THE ROLE OF FINANCIAL CONTROL INSTITUTIONS

IN PROMOTING FINANCIAL ACCOUNTABILITY IN THE

PUBLIC SECTOR:
A STUDY OF PLATEAU STATE UNDER DEMOCRATIC
REGIMES

SEDDI SEBASTIAN MAIMAKO

B.Sc, MBA
PGSS/UJ/12448/00

A Thesis in the Department of MANAGEMENT SCIENCES,

Faculty of Social Sciences.
Submitted to the School of Postgraduate Studies, University of
Jos, in Partial Fulfillment of the Requirements for the Award of the
Degree of DOCTOR OF PHILOSOPHY
of the
UNIVERSITY OF JOS

Ph.D Thesis
OCTOBER, 2005

DECLARATION
 ii

I hereby declare that this work is the product of my

own research efforts; undertaken under the

supervision of Dr. A.A. Okwoli and has not been

presented elsewhere for the award of a degree or

certificate. All sources have been duly distinguished

and appropriately acknowledged.

Seddi Sebastian Maimako

PGSS/UJ/12448/00
 iii

CERTIFICATION
 iv

ACKNOWLEDGEMENT

May I humbly submit that God has been very kind and sympathetic to me

before and during the preparation of this thesis.

I wish to acknowledge the invaluable role my supervisor Dr. A.A. Okwoli

played in making this dream a reality. May God reward you for interest in the

intellectual development of junior colleagues. I am indebted to my Internal

Examiner, Dr. Francis Ojaide who assisted in no small way to the success of this

thesis. God bless you.

I also wish to place on record my unreserved gratitude to my loving wife,

Jima Lucy Maimako. Your care and love gave me the impetus to remain focused on

this research. I value the contribution of our children – Na’ankwat, Tuamyen,

Dongvel, Shitnaan and Na’anpoe. They created a conducive environment for this

research.

My colleagues both academic and administrative, in the department of

Accounting and Management Sciences, I appreciate your contribution in making this

research a reality. I love you all.

The Dean of the Faculty of Social Sciences, Professor S.G. Tyoden, deserves

a special commendation. With gratitude, I acknowledge your contribution in making

this research a reality.

My colleagues in the Faculty of Social Sciences, I’m indeed indebted to you.

The following deserve special commendation: Dr. A.E. Idyorough, Dr. Dung Pam

Sha, Dr. A. Gambo, Dr. Gofwen, R.I., Professor U.A. Ibanga of Sociology

Department, Dr. M.I. Mai-Lafia and all Faculty members who actively participated
 v

in the various Faculty presentations.

My gratitude goes to our hard working Ph.D Coordinator, Dr. Peter Arinze.

Mrs. R.B. Jat, the G.M. of Consultancy is indeed a friend. Thank you for your

support and encouragement during the duration of this programme. I also

acknowledge the support of Mr. P. Ret, the Principal Accountant of Unijos

Consultancy.

Some of my friends deserve commendation for their encouragement and

prayers. These include Mr. Bitrus Dayil of Zenith Bank, Mr. Patrick Dariem of the

Ministry of Finance, Alhaji A. Akano, Hon. and Mrs. Peter Buba, Mr. and Mrs.

Jonathan Gukut, Mr. and Mrs. Stephen Dagoet, Mr. and Mrs. H. Homsuk Yalmi.

I would like to thank the Dean, Professor G.A. Ubom, his deputy Dr. B.N. Gyang

and the entire staff of PG School for their hard work and commitment to duty.

Continue with the good work you people are doing.

My brothers – Usman, Sule, Nda, Nkuri and sisters – Kande, Nana’an and

Rangyen have consistently supported me. I thank you for your prayers and support.

My research assistants deserve special commendations. They include Patrick

Tsenyil, Galadima Bawa, Aaron Pyelshak, Sunday Gonet, Gonam Miri, Mr. Isaac

Rwang and Lawrence Manji. You sacrificed both time and resources to support this

research. I am grateful.

The Proprietor of Citygate Integrated Systems, Mr. Samson Bamidele and his

very hardworking staff, Miss Peace Ogbonna have done tremendously well to

produce this work. They have worked on the manuscripts for years. To you, I say a

very big thank you.

 vi

Dr. Hashimu Bulus of Centre for Development Studies, University of Jos

guided me with the statistical aspects of this research. His valued contribution in

shaping this research is highly appreciated. Dr. Hashimu, many thanks.

I wish to acknowledge the support and contribution of my students past and

present. Your contribution is specially acknowledged. God bless you all.

 vii

DEDICATION

To my parents:

Miskoom Maimako Allahdamu

and

Late Mama Gwodi Maimako

 viii

TABLE OF CONTENTS

Title page……………………………………………..………………………………i

Declaration ..…………………….……………………………..…………………….ii

Certification …...………………………………………………………..……….…..iii

Acknowledgements …………………..………………………………………...…...iv

Dedication …………………………………………………………………………..vii

Table of Contents ……………………………..……………………………….…..viii

List of Tables ……………………………...………………………………….……xiv

List of Figures ……………………………….……………………………..….…..xvii

Abstract …………………………………….……………………………..……...xviii

CHAPTER ONE – INTRODUCTION

1.1 BACKGROUND TO THE STUDY ………………………….…………...…1

1.1.1 Financial Control …………………………………...………………….…….3

1.1.2 Institutions of Financial Control in Public Sector ……………...……….…...5

1.2 STATEMENT OF THE PROBLEM ………………………...……………....8

1.2.1 Research Questions …………………………………………..……………..10

1.3 OBJECTIVES OF THE STUDY ………………..…………..……………...11

1.4 HYPOTHESES OF STUDY...…....……………………..………………….11

1.5 SIGNIFICANCE OF THE RESEARCH …………………….……………..14

1.6 RESEARCH SCOPE ………………….………..……………..……………14

1.7 RESEARCH LIMITATION ……………………….…………….................15

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CHAPTER TWO – LITERATURE REVIEW

2.1 INTRODUCTION …………...……………………………………..………17

2.2 GOVERNANCE AND FISCAL TRANSPARENCY AND

ACCOUNTABILITY ……………………………………………..……..…18

2.3 FINANCIAL CONTROL FRAMEWORK IN THE EXECUTIVE

ARM OF GOVERNMENT OVER PUBLIC FUNDS .…………………….24

2.3.1 Powers and Responsibilities of Government Financial and

Accounting Officers ……………………………………….………………..31

2.3.2 Duties and Powers of Permanent Secretaries as Accounting

Officers …………………………………………………………..…………33

2.3.3 Governmental Budgeting ………………………………………...................35

2.3.4 Purposes of Budget ………………………..………………..……................37

2.4 GOVERNMENT ACCOUNTING AS A BASIS FOR

FINANCIAL CONTROL ………………...…………………………………..56

2.4.1 The Basis of Government Accounts ………………………..…...………….58

2.4.2 Treasury Control of Public Funds ………………………..……....…………63

2.4.3 Financial Reporting in Government …………………..…………................69

2.4.4 Objectives of Financial Reporting in Government ……..…………………..70

2.4.5 Users and Uses of Governmental Financial Reports ………..……...............71

2.5 AUDIT OF GOVERNMENT FUNDS …..………………………................73

2.5.1 Definitions and Evolution of Audit ………………………..……………….73

2.5.2 Types of Audit ……………………………………………..…...………….74

2.5.3 Types of Auditors …………………………………………….....…………75

 x

2.5.4 The Need for an Audit ………………………………..………….................75

2.5.5 Qualities Generally Required of Auditors ……………..…………………...76

2.5.6 Threats to Objectivity of Independence of Auditors …………….................80

2.5.7 Appointment and Removal of Government Auditors

(Auditors-General) in Nigeria ……………………………..……..................83

2.5.8 Duties and Rights of Auditor-General ……………………….....…………..85

2.5.9 Value for Money Audit ……………………………………..………………87

2.5.10 Audit Organisation in the Public Sector ……………………..……………..88

2.5.11 The Provision of the Civil Service (Reorganisation) Decree

1988 as they affect Government Auditors …………………….....…………89

2.5.12 Hindrances to Performance of Government Auditors in Nigeria…….……..90

2.6 PARLIAMENTARY CONTROL OF PUBLIC FUNDS …………………..94

2.6.1 Origins of Parliament ………………………………………….....................94

2.6.2 Functions of Parliament ………………………………………..………...…96

2.6.3 Functions of the Parliament under the Nigeria Constitution …..…………...97

2.6.4 Governance and Legislative Performance: A Critical Analysis….................99

2.6.5 Hindrances to Legislative Performance ………………………..………….107

2.6.6 Strengthening Legislative Instrument of Control over

Public Funds ..…………………………………………...………………...109

2.6.7 Other Legislations aimed at Promoting Financial

Accountability in Nigeria……………………………………….................113

2.7 SUMMARY OF THE CHAPTER ………………..……………………….114

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CHAPTER THREE – RESEARCH METHODOLOGY

3.1 INTRODUCTION ………………..………………………..…….. ………115

3.2 SOURCES OF DATA ……………..…………………………..………….115

3.2.1 The Primary Data Source …………..……………………..……… ………116

3.2.2 The Secondary Data Source ………..………………..…………… ………116

3.3 POPULATION OF STUDY …………..………………………..…………117

3.3.1 Sampling Procedure …………………..………………..………………….117

3.3.2 Sample Size Determination ……………..………………………...............118

3.4 METHOD OF DATA ANALYSIS ……..………………..………. ……...125

3.4.1 Test of Validity …………………………..………………………………..125

3.4.2 Test of Reliability ………………………….……………………...............129

CHAPTER FOUR – DATA PRESENTATION AND ANALYSIS

4.1 INTRODUCTION ………………………………………………..............131

4.2 DATA PRESENTATION ………………………………………………...131

4.2.1 The Chi-Square Test ……………………………………………................131

4.2.2 Test of Hypothesis One …...………………………………………………132

4.2.3 Test of Hypothesis 2 ………………………………………………………138

4.2.4 Test of Hypothesis Three ……………….…………………………………144

4.2.5 Test of Hypothesis Four …………………...………………………………148

4.3 OTHER ANALYSIS ……………………………………………………...155

4.3.1 Legislative Reliance on the Executive for Funding ………....…………….155

4.3.2 Infringement on Financial Regulations/Instructions ……………………...157

 xii

4.3.3 Budgetary Infringement …………………………………………...............157

4.3.4 Performance of the formal Institutions on Financial control of

public funds ……………………………………………..………...............158

4.3.5 Financial Record keeping in Plateau State ………………………..............164

4.3.6 Requirement for the preparation of Accounts …………………..………...166

4.3.7 Audit Queries and other financial offences ……………………………….166

4.3.8 Effect of Financial and Material Support on State Auditors

Independence ……………………………………………..……………….174

4.3.9 Measures to Promote Financial Accountability …………………..............180

4.4 DISCUSSION ON HYPOTHESES ……………………………………...182

4.4.1 Discussions of Findings in the hypothesis ………………………..............183

4.5 OTHER DISCUSSIONS ……………….…………………………….. .…197

4.5.1 Discussion on Findings in other Analysis ………………………………...197

4.5.2 Performance of the Formal Institutions of financial control ……………...197

4.5.3 Legislative Funding and Performance …………………………….............198

4.5.4 Executive influence on State Audit Performance …………………………199

4.5.5 Financial Offences ………………………………………………...............204

4.5.6 The Dominance of Executive Arm of Government on Financial

Control ……………………………………………..……………..............205

4.5.7 Measures to Promote Financial Accountability ………………..…………206

 xiii

CHAPTER FIVE – SUMMARY, CONCLUSION AND

RECOMMENDATIONS

5.1 SUMMARY OF FINDINGS …………………..……………….…………208

5.2 CONCLUSION ……………..……………………………………………..209

5.3 RECOMMENDATIONS …….……………………………………………210

5.3.1 Recommendations Based on Findings in this Research …………………..210

5.3.2 Areas for Further Research ..…………………………………..…………..216

5.4 CONTRIBUTION TO KNOWLEDGE …………………………..............217

REFERENCES …………………………………………….……………...218

APPENDIXES …………………………………………………………….226
 xiv

LIST OF TABLES
Table 1: Budget Amendment Powers of National Legislatures .….......……….....106

Table 2: Questionnaire Administered and Returned …………………………….119

Table 3: Computation of Sample Variance Based on Pilot Study ….…................121

Table 4: Sample Size Distribution Based on Pilot Survey ………….…................124

Table 5: Correlation Co-efficient Between First and Second Tests ……………...128

Table 6: Level of Budget Implementation ………………………….............133

Table 7: Significance of the Legislature in Controlling Public

Finance……………………………………………………..............134

Table 8: Public Budget Implementation by the Executive

Arm of Government …………………….........................................135

Table 9: Public Budget Implementation by the Executive

Arm of Government …………………………………………….…137

Table 10: Reliance of the Auditor-General on Financial Statements

Prepared by the Executive ………………………………………...139

Table 11: Performance of State Auditors ……………………………............140

Table 12: Effect of Reliance on Financial Statements Prepared by the

Executive on Performance of State Auditors ……………………..141

Table 13: Effect of Reliance on Financial Statements Prepared by the

Executive on Performance of State Auditors …………………… .143

Table 14: Performance of the Public Accounts Committee (PAC) ….............145

Table 15: Influence of PAC on State Auditors ……………………................146

Table 16: Quality of PAC Performance and its influence

on State Auditors…………………………………………………..147

Table 17: Qualification of Treasury Staff ……………………………………150

Table 18: Financial Records Kept …………………………..……..…………151

 xv

Table 19: Treasury Operating Staff Qualification and Number

of Financial Records Kept …………………………...…..………..152

Table 20: Treasury Operating Staff Qualification and Number

of Financial Records Kept ……………………………………...…154

Table 21: Effect of Financial Support from the Executive on Legislative

Performance …………………………..…………………………...156

Table 30: Operation of Financial Control by the Executive …………………159

Table 31: Quality of State Audit Work ………………………………………161

Table 32: Effectiveness of the Checks and Balances on Public Funds.............163

Table 33: Why Proper Financial Records are not Kept ……………………...165

Table 35: Audit Queries and Amount Involved …………………….………..167

Table 36: Nature of Financial Offences that gave Rise to Audit

Queries………...………………………………………..….............169

Table 37: Disposal of Audit Queries by the Executive Arm of

Government………………………………………………………..171

Table 38: Satisfaction with the Follow-up by the Executive Arm of

Government on Issues Raised by State Audit ………....………….173

Table 39: Level of State Auditors’ Independence in the Performance of

Its Audit Work …………………………………………..………...175

Table 40: Financial and Material Support …………………………………...177

Table 41: Effect of Financial and Material Support on State Auditors’

Performance …………………………………………………….…179

Table 42: Measures to Promote Financial Accountability …………..............181

Table 43: Budget Implementation as Approved by Legislature……………...185

Table 44: Influence of Budget Implementation on Legislature Oversight

Function ………………………………………………………...…187

Table 45: Budget Size and Actual Expenditure ……………………………...191

Table 46: Statement of Statutory Allocation and Vat 1999-2003…….............201

 xvi

Table 47: Total Internal Revenue Collection ………………………………...203

Table 22: Payment without authorization ……………………..........……….245

Table 23: Payment without vouchers ……………………………….……….246

Table 24: Absence of prepayment audit ……………………………………..247

Table 25: Payment without supporting documentation …………….………..248

Table 26: Expenditure not included in approved estimate …………………..249

Table 27: Exceeding approved budget limit …………………………………250

Table 28: Under-funding of approved budget ………………….…..………..251

Table 29: Non-funding of approved estimate ………………………..............252

Table 34: List of accounts to be maintained ………………………..………..253

 xvii

LIST OF FIGURES

Figure 1

Budgetary Cycle .…………………………………..…………………...…………..41

 xviii

ABSTRACT
Financial matters are so important that they receive constitutional recognition. To

avoid abuse, the 1999 Constitution of the Federal Republic of Nigeria, provides a

series of checks and balances over public finance by sharing financial responsibilities

among the Executive, the legislature and the Office of the Auditor-General. The

research sought to evaluate the effectiveness of the checks and balances on public

finance in Plateau State. The research also set out to recommend measures that will

enhance the discharge of financial accountability. In this research, four hypotheses

were formulated and tested. The primary data was obtained through the

administration of questionnaires, interviews and actual observation. This was

supplemented with secondary data. The technique of simple random sampling was

used in the questionnaire administration. The population of the study was 386 out of

which a sample of 160 was studied. The chi-square (χ2) test statistics was used to

test the four hypotheses. Percentage analysis was used to investigate issues

considered relevant to this research but were not covered by the hypotheses. The

findings of this research indicate that the public budget is not a significant instrument

of legislative control over public finance in Plateau State; the reliance of Auditor-

General on the financial statements prepared by the Executive arm of government

does not significantly influence his performance; the quality of legislative financial

oversight has a significant effect on the State Auditor-General and qualification of

State Treasury staff is independent of the number of financial records kept by them.

The research shows that budgetary non-compliance is quite common. Infringements

on financial rules and regulations are also common. The Public Accounts
 xix

Committee of the State Legislature never met to consider the report of the Auditor-

General between 1999 and 2003. The implications of these findings are that the

legislature is unable to discharge its Constitutional responsibility using the public

budget; the weakness of the legislature adversely affects the Auditor-General and

poor financial record keeping is not solely attributed to the qualification of those who

maintain them. The study recommends a balanced redistribution of financial powers

among the Executive, the Legislature and the Auditor-General to promote the

discharge of financial accountability in Plateau State.

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CHAPTER ONE
INTRODUCTION

1.1 BACKGROUND TO THE STUDY

Nigeria, a federation of thirty-six States and Seven Hundred and seventy-four

local governments, was a colony of Britain but became an independent State in 1960.

It has a population of nearly one hundred and twenty million people and the

dominant source of income is oil (Oladosu and Oyelakin 2003:1).

Nigeria has been divided into six geo-political zones - South-South, South-West,

South- East, North- East, North -West and North- Central. Plateau State falls within

the geo-political zone of North-Central. The State was first created as Benue-Plateau

in 1967. It later became Plateau State with the creation of Benue State in 1976.

Nassarawa State was also created out of Plateau State in 1996.

The Nigerian public sector consists of the governments at the Federal, States,

Federal Capital Territory, Local Governments and all government parastatals. The

public sector plays an important role in economic development. It provides services

which the private sector may not be willing or able to provide. Chan (1988:15)

argues that

the public sector provides many essential services to society. It plays

an essentially compensatory function; that is, it performs those
functions that the market economy does not do efficiently or lacks the
incentive to do at all.

Musgrave and Musgrave (1976) classify these functions as

a) Resource Allocation - the provision of public goods and services.

b) Income Distribution - the adjustment of the distribution of wealth or income in

the society to conform to some principle of fairness.

 2

c) Stabilization - the use of fiscal policies to achieve high employment, price

stability and economic growth.

In a Federal system like Nigeria, the different tiers of government perform these

functions in varying degrees. Governments at all levels desire to deliver good

governance to all their citizens. This is because “good governance is central to

creating and sustaining an enabling environment for development” (Asselin, 1995:3).

A strong link exists between economic development and good governance, and

between good governance and fiscal transparency.

The importance of good financial management in achieving the objectives of

government has not lost its relevance. Because of this, the financial accountability of

most countries is enshrined in the Constitution to facilitate the discharge of financial

accountability. Oshisami and Dean (1984:36) remark that

in recognition of the importance of finance as a basis for political

power, and the opportunities which absolute control offers for its
abuse, power over finance is divided, the division being formally
recognized Constitutionally in virtually all countries
.
Global practice shows that power over finance is shared between the

Executive and the legislature and in some cases with an independent body - the

Supreme Audit Institution. Has this Constitutional sharing of power over finance

achieved the desired result?

In view of the enormous responsibilities placed on government for the

welfare of its citizens, the public sector needs a lot of resources. In pursuit of this,

the government needs to put up a framework for the management and control of the

public purse. The formalities established in relation to accounting and financial

control support the process of governance

 3

1.1.1 Financial Control

The term ‘control’ has long been recognised as one of the principles of

management. Control exists in most human endeavours. Most authorities agree on

what constitutes control. Lucey (1996:137) states that control is concerned ‘with the

efficient use of resources to achieve a previously determined objective, or set of

objectives, contained within a plan’. Similarly, Koontz, Donnel and Wiehrick

(1980:81) define control as the measurement and correcting of activities of

subordinates to assure that events conform to plans. Ekwonu (1996:35) states that

control ‘is the measurement of the performance of the activities of subordinates in

order to make sure that objectives and plans devised to attain them are being

accomplished’. All these definitions point to the fact that control exists to ensure

that organizational objectives are met through measurement of performance. The

control process according to (Koontz et al 1980:722) involves three steps:

a) Establishing standards

b) Measuring performance against these standards and

c) Correcting deviations from standards and plans

Finance occupies a special place in the conduct of government business. Public

finance has been defined by Buhari (1993:66) as ‘a branch of economics concerned

with the finance and economic activities of the public sector’.

From these definitions, we can state that public finance not just deal with the

ways government raises money, but also the manner such money is expended with

the aim of achieving economic growth.

 4

In Nigeria, the Federal government raises money through the following major

sources: Petroleum profit tax, Mining, Company income tax, Import duties, Export

duties, Excise duties, Interest and repayment of loans granted by the government

(Buhari, 1993:169).

Others include; Education tax, Value added tax, Pay-as-you-earn, Fees and

charges, Royalties, Rent of government property, Grants, aids and loans

The money raised through the above sources is expended on the following

items: Administration, Infrastructural services, Productive services, Defense, Interest

on internal and external loans, and Diplomatic missions (Buhari, 1993:168)

In connection with government finance, we can identify two basic groups of

control- administrative and financial control; the former referring to those techniques

which have indirect bearing upon expenditure operation while the latter denote

techniques of control relating to fiscal control. The emphasis of this study is on

financial control.

Financial control is a very important type of control in the management of

government finance. Oshisami (1992:29) defines it

as the process which ensures that financial resources are obtained at

cost considered to be economical and utilized efficiently and
effectively for the attainment of established objectives.

A comprehensive definition of financial or fiscal control is given by Ekwonu

(1996:33) as

the sum total of the work, which guides, directs and interprets the
budget cycle. It covers the activities of the Executive branch,
involving finance and the ministries… the audit department and the
legislature…

In a democratic era, financial control may operate internally and externally.

 5

Within the Executive arm of government control by the finance ministry is internal

while audit by the Auditor-General and legislative oversight constitute external

control.

1.1.2 Institutions of Financial Control in the Public Sector

There are formal and informal institutions of financial control over public

revenue and expenditure. The formal institutions of financial control include the

Executive arm of government, Legislature and Office of the Auditor-General or

Supreme Audit Institution. The informal institutions of financial control include; the

media, the organised civil society and donor agencies.

With respect to the formal institutions of financial control, the Constitution of

the Federal Republic of Nigeria, 1999, establishes a cycle of financial accountability

for public funds. The cycle provides that:

(a) Legislature authorizes expenditure

(b) The Executive controls the collection and issue of funds. In addition, it

prepares the accounts.

(c) The prepared accounts are audited by the Auditor-General and

(d) The Auditor-General submits the results of his audit to the Legislature

through its Public Accounts Committee (PAC). PAC acts on the report by

inviting accounting officers to appear before it where need be.

The wisdom in sharing these responsibilities is that absolute conferment of

this power on one arm of government can create abuses in financial administration.

In other words, financial administration requires a series of checks and balances so

 6

that public funds are not wasted or misapplied. But, is this what we find in practice?

