial risks is essential. This involves assessing potential financial threats and putting measures in place to mitigate them. Risk management strategies could include creating contingency funds or implementing insurance policies.
- Technology and Automation: Modernizing financial systems through technology can enhance control measures. Automation can reduce the likelihood of errors and streamline processes, leading to greater accuracy in financial transactions and reporting.
- Training and Capacity Building: Ensuring that staff members responsible for financial management are well-trained and have the necessary skills is crucial. Training can help prevent mistakes and improve the overall financial control environment.
- Whistleblower Mechanisms: Implementing mechanisms that allow employees or citizens to report suspected financial irregularities without fear of reprisal can help identify and address potential issues at an early stage.
- Performance Evaluation: Local government entities should regularly evaluate their financial performance against predetermined indicators and benchmarks. This evaluation helps in identifying areas of improvement and refining financial control strategies.
- Public Participation: Engaging the public in financial matters through consultations and open forums can foster a sense of ownership and oversight. This can lead to more effective financial control as citizens become more informed and engaged in local government financial activities.
In conclusion, appraising the financial control approaches in a local government system involves evaluating various elements such as budgeting, internal controls, reporting, audits, compliance, risk management, technology utilization, and public involvement. A comprehensive approach that addresses these aspects can help ensure responsible and effective management of public funds in a local government context.