Are these checks and balances observed?

The financial accountability cycle provides that the Executive arm of

government collects, disburses and prepares the accounts of government. The other

formal institutions of financial control are excluded from this very vital stages. Their

involvement in public sector financial control is only visible when funds have been

expended. Is this not the same as calling a medical doctor to give an autopsy report?

What guarantee do we have that this sharing of financial responsibilities promote

sound financial management in the public sector? Haven been excluded from the

critical stages of collection and disbursement of public funds, can the Legislature and

State Audit significantly influence public finance?

In the cycle of financial accountability established by the Constitution, the

budget is a legislative instrument of financial control over the Executive. Funds

should be expended according to legislative intent as expressed in the budget. Has

the Legislature been able to control public expenditure using the budget?

The Office of the Auditor-General is a creation of the Constitution. Therefore his

status and duties are constitutionally determined. His basic duty is to report on the

accounts prepared by the Executive. In his report to the Legislature he states

whether the Executive has complied with legislative approval in its execution of the

budget. For the Auditor-General to be able to play this important role he has to rely

on the financial data supplied by the Executive. He also needs a strong Legislature

to help implement his findings. In practice, does the Auditor-General derive the

required support from the Executive and Legislature to perform his Constitutional
 7

duty? Has he been able to discharge the functions of his office as stipulated by the

Constitution?

Informal institutions of financial control may promote financial

accountability over public finance and these include; the mass media, the organised

civil society, the World Bank and other international donors.

A vibrant media may promote financial accountability by reporting the

findings of the Auditor-General. By exposing wrong doings the media may

influence the behaviour of public officials who may not want to be publicly exposed.

The organised civil society too, may play a significant role in promoting financial

accountability in the public sector. This can be achieved by an active inter-reaction

between them and the legislature. Krafchick and Wehner (2002:1) argue that

inter-reaction between legislatures and civil society organisations is

increasing in many countries… From the legislature’s perspective,
the input of civil society can help to make the legislature’s
engagement with the budget more effective.

The donor community today is an important institution that promotes

financial accountability in recipient countries. They encourage borrowers to

strengthen domestic institutions of financial control. Sahgal (2001:1) states that

“most donors are now looking for ways to improve their performance in terms of

promoting good governance and accountability.”

While these informal institutions may also promote financial accountability,

however, it is the formal institutions that are the focus of this research.

Researches targeted at strengthening the institutions of financial control over

public funds have ignored the influence of the link between the institutions of

control, especially the influence of the Legislature on State Audit performance. For
 8

example the researches of Ball et al (1999); Bartel (1996); Asselin (1995);

Premchand (1989); Hogy (2004); Dye and Stapenhurst (1998); Martinez-Soliman

(2003); Krafchik (2002); Sahgal (2001) and Ahsan (1994) emphasize strengthening

the institutions of financial control over public funds in isolation, without

establishing the interaction between them.

These researches address the problem of public sector financial

accountability arrangements on institutional basis only. They fail to identify the

shortcomings of the present cycle of financial accountability over public funds in

Nigeria. This research intends to address these shortcomings in the context of

Plateau State of Nigeria.

1.2 STATEMENT OF THE PROBLEM

Control of public finance is very important to public governance. That is

why power over public finance is enshrined in the Nigerian Constitution. To

promote financial accountability in Plateau State, power over finance is shared

between the Executive, Legislature and the Supreme Audit Institution or the Office

of the Auditor General. Have these institutions been able to play the roles assigned

to them?

It is observed that there is the problem of non or partial implementation of the

budget by the Executive arm of government in Plateau State. The budget is the

legislative instrument of control over public finance.

Related to the issue just raised above, is the problem of spending without

legislative authority. The checks and balances on public finance requires that the
 9

Executive cannot spend without legislative approval. Even where voted funds fall

short of requirements, the spending agency must apply for supplementary

appropriations provisions and obtain legislative approval for such additional

expenditure before incurring them. It has been alleged that this requirement of the

law is not usually followed.

The Executive arm of government which implements budgets is required to

ensure that expenditures are properly covered in the relevant Appropriation Acts.

Funds are supposed to be apportioned to spending departments in line with the

approved budget. It has been noted that public expenditure are frequently made on

items not budgeted for, which of course means that such expenditure have no

legislative approval. Once the budget has been approved, it is alleged that funds are

shifted to purposes other than those for which they were meant.

Limits of expenditure are imposed by the budget. However, spending

agencies do not observe these limits when incurring expenditure. In the course of

budget implementation, a vote book is maintained to ensure that approved budgetary

limits are not exceeded. This aspect of expenditure control is often abused. We may

ask, why should spending agencies not respect limits when incurring expenditure?

With all these abuses, what has happened to the legislative oversight function?

The performance of the Auditor General in Plateau State has been called to

question. It is alleged that the Auditor General is incapable of discharging the

functions of his office which is constitutionally prescribed. If this is true, why?

The Plateau State Legislature is seen to be weak and unable to discharge its

constitutional responsibility of exercising its power of financial oversight on the

 10

Executive arm of government. This problem is alleged to have adverse effects on the

performance of the State Auditor General.

Public financial control in Plateau State also suffers from poor financial

record keeping. Where financial records are poorly maintained, can the reliance of

the Auditor General on these records adversely affect his performance? In addition,

if it is true that financial records are poorly maintained in Plateau State, is this a

function of the qualification of those who keep these records? How do these

problems listed above impact on financial accountability in Plateau State?

1.2.1 Research Questions

The questions of this research are as follows:

a) Is the Budget a significant instrument of Legislative control over public

finance in Plateau State?

b) Are the rules and regulations governing the use of public funds being

observed in Plateau State?

c) Does the quality of legislative financial oversight enhance the performance of

State Auditors?

d) Does the reliance of the Auditor-General on financial statements prepared by

the Executive enhance his performance?

e) Is there any relationship between educational/professional qualification and

the number of financial records kept in Plateau State?

f) Do the formal institutions of financial control play their roles as spelt out by

the Constitution?
 11

1.3 OBJECTIVES OF THE STUDY

This research sets out to evaluate the role of the formal institutions of

financial control over public finance in Plateau State. Specifically the research has

the following objectives:

a) To evaluate the significance of the public budget as an instrument of

legislative control over public finance in Plateau State.

b) To determine whether the reliance of the Auditor-General on the financial

data supplied by the Executive enhances his audit work.

c) To examine the quality of legislative oversight function on State Audit

performance.

d) To investigate the significance of the qualification of Treasury staff on the

number of financial records kept.

e) To recommend measures on how to improve financial accountability in

Plateau State.

1.4 HYPOTHESES OF STUDY

Hypothesis One

Ho The public budget is not a significant instrument of Legislative control over

public finance in Plateau State.

H1 The public budget is a significant instrument of Legislative control over

public finance in Plateau State.

 12

RATIONALE/JUSTIFICATION

The budget is an expression of legislative approval on how public funds

should be disbursed. Budget implementation is used to judge the Executive’s

conformance to this legislative approval.

This hypothesis is formulated to find out whether or not the Executive

complies significantly with Legislative approval during budget implementation.

Hypothesis Two

Ho The performance of the Auditor-General is not significantly dependent on the

financial statements prepared by the Executive arm of government.

H1 The performance of the Auditor-General is significantly dependent on the

financial statements prepared by the Executive arm of government.

RATIONALE/JUSTIFICATION

The Auditor-General is an agent of the Legislature. The Auditor-General has

the duty of overseeing the management of public funds and the quality and

credibility of governments’ reported financial data. The Auditor-General ensures

that the budget is implemented according to legislative approval. This hypothesis

will reveal whether or not the Auditor-General is able to exercise his duties inspite of

his reliance on the financial statements prepared by the Executive.

Hypothesis Three

Ho State Audit performance is not significantly dependent on the quality of

legislative financial oversight.

 13

H1 State Audit performance is significantly dependent on the quality of

legislative financial oversight.

RATIONALE/JUSTIFICATION

This hypothesis seeks to establish whether the quality of legislative oversight

(through its public accounts committee) has any influence on State Audit work.

Does the quality of legislative financial oversight influence the work of State

Auditors?

Hypothesis Four

Ho : There is no significant difference between the qualification of treasury

operating staff and the number of financial records kept.

H1 : There is significant difference between the qualification of treasury staff and

the number of financial records kept.

RATIONALE/JUSTIFICATION

Where there is a culture of poor financial record keeping, no meaningful

control can be exercised. Good financial record keeping is a necessary condition for

the production of auditable financial statement. The aim of this hypothesis is to

evaluate whether qualification has a significant effect on financial record keeping in

Plateau State.
 14

1.5 SIGNIFICANCE OF THE RESEARCH

A research on the public sector, especially on financial control is very

important. This research is significant in a number of ways.

The research will assist financial policy makers in Plateau State and indeed

other States in Nigeria formulate policies that will promote financial accountability.

The academic community will benefit tremendously from this research. Other

researchers may use this research to investigate further issues on public finance

control.

The three formal institutions of financial control in Plateau State, that is, the

Executive, the Legislature and the Auditor General will discharge their financial

responsibilities effectively if the recommendations of this research are implemented.

1.6 RESEARCH SCOPE

This research evaluates the role of the formal institutions of financial control

over public finance under a democratic setting. This is because the institutions of

financial control are fully operational only during democratic dispensations. The

Legislature does not exist during military rule.

The role of the informal institutions of financial control such as the media,

the organised civil society and international donor agencies though important are not

the immediate focus of this research.

Plateau State which is chosen as the case study is an old State - first created

as Benue-Plateau State in 1967. The State has witnessed flashes of democratic rule

from 1979 to date.

 15

The research period covers years under democratic regimes. These are 1979-

1983; 1991-1992; and 1999-2003. The research period covers ten years of

democratic rule. The broken periods are periods of military rule.

The research covers only ministries. Parastatals are excluded because the

1999 Constitution S. 85 (3) does not authorize the Auditor-General to audit or

appoint external auditors for government parastatals. Local governments are also

excluded since they are guided by a different financial rule called the financial

memoranda.

1.7 RESEARCH LIMITATIONS

A number of limitations were encountered in this research. The major ones

included:

a) Literature Review - Getting materials for literature review was difficult - An

extensive search for literature took over one year. The cost incurred in obtaining

the relevant materials was also enormous.

b) Questionnaire Administration - During the main research, we had to deal with

an enlarged number of participants in the research. Since the questions were

randomly administered, many of the participants were seeing the questions for

the first time. Many of them felt that participating in this research would amount

to “leaking of government secret”. They were visibly uncomfortable - that was

even in spite of assurances given by research assistants that the information

required was strictly for research purposes. Some of them asked for time to

make up their minds as to whether to complete the questionnaires. For this

 16

category of respondents, research assistants had to plead and make repeated visits

before the questionnaires were completed and returned.

c) Secondary Data Collection - Getting information on public sector activity is

difficult. But it is even more difficult getting information on financial activities.

Information that is supposed to be publicly available is treated as confidential.

Enquiries for financial information are viewed with suspicion. A very high

official must authorize the release of such financial information. But getting

such an official to authorize the release of the information is pretty difficult. The

research assistants were suspected to be agents of opposing political parties.

They were thus to be kept at arms’ length. It took a long time to convince the

custodians of the required information to release the information.

d) State of Emergency - The state of emergency declared in Plateau State on the

18th of May 2004 adversely affected this research. The Plateau State House of

Assembly, it will be recalled was also suspended during the period. Reaching

out to the suspended members to participate in the research was difficult. Even

where contacts were established eventually, completing the questionnaire was

not seen to be of any immediate importance. Some of the lawmakers told me

that their immediate concern was whether they would be reinstated. They

eventually participated. Democratic structures were restored at the end of the

state of emergency in November 2004. To God be the glory.

 17

CHAPTER TWO
LITERATURE REVIEW

2.1 INTRODUCTION

The government plays a leading role in the development of any nation.

Given the explicit importance of government in shaping an economy, it is necessary

to provide a suitable framework for the achievement of this noble role. The role can

be accomplished through the apparatus of governance and public administration.

The field of public administration refers to

the manner in which central or Federal, provincial or state, and local

institutions with their procedural, legal, regulatory, financial, human
resources and asset aspects are organised, institutionalized and
managed with respect to regulatory, revenue extraction, spending and
procurement functions, and the provision of such services as defence,
social services, and economic infrastructure (Mhome, 2003:1)

One key component of public administration is financial management.

McKinney and Howard (1979:311) argue that

financial management is as old as government. It is a critical

management function that fuels the engine of the public
administration, and it is the only function that touches every
employee in an organization.

They state further that financial administration can be considered in three areas;

(a) determining fiscal policies - this is a process where political leaders or

community leaders identify programmes of priority and try to get funded

through appropriations.

(b) providing accountability by ensuring that public funds are spent for the

purposes intended and

(c) instituting the required organizational structures and controls to effectively

 18

carry out the fiscal duties and responsibilities.

A sound financial management system which will assist in the

accomplishment of government objectives will entail that

(a) there should be economy in the collection of government revenue.

(b) money appropriated should be spent according to the demands of competing

claimants which should satisfy public interest.

(c) project should be executed efficiently and economically and

(d) safeguards should be instituted to ensure that public resources are lawfully

used to accomplish public ends (McKinney and Howard, 1979).

To be able to play a leading role in promoting economic growth and

sustainable human development, the government should be accountable to the people

and that such accountability should be complemented by appropriate institutional

mechanisms and procedures of checks and balances both within government and

societal interests.

2.2 GOVERNANCE AND FISCAL TRANSPARENCY AND

ACCOUNTABILITY
Governance according to the United Nations Development Programme

(UNDP) in Dye and Staphenhurst (1997:12) is the

exercise of economic, political and administrative authority to

manage a country’s affairs at all levels. It comprises the
mechanisms, processes and institutions through which citizens and
groups articulate their interests, exercise their legal rights, meet their
obligations and mediate their differences… Governance encompasses
the State, but transcends the state by including the private sector and
civil society organizations

According to the World Bank, its concern for good governance is by its
 19

mandate to promote sustainable economic and social development. The Bank argues

that

good governance is central to creating and sustaining an enabling

environment for development. Where the Bank provides substantial
resources to governments, it encourages them to create the legal and
institutional framework for transparency and competence in the
conduct of public affairs and the management of economic
development, (World Bank, 1992:47).

It is believed that there is a link between good governance and fiscal

transparency. Sutcliffe (2002:15) suggests that

the relationship between good governance, fiscal transparency and

better economic outcomes is increasingly acknowledged. Holding
governments and their agencies accountable is a key element to good
governance in the public sector, and fiscal transparency is one
(though by no means the only) necessary condition for the discharge
of accountability.

He maintains that the Public Sector Committee (PSC) of the International

Federation of Accountants (IFAC) believes that the key components of any

governance system are:

(a) the preparation of financial reports in accordance with well understood and

generally accepted accounting standards developed in the interests of the

users of financial statements of public sector entities; and

(b) an audit that provides assurance that those standards have been complied

with.

Idasa (1998:1) supports the proposition that good governance and fiscal

transparency are related when it states that

it has become increasingly evident that fiscal transparency is of

considerable importance, meaningful participation by citizens and
macro economic stability. Public sector transparency enhances
accountability…
 20

The discharge of fiscal transparency can be accomplished when certain

conditions are met. Various reasons have also been identified as hindrances to the

effective discharge of fiscal transparency.

Having identified fiscal transparency as a tall pillar in the achievement of good

governance, Asselin 91995:3) writes that

financial accountability demands a properly functioning government

accounting system for effective budgetary control and cash
management; an external audit system which reinforces expenditure
control by exposure and sanctions against misspending and
corruption, and mechanisms to review and act on the results of audits
and to ensure that follow-up action is taken to remedy problems
identified.

He argues further that

without a well-functioning system of financial accountability,

governmental efficiency is poor, the probability of corruption
increases greatly and the prospects of economic growth and
development is impaired
.
Good governance is accountable, participatory and transparent. Dye and

Staphenhurst (1997) identify corruption to be one of the principal causes of “bad

governance” while accountability is one of the core foundations for good

governance.

The Public Sector Committee (PSC) holds the view that

a major impediment to the achievement of enhanced accountability

and financial transparency of governments and their agencies in
many jurisdictions is the absence of generally accepted financial
reporting standards for these entities, (Sutcliffe 2002:15).

Other factors still hinder the effective discharge of fiscal transparency.

 21

According to Idasa (1998:1)

many countries are plagued by poor transparency and weak

accountability as can be seen by their closed-door budget processes,
unforeseen expenditures, weak accounting and reporting systems and
ineffective audits. Many countries also exclude the Parliament
and/or civil society from dialogue on budget issues.

Oshisami (1992:205) provides support for the argument that certain conditions have

to be met for the discharge of fiscal transparency when he states that

financial accountability demands three prerequisite conditions to

operate smoothly; good financial reporting, sound management
system and effective organisational arrangements.

From available literature, we can state that the principal factors which

influence the discharge of fiscal transparency include:

(a) a proper functioning accounting system

(b) an effective budgetary and sound cash management system

(c) the existence of an effective audit

(d) absence of corrupt practices

(e) presence of generally accepted reporting standards and

(f) an open budgetary system

Observance of these principles will improve the quality of governance -

hence the effective discharge of fiscal transparency.

Fiscal transparency is one of the major means by which accountability can be

discharged. Accountability, according to McKinney and Howard (1979:30) is

any situation in which individuals who exercise power are expected to

be constrained and in fact are reasonably constrained by external
means.
 22

A similar definition is also given by Dye and Staphenhurst (1997:12) who

state that “accountability is a process that subjects a form of control over

departments and agencies, causing them to give a general accounting for their

actions.”

Etzioni (1975:279) argues that there are three meanings associated with the term

accountability:

(a) greater responsibility to elected members

(b) greater responsiveness to community groups

(c) greater commitment to “values and higher standards of morality”

We could therefore argue that accountability is a process whereby people

entrusted with resources are required to give account of their stewardship to the

relevant stakeholders and this may or may not be required by legislation.

Administrators, McKinney and Howard (1979) argue, have several accountabilities

to discharge, which include

(a) fiscal accountability - responsibility for public funds;

(b) legal accountability - responsibility for obeying laws;

(c) programme accountability - responsibility for carrying out a problem;

(d) process accountability - responsibility to carry out procedures and

(e) outcome accountability - responsibility for results.

Of these, fiscal accountability is very vital because most policy decisions have

financial implications.

Public sector bodies operate in an environment of ‘multiple accountability’ - to users,

 23

employees, customers, general public as well as Parliament.

The basic tenets of accountability include

(a) Openness - public bodies should have a commitment to openness in all of the

activities of the body, subject only to the need to preserve confidentiality in

specific circumstances where it is proper to do so.

(b) Reporting to stakeholders - public bodies should have clear channels of

communication with their stakeholders on the body’s roles, objectives and

performance.

(c) External review - public bodies should be subjected to both internal and

external audits which ensure that funds are properly safeguarded and

accounted for and are used economically, efficiently and effectively, in

accordance with the statutory or other authorities that govern their use.

(d) Safeguards of conduct - public bodies should comply with the highest

standards of corporate governance. Public bodies should have effective

arrangements to ensure compliance with all applicable statutes and

regulations.

(e) Redress - public bodies should have appropriate mechanisms to receive and

to respond to complaints from customers and users which should be

publicised widely to all stakeholders.

The motivators or incentives which will strengthen the culture of responsible

governance include a functional legislative mechanism and transparency in the

budget process (Sahgal 2001).

The process of financial control in the public sector begins in the Executive arm of
 24

government. The Executive arm of government plays a dominant role in financial

control. We now turn our attention to this arm.

2.3 FINANCIAL CONTROL FRAMEWORK IN THE EXECUTIVE ARM

OF GOVERNMENT OVER PUBLIC FUNDS

The British colonial administration installed a financial control framework

that is still being practiced today in the Nigerian public sector. The legal framework

for the control of public funds is still based on the laws that were bequeathed to

Nigeria by the colonial masters at independence. Most of these laws have been

scantily amended. In addition, the literature on the legal framework of financial

control review the provisions of these legal documents without addressing the

adequacy of these laws in terms of their ability to cope with the ever increasing

complexities in the Nigerian environment. The two most important legal documents

that predate independence and which are still used today are the Finance (Control

and Management) Act No. 33, 1958 and the Audit Act No. 38, 1956 (Anyafo,

2002:1). Other legal documents that influence financial practice include the

Constitution of the Federal Republic of Nigeria; the Appropriation Acts; Financial

Regulations and Finance and Treasury Circulars (Daniel 2002:20).

Although these financial laws were meant for the central government, they

were reproduced by the four regional governments. With States creation in 1967 the

governors of the States were empowered to replicate the regional laws in their States

with modifications where necessary.

The laws regulating financial administration in Northern Nigeria, one of the

four regions, to which Plateau State belonged include:

 25

(i) Public Finances (Control and Management) law No.7 1958 reproduced as

chapter 108 of the laws of Northern Nigeria 1963 which is a law to provide

for the control and management of the public finance of Northern Nigeria

with effect from 1st August 1958;

(ii) Northern Nigeria Audit law No.26, 1958 reproduced as chapter 11 of the

laws of Northern Nigeria 1963, the laws provides for the salary and functions

of the Auditor-General and for the audit of public accounts and came into

force on 15th March, 1959;

(iii) Northern States Financial Instructions (Revised to 1st April 1968) which

apply to the Control and use of public monies are issued in accordance with

section 3(2) of the Public Finances (Control and Management) Law (cap

108);

(iv) Northern Nigeria Native Authority Law No. 23, 1954, this law which gives

the foundation of public accounting and auditing at the local government

level empowers the governor to issue written instructions (to be called

Financial Memoranda) for the conduct of local government business,

(Anyafo, 2002:27-29).

Financial rules and regulations in force at the States are very similar to the

ones at the Federal level. The financial control framework at the States have been

modeled after the Federal financial control framework.

The principal legal documents that govern financial practice in the public sector in

Nigeria include:
 26

(1) Constitution of the Federal Republic of Nigeria, 1999

This legal document regulates the financial administration of government

funds. The supremacy of the Constitution on financial matters has been pointed by

Oshisami (1992:2) when he states that

this is the primary and supreme legal instrument which sets the
general framework for the total financial management as well as
accounting and financial reporting in government.

He further reports that the decision to include financial matters in the

Nigerian Constitution was first taken at the Constitutional Conference held in May

and June 1957. That conference decided that certain basic financial principles be

included in the Constitution rather than left to the discretion of the Parliament. As a

result, the principle of the operation of the Consolidated Revenue Fund, the

authorisation of expenditure (legislative approval); the treatment of the public debt

and the audit of the accounts of the federation were included by the Constitutional

Amendment Order 1957. These same principles have been included in all

subsequent Constitutions with slight changes.

The 1999 Constitution confers powers and control over public funds by the

provisions of sections 80(1)(2)(3) and (4); 81(1)(2); 82; 83(1)(2) and 84 which apply

to the Federal Government. The replica of these rules which apply to the States are

stated below:

(a) Payment and Withdrawal of Money from the Consolidated Revenue Fund

Section 120(1) of the 1999 Constitution provides that all revenues or other moneys

raised or received by a state (not being revenues or other moneys payable under this
 27

Constitution or any law of a House of Assembly into any other public fund of the

state established for a specific purpose) shall be paid into and form one Consolidated

Revenue Fund of the State.

Subsection (2) of section 120 of the 1999 Constitution provides that no

moneys shall be withdrawn from the Consolidated Revenue Fund of the State except

to meet expenditure that is charged upon the Fund by the Constitution or where the

issue of those moneys has been authorised by an Appropriation Law, Supplementary

Appropriation Law or Law passed in pursuance of section 121 of the Constitution.

(b) Preparation of Budget and its presentation to Parliament

Under section 121(1) of the 1999 Constitution the governor shall cause to be

prepared and laid before the House of Assembly at any time before the

commencement of each financial year estimates of the revenues and expenditures of

the State for the next following financial year.

Subsection (2) provides that the heads of expenditure contained in the

estimates, other than expenditure charged upon the Consolidated Revenue Fund of

the State by the Constitution, shall be included in a bill, to be known as an

Appropriation Bill, providing for the issue from the Consolidated Revenue Fund of

the State of the sums necessary to meet that expenditure and the appropriation of

those sums for the purposes specified therein.

Subsection (4) provides that if in respect, of any financial year, it is found that

(a) the amount appropriated by the Appropriation Law for any purpose is

insufficient; or

(b) a need has arisen for expenditure for a purpose for which no amount has been
 28

appropriated by law, a supplementary estimate showing the sums required shall

be laid before the House of Assembly and the heads of any such expenditure

shall be included in a supplementary Appropriation Bill.

(c) Withdrawal of Money from the Consolidated Revenue Fund in Default of

Appropriation. Section 122 of the 1999 Constitution provides that if the

Appropriation Bill in respect of any financial year has not been passed into law

by the beginning of the financial year, the Governor may authorise the

withdrawal of moneys from the Consolidated Revenue Fund of the State for the

purpose of meeting expenditure necessary to carry on the services of the

government for a period not exceeding six months or until the coming into

operation of the law whichever is the earlier:

Provided that the withdrawal in respect of any such period shall not exceed the

amount authorised to be withdrawn from the Consolidated Revenue Fund of the

State under the provisions of the appropriation law passed by the House of

Assembly for the corresponding period in the immediately preceding financial

year, being an amount proportionate to the total amount so authorised for the

immediately preceding financial year. This section of the 1999 Constitution

limits the power granted to Parliament under section 120 of the same

Constitution as discussed above.

(d) Establishment of a Contingencies Fund

Section 123(1) provides that a House of Assembly may by law make

provisions for the establishment of a Contingencies Fund for the State and for

authorising the Governor, if satisfied that there has arisen an urgent and
 29

unforeseen need for expenditure for which no other provision exists, to make

advances from the Fund to meet that need.

Furthermore, Subsection (2) of section 123 provides that where any advance

is made in accordance with the provisions of S.123(1) of the Constitution, a

Supplementary Estimate shall be presented and a Supplementary

Appropriation Bill shall be introduced as soon as possible for the purpose of

replacing the amount so advanced.

(e) Payment of Salaries and Allowances Directly from the Consolidated Revenue

Fund

The 1999 Constitution by the provision of section 124 authorises the payment

of the salaries and allowances of Governor, Deputy Governor, Auditor-

General for the State and the chairman and members of the following bodies,

the State Civil Service Commission, the State Independent Electoral

Commission and the State Judicial Service Commission directly upon the

Consolidated Revenue Fund of the State.

The Constitution does not spell out the duties and responsibilities of officers

in the Executive arm of government over financial matters. Other legal

documents do. We examine below the provisions of some of these legal

financial documents:

(2) Finance (Control and Management) Act No. 33 1958 (As Amended) -

According to Anyafo (2002) this law which became operative on July 31,

1958 provides for the control and management of public funds. This Act

regulates the accounting format for the preparation of government accounts.

 30

The Act spells out how government funds and assets should be managed. It

also prescribes that the cash basis of accounting shall be used for the

preparation of government accounts. In other words, it regulates the

accounting system as well as the books of accounts to be maintained.

(3) The Audit Act 1956 - This Act which began as an ordinance has been

amended at various times. Apart from empowering the Auditor-General to

audit the accounts of the federation, the Act also requires the Accountant-

General to sign and present, within a period of seven months after the close

of each financial year, to the Auditor-General for the federation the accounts

showing the financial position of the federation of Nigeria on the last day of

such financial year. This law is applicable to the States.

(4) Appropriation Acts - The annual appropriation Acts regulate financial

matters to the extent that an expenditure made which is not contained in the

Act becomes an impeachable offence. They guide the withdrawal of money

from the Consolidated Revenue Fund.

(5) Financial Regulation/Instruction - The Constitution and other legal

documents that govern the practice of financial administration listed above do

not give details as to how the specific rules are to be applied. A code is

therefore needed for the sake of uniformity. The regulation is the accounting

manual dealing with financial matters at the Federal level is known as

financial regulation while that of the state is called financial instructions. As

mentioned earlier, the provisions of both manuals are very similar. However,

both manuals derive their powers from the Finance (Control and
 31

Management) Act 1958. It is instructive to note that the Financial

Instructions which apply to the Northern region was last revised by 1st April

1968. The Financial regulations on the other hand have been revised to 1st

January, 2000 coming after the revision in 1976.

(6) Treasury and Finance Circulars - Where the need arises, treasury and

finance circulars may be issued to amend an existing provision in the

Financial Regulation/Instruction or to introduce a new policy.

2.3.1 Powers and Responsibilities of Government Financial and Accounting

Officers

Chapter 1 - part II of the Financial Regulations (2000) and chapter 2 of the

Financial instructions (1968) spell out the powers and responsibilities of government

officers having monetary responsibilities. The powers and duties are as stated

below:

(a) Ensure that the proper system of accounts as prescribed by or under the

authority of the Ministry of Finance is established and maintained.

(b) See that all books are correctly posted and kept up to date.

(c) Exercise supervision over the receipt of public revenue, ensure its punctual

collection, and report any apparent defect or difficulty in the procedure for

the collection of revenue which comes to his notice.

(d) Promptly bring to account, under the proper Heads and subheads of the

Estimates or other approved classification all money, whether revenue or

other receipts, accounted for to him.

 32

(e) Promptly bring to account as a receipt any unexplained surplus of cash or

stamps by placing it on deposit.

(f) Take care that no payment is made which is not covered by proper authority

and report any waste or extravagance which comes to his notice.

(g) Promptly charge in his accounts under the proper Heads and Sub-Heads of

the Estimates or other approved classifications all disbursements of the

Government.

(h) Ensure that proper provision is made for the safe keeping of public money,

securities, stamps, counter foil receipts, licenses, etc.

(i) Ensure that the authorized maximum cash balance that may be held at any

time is not exceeded without the approval of the Accountant-General.

(j) Regularly, and not less frequently than weekly, check all cash and stamps in

his charge and verify the amounts with the balances shown in the Cash Book

or Stamp Register.

(k) Exercise strict supervision over all officers under his authority entrusted with

financial and accounting duties and bring to notice any incompetence or

repeated carelessness on their part, take precautions by surprise inspections

and the maintenance of efficient checks, against the occurrence of fraud,

embezzlement or carelessness.

(l) Produce when required by the Accountant-General or his staff or by the

Auditor-General or his staff, all cash, stamps securities and account books,

records or vouchers in his charge.

(m) Promptly reply to any queries or other observations addressed to him by the
 33

Accountant-General or Auditor-General, giving fully the particulars or

information required.

(n) Promptly prepare such financial returns and statements as are required by any

Act or Law or Directions or subsidiary legislation thereunder or the Financial

Regulations/Instructions.

(o) Study the convenience of the public and make arrangements, compatible with

carrying out of these Financial Instructions, to facilitate the transaction of

business with the public.

(p) Bring to notice any apparent deficiency in accounting instructions or any

means by which it appears that the financial and accounting procedures might

be improved.

2.3.2 Duties and Powers of Permanent Secretaries as Accounting Officers

Federal Financial Regulation 104 states that the term Accounting Officer

means the Officer of a Ministry or Department who upon receiving an appointment

or acting appointment as a Permanent Secretary or Head of an Extra-Ministerial

Department is consequently designated and appointed Accounting Officer for his

Ministry or Extra-Ministerial Department. Any reference to an Accounting Officer

in the Financial Regulations means the Permanent Secretary of a Ministry or the

Head of Extra-Ministerial Department. The Accounting Officer is responsible for

stewardship, that is, safeguarding of public funds and the regularity and propriety of

the expenditure under his control.

The functions of the Accounting Officer include:

 34

(a) To ensure that proper budgetary and accounting systems are established in his

Ministry/Extra-Ministerial Department to enhance internal control,

accountability and transparency;

(b) To ensure that the essential management control tools are put in place to

minimize waste and fraud;

(c) To ensure that all Government revenues are collected and paid into the

Consolidated Revenue Fund promptly;

(d) To render monthly and other periodical accounting returns and transcripts to

the Accountant-General or the Federation as required by the Financial

Regulations;

(e) To ensure the safety and proper maintenance of all Government assets under

his care;

(f) To ensure that all audit queries pertaining to his Ministry/Extra-Ministerial

Department or Agency are answered including appearance before the public

Accounts Committee;

(g) To ensure accurate collection and accounting for all public moneys received

and expended;

(h) To ensure prudence in the expenditure of public funds.

The Accounting Officer is held personally and peculiarly responsible for all

wrong doings in his Ministry/Extra-Ministerial Department. Delegation of his duties

or functions shall not absolve him from these responsibilities and liabilities.

From the powers and responsibilities listed above, it may be acknowledged that these

responsibilities are indeed enormous. These powers are designed to guarantee an

 35

efficient management of public funds if they are exercised as prescribed. This is

because these rules are designed to enhance transparency and public accountability.

This position has been made clear by the preface to the financial regulations (2000)

when it states that

henceforth rules and regulations designed to promote honesty and

transparency in dealings with government would be restored,
strengthened and vigorously enforced… it is mandatory for all public
officials to ensure strict compliance with the rules and regulations.

Statements like the above reflect the thinking of many that compliance with

the rules and regulations will ensure the achievement of objectives. This may not be

necessary so. What assurance do we have that public money has been spent

according to legislative intent? The major instruments of control are the budget and

Accounting. The financial responsibilities of government officers highlighted above

can be discharged through the instruments of budget and Accounting. We now turn

our attention to these two.

2.3.3 Governmental Budgeting

Budgeting in Nigeria is a Constitutional requirement as it is in most countries

- developed and developing. In the case of Nigeria, the 1999 Constitution by the

provision of sections 81(1) and 121(1) authorizes the President and the Governors to

prepare and lay before Parliament at any time in each financial year estimates of the

revenues and expenditures of the government for the next following financial year.

Budgeting in the public sector has not lost any steam from practitioners and

researchers because, according to Premchand (1990:30),

 36

it is generally recognized that the government is the largest

organization, employer, and spender in industrial and developing
countries. The magnitude of its receipts and expenditures has no
parallel in the private sector.

The importance of government in shaping the economy has also been pointed by

Hogye (2004:5) who suggests that

a significant development in the intellectual history of the 20th

century has been the explicit recognition by economists, politicians
and the public at large of the importance of government in the
operation of the economy. The public budget generally reflects the
policy of the government toward the economy.

The budget occupies a central place in public sector financial management.

The budget plays a significant role in planning and controlling governmental

operations than they do in the private sector, (McKenzie 1998).

Stedry (1979:125) supports this view when he states that

almost every governmental decision has budgetary implications since

the process of decision-making almost invariably involves the
allocation of scarce resources among alternative uses.

In view of the significance of the budget in public financial management,

what then is a budget?

Available literature suggest that a budget is a series of goals with price tags

attached (Wildavsky 1964). Other definitions are: “a valuation of receipts and

expenditures or a public balance sheet, and as a legislative act establishing and

authorizing certain kinds and amounts of expenditure and taxation” (Schiesl,

1977:89); “a financial plan describing proposed expenditures and the means of

financing them” (McKenzie 1988:11.1) and “a map or blueprint for what political

scientists refer to as the authoritative allocation of resources” (Pollack, 1999:332).

 37

Other definitions of budget include “a process by which costs are assigned to specific

tasks that are planned within a definite time period, (Akinola and Asein, 1998:37)

and “a plan or target in quantities/and or money value prepared for a future period of

time. It usually shows planned or target income and planned or target expenditure”

(Pogue 1989:33).

These definitions suggest that a budget deals with anticipated revenue and

expenditure ahead of the period to which they relate.

Public sector budgeting grow out of the need for sharing political power

between the Executive and the Legislature (McKinney and Howard, 1979,

Premchand, 1989 and Wapmuk 1999). In a democratic setting, the budget serves as

a bridge between the legislative and the Executive branches (Lawton 1979).

Similarly, Staats (1989:133) argues that

the budget is the single most important expression of the policies,

program, and plans to execute programs by a governmental entity. It
is both a means of control by the Parliament and the Executive as
well as their accountability to the taxpayer.

2.3.4 Purposes of Budget

The public budget has a variety of purposes:

(a) a tool of accountability - the budget is an instrument through which

accountability is discharged. There should be budgetary provision for all

government spending and such spending should be within the limits imposed

by the budget.

(b) a tool of management - the budget serves as an operational document

specifying directly or implicitly the cost, time and nature of the expected
 38

results.

(c) an instrument of economic policy. Premchand (1989:36 - 37) argues that the

public budget serves a variety of economic policy. First, it indicates the

direction of the economy and expresses intentions regarding the utilization of

the available resources. Second the public budget promotes macroeconomic

balance in the economy. Third, the budget is a vehicle for reducing

inequalities by the distribution of resources in an egalitarian fashion, and

fourth, the public budget enables a determination of government’s share in

national income and the extent to which growth and associated objectives of

government are fulfilled by the budget.

2.3.4.1 Budgetary Process

Budgeting is a dynamic ongoing process. It is a cycle. It has four phases:

planning and preparation, legislative review, execution and audit (McKinney and

Howard, 1979: Teriba and Oji 1973 and McCaffery 1999). The budgetary cycle is

depicted in figure 1.

The Budgetary cycle shows that the budget is a continuous process.

Parliament for instance may be considering the audit report on a previous budget

while at the same time debating a future budget and as well monitoring the

implementation of a current budget.

Budget preparation in Nigeria is still a closed process. The involvement of

civil society and the mass media is negligible, which negates the concept of

budgetary fiscal transparency.

 39

Figure 1 Budgetary Cycle

Planning &
Preparation

Audit Legislative
Review

Implementation
Execution
 40

Although a budget is intended to look at the future, it cannot meaningfully do

this without appraising the past.

The budgetary process is briefly discussed below:

(i) Planning and Preparation - This is an Executive-dominated process in most

countries. Budget preparation at the state level starts with the issuance of the budget

call circular from the state’s budget and planning division to all ministries and state

government departments. The budget call circular provides the format for budget

presentation. Completed budget call circulars - are collated by the budget and

planning division (ministry) and presented to the state-Executive council for

approval. The budget is then presented to the Legislature.

(ii) Legislative Review - the Constitutions of most countries confer on their

Legislatures the power of budget oversight. The power of the Legislature over

budgetary matters varies considerably from country to country and on the type of

political system practiced. Premchand (1999:85 - 86) states that a global look at the

power of the Parliament over budgetary matters reveal five (5) types of institutional

arrangements. The first group comprises the United States, Italy and to a certain

extent, the Russian Federation after 1991. The institutional arrangements in these

countries reveal the dominant influence of the Parliament, which has power to reject

the proposals of the Executive and is empowered to craft its own legislation, which is

then subjected to presidential veto or approval.

The second group comprises the United Kingdom and the member countries

of the British Commonwealth (including Australia, New Zealand and several

developing Asian, African and Caribbean countries). In these countries, the primary
 41

responsibility for the preparation and implementation of the budget is located in the

Executive and the role of the Parliament is to approve the proposals of government.

The Legislature has the power to reject the budget or modify any part of it (without

increasing expenditures, but such non-approval is viewed as a vote against the

government, obliging it to resign).

The third group of countries comprising France and Japan envisages a

different role for the Legislature in that it is expected to concentrate on new

proposals and expenditures while continuing expenditures are approved in a routine

way. In France, the Legislature cannot increase expenditures or reduce revenues.

The fourth group comprises countries where the medium-term financial plan

has a significant role to play in overall budgetary decision-making, although

legislative approval is limited to one year. Examples include Germany and Sweden.

The fifth group of countries consists of those where either there is no Legislature, or

if there is one, it has little power except to debate. Examples include several

countries in the Middle East and China.

Budgetary matters usually bring about conflict between the Executive and the

Legislature. Rubin (1999:30) argues that “conflict is endemic to budgeting”. She

further argues that one way of handling the stress between legislative bodies and

Executives is for the Executives to set aside some amount of money for the

Parliaments to allocate so as to bring some projects to their constituencies.

Once the President or Governor has presented his budget proposal to the

Legislature, the various legislative committees usually write principal officers of

each ministry or extra ministerial departments to come and defend their budget
 42

proposal. Parliament debates and approves the budget.

The Nigerian Constitution of 1999 does not clearly specify the powers of

Legislature over budget amendment. This has therefore been a good source of

conflict between the Executive and the Legislature especially at the Federal level.

(iii) Execution or Implementation - Once the Legislature has voted funds, the

control of expenditure shifts back to the Executive branch. Budget execution or

implementation is a management process (Premchand 1999). Burkhead (1959: 340 -

356) believes that budget execution is an Executive responsibility. He divides

budget execution techniques into two classes: those concerned with financial

controls and those concerned with administrative controls. Financial controls are

directed at the various accounts used to record government transactions for both

receipts and expenditures. Administrative controls are concerned with executing and

adjusting the budget plan that was developed and refined in the Executive branch and

reviewed and approved in the legislative branch. Burkhead suggests that the goals of

budget execution involve preserving legislative intent, observing financial limitations

and maintaining flexibility at all levels of administration.

Forrester (1999) asserts that budget execution is the vehicle by which

financial control and accountability can be achieved. He concludes that

accountability and financial control are checked then, by using the

budget and implementation procedures to assess, guide, monitor and
control the fiscal side of government, (Forrester 1999:569).

Although the budget provides the means of financial control and

accountability, this aspect has proved to be difficult to accomplish in Nigeria.

Approved expenditures can only be incurred on the strength of a warrant issued for
 43

that purpose. Where voted funds fall short of requirements, the spending agency

must apply for supplementary appropriations provisions and obtain Parliamentary

approval for such additional expenditure before incurring them. However (Teriba

and Oji 1973: 324) lament that

supplementary provisions were made ex post; expenditures were first

incurred over and above Parliamentary authorization and
supplementary appropriations were subsequently introduced to cover
them.
They conclude that

this state of affairs certainly makes nonsense of the concept of

Parliamentary control of expenditure, and the impression one has is
that once unapproved over-expenditure are incurred, both ministerial
and Parliamentary authority would be given ex post as a matter of
course.

It is now suggested that adherence to budget targets can bring sub optimal

behaviour on the part of vote controllers. For instance, Johnson (1992) suggests that

sometimes expenditure may be incurred because it is included in the budget and not

necessarily because it is needed. Vote controllers may do this because they fear the

existence of end of year surpluses in their accounts. Wildavsky (1979) therefore

suggests that year-end surpluses will be perceived by legislators and chief Executives

as unneeded money and the next year’s budget will be reduced to eliminate the

unnecessary funds.

(iv) Audit - The final phase in the budget process, is however an important part

of the budget cycle. The budget requires public disclosure, evaluation and auditing.

The report of the auditor shows how the budget has been implemented and managed.

Auditing (Dye and Stapenhurst 1998) argue, is a function that serves accountability
 44

as it adds credibility to the assertions of the person or entity rendering account and it

provides valuable insights and information to the person or entity conferring the

responsibility. The agency responsible for the audit of government accounts is the

Auditor-General or what is commonly referred to as Supreme Audit Institution

(SAI). They have the duty of overseeing the management of public funds and the

quality and credibility of governments’ reported financial data. Dye and Stapenhurst

(1998) further argue that Supreme Audit Institutions play a critical role, as they help

promote sound financial management and thus accountable and transparent

government.

Stapenhurst and Titsworth (2001:1) illustrate three types of Supreme Audit

Institutions: Napoleonic, Westminster and board. In the Napoleonic system the

Supreme Audit Institution - also known as the cour des compies (court of accounts)

wields both judicial and administrative authority and is independent of the legislative

and Executive branches. The institution which is an integral part of the judiciary,

sits in judgement on government compliance with laws and regulations as well as

ensuring that public funds are judiciously spent. The cour des compies audit

jurisdiction covers government ministries, departments, and agencies; commercial

and industrial entities under the purview of ministries and social security bodies.

Examples of countries in this group include France, Italy, Spain, Portugal, Turkey

and most Latin American and Francophone African countries.

Under the Westminster system, the Office of the Auditor-General is an

independent body that reports to Parliament. The office submits periodic reports on

the financial statements and operations of government entities although the emphasis
 45

on legal compliance is less than the Napoleonic system. The office does not perform

judicial function but when warranted, its findings may be passed to legal authorities

for further action. Examples of countries in this group include many Commonwealth

countries (Australia, Canada, India, the United Kingdom) and many Caribbean,

Pacific and sub-Saharan African countries. Nigeria falls within this group.

The board system, which is similar to the Westminster model, is independent of the

Executive and assists Parliament perform its oversight function.

The audit board is composed of an audit commission (the decision-making

body) and a general Executive bureau (the Executive organ). The president of the

board is the defacto Auditor-General. He analyzes government spending and

revenue and report its findings to the Legislature. Countries in this group include

Indonesia, Japan and Republic of Korea.

Stapenhurst and Titsworth (2001) also list three basic audit types: financial

(or attest), compliance and performance (or value-for-money).

In financial auditing the auditor assesses the accuracy and fairness of an

organization’s financial statements. Knighton (1979) states that in conducting

financial auditing, procedures are developed to ensure that expenditures are

authorized, properly documented, and that funds are properly receipted, accounted

for and safeguarded. He further reports that as the volume of government financial

transactions increased, the demands made of the auditor for additional information

also increased. As a result the traditional financial audit could not cope, so the audit

scope began to expand into other areas. Various names were given to the new phase

of audit efforts including compliance audits and performance audits.

 46

In compliance auditing, the auditor assesses whether expenditures have been

authorized and used according to legislative mandate. Transactions are reviewed to

determine if government departments and agencies have conformed to all pertinent

laws and regulations. The emphasis is on compliance with all relevant laws.

In value-for-money audit, the emphasis is on whether taxpayers have

received value for their money. Value-for-money audit place emphasis on economy,

efficiency and effectiveness of transactions. Performance or value-for-money audit

sometimes takes the form of reviewing operational efficiency or reviewing the

effectiveness of government programmes in achieving their objectives. Value-for-

money is necessary because

public sector accountability previously placed emphasis on

restriction of expenditures and ensuring that expenditures conform
with budgeted estimates without examination of the intrinsic value of
the resources utilization (Ene 2001:30).

2.3.4.2 Critical Success factors for Supreme Audit Institutions and

Limitations
Whether Supreme Audit Institutions will succeed in their assigned role of

being the watchdog over financial integrity and the credibility of government

reported information will depend on the following factors (Dye and Stapenhurst

1998:20 and Stapenhurst and Titsworth 2001:3):

(a) Supportive environment - Supreme Audit Institutions require a strong

Legislature, properly maintained accounts; timely submission of financial

statements, an Executive branch of government that does not pay lip service

to accountability among other factors to function effectively. Wrongdoing

identified by the institution must be addressed seriously. Audit queries

 47

should be responded to promptly.

(b) Clear mandate - The auditor’s independence, and reporting responsibilities,

the scope of audits and the entities to be audited must be clearly stated.

(c) Independence - The Auditor-General needs the freedom to do his work and to

report his findings directly to the Legislature without interference from other

arms of government. Additionally, those being audited should have no

influence on the choice of who or what gets audited. The Auditor-General

also needs the freedom to determine what shall be reported.

(d) Adequate funding, facilities and staff - The Office of the Auditor-General

needs to be adequately funded, equipped and provided with facilities. The

Auditor-General should have the mandate to recruit his own staff and they

should be adequately remunerated. Opportunities for further improvement in

skills and expertise should be provided.

(e) Sharing of knowledge and experience - International cross fertilization of

ideas, knowledge and experience improves audits, harmonizes standards,

promotes best practices and generally helps Supreme Audit Institutions fulfil

their mandate.

(f) Adherence to international and local standards - Audits assume the character

of effectiveness when audit institutions stick to professional auditing

standards such as those published by the International Organizations of

Supreme Audit Institutions (INTOSAI) and local audit standards published

jointly by the Office of the Auditor-General of the federation in conjunction

with state’ Auditors’-General.

 48

Mention however must also be made of the limitations faced by the State

Audit institutions although such limitations vary from country to country. The

limitations include limits on independence, lack of qualified staff; lack of equipment;

non-follow-up of audit queries and recommendations; restricted audit scope and a

non-supportive environment.

The important role played by audit in the administration of funds has been

captured by Speck (2003: 3 - 4) who argues that

allocation of financial resources plays a major role for the exercise of

political power. Therefore control of compliance with norms is
essential not only to guarantee an efficient use of public funds but
also to keep power holders within a near bandwidth of norms and
make them responsible for their acts.

2.3.4.3 Types and Methods of Budgeting

Governmental budgets may be classified on a time-period basis as annual,

biennial and long-term. An annual or current budget is the financial plan for a single

fiscal year and is the most common. The biennial budget covers two consecutive

years, which is treated as a single fiscal year. Long-term budgets which cover four-

to-six year period are planning documents. Development plans fall into this

category. Current portions of long-term budgets are usually incorporated into the

annual budget.

McKenzie (1988) identifies three basic methods of budgeting in the public

sector: the line item (traditional) budget, the programme budget and the performance

budget. He argues that the new budgeting effort, planning-programming-budgeting

system (PPBS) and the zero base budgeting (ZBB) basically represent extensions of

the performance approach.

 49

(a) Line-Item Budgeting - This is the traditional budgeting method used by

governmental units. Expenditure is classified by department according to the

object of expenditures, for example, salaries, materials, supplies and

equipment. These objects of expenditure could be collapsed into broad

categories such as personnel, operating and capital expenses. Statutory or

administrative controls could be imposed on the transfer of funds from one

line-item to another, or between broad categories of expenditure.

Prior to line-item budgeting, most budgets were lump sum (Tyer and Willand

2004).

line-item budgeting became necessary to provide a better

understanding of the intentions and purposes of government for
which funds were sought … what influenced the budget structure was
the manner in which accountability could be ensured… the budget
structure was devised as to indicate the full responsibility of the
spending agency (Premchand 1989:289).

Schick (1971: 14 - 43) argues that

line-item budgets were relatively easy to use and understand. Thus,

they were attractive to legislative officials. They allowed central
control over inputs, or money, before they are used. They are
uniform, comprehensive and exact. They allow routines to be
established. Line-items provide multiple opportunities for control to
occur, such as in purchasing and hiring staff.

Line-item budgeting has been criticized for its emphasis on short-term inputs

at the detriment of long-term objectives and policies. It tends to maintain the present

pattern of expenditure levels. Line-item budgeting occupies the attention of the

Legislature to such an extent that data relating to programmes, activities, and outputs

are ignored (McKenzie 1988).

(b) Programme Budgeting - This budgeting method emphasizes activities and

 50

programmes. The cost of a function is allocated by the programme regardless

of the departments involved in the programme. Gambino and Reardon

(1981:63) list the key features of this budgeting system to include:

i. A structuring of activities in terms of output-producing programmes.

ii. The arrangement of these programmes according to explicitly stated

objectives of the government unit.

iii. A focus on the benefits, as well as the costs of the programme.

iv. An emphasis on the total variable costs associated with each programme.

v. A projection of both the costs and inputs of the programme into future

periods.

Miller (1996:95) however notes that programme budgeting suffers for a

“severe identification crisis in the budgetary literature”. This is because it is used

synonymously with performance budgeting and the planning, programming

budgeting system reform. Burkhead (1956) asserts that a programme could be

higher in an organisation than performance units, and indeed could encompass

several organizational units. Programme budgeting tends to be forward-looking

while performance budgeting focuses on what has been accomplished already. The

key elements of programme budgeting include “long-range planning, goal setting,

programme identification, quantitative analysis such as cost-benefit analysis and

performance analysis (Burkhead, 1961:139).

Critics of programme budgeting feel that it is expensive to implement,

requires more planning and a skillful staff and cost breakdown may not be detailed

enough to indicate operational efficiency (McKenzie, 1988).

 51

(c) Performance Budgeting - There has been difficulty in defining

performance-based budgeting because the measurement of performance in

government is difficult. Joyce (1999:598) states

that “performance-based budgeting assumes that outcomes are considered in

the process of allocating and managing government resources”. It connects

resources to results. Performance budgeting is said to extend the programme

approach by including quantitative data on services or work performed.

Legislative bodies and elected chief Executives may want to use performance

information to make decisions on how to allocate scarce resources among

competing priorities. Performance measures are most useful to these people

if the measures help determine how much money should be spent on the

various purposes of government. While line-item budgeting focuses on how

much money is being spent, performance-based budgeting concentrates on

varying levels of programme results that might accompany varying levels of

performance. It has been argued that it is difficult to develop measures of

input; it is even harder developing appropriate measures of results and even

much harder using these measures to allocate resources at a government-wide

level. If performance measures are to be used to influence the allocation of

resources, the change is not likely to happen immediately (Joyce 1999).

(d) Planning-Programming-Budget System (PPBS) - The PPBS which was

fashionable in the US was pioneered in the Defence Department by Secretary

Robert McNamara in the 1960s (Joyce 1999). By 1971, PPBS ceased to exist

except in the Defence Department. It has been reported that the PPBS was
 52

much less successful in civilian agencies because the agencies lacked

administrative commitment to integrating the system fully into their

management systems.

Hatry and Cotton (1967:15) state that the major characteristics of PPBS are:

i. It focuses on identifying the fundamental objectives of the government and

then relating all activities to these (regardless of departmental or unit

placement).

ii. Future year implications are explicitly identified.

iii. All pertinent costs are considered.

iv. Systematic analysis of alternatives is performed, e.g. cost-benefit analysis.

McKenzie (1988:11.12) argues that

PPBS emphasizes long-range planning by projecting the benefits and

costs of each programme over a number of years. Various
alternatives are identified and analyzed to meet the stated programme
objectives. All programmes are to be evaluated annually to
determine if they are to be continued or if new programmes are to be
added.

He reports that advocates of PPBS state the following advantages for its use:

(a) It provides a framework for accountability.

(b) It provides opportunity for long-range planning.

(c) It promotes an optimization of resources.

(d) It assists in acquiring government funds.

(e) It compels organizational self-study and analysis and

(f) It promotes rational decisions.

However, in spite of these appealing features, PPBS is regarded as an

unsuccessful experiment as (Schick, 1971:103) remarks

 53

there are few success stories to emulate, few examples of what works
and no solid evidence of the benefits. The traditions established in
earlier years continue to dominate the budget process…

It should be noted that PPBS was recommended for Nigeria by NISER. Its degree of

success has been difficult to determine.

(e) Zero-Based Budgeting (ZBB) - This represents the newest approach in the

budgetary literature. McKenzie (1988:11.13) explains that ZZB requires

every manager or supervisor to examine all programmes or activities

from the ground up before funds are allocated. The cost of each
programme or activity must be justified in its entirety each year.

Tyer and Willand (2004:7) also explain that “ZZB requires that programmes

be justified over and over again so that the traditional based budget which receive

little or no scrutiny in traditional budget processes is no longer sacrosanct”.

Tyer and Willand (2004) further explain that the concept calls for

identification of decision units, decision packages, ranking of units within packages

and evaluation of alternative spending levels for units in the packages. Managers are

to provide estimates of different levels of funding, such as below current levels of

support, maintenance of the current level, or a higher level of support with

explanation of the impact of such alternative funding levels upon their programme.

The uniqueness of ZBB is in the formatting of information and the redefinition of

budget base to include decrements and not just increase in funding.

If PPBS was implemented as advocated by its proponents, the concept

included a zero-base budget idea since programme analysis would be applied to all

programmes, old and new.

ZBB was discarded in the US in 1981 when Reagan replaced Carter because
 54

complaints were wide spread about the amount of time required to

prepare requests and the tremendous increase in paper work.
Contrary to promises, ZBB did not require agencies to justify every
dollar they received. Administrators resented determining minimum
levels below current operation when they were legally required to
provide minimum benefits… (McKenzie 1988: 11.14).

Have the budgetary reforms succeeded? To this question we have different

answers. Wildavsky (1975:366) asserts that “most reforms fail… the governmental

landscape is lettered with their debris”. Tyre and Willand (2004:15) insist that

most reforms are oversold. Consequently, because the expectations

are unrealistic, assessments conclude that they have failed.
Conclusions of general failure may not be entirely accurate.

Whatever belief we may hold, budget reform is a never ending process, it is

continuous, as the light of experience and careful research point the way to greater

improvements in the management of public affairs.

Budgeting, as we have noted earlier, is one of the instrument by which fiscal

transparency is discharged, but as (McKinney and Howard, 1979:30) assert,

accounting is the most pervasive activity of the control function, it

provides a link between the money that is appropriated and where
and how it is used.

For this reason (Premchand 1989:129) states that “budgeting and accounting

have been closely linked”.

The link between budgeting accounting and auditing has been demonstrated

by (Ndubuisi 1996:70) who remarks that

where budgeting ends, accounting begins and where accounting ends,

auditing begins and these are tailored towards guarding against
abuse and misuse of government resources.

Asechemie (1994:115) also states that

 55

the structure and routines of government financial accounting closely

follow the budgeting system. The overriding role of financial
accounting is to ensure adherence to the budget by heads and
subheads.

This practice is referred to in accounting and budgetary literature as

budgetary accounting. Budgetary accounting according to Johnson (1992:5)

refer to the practice of many public sector organization in keeping

and presenting their operating accounts in the same format and
alongside their budget.

Premchand (1989) agrees and states that “the policy and Programme

requirements of budget management necessitate that accounts also follow the same

structure as in the budget”.

We now turn our attention to government accounting.

2.4 GOVERNMENT ACCOUNTING AS A BASIS FOR FINANCIAL

CONTROL
Government accounting has a long history and is said to be oldest form of

accounting (Premchand 1989 and Oshisanmi 1992).

The present financial management system in Nigeria is modeled after the

British financial management system. Most of the financial regulations governing

financial practice today in Nigeria, as we have earlier noted, were bequeathed to

Nigeria on attainment of independence in 1960. Since then they have been scantily

reviewed.
 56

Premchand (1989:344) notes that

as developing countries attained independence… it became clear that

inherited systems of financial management were not best suited to the
changed role of governments in the context of development. The
budget structures and financial management systems were found to
be archaic and functionally weak. There was little or no systematic
viewing of proposals or planning of expenditures. Central controls
were illusory and accounting and reporting received scant attention
despite their importance.

Government accounting according to (Oshisanmi and Dean 1984:101) is

the process of recording, analyzing, classifying, summarizing,

communicating and interpreting financial information about
government in aggregate and in detail, reflecting all transactions
involving the receipt, transfer and disposition of government funds
and property.

Similarly (Ahonsi 2002:3) defines government accounting as

the recording and presentation of government financial transactions

to comply with statutory requirements as well as to assist
management in efficiently utilizing government funds.

There is general agreement as to what constitutes government accounting.

The definition usually emphasizes the activities of: analysing, recording,

summarizing, reporting and interpreting. The definitions adequately describe

government accounting.

Government accounting is intended to serve a number of purposes which

include:

(a) “to provide useful financial information for making economic, political and

social decisions and to demonstrate accountability and stewardship;

(b) “to provide useful information for evaluating managerial and organizational

performance;
 57

(c) “to determine and predict the flows, balances and requirements of short-term

financial resources of the governmental units;

(d) “to determine and predict the economic condition of the government unit and

changes therein;

(e) “to monitor performance under term of legal, contractual and financial

requirements;

(f) to provide financial information useful for “planning, budgeting and to

predict the impact of the acquisition and allocation of resources on the

achievement of operational objectives;

(g) “to evaluate managerial and organizational performance (Daniel 1999:6)

We may say that government accounts serve legislative interest by

enthroning the concept of accountability; it provides a framework for purposes of a

variety of decision-making and it can be used for evaluating performance.

2.4.1 The Basis of Government Accounts

The basis of accounting refers to the method used in recording government

financial transactions vis-à-vis the compilation of the financial statements (Oshisami

1992; Ahonsi 2002 and Daniel 2002).

A number of accounting bases are available for recording and compilation of

government amounts. These include:

(a) the cash basis

(b) the accrual basis and

(c) the commitment, obligation or encumbrance basis.

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(a) The cash Basis of Government Accounting

The cash basis of accounting recognises only cash receipts and

disbursements. It is to be noted that government accounting in Nigeria is on the cash

basis. The following advantages have been claimed for the use of the cash basis of

accounting:

(a) that it is simple

(b) that it promotes accountability because it permits the easy identification of

those who authorize payments and those who receive them.

(c) It promotes control; it allows a simple and unambiguous comparison between

amounts authorized in the budget and those actually spent.

(d) That it is factual

(e) That it concentrates on the crucially important disbursement of

money.

(f) It enables final accounts to be compiled in a timely manner and

(g) It is consistent with the importance attached to movements of cash in the

public sector” (Oshisami and Dean 1984:105-106).

The proponents of the cash basis of accounting further argue that since

government transactions are financed by annual appropriations, cash budgets and

cash amounts are the simplest and most effective way of controlling appropriations.

Despite these appealing arguments, the cash basis of accounting has attracted a lot of

criticisms. Ball et al (1999:8) cite the following disadvantages against the cash basis

of accounting:
 59

(a) Failure to accurately represent the amount of resources usage. For instance, a

large capital acquisition will distort expenditure upward in the first year but

the usage of that asset will not be recognized in following years.

(b) Failure to take account of future commitments, guarantees or other contingent

liabilities. A liability will not be recognized until cash is paid to settle the

debt.

(c) Concentrate on cash payments alone, sometimes resulting in an unnoticed

deterioration in fixed assets.

(d) Control of the inputs purchased rather than the output produced.

(e) Distortion of incentives by encouraging managers to underestimate the cost

of programmes and to spend their full annual appropriations.

Wildavsky (1979) also argues that cash accounts may encourage

dysfunctional behaviour because vote controllers may incur last minute obligations

to delete anticipated year-end surpluses so that future budgetary allocations will not

be reduced.

Cash accounting, Reviglio (2001:17) suggests

allows countries to maneuver the size of unspent commitments

(budget carry-overs) that do not have to be financed by governments
in the same year in which they were recorded, avoiding fiscal
constraints that are related only to cash accounting.

Perhaps for the aforementioned disadvantages, the National council on Government

Accounting (1979) in (Johnson 1992:6) states that

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the accrual basis is the superior method of accounting for the

economic resources of an organization. It results in accounting
measurements based in the substance of transactions and events,
rather than merely when cash is received and disbursed and thus
enhances their relevance, neutrality, timeliness, completeness and
comparability. Accordingly, the council recommends use of accrual
basis to the fullest extent practicable in the government environment.
The cash basis of accounting is not appropriate.

(b) The Accrual Basis of Accounting

Ball, Dale, Eggers and Sacco (1999:7-8) state that

accrual accounting recognized events and transactions when they

occur, regardless of when cash changes hands. By recording
accounts payable and receivable, and thus the change in value of the
assets and liabilities, it keeps a running tally of what an organization
owns and owes in economic terms.

Accrual accounting requires that a transaction must be recorded when it

produces its economic effects. Recording may seldom coincide with the timing of

cash transactions (Riviglio 2001:18).

Ball, Dale, Eggers and Sacco (1999:10-11) report that the use of accrual

accounting has been criticized on the following grounds:

(i) That the implementation and operation of an accrual accounting systems is

expensive.

(ii) That accrual accounting is less objective than cash accounting.

(iii) That there is loss of comparability of fiscal settings across governments and

through time because only very few governments have produced fully

consolidated accrual amounts.

(iv) It is also suggested that users of government accounts, such as debt-rating

agencies are unfamiliar with the format and content of accrual accounts. It is

also being argued that the accrual basis of accounting is only appropriate in
 61

profit making organizations (Oshisami and Dean, 1984).

However, the proponents of accrual accounting cite the following advantages for its

use:

(i) accrual accounting would help assessing budgetary performance, such as

government deficit and debt, and enhance the effectiveness of fiscal

constraints (Reviglio 2001)

(ii) accrual accounting is designed to provide critical information to owners and

lenders. If major pieces of equipment are becoming obsolete, or long-term

liabilities are accumulating, owners and lenders want to know how, not when

the equipment is sold or scrapped or when the liabilities become due (Ball et

al 1999).

(iii) it results in accounting measurements based in the substance of transactions

and events, rather than merely when cash is received and disbursed, and thus

enhances their relevance, neutrality, timeliness, completeness and

comparability. (NCGA, 1979).

(iv) intergenerational fairness is important in fiscal policy. It reflects the degree

to which the government today is paying the cost of services today, as

opposed to shifting costs to other periods. Accrual accounting provides a

long-term perspective for judging the impact of policies. For example,

without accrual accounting, decisions on pensions that create pension

liabilities may not fully consider the impact of the liabilities on future

budgets (Ball et al 1999:10).

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(c) The Commitment Basis or Encumbrance Basis or Obligation Basis of

Accounting

Daniel (2002;2003) states that

this is the type of accounting system concerned with the recording of

local purchases order, contract or job order issued in the
memorandum book (Vote Book) as liability pending when payment
will be effected.

Premchand (1989) explains that in the sequence of administrative steps, the

first step of spending agencies toward the utilization of appropriated funds is to place

orders for goods and services needed during the year. Such orders, which result in

incurring obligations, can be placed at any time during the fiscal year. Accounts

when maintained with reference to this point in time are known as obligation basis

and refers to a system where recorded transactions represent commitments to acquire

materials or services or make payments under specific conditions and include orders

placed, contracts awarded and related transactions requiring money disbursement,

usually at a later date. Obligation basis is usually restricted to outlays.

The appropriate basis of accounting to use in government has always been a

source of controversy in accounting literature. Even proponents of the cash basis of

accounting have admitted the need for reform. Partial reforms have resulted in

hybrid systems like modified accrual basis or modified cash basis. Some of the

arguments made in favour of cash based accounts is that it results in timely

preparation of financial statements. In the case of Nigeria this is not true as we have

acknowledged the lateness in preparing financial statements as one of the problems

of government accounting.
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2.4.2 Treasury Control of Public Funds

Treasury is an office headed by the Accountant-General and is usually part of

the ministry of finance. Teriba and Oji (1973) explain that treasury control takes the

form of overall supervision of the spending of ministries and departments. The

objective is to ensure that they conform to the approved estimates and that adequate

attention is paid to efficiency in the spending of funds allocated by Parliament.

Where spending departments wish to deviate from the policies and programmes

approved by Parliament or wish to exceed their votes, they need to secure the

approval of finance for the new policies or changes.

Treasury control is exercised by the office of the Accountant-General. The

Accountant-General is vested with the duties of:

(i) receiving, keeping and disbursement of government funds;

(ii) recording and reporting of government financial transactions

(iii) exercising supervisory powers over other ministries in terms of financial

matters.

(iv) managing government investments.

(v) organising the training of accounting and auditing personnel

(vi) investigating cases of fraud, loss of funds, assets and store items, and

(vii) formulating the accounting policy of government

Other duties of the Accountant-General include posting of account staff;

preparation of final accounts for submission to the Auditor-General,

designing the accounting system and performing all other duties conferred on

him by law.
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The accounting system installed acts as a control mechanism for the receipt

and disbursement of public funds.

Oshisami (1992:39) states that

accounting controls are the checks, balances and supervisory

controls within and around the accounting system to ensure that all
financial transactions and events are accurately recorded in the
system completely and promptly; that there are safeguards over the
custody and use of assets held by the organisation; and the possibility
of the occurrence of errors and improper or illegal financial
transactions are reduced to the barest minimum.

A series of checks and balances exist within the accounting system to ensure

effective financial control. Teriba and Oji (1973: 326) explain that

there are checks and balances in the accounting system of

ministries/departments aimed at ensuring effective financial control.
The essence of this financial control system is that book-keeping
functions are so allocated that one book-keepers function provides a
check on the function of some other book-keepers.

The design of the accounting system has in-built checks and balances- these

include the requirement that all transactions must be duly authorised; transactions

must be recorded in the appropriate books promptly; key duties and responsibility

should be assigned to different individuals and adequate supervision must be

maintained over the work performed by subordinates. Other prescribed financial

controls require that all payments must be supported by a voucher while it is also

required to pass through the process of pre payment auditing.

Ministries/departments are also required to operate within the limits approved by the

appropriation act. A vote book is required to ensure that expenditures do not exceed

their approved limits. Practitioners hardly comply with this requirement as

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(Oshisami and Dean 1984:47) observe “overspending has become common place

and has not attracted any notable penalties.”

The ministry of finance also exercises another control through treasury-

control by warrant. The Accountant-General may not allow an issue from the

Consolidated Revenue Fund or Development Fund unless it is supported by a

relevant warrant for expenditure issued by the Minister or Commissioner of finance.

Warrants fall into two classes - warrants for recurrent expenditure and warrants for

capital expenditure. Financial Regulations 2000, chapter 4. Recurrent expenditure is

paid from the Consolidated Revenue Fund. For recurrent expenditure, the authority

of the Minister or Commissioner of finance shall be conveyed in one of the

following forms of warrants:

a) The Annual General Warrant of Recurrent Expenditure.

b) A Provisional General Warrant.

c) A Supplementary General Warrant of Recurrent Expenditure.

d) A Supplementary (Contingencies) Warrant

e) A Viement Warrant

f) A supplementary (Statutory Expenditure) Warrant

(Financial Regulations 2000:402)

These warrants are briefly discussed below:

Annual General Warrant - authorises the Accountant-General to issue funds to pay

for the Personal Emoluments and other services provided in the annual estimates.

Provisional General Warrant - is issued if the appropriation act has not come into

operation at the beginning of the financial year (for a period of three months, or until
 66

the Appropriation Act comes into operation, whichever is the shorter) for the

continuance of the Government at a level not exceeding the level of those services

prevailing in the previous financial year.

Supplementary General Warrant - authorises the Accountant-General to issue

funds to pay for the additional personal emoluments and other services which may

have been approved in supplementary estimates, and for which additional funds have

been approved by the Parliament.

Supplementary (contingencies) Warrant - is issued where virement is not possible

and where an application for additional provision reveals such a degree of urgency

that the issue of funds cannot without serious injury to the public interest be

postponed until a supplementary appropriation act can be passed.

A Virement Warrant - may be issued when, as a result of circumstances which

could not have been foreseen when the annual estimates were framed, additional

provision is required under a particular sub-head (or a new sub-head is required)

while at the same time, equivalent savings can be made under another sub-head of

the same head.

Supplementary (statutory) Expenditure Warrant - this authorizes additional

expenditure over and above that included in the general warrant from votes which

are chargeable against the consolidated revenue fund.

Financial Regulations (2003:513) provides that the authority for recurrent

expenditure conveyed by any of the warrants above lapses at the end of the financial

year to which it relates and any unspent balance required for the completion of a

service must be provided for in the estimates of the year in which the sum will
 67

actually be expended.

Capital expenditure on the other hand is paid from the Development Fund and may

be conveyed in one of the following forms of warrant (Financial Regulations

2000:416):

(a) The Development Fund General Warrant

(b) A Provisional Development Fund General Warrant

(c) A Development Fund Supplementary General Warrant

(d) A Development Fund Supplementary Warrant

(e) A Development Fund (Special) Warrant

(f) A Development Fund Virement Warrant -

The Development Fund General Warrant authorizes the Accountant-General to

issue funds for expenditure on capital projects as contained in the annual estimates.

A Provisional Development Fund General Warrant is issued if the draft capital

estimates have not been approved by the Parliament at the beginning of the financial

year to carry on projects which had been approved in any previous financial year for

a period of 3 months or until approval has been obtained by the Parliament, which

ever is shorter.

A Development Fund Supplementary General Warrant authorizes the

Accountant-General to issue funds for projects as sanctioned by the Parliament in

resolutions, approving supplementary capital estimates.

A Development Fund Supplementary Warrant authorizes the Accountant-General

to issue funds on capital projects beyond the amounts provided for the year

concerned. The purpose is to accelerate the provision of funds formally allocated but
 68

not yet voted for a project.

A Development Fund (special) Warrant may be authorised by the council of

ministers or state Executive council when an application for supplementary provision

reveals a degree of urgency which makes it essential that funds be immediately made

available to meet expenditure which cannot be provided for by virement.

The Development Fund Virement Warrant permits the issue of additional funds

necessary for the completion of a capital project, for which funds have been

appropriated, where the project cannot be completed within the amount shown as its

estimated total cost in the approved annual or supplementary estimates, but where

sufficient offsetting savings can be found within the amounts appropriated for other

capital projects in the same economic programme section or where a sufficient

amount is available within an appropriation made under the section providing a

margin for increased costs.

Financial Regulations [2000:513(b)] provides that Capital Expenditure

Warrants shall not lapse until the end of the rolling plan period.

The warrant system of financial control in government effectively places a second

control before funds can be disbursed - the first being the need for expenditure to be

backed by an appropriation law.

For accounting to be meaningful, it’s end product has to be reported to the

users.

2.4.3 Financial Reporting in Government

Financial reporting is one of the most important products of the accounting

system.
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Bartel (1996:39) argues that

unless financial information compiled by accounting is organized into

meaningful reports and distributed to the appropriate people,
accounting will have little effect on the overall management of the
public sector.

Financial reporting deals with the ways in which the accounting techniques

are reported. Henley et al (1993:9) states that “financial reporting in the public

sector is a key element in the accountability of public sector bodies”.

Reporting could take two forms - internal and external reporting.

The Accountant-General is responsible for preparing governments’ financial

statements. The main financial statements in Nigeria include the following

statements:

(a) Public Debt

(b) Assets and Liabilities

(c) Consolidated Revenue Fund

(d) Development Fund

(e) Treasury Fund

(f) Special and Trust Funds

(g) Other Loans and Investments

(h) Losses of government money and stores written-off during the year

(i) Revenue abandoned for the year

(j) Guarantees given by the government on loans and statutory corporations and

government-sponsored bodies

(k) Arrears of revenue returns (Oshisami and Dean 1984:117).

In addition, these statements have many other supporting sub-statements.

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Oshisami and Dean (1984) lament that the Accountant-General’s report run into

hundreds of printed foolscap pages and that the level of details and the number of

statements required militate against their timely production.

2.4.4 Objectives of Financial Reporting in Government

Chan (1988:1. 17-18) identifies the following as the objectives of financial

reporting in government.

(a) Financial reporting should assist in fulfilling government’s duty to be

publicly accountable and should enable users to assess that accountability.

(b) Financial reporting should assist users in evaluating the operating results of

the governmental entity for the year.

(c) Financial reporting should assist users in assessing the level of services that

can be provided by the governmental entity and its ability to meet obligations

as they become due.

(d) To provide information useful for planning and budgeting and for forecasting

the impact of the acquisition and allocation of resources on the achievement

of operational objectives.

2.4.5 Users and Uses of Governmental Financial Reports

Four broad categories of users have been identified (Chan 1988) - citizen

group, legislative and oversight officials, investors and creditors and employees.

The interests of these groups may not be identical, they may conflict.

Ebhomielen (2003:17) remarks that

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to be useful for decision making, financial information must be

relevant to the types of decisions which accountants anticipate at the
time of preparing their accounts. Those decisions to which users
might potentially apply the information must be anticipated and
articulated.

A particular user group may use government financial report for various reasons

including:

(a) Determination of the level of compliance with appropriations

(b) Comparison of results with those of previous years

(c) Advocacy for certain programmes and actions

(d) Evaluation of financial operations and financial condition.

While the prime interest of legislative officials is to ensure that the executed budget

was in line with the appropriation law (Chan 1988).

Government financial reporting in Nigeria suffers from the absence of a sound

conceptual framework.

The major crisis facing government and accounting and financial reporting is the

lack of generally accepted accounting principles and standards.

The Nigerian Accounting Standards Board (NASB) publishes accounting standards

for the private sector. There are no specific standards targeted at the public sector as

we have in other countries. The Nigerian public sector is over due for its accounting

and reporting standards.

Another serious set back for government financial reporting is the volume and size of

issues to be reported. Good reports should contain details, but where reports contain

unnecessary details, they tend to bury the essentials.

The style and format of presentation of public sector financial reports in Nigeria are
 72

too technical to be understood by even some accountants. They are not user friendly.

Modern financial statements for public sector bodies should be designed to cover

critical areas like statement of operations, assets and liabilities and cash flow. This

should be done in such a way that the diverse interest of user groups are taken into

consideration and the style and format of presentation should be simple enough for

even non-accountants to comprehend. In other words, financial reports should be

brief, concise and factual.

To ensure that there is proper financial accountability, the 1999 Federal Constitution

requires the Auditor-General to audit the accounts prepared by the Executive. The

Auditor-General is therefore an important link in the chain of the accountability

process in the public sector. We now examine this important institution of financial

control.

2.5 AUDIT OF GOVERNMENT FUNDS

2.5.1 Definitions and Evolution of Audit

Modern audits have been defined in various forms. For instance Arens and

Loebbecke (1988:1) define an audit as

the process by which a competent independent person accumulates

and evaluates evidence about quantifiable information relating to a
specific economic entity for the purpose of determining and reporting
on the degree of correspondence between quantifiable information
and established criteria.

Similarly Oremade, (1986:2) defines an audit as

the independent examination of financial information of any entity,

whether profit oriented or not, and irrespective of its size, or legal
form, when such an examination is conducted with a view to
expressing an opinion thereon.

In an effort to improve on the definition of an audit which (Okolo 1987) claims are
 73

defective on account of their emphasis on financial statements, he puts forward this

definition

a conscientious and objective examination of and enquiry into any

statement of account relating to money or money’s worth, the
underlying documents, and the physical assets where possible, as will
enable the audit to form an opinion as to whether or not the
statement of Account presents a true and fair view of whatever it
purports to represent, and to report accordingly (Okolo,1987;5).

Most standard definitions, including the ones cited above define audit in

terms of external auditing. These definitions are adequate in the context of external

auditing activities. However, these definitions do not capture the work of internal

auditors. A definition which could accommodate the work of both internal and

external audit is the independent examination of financial information of an entity

with a view to expressing an opinion thereon or an independent appraisal activity

within an establishment for the review of operations as a service to management.

The evolution of auditing has been documented in the literature as part of

stewardship accounting. For instance Woolf (1986:1) states that the word Audit is a

Latin word which has an English translation of ‘he hears’. The roots of auditing, he

explains, has existed for long as men have been required to account for their

transactions. That in those days, the accounts of wealthy landowners or merchants

were checked by having them read out to the hearing of the owners. Modern audit as

we know it today

has its roots two to three hundred years ago, in the first division of
interests between those engaged in a business undertaking (the
entrepreneurs) and those who made the finance available without
necessarily becoming directly involved in day-to-day management
(Woolf 1986:1).
 74

We could say that Woolf (1986) uses the agency or stewardship theory to explain the

evolution of auditing.

Audits were not statutorily required in Britain until 1844 neither were auditors

required to possess any recognized qualification until 1948.

2.5.2 Types of Audit

In terms of statutory prescription, audits fall into two groups - those required by

statute and those that are not.

The audit of government accounts and companies incorporated in Nigeria fall under

the ambit of statutory audits while the audit of clubs and incorporated businesses are

voluntary, that is, not required by statute.

Audits can also be classified by their nature, that is, as to whether they are financial

statement audit, compliance audit or operational audit, (Kell and Boynton, 1992:11).

They further explain the three types of audits as

a financial statement audit involves obtaining and evaluating

evidence about an entity’s statement for the purpose of expressing an
opinion on whether they are presented fairly in conformity with
established criteria- usually GAAP,

While

a compliance audit involves obtaining and evaluating evidence to

determine whether certain financial or operating activities of an
entity conform to specific conditions, rules or regulations and ‘an
operational audit involves obtaining and evaluating evidence about
an organization’s operating activities in relation to specified
objectives’.
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2.5.3 Types of Auditors

Kell and Boynton (1992:13) classify auditors into three groups

(a) independent auditors

(b) internal auditors and

(c) government auditors

This classification is defective because government auditors are by law supposed

to be independent just as they also have internal auditors. An adequate classification

could be whether the auditor is external or internal.

2.5.4 The Need for an Audit

Initially, an audit was necessary where resources were made available to one

party and the resource provider was not involved in the day-to-day management of

the venture. Modern audits, according to Millichamp (1986:3) have the following

objectives:

Primary: to produce a report by the auditor of his opinion of the truth and fairness of

financial statements so that any person reading and using them can believe in them.

Subsidiary:

i. To detect errors and fraud

ii. To prevent errors and fraud by the deterrent and moral effect of the

audit

iii. To prevent spin-off effects. The auditor will be able to assist his clients

with accounting system, taxation, financial and other problems.

An audit is needed for various reasons: An audit is necessary

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a) During business takeover or mergers as this adds credibility to the

financial statements produced.

b) In lending situations.

c) When appraising the performance of management.

d) To determine the efficiency, effectiveness and economy of transactions.

e) To evaluate the degree of compliance with laid down rules and regulation

and

f) For taxation purposes and personnel administration.

2.5.5 Qualities Generally Required of Auditors

Auditors whether external or internal should possess some special qualities.

Woolf (1986:1) reports that

in the early days of auditing the prime qualification for the position of
the auditors was reputation. A man known for his integrity and
independence of mind would be sought for his honoured opinion, the
matter of technical ability being entirely secondary…

It is generally accepted (Millichamp 1987; Woolf, 1986; and Oremade, 1986)

that auditors should possess the following qualities- integrity, objectivity,

independence and competence. Professional accountancy and audit institutions

prescribe the same qualities for their members. For instance the Institute of Internal

Auditors code of Ethics prescribe the following principles for members:

a) Integrity- the integrity of internal auditors establishes trust and thus provides the

basis for reliance on their judgement. Integrity, according to the ICAN’s

members’ code of conduct (1998:7) ‘implies not merely honesty but fair dealing

and truthfulness’.
 77

b) Objective- internal auditors exhibit the highest level of professional objectivity in

gathering, evaluating, and communicating information about the activity or

process being examined. Internal auditors make a balanced assessment of all the

relevant circumstances and are not unduly influenced by their non-interests or by

others in forming judgements. ‘Objectivity is the state of mind which has regard

to all considerations relevant to the task in hand but no other. It is sometimes

described as ‘independence of the mind’ (ICAN, members’ code of

conduct,1998:7).

c) Confidentiality- internal auditors respect the value and ownership of information

they receive and do not disclose information without appropriate authority unless

there is a legal professional obligation to do so.

d) Competence- internal auditors apply the knowledge, skills and experience needed

in the performance of internal auditing services.

e) Independence- the state of being impartial and free from bias and conflict of

interest is an important one in auditing, as Woolf (1986:16) argues

the concept of audit and the concept of independence are the twin
sides of the same coin. The auditor who has lost his independence has
lost his raison detre; he has become ‘dependent’ and a ‘dependent’
auditor is a contradiction in terms.

Similarly, Millichamp (1987:5) argues that “not only must the auditor be

independent in fact and in attitude of mind, but he must also be seen to be

independent.”

Stressing the importance of independence to audit work the Supreme Audit

Institutions (2003;2) state that

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the independence of the auditing organization and its auditors is

essential to assure that the work will not be biased by any
relationship it might have to the entity being audited… Although state
institutions cannot be absolutely independent because they are part of
the state as a whole, the Supreme Audit Institutions shall have the
functional and organizational independence required to fulfill their
tasks.

In fact independence can be viewed from two perspectives: independence in

fact (or real independence) and independence in appearance (or perceived

independence). Independence in fact refers to the achievement of actual freedom

from bias, personal interest or susceptibility to undue influence or pressure.

Independence in appearance refers to the absence of circumstances that might

otherwise suggest a compromised independence. In other words, independence in

fact is of little value if those who read an auditor’s report don’t perceive that

independence exists.

The code of ethics designed for external and internal auditors expect all

practicing auditors to observe the following rules of conduct:

a) Integrity

i. auditors shall perform their work with honesty, diligence, and responsibility.

ii. auditors shall observe the law and make disclosures expected by the law and

the profession.

iii. auditors shall not knowingly be a party to any illegal activity, or engage in

acts that are discreditable to the profession or the organization.

iv. auditors shall respect and contribute to the legitimate and ethical objectives of

the organization.

b) Objectivity
 79

i. auditors should not participate in any activity or relationship that may impair

or be presumed to impair their unbiased assessment. This participation

includes those activities or relationship that may be in conflict with interest of

the organization.

ii. shall not accept anything that may impair their professional judgment.

iii. shall disclose any material facts known to them that, if not disclosed, may

distort the reporting of activities under review.

c) Confidentiality

i. auditors should be prudent in the use and protection of information acquired

in the course of their duties.

ii. auditors shall not use information for any personal gain or in any manner that

would be contrary to the law or detrimental to the legitimate and ethical

objectives of the organization.

d) Competency

i. auditors shall engage only in those services for which they have the necessary

knowledge, skills, and experience.

ii. auditors shall perform their work in line with generally accepted accounting

and auditing standards and

iii. auditors shall continually improve their proficiency and the effectiveness and

quality of their services.

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2.5.6 Threats to Objectivity and Independence of Auditors

In practice, auditors may not be able to perform their work in line with

professional code of ethics. Certain inhibitions may affect the ability of auditors to

do their work impartially.

The public sector Auditing standards (1997;10) identifies three classes of

impairment: namely; personal, external and organizational.

Personal impairments include but are not limited to the following:

a) Official, professional, personal or financial relationships that might cause an

auditor to limit the extent of the enquiry; to limit disclosure or weaken or slant

audit findings and conclusions in any way;

b) Possible bias arising from preconceived ideas towards individual groups,

organizations or objectives of a particular programme. Biases induced by

political or social convictions that result from employment in , or loyalty to, a

particular group, organization or level of governance;

c) Previous responsibility for decision-making or managing an entity that would

affect current operation of the entity or programme being audited.

d) Subsequent performance of audit by the same individual who either previously

approved invoices; payrolls, claims and

e) Financial interest that is direct or substantial; it may even be indirect to the

audited entity or programme. External impairment arise from factors external to

the entity which interfere with the auditor’s ability to draw reasonable

conclusions which would enable him to form an unbiased opinion on the audit

conducted. External impairments include but are not limited to the following:
 81

f) external inference or influence which unduly or impudently limit or modify the

scope of an audit;

g) external interference with the selection or application of audit procedure in the

selection of the transactions to be tested.

h) Unreasonable restrictions on the time allowed to complete an audit;

i) Restrictions on funds or other resources (e.g. space, staff, equipment and

materials) provided to the organization that would adversely affect the audit

organization’s ability to carry out its responsibilities;

j) Authority to over rule or to influence the auditor’s judgment as to appropriate

content of an audit report;

k) Influences that jeopardize the auditor’s continued employment for reasons other

than competence.

Organizational impairment arises from factors internal to the organization. They

are factors relating to hiring of staff, remuneration, training, job tenure, promotion

and dismissal.

Political and Executive pressures can impair the auditor’s ability to draw

reasonable conclusion from audit exercises. Fear of political and Executive

persecution can influence the quality of audit work.

From the foregoing, it is clear that the factors which have the capacity to

undermine the auditors objectivity and independence are many and varied. However,

most of these factors have one common feature, as Woolf (1986;18) argues

they are situations in which there exists an implicit temptation on the

part of the auditor to avoid incurring the displeasure of those in a
position to sack him.
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What can the auditor do when faced with one or more of these inhibitions

mentioned above? The public sector Auditing standards (1997:10) state that

if one or more of these inhibitions affects the ability of the auditor to

perform the work and report findings impartially, the auditor should
either decline to perform the work or where the auditor cannot
decline, the impairments should be reported on the scope section of
his qualified audit report.

The literature on auditor’s independence and objectivity captures the crucial

aspects of the auditors standing in the context of financial and performance auditing.

However one issue that has not been properly addressed by the literature is the

threats faced by internal auditors. Internal auditors who may fear incurring the

displeasure of those in a position to determine the status of their employment, may

not be in a position to turndown an audit assignment nor be in a position to qualify

audit report. The internal auditor as it is now, is not adequately protected from

Executive pressures.

2.5.7 Appointment and Removal of Government Auditors (Auditors- General)

in Nigeria

The Federal Constitution of Nigeria, 1999 sections 85 and 125 provide for the

appointment of an Auditor- General for the Federation and each state of the

federation.

Section 86 states that the Auditor-General for the federation shall be

appointed by the president on the recommendation of the Federal civil service

commission subject to confirmation by the senate.

The state equivalent of this section is found in section 126 which vests the
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power of appointment of the Auditor-General on the state governor on the

recommendation of the state civil service commission.

The power to appoint persons to act in the Office of the Auditor-General shall

rest in the President and the Governor, sections 86(2) and 126(2) of the 1999

Constitution.

Except with the sanction of a resolution of the Senate or the House of

Assembly of a State, no person shall act in the office of the Auditor- General for a

period exceeding six months, sections 86(3) and 125(3).

The removal of the Auditor- General is also spelt out by the 1999

Constitution. The Auditor-General shall not be removed from office before such

retiring age as may be prescribed by law save in accordance with the provisions of

the Constitution, sections 87(2) and 127(2). Sections 87(1) and 127(1) provide that a

person holding the office of the Auditor-General for the Federation or the State shall

be removed from office by the president or governor acting on an address supported

by two-thirds majority of the senate or the House of Assembly of a state praying that

he be so removed for his inability to discharge the functions of his office (whether

arising from infirmity of mind or body or any other cause) or for misconduct.

The Constitutional provisions on the appointment and removal of the

Government Auditor-General is defective for two reasons:

a) an important feature of democratic societies is a well-defined distribution of

power among the three arms of government - Parliament, Executive, and judiciary.

The Parliament is the arm given the Constitutional power [S.180 (1) and S.120 (1) of

the 1999 Constitution] of oversight over the Executive in the way public funds are
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utilized. To assist the Parliament to perform this important function, the government

provides Parliament with information about the use of the public funds entrusted to

it. The Parliament needs assurance that these information are appropriate, credible

and complete, and that it accurately reflects the result of the activities of government.

The way in which it obtains such assurance is through an independent audit function

set up to assist it in fulfilling its oversight role. The audit function is therefore a

critical link in the chain of public accountability and a vital part in the democratic

process of responsible government.

The importance of government audit in bringing about good governance has

been captured by Ahsan (1994;1) who states that

State Audit in this situation should be viewed as an institution which,

acting on behalf of the Parliament, unveils the mystery of Executive
decisions and probes into the implementation of public policy to
verify if it was carried out in accordance with legislative intent. In
this manner, State Audit makes the process of government transparent
and brings out instances of misuse of authority
.
The Auditor-General cannot perform this vital role effectively if he takes his

appointment at the pleasure of the Executive. Support for this view is given by the

Auditor-General of Alberta (1998:8) who argues that

giving the job of appointing an auditor to the persons who are subject
to audit is prejudicial to audit independence… the appointment of a
legislative auditor should not be in the hands of government.

b) When auditors take their appointment from the Executive the impression being

created is that they are accountable to the government rather than the Legislature.

Worldwide practice shows that in Parliamentary democracies, the Auditor-General is

accountable to the people through their elected representatives - members of

Parliament.
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2.5.8 Duties and Rights of the Auditor-General

The third formal institution of financial control over public finance is the

Office of the Auditor-General. In some countries the Auditor-General is an agent of

Parliament, while in others he is independent of both Parliament and the Executive.

The Constitutions of most countries give great recognition to the Office of the

Auditor-General in their accountability arrangements. The basic duty of the

Supreme Audit Institution is to oversee the way public funds are managed to ensure

that there is financial accountability. They promote accountability by their work as

(Dye and Stapenhurst, 1998:1) observe

Supreme Audit Institutions play a critical role as they help promote

sound financial management and thus accountable and transparent
government

The 1999 Constitution sections 85 and 125 spell out the duties and rights of the

Auditor-General. The 1999 Constitution confers the same right and duties on the

Auditors-General whether at the Federal or state level.

The Auditor-General shall

a) audit the public accounts of a state and of all offices and courts of the state

b) recommend a list of qualified auditors to be appointed as external auditors for

government statutory corporations, commissions, authorities, agencies and all

persons or bodies established by law.

c) provide a guideline on the level of fees to be paid to external auditors.

d) comment on the annual accounts of the bodies mentioned in (b) above and the

external auditor’s report.

e) submit his report within ninety days of receipt of the Accountant- General’s
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financial statement and annual accounts of the state to the house of assembly of

the state.

f) shall have access to all books, records, returns and other documents relating to all

bodies he is empowered to audit and

g) have power to conduct periodic checks of all government statutory corporations,

commissions, authorities, agencies, including all persons and bodies established

by law Section 125 (6) guarantees the independence of the State Auditor-General

when it provides that, in the exercise of his functions under the Constitution, the

Auditor-General shall not be subject to the direction or control of any other

authority or person. Financial regulations (2000) S.102 provides that the

Auditor-General in the performance of his duties shall ascertain whether in his

opinion.

h) The accounts have been properly kept.

i) All public monies have been fully accounted for, and the rules and procedures

applied are sufficient to secure an effective check on the assessment, collection

and proper allocation of revenue;

j) Monies have been expended for the purpose for which they were appropriated

and the expenditures have been made as authorized and

k) Essential records are maintained and the rules and procedures applied are

sufficient to safeguard and control public property and funds.

2.5.9 Value for Money Audit

One of the ways by which fiscal transparency can be achieved is through an effective

audit. Okwoli (2004:143) argues that

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the concept of public accountability imposes responsibilities on

public officers, that funds which are often raised by compulsory levy
are not wastefully applied by the Executive. One of the avenues
through which an assurance of the judicious use of such funds can be
provided is the Value For Money (VFM)

Oshisami and Dean (1984:140) define value for Money Audit as

an examination of economy and efficiency, to bring to light examples

of wasteful, extravagant or unrewarding expenditure, failure to
maximise receipts or financial arrangements detrimental to the
Treasury and weaknesses leading to them.

Value for Money audit seeks to justify the use of resources. It compares

inputs with outputs. Financial transactions may be duly authorised and documented,

but it may fail to show whether value has been achieved. This is one of the

limitations of the traditional financial audit.

Value for Money Audit focuses on three elements - economy, efficiency and

effectiveness - the three Es.

Okwoli (2004) states that a poorly conceived system, illequipped or poorly

motivated staff and bad management styles may work against the achievement of

value for money.

He further states that an organisation that seeks to achieve value for money should

have a clear vision, a strategy by which the vision is to be achieved; an appropriate

management structure, properly trained and motivated staff. On the application of

value audit in Nigeria, he states that the concept has not gained the desired level of

acceptance despite the fact that it has been a subject of discourse among academics

in Nigeria for over a decade.

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2.5.10 Audit Organisation in the Public Sector

The Auditor-General carries out a comprehensive audit of all government

financial transactions. The Auditor-General is required by the Constitution to pass

his Audit report to Parliament. The duties of the Accountant-General are

Constitutionally determined and have been listed earlier. However, the Auditor-

General carries out other important activities which include:

(a) touring areas outside the headquarters for the purpose of his audit.

(b) facilitating the write-off of lost funds.

(b) auditing the payment of pensions and gratuities

(d) addressing queries to accounting officers

(e) verifying government stores and

(f) producing an annual report (Okwoli 2004)

In Plateau State, the Auditor-General being the external auditor to government

ministries, carries out his audit on an annual basis with exception of salaries which

are audited monthly. The staff of the Auditor-General do not carry out internal audit

functions. In Plateau State, internal auditors are drawn from treasury.

2.5.11 The Provision of the Civil Service (Reorganization) Decree 1988 as they
affect Government Auditors

The decree established the Audit Alarm committee to prevent the making of

irregular payment in government. The membership of the committee consisted of;

a) the Auditor-General for the federation or state

b) the Accountant-General of the federation or state and

c) a representative of the president or the governor

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The major functions of the committee include

i. examining all cases of alarm raised that were brought before it and

ii. issuing audit certificate on any payment voucher that may have been queried

before any payment could be made.

The internal auditors were supposed to be the major facilitators of the committee by

informing the Auditor-General of any irregular payment.

The auditor general is by the provisions of the decree empowered to;

a) sanction and surcharge any officer as stipulated in the guidelines governing

offences and sanctions;

b) have direct access to the president or governor through the representative on the

committee;

c) notify the president or governor of audit alarms of significant importance and

serious prepayments audit queries for which the accounting officer of the

ministry or extra-ministerial department is liable or responsible and

d) visit contract sites for the purpose of auditing and monitoring contract

performance.

2.5.12 Hindrances to Performance of Government Auditors in Nigeria

Government auditors or the Supreme Audit Institutions or legislative auditors

as they are called in other countries, no doubt face a number of obstacles in the

performance of their duties. These problems include:

(a) Appointment and removal: We have pointed out earlier that placing the

appointment and removal of government auditors in the hands of the Executive is

prejudicial to audit independence. Auditors cannot discharge the functions assigned

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to them if they hold office at the pleasure of those they are supposed to audit. The

case of Azie, the else-whilst Auditor-General of Nigeria is a test case. Azie had

released an audit report that indicted the Government over the management of public

funds. The government refused to confirm his appointment since he was in acting

capacity.

This position is also supported by Vakabua (1999:15) when he states that:

the Auditor-General is not independent if he enjoys his appointment

or those of his staff on the generosity of the Executives. Likewise, he
is not independent of the Executives if the Executives determine and
allocate the resources with which the Auditor-General carries out his
functions.

(b) Resource Constraints: Government auditors in Nigeria both at the Federal

and state levels rely on the Executive for financial support. Ahsan (1994:2) argues

that

auditors all over the world are technically free to report their
findings to the Parliament, the control of Executive government on
their resource allocation and management does affect their capability
and will for an independent and objective assessment. It is therefore
imperative that if State Audit is to work as an efficient and competent
tool of Parliament, it should not be dependent on the Executive for
support.

The Executive determines how much is appropriated to State Audit. In most

cases such allocations fall far short of what is required to run their offices. Daniel

(1999:217) uses a hypothetical case to explain the effect of the inadequate funding of

State Audit on the audit work. The illustration is as follows:

‘In the Lagos headquarters of a Ministry, there was a voucher of N2.5m for the

construction of six (6) bedroom flat at Sokoto.

It is the duty of the internal Auditor to verify all claims before payments are
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effected. Therefore a Duty Tour allowance is required to enable him travel down to

Sokoto to carry out the verification before passing the voucher for payment.

‘The duty Tour allowance is to be approved by the chief Executive who awarded the

fake contract.

‘The Duty Tour Application was in the chief Executive’s office for two

weeks without approval. On the third week, the chief Executive phoned the

accountant to inquire from him the progress of the voucher and the accountant told

him that the voucher was still with the internal auditor.

‘He then phoned the internal auditor saying that he should pass the voucher as the

contractor was sitting in his office to collect his cheque.

As the boss who determines his transfer and promotion, he had no choice than to

pass it for payment.

‘In the light of the above, it will be very difficult for the auditor to express any

opinion on the contract sum of N2.5m as he was not at the site.

He concludes that ‘lack of funds has always hampered the efficient

functioning of the Auditor-General’s office’.

(c) Staff capacity constraints: the office of the government auditors are often not

adequately staffed and poorly equipped. This will of course slow down on the

pace of work being carried out.

(d) Apart from inadequate staffing, the offices of Auditor-Generals also lack

highly skilled and trained staff. Daniel (1999:217) argues that government-

auditors with limited training may not be able to detect sophisticated fraud.

(e) Appointment of external auditors: We have earlier mentioned that the

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Constitution forbids the Auditor-General from appointing external auditors

for government extra-ministerial departments and agencies.

Government parastatals and agencies that are funded with public money

should be audited by the Auditor-General who is an agent of Parliament. If he

cannot do it, the law should allow him to appoint his agent to do it. Vakabua

(1994:17) argues strongly that

the Auditor-General has the right to appoint his own agents or audit
service providers to undertake auditing duties on his behalf. These
audit service providers are effectively sub-agents of Parliaments
agents.

(f) Non regular communication with Parliament:

If the Auditor-General is to be an effective agent of Parliament, then there is

the need for regular flow of information between the two. It has however

been observed by (Ahsan 1994:10), that in a number of countries, including

Nigeria, that communication between the Parliament and the Office of the

Auditor-General is not regular. In strong Parliaments, like the United States

Congress, continuous dialogue goes on between the two.

(g) Delays in submission of Annual statement of Accounts by the Accountant-

General. The Accountant-General is expected to present to the Auditor-

General signed accounts for the year for audit within seven months of the end

of the financial year (Oshisami 1992:217). However, it has been noted that

the Accountant-General’s statement of accounts are always many years in

arrears (Ekwonu, 1996:38; Watoseninyi, 1996:24 and Oshisami 1992:217).

Consequently, audit reports fall into many years of arrears which of course

affects Parliamentary performance. The delayed audit reports may be of little

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value to them for the purpose of decision making. Parliamentary oversight

suffers when the audit report is not provided to Parliamentarians on a timely

basis (Sahgal. 2001:6).

(h) Exclusion of some classes of expenditure from the purview of state-audit.

Certain categories of expenditure are excluded from proper audit, an example

is security vote. A security vote is an appropriation which by tradition, is

scantily vouched, because full and proper vouching may contain information

that is of national interest. An independent analysis of such expenditure by

auditors is not acceptable. Even where vouching is permitted auditors cannot

question the validity of decisions made.

(i) Indifference to audit queries and non-enforcement of sanctions:

It has been alleged that many Ministries and departments of government do

not bother to respond to audit queries. Although the civil service rules

provide a number of sanctions for offences, how often are these sanctions

enforced? It has also been pointed that domestic reports by auditors to

management are often not implemented.

Leading democracies clearly have established principles of accountability

and transparency. In such cases the quality of Parliamentary oversight is

high. If the offices of the Auditor-General are to become effective weapon of

accountability and transparency, then efforts must be intensified to remove

the identified obstacles. This position has been captured by (Ahsan 1994:13)

who remarks that

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if the Parliaments are serious in providing an efficient government to

their people, they will learn how to use audit to their advantage. In
the continuing tussle of power between Executive and Parliament, the
Legislature can only keep its authority intact if it ensures
transparency in the implementation of public policy and makes the
government accountable for what it does and how it does it. State
Audit is the only institution available to the Legislature to establish
its writ.

In many democracies, the Auditor-General is an agent of Parliament. The result of

his audit is passed to Parliament for consideration because Parliament is granted the

Constitutional duty of oversight on the Executive. How is Parliament able to do

this?

2.6 PARLIAMENTARY CONTROL OF PUBLIC FUNDS

2.6.1 Origins of Parliament

Parliament, or other terms by which it is known - Congress, Diet, Legislature,

Assembly, dates back to many centuries in recorded history. The original idea of

Parliament according to Borthwick (2002) was a place where talking took place.

The name Parliament is said to derive from the French verb ‘parler’ which means to

talk. Therefore, for the purpose of literature review, the terms parliament and

legislature are used interchangeably.

The roots of Parliaments are many and diverse. The oldest surviving Parliament is

generally regarded as being the Althing in Iceland, but with a break in its functions

in the 19th century implies that the longest continuous Parliament is the Tynwald of

the lsle of Man. Among the oldest is the British Parliament, which has been

acclaimed to be the most influential in developing the traditions of Parliamentary

government (Borthwick, 2002).

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Early in the development of Parliamentary government in England, the Monarch or

Crown assembled landowners for advice. This group of advisers evolved into

Parliament.

Parliament was summoned if the Crown needed money for a war. If Parliament

authorized this money immediately, the Crown would dismiss the advisers and their

opinions would not be heard. The advisers would therefore refuse to supply money

until they were heard. The present-day item-by-item consideration of the Estimates

by the Parliament through the Committee of Finance is based on the historic

principle of ‘grievance before supply’. By the early 17th century the English

Parliament had embarked on a struggle for supremacy with the Crown. Originally,

the Crown authorised taxes and expenditures; however, eventually Parliament gained

power over the crown to determine taxes. Power gradually passed from Monarch to

Ministers responsible to Parliament.

In the course of the 18th and 19th centuries the power of the Monarch waned and

Parliament became accepted as the sovereign body.

Parliaments in the modern world fall into a variety of categories. Some are involved

in policy-making, as with the Congress of the United States; others are policy-

influencing bodies, as with Parliaments in the United Kingdom, Germany and

France. In others, the Parliament may be essentially decorative.

One of the legacies of British rule was a belief in the value of Parliamentary

government. At independence in 1960, Britain bequeathed to Nigeria a central

government with its Parliament and three regional governments - North, West and

East each with its regional assemblies.

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With the advent of the second republic in 1979, Nigeria adopted the American

Presidential System of Government with a bicameral or two-house Parliament at the

Federal level and a unicameral or single-house Parliament in each state of the

Federation.

2.6.2. Functions of Parliament

Modern Parliaments perform a variety of roles. Parliaments are involved in

law-making, in controlling the raising and spending of money, in

representing in some sense the population of the country concerned
and possibly in influencing the composition of the government
(Borthwick, 2002;4).

Parliamentary duties of law-making, controlling the raising and spending of money,

of representing the electorates or acting a check and balance to the Executive arm of

government have been widely acknowledged (Jibo, 2002:2; Best 1998: 1; Alli

1998,:10, and Martinez-Soliman 2003;2). The frontiers of legislative functions have

been expanded by Abayomi (2000:2) who states that

Parliament is expected to be one of the numerous complex social

institutions instrumental in the establishment and maintenance of the
legal order, receive and settle conflicts, set priorities, make and
legitimize policies, adopt existing rules of society to none conditions
by constantly receiving and revising societal norms, (ethos) and the
culture of the people.

2.6.3. Functions of the Parliament under the Nigerian Constitution

The Constitution of the Federal Republic of Nigeria 1999 is the organic law of the

country and it is supreme and all other laws must conform to its prescription. It

prescribes the role, duties and functions of both Federal and State Legislature. The

1999 Constitution assigns three or four basic functions to the Legislature, namely,
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the power to legislate, power and control over public funds, power to generally

supervise and ensure that the Executive is accountable to the Legislature in respect of

duties given to it.

(a) Legislative Power:

Sections 4(1)(2)(3)&(4) of the 1999 Constitution provides that the legislative powers

of the Federal Republic of Nigeria shall be vested in a National Assembly of the

Federal which shall consist of a Senate and a House of Representatives. The

National Assembly is empowered to make laws for the peace, order and good

government of the Federation with respect to matters included in the exclusive

legislative list.

S. 4(6)(7). The legislative powers of a State is vested in the House of Assembly of

the State and it shall have power to make laws for the peace, order and good

government of the State with respect to any matter not included in the exclusive

legislative list and any matter included in the concurrent legislative list.

(b) Power and control over public funds:

S.80 (1) and S.120 (1) - Both the National and the State Houses of Assemblies are

the only organs empowered to authorise withdrawal of money from the consolidated

revenue fund except money meant to meet expenditure that is a charge upon the fund

by the Constitution.

Similarly, S. 83 (1) & (2) and S. 123 (1) & (2) empower the legislative arm of

government to make laws for the establishment of a contingency fund to meet urgent

and unforeseen expenditure which shall be replaced by a supplementary

appropriation.
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(c) Power to conduct investigations:

S. 88(1) and S. 128 grant the legislative arm of government the power to conduct

investigation into any matter or thing with respect to which it has power to make

laws and the conduct of any person, authority, ministry or government department

relating to both financial and non-financial matters. In the exercise of this power, the

legislative arm of government shall have power to procure all evidence, written or

oral, direct or circumstantial, as it may think necessary or desirable, and examine all

persons as witnesses whose evidence may be material or relevant to the subject

matter, S. 89 (1) and S. 129 (1).

(d) Power over budgets:

S. 81(1) and S. 121. This power has been explained earlier.

(e) Power to rectify appointments and to remove certain officers:

S. 188 of the 1999 Constitution grants powers to the house of assembly of a state the

power to remove the governor and his deputy.

The Constitutional powers granted to the Legislature is commonly referred to as

oversight functions. Legislative oversight enables the legislators to assess whether

the Executive branch is carrying out the business of governance according to

legislative mandates. Arguing in support of legislative oversight, Tyoden (1998:85)

states that

the oversight function is necessary and desirable because the

Executive arm of government might not carry out legislative decisions
according to the intentions of lawmakers.

Legislative oversight is not without its problems. Tyoden (1998) further states that
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“ordinarily, the legislative oversight function is supposed to be a veritable weapon in

the hands of legislators”.

How effectively does the Legislature use its oversight responsibility?

Legislators may not use the oversight function effectively because “they may have

little time for over-sighting, or may pursue it as a guerilla attack or as a mere routine

or ritual” (Tyoden 1998:87).

2.6.4 Governance and Legislative Performance: A Critical Analysis

Governance may be regarded as an act or manner in which public policy is

formulated and delivered. According to Vakabua (1994:15) governance refers to

“the authority, control and management functions of government. The purpose of

governance is sustainable human development.”

It has been argued that good governance especially in democratic societies

cannot be achieved without legislative involvement, as Ahsan (1994:9) remarks

history has taught us that good governance should have two basic
characteristics; firstly, transparency of decision making and
execution, and secondly, reasonable controls on unbridled authority
of the Executive.

Support for this view is given by Martinez-Soliman (2003:1) when he asserts that

good governance and development are entwined. Parliamentary

democracy is the representational dimension of good governance…
Democracy has extra ordinary positive effects on development.

He went further to quote Koffi Annan, the UN Secretary-General as saying

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without good governance, without the rule of law, without a

predictable administration, without a legitimate power and a
responsible legislative body; no amount of financial aid or support
will put us on the path to prosperity.

Democratic governance without Parliamentary involvement is not

conceivable. This is because as Sahgal (2001:3) puts it, the “buck starts and stops at

the door of Parliament”. He further states that

the ultimate responsibility for good governance and promoting a

culture of accountability lies with Parliamentarians and elected
officials at sub-national levels in democratic settings. This is why
Parliamentary oversight of the public purse becomes so crucial
(Sahgal; 2001:10).

The importance of Parliamentary democracy has been elegantly captured by

(Best 1998:8) who argues that

in a democratic setting, especially of the west minister model,

sovereignty rests with Parliament, which essentially is the
Parliament… In other words, democracy gives Parliament power
above all else, even through such powers are checked by other arms
of the government.

Democracy through the Constitution bestows on Parliament a lot of powers.

One of such powers is the power over public funds. Krafchik and Wehner (2002:1)

states that

the Parliament’s ‘power of the purse’ is a fundamental feature of

democracy. The vast majority of Constitutions require
appropriations and taxation measures to be approved by the
Parliament in order to become effective.

Of interest to this research is Parliamentary control of public funds.

Parliament is able to exercise this control through a number of instruments, organs

and institutions and these include:

(a) Budget - The importance of budget as an instrument of planning is well

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recognised. In determining whether public funds have been wisely spent, the

process starts with the budget. Sahgal (2003:2) opines that budgeting has

been the first point of entry. The importance of budget control as a tool of

development is now well recognised.

(b) Another instrument of Parliamentary control of public funds is through the

operation of the Consolidated Revenue Fund. With legislative approval of

the budget and once it has been signed into law, spending can commence

from the consolidated revenue fund. Budget approval carries with it

Parliamentary consent to withdraw from the consolidated revenue fund.

(c) Auditor-General: this is an institution of control. This office serves as an

agent of Parliament. The Auditor-General is expected to lay his report on the

accounts examined by him before the Parliament.

(d) Public Accounts/Petitions Committee: The committee shall consider the

subject matter of all petitions referred to it and report their opinions to the

house from time to time.

(e) Finance Committee: A standing committee of the house whose jurisdiction

covers budget proposals, conducting continuing studies of the effect on

budget outlays of relevant existing and proposed legislation and requesting

and evaluating continuing studies of tax expenditures, to devise methods of

co-ordinating tax expenditures, policies and programmes with direct budget

outlay and to report the results of such studies to the House on a recurring

basis.

The above listed instruments of Parliamentary control of public expenditure

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may have a slight variation between countries with respect to the assigned roles

given to committees. However, the basic role of Parliamentary oversight over the

public purse is the same.

Despite the traditional Constitutional role of Parliaments in budget oversight,

the performance of Parliaments in this area in some democracies has been called to

question. Ahsan (1994:11) argues that

the Legislature have traditionally been charged with one basic

authority, the power of the purse. This power implies that
Parliaments not only appropriate money for various services, they
also have to ensure that the monies appropriated by them were spent
according to legislative intent, in an economic and efficient manner
and had produced intended results. The allocation of money by
Parliaments in many countries, who follow an incremental budgeting
process, has gradually become a routine and unproductive exercise.
This means that the budget has ceased to be an instrument of
legislative control

Krafchik and Wehner (2002:5) also state that

The execution of the budget is in the hands of the Executive. Funds

are supposed to be apportioned to spending departments in line with
the approved budget. However, it is not uncommon that funds are
shifted to purposes other than those for which they were approved

Other factors include the Executive’s neglect, failure and refusal to

implement appropriation Acts duly passed and assented to and the late submission of

financial statements. Commenting on the late submission of Accounts to the

Parliament, James - Enang (2002:27) laments that

this calls to question, whether a report submitted after such a long

time can be of any use for the purpose for which accounts were
meant.

He further states that

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in most cases, key officials such as accounting officers, stores

officers, schedule officers, etc. who participated in the financial
transaction which led to the queries have either been transferred, left
the service or died, thereby making it difficult for the committee to get
to the root of certain cases.

Even in countries where the public Accounts committee is influential, it is

felt that its valued contribution comes rather late, as Diamond (1975:113) points out

the work of the PAC alone, valuable as it in bringing errors to light

and thereby pointing the way to the avoidance of their repetition, is
not enough. In the nature of things the discovery may be too late -
that is to say the stable door may be seen to be open only after all the
horses have fled, whereas the escape of the first one should have set
the alarm bells ringing.

What should be the role of the Legislature during the budget process?

The drafting stage normally takes place within the Executive. Parliamentary

involvement is minimal at this stage. Parliamentary involvement is visible during

approval. At implementation stage their involvement is again minimal. During

audit, Parliamentary participation is glaring.

Parliaments differ substantially in their degree of influence on budget policy.

The most powerful Parliaments are those that have the ability to write the budget.

The most visible in this category is the United States Congress as (Krafchik and

Wehner 2002:5) puts it

the United States Congress’s power to shape budgets is probably

unique, and only a few other Parliaments make significant changes to
draft budgets on a regular basis. At the opposite and of the spectrum
are Parliaments that have ceased to exercise any significant influence
on budget policy, and merely rubber stamp Executive draft budgets
without any changes. This group is primarily comprised of
Westminister type Parliaments, where any successful amendment to
the budget is considered a vote of no confidence in the government.
Most Parliaments fall into a middle category: they approve the
budget proposed by the Executive with minor changes only.
 104

These variations in the budgetary influence of the legislature are to a large

extent a function of the system of government. In the Westminster types of

Parliaments, Legislative-Executive relations are cordial because the electoral

fortunes of Parliament and the Executive are intertwined. Rewriting the Executive

budget would amount to a vote of no confidence in the government. In a presidential

system on the other hand, the separation of powers can lead to great antagonism in

Executive-Legislative relations as the Legislature is much more likely to be critical

of budgets and policies proposed by the Executive.

Another important variation in the legislative influence in the budget process

is its powers to amend budgets. The power of the Legislature to amend budgets

varies from country to country. In some, Parliament can increase or reduce while in

others Parliament can only reduce but not increase. This means that Parliament may

reduce or eliminate existing spending items but may not add new items or increase

existing ones.

In a survey of 81 countries, the Inter-Parliamentary Union captures these

differences as tabulated below:

A look at the classification will place Nigeria in the group - ‘not specified’. This is

because sections 81(1), 89(1), 121(1) and 129(1) do not specifically mention the

power of the National and States assemblies to amend the budget. This has often led

to confrontation between the Legislature and the Executive.

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Table 1: Budget Amendment Powers of National Parliaments

Powers Countries
May reduce and increase expenditure and revenue 32
May reduce but may not increase expenditure 17
Not specified 15
May reduce and increase expenditure if alternative
provisions are made elsewhere 13
May reduce expenditure but only increase it with the
permission of the government 4
Total 81

Source: Krafchik and Wehner (1996) “Parliaments and Budget Oversight”

<http://www.internationalbudget.org.
 106

2.6.5 Hindrances to Legislative Performance

The obstacles to effective legislative performance apart from Constitutional

constraints also include the wrong perception of the role of the Legislature by the

Executive. In many democratic set ups, the Legislature is seen as an intruder into the

affairs of the Executive. Therefore the Executive is not usually interested in a strong

or influential Legislature, as Garret (1980: 162) argues

it suites the government and the civil service that Parliamentary

interest and scrutiny is on ad hoc rather than a systematic basis and
therefore governments have usually strongly resisted the creation of
effective structures and systems for Parliamentary surveillance.

Martinez - Soliman (2003:5) agrees no less when he states that

Parliaments find themselves in an inferior position when it comes to

overseeing the Executive. The government, in fact all governments in
the world are trying to “work” and often consider the oversight
function as a delaying factor, a disturbing intrusion into their internal
affairs, or an invasion of their prerogatives… it could be insinuated
that the Parliaments’ means are restricted in order to make them
almost blind and deaf.

The Executive arm of government has always preferred rubber stamp

Legislature, as Nigro and Nigro (1982:392) point out

the tendency of some chief Executives to assign a secondary role to

the Legislature is revealed in the quoted words of one ex-governor
who said the Legislature should confine itself to “revising what the
governor submits, exercising in effect a veto power over his program,
studying in some depth specific matters and upon occasion initiating
ideas but not too frequently.

Further, they maintain that

governors may not openly oppose legislative improvements but it is a

rare governor who has contributed any energy or initiative to matters
of strengthening the Legislature.

The performance of Parliaments in Nigeria has attracted some comments

 107

which suggest that their performance has been below average. In recognition of the

fact that the legislative arm of government is supposed to provide the roadmap

towards good governance, this expectation has not been achieved in the case of

Nigeria, as Alli (1998:18) painfully points out

it has been observed that Parliaments both at the Federal and State
levels have over the years been unable to deliver on these promises.
The main reason we may hasten to point out is the great material
inadequacies of most legislators; a situation that has grown worse
with the worsening economic condition of the nation.

Other problems identified by Alli include low educational background and

the high level of partisanship of most legislators that have become obstacles to good

governance.

Tyoden (1998:87) also argues that legislators may not exercise the oversight

function because

legislators are preoccupied with many tasks as to have little time for
oversighting. At times, they are simply indifferent… Oversight is too
often pursued as a guerilla attack… rather than a continuous review
or monitoring of government programmes. The watch-dog and
corrective effect is therefore missed
.
He contends that the legislators may not be able to exercise the oversight

function because of alliances that develop between committees and agencies.

Regrettably, legislators who should be vanguards in the effective promotion of

democratic governance have failed to take the lead because

it is well documented that in the past republics, many legislators were

preoccupied with personal emoluments and other perquisite of office
to the detriment of their role as watchdogs and lawmakers for the
nation. Others were busy chasing contracts. Others were only too
happy to trade in their opinions and votes for favours from the
Executive…
It was generally believed that for a fee, legislators would approve any
proposal from the Executive (Alli 1998:19 - 20).
 108

It has also been alleged that Nigerian legislators demand gratification to

confirm appointments made by the Executive and to even pass budget proposals.

Nigerian legislators may not agree with their critics. Nigerian legislators often

attribute their weakness in the performance of their oversight function over the

Executive due to their financial dependence on the Executive.

Another factor that can alter the budgetary balance of power between the

Legislature and the Executive is the high level of debt incurred by some transition

countries. When international financial institutions attach stringent conditions to

loans, Parliaments’ role might be limited severely, to rubber stamping budgets that

reflect prior agreements between lenders and the Executive (Krafchik and Wehner)

To what extent do these observed obstacles affect legislative deployment of its

oversight function?

2.6.6 Strengthening Legislative Instruments of Control over Public Funds

The indisputable role of Parliament in enhancing good democratic

governance has been stressed, (Ahsan, 1994; Martinez-Soliman 2003; Sahgal 2001;

Best 1998:8 and Alli 1998). However, only strong Parliaments can perform this role.

The battle for supremacy between the Executive and Parliament especially in

presidential systems of government has tended to frustrate efforts aimed at

improving Parliamentary oversight functions in developing countries. The Executive

arm of government, which prefers weak Parliament cannot be partners in efforts to

strengthen Parliaments. The Executives have therefore demonstrated that they

cannot be champions of Parliamentary reform since the aim of Parliamentary reform

is to
 109

continue reinforcing democratic institutions to enable them control

governments’ action more effectively, to better enact laws applicable
to all and to better represent the electorate (Martinez-Soliman,
2003:9).

The good news is that the United Nations Development Programme (UNDP),

the World Bank, the International Monetary Fund (IMF) and the International Donor

Community in corroboration with the academia, the media, civil society and audit

institutions among others are working in partnership to assist weak Parliaments to

improve on their oversight functions.

The quality of Parliamentary oversight functions might be improved when

consideration is given to the following factors.

(a) Access to Relevant information. Legislative decision making is enhanced by

the provision of comprehensive, accurate and timely information supplied by

the Executive and the audit institution. Commenting on the relevance of

access to information, Robinson (1982:9) states that no legislative assembly,

whether it has the direct authority of the US Congress or relies on influence

like the British House of Commons, can possibly play an effective role in the

control of public expenditure if it does not have access to information about

what the Government does and how well it does it.

Comprehensiveness of budget information is a crucial issue. Also worthy of

mention is availability of information at the time required.

(b) Legislative Budget Research Capacity. This calls for the strengthening of

budget analysis units. Parliaments need access to research capacity to make

sound budgetary decisions, some of the more active Parliaments, for instance,
 110

the United States Congress, has substantial budget research capacity with

about 245 highly trained staff.

(c) The timing of the budget process. Parliaments require time if they are to

participate effectively in decision making. Depending on legislative budget

research capacity, a minimum of three to four months is required for

meaningful legislative scrutiny of draft budgets. The budget should be tabled

sufficiently in advance of the fiscal year to which it relates. This will curtail

Executive withdrawal from the consolidated revenue fund.

(d) Legislative Committees. The strength of the Legislature lies in its

committees. However for committees to be strong and influential they need

resources, adequate support staff and stable membership. The power of the

committees to summon individual and obtain all information that might be

relevant for an inquiry can reveal the influence of the Legislature.

(e) Cooperation between civil society and Parliaments in budget oversight.

Some Parliaments now involve the civil society organisations in the budget oversight

function. Krafchik and Wehner (2002:2) reports that

many Parliaments now open their proceedings to the media and the
public, and it is becoming more frequent for them to call for
submissions and outside experts to testify from the Parliaments
perspective, the input of civil society can help to make the
Parliament’s engagement with the budget more effective.

He further states that

some civil society organisations have provided budget training to

legislative staff and members and have provided accessible guides to
the budget process. In addition, civil society’s expertise can boost the
capacity of legislative committees to conduct independent analysis of
the budget. This is particularly important when adequate legislative
research capacity is not available.
 111

The involvement of civil society organisations in the budget process in

transition countries especially Nigeria is not noticeable. Committees usually

summon representatives of the relevant Ministries or parastatals to defend their

estimates in camera.

Their failure to engage the civil society will rob them the opportunity of

having a balanced view of the budget.

Other factors that may reinforce the autonomy of the Legislature and its

legislative oversight and representational functions include.

(f) Creation and strengthening of budget analysis units.

(g) Creation and strengthening of legislative drafting units.

(h) Development of Parliamentary libraries and research institutes.

(i) Training in Parliamentary journalism for the media and media techniques for

the Parliamentarians.

(j) Designing and implementing orientation models for new MPS and

(k) Developing and promoting inter-Parliamentary co-operation.

A strong Parliament is conceivable when the obstacles to performance have

been removed, that is when the issue of corruption has been properly stamped out.

Parliament can not perform its oversight function well when it shows little interest in

financial accountability, as (Samuel, 2002:15) argues

and the house, which is yet to open its books to the nation so that its
fund management style can be judged continues to weaken its moral
stand.

Perhaps it is Legislature’s lack of interest in accountability that undermines

its influence more than the supposed financial dependence on the Executive.
 112

The 1999 Constitution of the Federal Republic of Nigeria that assigns a lot of

financial powers to the Parliaments have failed to anticipate the receptiveness of

accountability by Parliamentarians.

Perhaps we can claim that the development of good legislative practice in

Nigeria has been delayed by the long occupation of the political terrain by the

military who usually combine both law making and Executive functions. What

perhaps is needed is Parliamentary re-engineering.

2.6.7 Other Legislations aimed at Promoting Financial Accountability in

Nigeria

Apart from the Constitution and other financial laws which prescribe how

public funds should be managed, other legislations have also been enacted to help

promote transparency and accountability in Nigeria. These legislations include

(a) The Anti-Corruption Act, 2000

(b) The Code of Conduct Tribunal

(c) The Economic and Financial Crimes Commission (EFCC) and

(d) Due Process

All these legislations are designed to enthrone financial accountability in

Nigeria. The success or otherwise of these legislations are outside the scope of this

research.

2.7 SUMMARY OF THE CHAPTER

This chapter has reviewed relevant literature in the area of public sector

financial control. The roles of the Executive arm of Government, the Auditor
 113

General and the Legislature in discharging financial accountability in the public

sector were extensively reviewed.

On the basis of the literature reviewed it was observed that there is need to

reinforce the institutions of financial control in the public sector, of which Plateau in

Nigeria is no exception.

It is observed that there is a failure to link the three institutions of financial

control namely; the Executive, the legislature and the Auditor General. The absence

of these interrelationships in financial control is one of the fundamental areas to be

addressed by this research.

 114

CHAPTER THREE
METHODOLOGY

3.1 INTRODUCTION

One way by which knowledge can be acquired is through the scientific

method. What differentiates the scientific method from other methods are the

assumptions and the methodology. According to Frankfort - Nachmias and

Nachmias (1996:13) a scientific methodology “is a system of explicit rules and

procedures upon which research is based and against which claims for knowledge

are evaluated.”

The rules and procedures on which research is based are not constant - they

are ever changing. Methodology provides the criteria for empirical objectivity, the

methods and techniques for validation and the rules for communication. The

methodology prescribes the methods and procedures used in this research. The rules

of validation are also explained. This provides the basis upon which the results of

this research can be relied upon.

This chapter discusses the sources of data, the methods and techniques used

in collecting such data, the target group for study, the population and sample sizes

and the methods used in analysing the data.

3.2 SOURCES OF DATA

The data for this study was obtained from two main sources - primary and

secondary sources.
 115

3.2.1 The Primary Data Source

The administration of questionnaires, personal observation and oral

interviews constituted the principal sources for obtaining primary data. The

questionnaire for this research is divided into three (3) sets. Set “A” of the

questionnaire was designed for employees of the Ministry of Finance who are

directly involved in accounting duties.

This set of questions evaluated the role of treasury staff in financial record keeping

and reporting.

Set “B” of the questionnaire was designed for staff of the Auditor-General.

The questions attempted to determine the role of State Audit in promoting financial

accountability in the public sector. The questions also evaluated the relationship

between State Audit and the Executive on one hand and State Audit and the

legislature on the other hand.

Set “C” of the questionnaire was designed for elected legislators. The

questions in this section attempted to examine the role of the Legislature in

promoting financial accountability in the State. The questions also sought to find out

whether the Legislature has been able to discharge its Constitutional responsibility of

overseeing the Executive on financial matters.

Personal interviews were conducted into areas that were not satisfactorily

explained in the questionnaires.

3.2.2 The Secondary Data Source

The secondary data for this study was obtained from textbooks, journals,
 116

newspapers, government publications, internet browsing, CR-ROM search, the

offices of the Accountant-General and the Auditor-General and the Ministry of

Budget and Planning, Plateau State.

Specifically, the secondary data collected included budgeted and Actual

spending during democratic periods and audit queries raised and responded to.

3.3 POPULATION OF STUDY

The Ministry of Finance was contacted for the list of accounting operating

staff. Similarly the Office of the Auditor-General was also consulted for the list of

audit operating staff. The house of assembly was also consulted for the list of house

members. From the preliminary survey, the population for the study consists of:

Treasury operating staff (as at 31.12.2003) 286

Audit operating staff (as at 31.12.2003) 76

House of assembly members (as at 31.12.2003) 24

Total - - - 386

Being active participants in the managing of public funds, this population, we

believe know about the accountability arrangements in the public sector and as such

hold important opinion from which this research can benefit tremendously.

3.3.1 Sampling Procedure

In this research, the simple random sampling was used for the purposes of

obtaining response to the questionnaires administered.

Frankfort - Nachmias and Nachmias (1996:186) argue that

 117

random selection procedures ensure that every sampling unit of the

population has an equal and known probability of being included in
the sample; this probability is n/N, where n stands for the size of the
sample and N for the size of the population.

3.3.2 Sample Size Determination

Mason and Lind (1993:319) state that

there are three factors that determine the size of the sample… the
degree of confidence selected; the maximum allowable error and the
variation of the population.

The formula for determining the sample size (n) under the simple random

sampling method is given by Mendenhall (1993:303) as

n = NS2
(N - 1)(b/z)2 + S2 - (1)
where

N = the population of study

S2 = the sample variance obtained from pilot survey

b = the bound on the error of estimation

z = normal random variable corresponding to a confidence

coefficient of (1 - α)

The formula requires the use of a sample variance (S2). Since this was not

known a pilot survey was conducted. This was followed by a second pilot survey in

September 2003 which was designed to test the validity of the instrument of

measurement.

During the first pilot study, twenty copies of the questionnaires were

distributed to treasury operating staff, ten to staff of the Auditor-General, and five to

members of the Plateau State House of Assembly. Tables 2 and 3 show the

distribution.
 118

Table 2: Questionnaire Administered and Returned (Administered in August

2003).

Institution of Financial Number Number Valid %

Control Administered Returned
Executive 20 20 100
State Audit 10 10 100
Parliament 5 5 100

Source: (Field Survey, 2003)

 119

The first pilot survey which was conducted in August 2003 had a response

rate of 100%. The technique used for the administration of the questionnaire was the

simple random sampling method.

The high return rate suggested that not only were the questions understood by

the respondents but it also indicated their enthusiastic willingness to participate in

the research.

The sample variance was calculated based on table 3.

The Sample Variance (S2) can be calculated using the formula below:

S2 = Σ(fX)2 - (Σ fX)2 - (2)

n
n-1
Substituting in the formula (2) above, we have

S2 = 2197 - (97)2
35
35 – 1

S2 = 2197 - 268.83
34

S2 = 56.71

To calculate the sample size (n) we substitute in equation (1)

n = _ 386 (56.71) _
2
(386 - 1) 0.9 + 56.71
1.96
Here,

S2 = 56.71 (from pilot survey)

Z = 1.96 (from statistical table)

b = 0.9 (chosen)

N = 386 - population of study

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Table 3: Computation of Sample Variance Based on Pilot Study

Χ f fX (fX)2
1 0 0 0
2 3 6 36
3 18 24 576
4 7 28 784
5 3 15 225
6 4 24 576
2
ΣX = 21 Σf = 35 Σ(fX) = 97 Σ(fX) = 2197
 121

Solving we have

n = 21890.06
137.56

n = 159.13

n rounded up to 160

n shall now be allocated proportionally using the formula below:

n Ni - (3)
N

Where n = sample size

Ni = Population of study in each financial control institution

N = Total population of study in each financial control institution

ni = n Ni
N

= 160 X 286
386 = 119

n2 = 160 X 76
386 = 32

n3 = 160 X 24
386 =9
 122

Table 4: Sample Size Distribution Based on Pilot Survey

Financial Control Population of Sample Size (ni)

Institution Study
Executive 286 119
State Audit 76 32
Legislature 24 9
Total 386 160
 123

3.4 METHOD OF DATA ANALYSIS

The four hypothesis were tested using the chi-square test as generated from

secondary data. The chi-square test is a test of independence between variables. We

used simple percentages in areas where we expected significant findings but

hypotheses were not formulated.

The formula for computing the 2 test given by Anderson, et al (1997: 403) is;

2 = ίj (fij - ℮ij)2

℮ij
Where ;
fij = observed frequency for contingency table category in row ί and

column j .

℮ij = expected frequency for contingency table category in row ί and

column j based on the assumption of independence, with n rows and

m columns in the contingency table. The test statistic has a chi-square

distribution with (n - 1) (m - 1) degrees of freedom provided that the

expected frequencies are 5 or more for all categories.

 = double summation sign

3.4.1 Test of Validity

Our analysis of data involves measurement. One instrument of measurement

is the questionnaire. Measurement procedures in a research like this is seldom

perfect. Measurement errors can occur due to real differences or artifact differences

in the properties being measured. Measurement errors can introduce an element of

invalidity to the research findings. As a result techniques have been introduced to

reduce such measurement errors.

 124

Validity as a technique for reducing measurement errors refers to “the degree to

which a measuring instrument measures what is supposed to measure” (Frankfort -

Nachmias and Nachmias 1996:599).

Three kinds of validity can be identified and these include content validity, empirical

validity and construct validity.

(j) Content Validity. Two forms of content variety exist: face validity and

sampling validity. Face validity refers to the extent to which the researcher

believes that the instrument is appropriate. While sampling validity is

concerned with whether a given population is adequately sampled by the

measuring instrument. Do the statements and questions adequately represent

the property being measured?

(ii) Empirical Validity. This addresses the relationship between a measuring

instrument and the measurement outcomes. Investigators hold the opinion

that if a measuring instrument is valid, there should be a strong correlation

between the results and the real relationships existing among the properties

measured.

Predictive validity is the most widely used test to evaluate empirical validity.

With predictive validity researchers predict the results they expect to obtain in

relation to an external measure called, a criterion. Predictive validity is a measure of

correlation between the results of a given measurement and an external criterion.

For this research predictive validity the instrument was tested using the results of the

pilot surveys conducted. The correlation formula given by Frankfort - Nachmias and

Nachmias (1996:420) is
 125

NΣXY - (ΣX) (ΣY)

r =
[NΣX2 - (ΣX)2] [NΣY2 - (ΣY2) - (4)

where

r = correlation coefficient

X = deviation from the mean of one variable

Y = deviation from the mean of the corresponding variable

Results of the two tests conducted in August and September 2003 are used to

predict the validity of the research.

Substituting in formula (4) above we have

10 (448) - (35) (35)

r =
√ 10(407)-(35)2 10(507)-(35)2

3255
r =
√ (10939025)

r = 3255
3307.42

r = 0.98
 126

Table 5: Correlation coefficient Between First and Second Tests

First Test Second Test

Χ Y Χ2 Y2 XY
0 0 0 0 0
3 1 9 1 9
8 21 324 441 378
7 5 49 25 35
3 6 9 36 18
4 2 16 4 8
ΣX = 35 ΣY = 35 ΣX2 = 407 2
ΣY = 507 ΣXY = 448
 127

The high correlation between the two tests suggests that the validity of the

instrument of measurement is obvious.

(ii) Construct Validity. Frankfort-Nachmias and Nachmias (1996) suggest that

researchers establish construct validity by relating a measuring instrument to

a general theoretical framework to be able to evaluate whether the instrument

is related to the assumptions and concepts being used.

3.4.2 Test of Reliability

Where evidence of validity is questionable, the researcher has to evaluate the

measuring instrument with respect to other characteristics and assume its validity.

Researchers frequently evaluate an instrument by its degree of reliability.

According to Frankfort-Nachmias and Nachmias (1996:170) reliability refers to

the extent to which a measuring instrument contains variable errors,

that is, errors that appear inconsistently from observation to
observation during any one measurement attempt or that vary each
time a given unit is measured by the same instrument.

There are three ways of estimating reliability: the test-retest method, the

parallel-forms technique and the split-half method.

(i) Test-Retest Method. With this method the researcher administers the

measuring instrument to the same group of people but at two different times

and calculates the correlation co-efficient. The correlation coefficient is the

reliability estimate.

(ii) Parallel-Forms Technique. The researcher develops two parallel versions of

a measuring instrument. The two sets are administered to the same group of

persons and the correlation between the two sets is computed.

 128

(iii) Split-Half Method. Under this method, reliability is estimated by treating

each of two or more parts of a measuring instrument as a separate item. The

two sets are then correlated.

Test of reliability is necessary when the validity of the measuring instrument

is lacking. For this research, the validity of the measuring instrument has

already been tested and it was found to be very valid. Therefore, it is not

necessary to carry out any reliability test.

 129

CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS

4.1 INTRODUCTION

In this chapter, we present our data obtained from the field. We also analyse

the data and discuss our findings. Two types of data were generated for this research

- secondary and primary. The primary data were collated and coded before being

analysed. The use of analysis enables interpretations to be made and conclusions

drawn from generated data.

4.2 DATA PRESENTATION

One statistical method was used to test the four hypotheses formulated in this

research - the chi-square (2) test statistic. The 2 test was used because the data

obtained are based on frequencies. For other analysis, simple percentage was

employed.

4.2.1 The Chi-square Test

The four hypotheses of this research were tested using the 2 test. The

application of the 2 test is to test for the independence of two variables. The

formula for computing the 2 test given by

Anderson, et al (1997 : 403) is;

2 = ίj (fij - ℮ij)2

℮ij
Where ;
fij = observed frequency for contingency table category in row ί and

column j .
 130

℮ij = expected frequency for contingency table category in row ί and

column j based on the assumption of independence, with n rows and

m columns in the contingency table. The test statistic has a chi-square

distribution with (n - 1) (m - 1) degrees of freedom provided that the

expected frequencies are 5 or more for all categories.

 = double summation sign

4.2.2 Test of Hypothesis One

Hypothesis one is:

H0 : The public budget is not a significant instrument of Legislative control over

public finance in Plateau State.

H1 : The public budget is a significant instrument of Legislative control over

public finance in Plateau State.

We used questions 9 & 10 in set ‘A’ to generate data for hypothesis one. These

questions have the distribution shown in table 6 and 7 and the contingency table

(table 8).
 131

Table 6: Level of Budget Implementation

Level of Implementation of Frequency

Public Budget
1% - 25% 6
26% - 50% 65
51% - 75% 45
76% - 100% 3
Total 119

Source (Field Survey, 2004)

 132

Table 7: Significance of the Legislature in Controlling Public Finance

Significance of the Legislature in Frequency

using the budget to control public
finance
Highly Significant 4
Significant 42
Insignificant 61
Highly Insificant 12
Total 119

Source: (Field Survey, 2004)

 133

Table 8: Public Budget Implementation by the Executive Arm of Government

Significance of Level of Public Budget Implementation by the

the Legislature Executive arm of Government
using the Budget 1% - 26% - 51% - 76% - Total
to control Public 25% 50% 75% 100%
Finance
Highly Significant 1 2 1 0 4
(0.20) (2.18) (1.51) (0.10)
Significant 1 22 18 1 42
(2.12) (22.94) (15.88) (1.06)
Insignificant 2 36 22 1 61
(3.08) (33.32) (23.07) (1.54)
Highly
Insignificant 2 5 4 1 12
(0.61) (6.55) (4.54) (0.30)
Total 6 65 45 3 119

Source: Field Survey, (2004)

 134

The expected frequencies for each cell are obtained by multiplying the two

totals common to the cell and dividing by N - total number of observations.

Thus,
4 X 6 = 0.20
119
Other expected frequencies are obtained in a similar manner.

However, to calculate the chi-square test statistics, the expected frequency for each

category must be 5 or more for each category (Anderson et al 1997).

After reviewing the expected frequencies we found that some cells have expected

frequencies of less than 5. We therefore proceed with the process of merging to

improve on the deficient cells until we meet the requirements for the 2 test statistic.

For a detailed analysis, refer to appendix B.

The process of merging gave rise to a two-by-two contingency table as

shown in table 9.

Lere et al (2002:112) gives the formula for the two-by-two table as;

2 = N (AD - BC)2 _
(A+B) (C+D) (A+C) (B+D)

with 1 degree of freedom.

where: N = total number of respondents

A = 1st cell B = 2nd cell

C = 3rd cell D = 4th cell

Substituting in the formula we obtain below

2 = 119 [(26) (28) - (20) (45)]2

(46) (73) (71) (48)

2 = 0.31

2 calculated = 0.31 < 2(1,0.05) = 3.841

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Table 9: Public Budget Implementation by the Executive Arm of Government.

Significance of the Level of budget

Legislature in using implementation by the
the budget to control Executive arm of Total
public finance government
1% - 50% 51% - 100%
Highly Significant / 26 20 46
Significant (27.45) (18.55)
Highly Insignificant/ 45 28 73
Insignificant (43.55) (29.45)
Total 71 48 119
Source: Field Survey, (2004)
 136

Since the value of our 2 calculated is less than the value of 2 tabulated as

shown above, we accept H0 which states that the public budget is not a significant

instrument of legislative control of public finance in Plateau State.

4.2.3 Test of Hypothesis Two

Hypothesis two is:

H0: The performance of the Auditor-General is not significantly dependent on the

financial statements prepared by the Executive arm of government.

H1: The performance of the Auditor-General is significantly dependent on the

financial statements prepared by the Executive arm of government.

Questions 5 and 6 in set “B” of the questionnaires were used to generate data

for this hypothesis. The questions have the distribution shown in tables 10, 11 and

12.
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Table 10: Reliance of the Auditor-General on Financial Statements prepared by

the Executive

Level of Reliance Frequency

1% - 25% 2
26% - 50% 17
51% - 75% 7
76% - 100% 6
Total 32

Source: (Field Survey, 2004)

 138

Table 11: Performance of State Auditors

Effect on Performance of State Frequency

Auditors
Highly Significant 0
Significant 14
Insignificant 17
Highly Insignificant 1
Total 32

Source: (Field Survey, 2004)

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Table 12: Effect of Reliance on Financial Statements Prepared by the Executive

on Performance of State Auditors.

Effect on Level of Reliance on Financial Statements

Performance Prepared by the Executive
of State 1 - 25% 26 - 50% 51 - 75% 76 - Total
Auditors 100%
Highly Significant 0 0 0 0

Significant 0 7 4 3 14
(0.875) (7.44) (3.06) (2.63)
Insignificant 2 9 3 3 17
(1.06) (9.03) (3.75) (3.187)
Highly 0 1 0 0 1
Insignificant
(0.063) (0.531) (0.219) (0.188)
Total 2 17 7 6 32
Source: Field Survey, (2004)
 140

A review of the expected frequency cells indicates that some of the cells are

deficient. To satisfy the requirement for the calculation of the 2 test statistic, we

merge to improve on the deficient cells. For a detailed analysis refer to appendix

B. The requirement for the calculation of the 2 test statistic was found in two-by-

two contingency table as shown in table 13.

The formula for the two-by-two contingency table is as given in hypothesis

one.

Substituting in the formula we have

2 = 32[(7) (6) - (7) (12)]2

(14) (18) (19) (13)

2 = 0.91

2 calculated = 0.91 < 2(1,0.05) = 3.841

Since 2 calculated is less than 2 tabulated as demonstrated above, we accept

H0 which states that the reliance of the Auditor-General on the financial statements

prepared by the Executive arm of government does not significantly enhance his job

performance. This means that the performance of the Auditor-General as

government auditor is independent of his reliance on the financial statements

prepared by the Executive for his audit.

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Table 13: Effect of Reliance on Financial Statements Prepared by the Executive

on Performance of State Auditors

Effect on Level of Reliance on

Performance of State Financial Statements
Auditors Prepared by the Executive Total
1% - 50% 51% - 100%
Highly Significant/ 7 7 14
Significant (8.31) (5.69)
Highly Insignificant/ 12 (10.69) 6 18
Insignificant (7.31)
Total 19 13 32
Source: Field Survey, (2004)
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4.2.4 Test of Hypothesis Three

Hypothesis three is;

H0 : State Audit performance is not significantly dependent of the quality of

legislative financial oversight.

H1 : State Audit performance is significantly dependent on the quality of

legislative financial oversight.

The data for this hypothesis were generated using questions 7 and 8 in set

“B” of the questionnaires. These questions have the frequency distribution shown in

tables 14 and 15. The contingency table (table 16) is derived from tables 14 and 15.

After reviewing the expected frequency cells we found that some cells have

expected frequencies of less than 5. We therefore merge such cells to improve on

the deficient cells. Refer to Appendix B for a detailed analysis.

Having improved on the deficient cells, we compute the chi-square statistics as:

2 = ίj (fij - ℮ij)2

℮ij
Thus;
2 = (5 - 5.5)2 + (8 - 5) 2 + (3 - 5.5) 2 +
5.5 5 5.5

(6 - 5.5) 2 + (2 - 5) 2 + (8 - 5.5) 2 +
5.5 5 5.5

2 = 6.375

The degree of freedom is (3-1) (2-1)

(2) (1)
= 2

2 is critical at 5% confidence level with a degree of freedom of 1 = 5.99.

Since 2 calculated = 6 > (0.05) = 5.99, we reject H0.

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Table 14: Performance of the Public Accounts Committee (PAC)

Quality of PAC Performance Frequency

Very Good 4
Good 7
Average 10
Poor 11
Total 32

Source: (Field Survey, 2004)

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Table 15: Influence of PAC on State Auditors

Influence on job performance of

State Auditors Frequency
Positive influence 16
Negative influence 12
No influence 4
Total 32

Source: (Field Survey, 2004)

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Table 16 - Quality of PAC Performance and its Influence on State Auditors.

Influence on job Quality of PAC Performance

Performance of Very Good Average Poor Total
State Auditors Good
Positive influence 1 24 8 3 16
(2.0) (3.5) (5) (5.5)
Negative influence 2 2 2 6 12
(1.5) (2.63) (3.75) (4.13)
No influence 1 1 0 2 4
(0.5) (0.88) (1.25) (0.5)
Total 4 7 10 11 32
Source: Field Survey, (2004)
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Rejecting H0 means that the State Audit performance is significantly

dependent on the quality of Legislative financial oversight. In other words, the

quality of Legislative financial oversight has a significant effect on State Audit

performance.

4.2.5 Test of Hypothesis Four

Hypothesis four is;

H0 : There is no significant difference between the qualification of treasury

operating staff and the number of financial records kept.

H1 : There is significant difference between the qualification of treasury operating

staff and the number of financial records kept.

To generate data for this hypothesis we used questions 2 and 3 in set “A” of

our questionnaires.

These questions have the following frequency distribution shown in tables 17

and 18 and the contingency table (table 19).

A review of the cells shows that some cells are deficient. We therefore

merge such cells to improve on the deficient cells until we satisfy the requirement for

the calculation of the 2 test.

See Appendix B for a detailed analysis.

The resultant table after merging is a two-by-two contingency table, shown in table

20.
 147

Table 17: Qualification of Treasury Staff

Highest Educational/ Professional Frequency

qualification
ACCA/ACA/CNA 6
M.Sc/MBA 6
B.Sc/HND 32
DIP/NCE 68
GCE/SSCE 7
Total 119

Source: (Field Survey, 2004)

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Table 18: Financial Records Kept

Number of Financial Records Frequency

kept
1-5 71
6 - 10 41
11 and above 7
Total 119

Source: (Field Survey, 2004)

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Table 19: Treasury Operating Staff Qualification and Number of Financial

Records Kept

Number of
Financial Qualification of Treasury Operating Staff
Records kept ACCA/ M.Sc/ B.Sc/ DIP/ GCE/ TOTAL
by Treasury ACA/ MBA HND NCE SSCE
Operating CNA
Staff
1-5 2 3 18 43 5 71
(3.58) (3.58) (19.09) (40.57) (4.18)
6-10 3 1 13 23 1 41
(2.07) (2.07) (11.03) (23.43) (2.41)
11 and above 1 2 1 2 1 7
(0.35) (0.35) (1.88) (4) (0.41)
Total 6 6 32 68 7 119
Source: Field Survey (2004)
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Table 20: Treasury Operating Staff Qualification and Number of Financial

Records Kept.

Number of Financial Qualification of Treasury Staff

Records Kept by ACCA/ACA/CA/ DIP/NCE/GC Total
Treasury Operating MSc/MBA/BSC/ E/SSCE
Staff HND
1 – 10 23 48 71
(25.69) (15.31)
11 and above 21 27 48
(68.31) (40.69)
Total 44 75 119
Source: Field Survey, (2004)
 151

We therefore compute the 2 test as:

2 = N (AD - BC)2 _
(A+B) (C+D) (A+C) (B+D)

= 119[(23) (27) - (48) (21)]2

(71) (48) (44) (75)

2 = 1.58

2 critical at 5% confidence level = 3.841

Since 2 calculated = 1.58 < 2(1,0.05) = 3.841 we accept H0.

Accepting H0 implies that there is no significant difference between the

qualification of treasury operating staff and the number of financial records kept. In

other words, the number of financial records kept is not solely dependent on the

qualification of those who keep them.

4.3 OTHER ANALYSES

Here, we carry out other analysis that were not covered by our hypotheses,

but from which major findings are expected.

4.3.1 Legislative Reliance on the Executive for Funding

What is the influence of the Executive’s funding on the financial oversight

function of the Legislature? This is a critical question. Question 14 addresses this

problem. The views of respondents are tabulated in table 21.

Table 21 reveals that Executive funding of legislature has an adverse effect on

legislative performance. A single majority of 6 or 60% stated that they are

ineffective as a result of funding from the Executive. Only 1 respondent stated that

he is effective.
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Table 21: Effect of Financial Support from the Executive on Legislative

Performance

Level of Effectiveness Frequency %

Highly effective 0 0
Effective 1 11.11
Ineffective 6 66.67
Highly ineffective 2 22.22
Total 9 100
Source: Field Survey, (2004)
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4.3.2 Infringement on Financial Regulations/Instructions

The research sought to establish infringement on financial

regulations/instructions. The pattern of responses is tabulated in appendix B.

The results of our survey indicate that cases of payment not supported by payment

vouchers; absence of prepayment audit and payment without supporting documents

occur frequently at 48.74%, 49.58% and 38.66% respectively, (tables 22, 23, 24 and

25).

4.3.3 Budgetary Infringement

These refer to non-compliance. These are tabulated in appendix B.

Tables 26, 27, 28 and 29 in appendix B reveal that budgetary non-compliance

are quite frequent. Offences of expenditure without budgetary provision, cases of

exceeded votes, under funding of approved estimates and none funding of approved

estimates receive the highest scores of 47.06%, 57.98%, 51.26% and 39.50%

respectively. While 9 representing 7.56%, 11 or 9.24% and 16 or 13.44% maintain

that these offences never occur.

4.3.4 Performance of the Formal Institutions of Financial Control on Public

Funds

The researcher further sought the views of respondents on the performance of

the three formal institutions of financial control and whether the checks and balances

on public funds are effective.

Their responses are tabulated in tables 30, 31 and 32.

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Table 30: Operation of Financial Control by the Executive

Level of Performance Frequency %

Very good 0 0
Good 17 14.29
Average 55 46.22
Poor 47 39.49
Total 119 100

Source: Field Survey, (2004)

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Table 30 indicates that the operation of financial control by the Executive has

been adjudged to be average at 46.22%, poor at 39.49% and good at 14.29%. No

respondent assessed the control mechanism to be very good.

Survey result from table 31 reveals that 61 respondents representing 51.26%

stated that the quality of State Audit work is average; 35 respondents or 29.41%

stated that State Audit work is poor; 21 respondents or 17.65% stated that it is good,

while only 2 respondents representing 1.68% stated that the Quality of State Audit

work is very good.

Table 32 shows that 71 respondents representing 59.66% of the respondents

indicated that the checks and balances on public funds are ineffective; 35

respondents or 29.41% indicated that the checks and balances are highly ineffective,

while 13 respondents or 10.93% maintained that the checks and balances are

effective.

4.3.5 Financial Record Keeping in Plateau State

Why are proper financial records not kept in Plateau State? The views of

respondents have been presented in table 33.

Table 33 suggests that the major reason for lack of proper record keeping in Plateau

State is carelessness on the part of operating treasury staff at 39.5%. 20.17%

attributed it to lack of qualified staff; 15.95% stated that it is due to the inadequate

number of accounting staff, while 10.92% stated that all the listed factors are

responsible.
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Table 31: Quality of State Audit Work

Quality of Audit Frequency %

Very Good 2 1.68
Good 21 17.65
Average 61 51.26
Poor 35 29.41
Total 119 100

Source: Field Survey, (2004)

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Table 32: Effectiveness of the Checks and Balances on Public Funds

Level of Effectiveness Frequency %

Highly Effective 0 0
Effective 13 10.93
Ineffective 71 59.66
Highly Ineffective 35 29.41
Total 119 100

Source: Field Survey, (2004)

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Table 33: Financial Record Keeping

Reasons for Poor Financial Record

Keeping Frequency %
a) Inadequate Number of Qualified staff 24 20.17
b) Inadequate Number of Accounting staff 19 15.97
c) Carelessness on the part of Accounting 47 39.50
Staff
d) Lack of Interest from Accounting Officers 8 6.72
e) All of the above 13 10.92
f) None of the above 4 3.36
g) Others – specify 4 3.36
Total 119 100

Source: Field Survey, (2004)

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4.3.6 Requirement for the preparation of Accounts

Financial instructions, rules and circulars stipulate that the under listed

accounts be maintained to facilitate the preparation of financial accounts. They are

listed in table 34 in appendix B.

4.3.7 Audit Queries and Other Financial Offences

Audit queries are issued when auditors are not satisfied with evidence

presented or explanations made. The number of audit queries issued and the amount

involved from 1998 to 2003 is presented below:

Table 35 reveals that audit queries are issued each fiscal year. Between 1999

and 2003, a total number of 112 audit queries involving a total amount of

N7,625,400 was issued. Table 35 also indicates that out of the 43 audit queries

issued in 1999 33 or 76.74% were answered and of the 19 audit queries issued in

2000, only 8 or 42.11% were answered. However, between 2001 and 2003, a total

number of 50 audit queries were issued, none of which was replied.

Table 36 captures the nature of financial offences that gave rise to audit queries

between 1999 and 2003.

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TABLE 35: Audit Queries and Amount Involved

1999 2000 2001 2002 2003 Total

Number of
Audit Queries
Issued 43 19 21 16 13 112
Amount
Involved N2,750,400.00 N370,000.00 N1,670,000.00 N1,875,000.00 N960,000.00 N7,625,400.00
Number of
Audit Queries
Answered 33 8 Nil Nil Nil 41
Amount
Involved N2,160,500.00 N120,000.00 - - - N2,280,500.00

Source: Office of the Auditor-General, Plateau State, (2004)

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Table 36: Nature of Financial Offence that gave rise to Audit Queries

1999 2000 2001 2002 2003 Total

Cash Shortages
No. 15 6 7 4 2 34

Amount N482,000.00 N95,500.00 N335,000.00 N543,000.00 N170,000.00 N1,625,500.00

Payments
without
supporting
documents 19 9 9 8 6 51

Amount N1,650,000.00 N167,300.00 N1,020,000.00 N955,300.00 N580,000.00 N2,793,500.00

Unretired
Advances 4 3 4 2 3 16

Amount N520,000.00 N89,500.00 N300,000.00 N285,000.00 N196,500.00 N1,391,000.00

Stock
Shortages 5 1 1 2 2 11

Amount N98,000.00 N17,700.00 N15,000.00 N91,704.00 N13,500.00 N235,904.00

Source: Office of the Auditor-General Plateau State, (2004)

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Table 36 indicates that reported cases of cash shortages were 34 between

1999 to 2003. The total amount of cash shortages in these reported cases is

N1,625,500.

The table also reveals that between 1999 and 2003 a total number of 51

payments were made without supporting documents. This data tallies with the

responses in table 25 (in the appendix) where 46 or 33.66% of respondents stated

that payment without supporting documents are frequent, while 31 representing

26.05% maintain that its occurrence is infrequent. Total payments made without

supporting documents during the period under reference amounted to N2,793,500.

Similarly, unretired advances reported were 16 cases involving N1,391,000 during

the period under review.

Stock shortages also occurred during this period involving a total amount of

N235,904 in 11 reported cases.

The research further sought the views of State Auditors on the prompt and

proper disposal of audit queries by the Executive. Their responses are presented in

table 37.

From table 37, 8 respondents representing 25.81% stated that they are highly

dissatisfied. 19 or 58.38% maintained that they are dissatisfied. Only 4 respondents

representing 12.5% stated that they are satisfied. No respondent was highly satisfied.

Only 1 respondent was not sure.

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Table 37: Disposal of Audit Queries by the Executive Arm of Government.

Rating of Satisfaction Frequency %

a) Highly dissatisfied 8 25
b) Dissatisfied 19 59.38
c) Satisfied 4 12.5
d) Highly satisfied 0 0
e) Not sure 1 3.12
Total 32 100

Source: Field Survey, (2004)

 164

58.06% of the respondents by table 37 stated that they are dissatisfied with

the performance of the Executive arm of government with respect to the prompt and

proper disposal of audit queries. This is consistent with the secondary data in table

35.

Audit queries are not the only issues raised by State Auditors. Issues relating

to internal control and compliance to rules and regulations may also be raised in

audit reports or letters to management. How are these issues treated by the

Executive? The views of respondents are presented in table 38.

From Table 38, it is observed that 20 respondents representing 62.5%

maintained that they are dissatisfied with the response of the Executive arm of

government on issues raised by State Audit. Only 4 or 12.5% are satisfied. 1 or

3.12% was not sure.

4.3.8 Effect of Financial and Material Support on State Auditor’s

Independence

The issue of independence is very crucial to the concept of auditing. The support -

both material and financial received by State Auditors is equally important. What

are the views of State Auditors on these issues? These views are presented in tables

39, 40 and 41.

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Table 38 - Satisfaction with the Follow-up by the Executive Arm Of

Government On Issues Raised by State Audit.

Satisfaction Level Frequency %

a) Highly dissatisfied 7 21.88
b) Dissatisfied 20 62.5
c) Satisfied 4 12.5
d) Highly satisfied 0 0
e) Not sure 1 3.12
Total 32 100

Source: Field Survey, (2004)

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Table 39: Level of State Auditors’ Independence in the

Performance of its Audit Work

Level of Independence Frequency %

76% - 100% 1 3.12
51% - 75% 15 46.88
26% - 50% 16 50
1% - 25% 0 0
Total 32 100

Source: Field Survey, (2004)

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The survey result shows that State Auditors have average independence, the degree

of independence ranging between 26% - 75%. Only 1 respondent representing

3.12% stated that his level of independence ranges between 76% - 100%.

Table 40 tabulates the views of State-Auditors on their satisfaction with the

material and financial support they receive from the Executive arm of government.

Table 40 shows that State Auditors are dissatisfied with the financial and

material support they get from the Executive arm of government 8 or 25% are highly

dissatisfied, 19 or 59.38% are dissatisfied. 4 respondents are satisfied, while 1 was

not sure.

In table 41 no respondent is highly effective as a result of financial and

material support from the Executive. 13 respondents representing 40.63% stated that

they perform effectively under the influence of financial and material support with

17 or 53.12% of respondents stating that they perform ineffectively. Only 2

respondents or 6.25% stated that they are highly ineffective as a result of the support.

We now explore other measures that may promote financial accountability in the

State.

4.3.9 Measures to Promote Financial Accountability

We sought the views of respondents on ways to promote financial

accountability. Respondents were free to suggest any number of measures that will

promote financial accountability. No list of measures was provided to guild the

participants in this research. These views are presented in table 42.

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Table 40: Financial and Material Support

Satisfaction Level Frequency %

a) Highly dissatisfied 8 25
b) Dissatisfied 19 59.38
c) Satisfied 4 12.5
d) Highly satisfied 0 0
e) Not sure 1 3.12
Total 32 100

Source: Field Survey, (2004)

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Table 41: Effect of Financial and Material Support on State Auditor’s

Performance

Level of Effect Frequency %

a) Highly effective 0 0
b) Effective 13 40.63
c) Ineffective 17 53.12
d) Highly ineffective 2 6.25
e) Others - specify 0 0
Total 32 100

Source: Field Survey, (2004)

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Table 42: Measures to Promote Financial Accountability

Measures Frequency %
Establishment of Due Process 108 14.01
Compliance to financial rules and regulations 102 13.23
Compliance to Budget approval 101 13.10
Reduction in corruption 98 12.71
Training for new employees 72 9.34
Supervision of treasury staff 63 8.17
Implementation of audit advise 61 7.91
Computerisation of Government accounts 58 7.52
Punishment of financial offenders 55 7.13
Adequate funding of the Office of the Auditor- 32 4.15
General
Financial autonomy of the legislature 9 1.17
Others 12 1.56
Total 771 100
Source: Field Survey (2004)
 171

All respondents suggested more than one measure to help promote financial

accountability.

From table 42 eleven (11) measures were identified as factors that can

promote financial accountability by the respondents. One hundred and eight (108)

respondents suggested that the establishment of Due Process will enhance the

discharge of financial accountability. One hundred and two (102) suggested

compliance to rules and regulations. One hundred and one (101) listed compliance

to budget approval, while ninety-eight (98) opined that when corruption is reduced or

eradicated, financial accountability would improve. Other factors that would

promote financial accountability include: training for new employees (72); close

supervision of treasury operating staff (63); implementation of audit advice (61);

computerization of government accounts (58); punishing financial offenders (55);

adequate funding of the office by the Auditor-General (32) and the granting of

financial autonomy to the legislature (9).

Some respondents listed other factors to include: motivation of staff;

employment of the right caliber of staff; eradication of god-fatherism in public

service; full disclosure of information by the Executive to the legislature and

leadership by example.

4.4 DISCUSSION ON HYPOTHESES

We now discuss the results of our analysis. We will also seek to compare our

findings with existing theoretical bases where these are available. We begin with our

hypotheses.
 172

4.4.1 Discussion of Findings in the Hypotheses

Four hypotheses were tested in this research. Our findings are discussed

below:

4.4.1.1 Hypothesis One

Hypothesis one sought to establish whether the legislature has been able to

use the public budget to control public finance. Our finding in this hypothesis

indicates that the legislature has not been able to use the public budget to control

public funds. This finding is consistent with the findings of Ahsan (1994:3) who

states that

the allocation of money by legislatures in many countries who follow

an incremental budgeting process, has gradually become a routine
and unproductive exercise. This means that the budget has ceased to
be an instrument of legislative control.

The finding also accords with the finding of Krafchick (2002) who in an

earlier research revealed that once the budget has been approved, funds are shifted to

items not budgeted for. The budget is used to acquire funds, and once the approval

has been obtained, funds are expended on items not included in the budget. In other

words, the budget does not determine the pattern of expenditure.

The House of Representatives Committee on Public Accounts lends support

to this finding when its chairman was quoted as saying that “about 65% of the

nation’s budgeted funds are wasted. We are not budgeting, but we are just throwing

away money” (Nigerian Newsday, 2005:6). This assertion led the newspaper to

draw the conclusion that

 173

yearly budgets hardly improve the lives of the majority of the people
because most of the money allocated in the budget end in the pocket
of few individuals to the detriment of the majority of the people.

All these assertions support the position that the budgeted funds are spent on

some items other than those approved by the legislature.

The research sought to establish from legislators whether the Executive arm

of government implements budgets as approved by them. Public budgets are

supposed to be implemented according to legislative approval. In other words,

budgets are expected to be implemented as passed by the legislature. Their

responses are presented in table 43.

All the sampled legislators responded to this question. All of them

maintained that the Executive does not implement the budget according to legislative

approval. We wanted to know further the type of influence the non-implementation

of budgets according to legislative approval have on their financial oversight

function. In other words, how does budget implementation affect legislative

performance? Their views are presented in table 44.

From table 44 a dominant 88.89% of the respondents asserted that the manner

the Executive implements the budget influence them negatively, while one (1)

respondent stated that the way the Executive implements the budget has no influence

on him. However, it has been observed that budget implementation is usually a

source of conflict between the legislature and the Executive especially at the Federal

level.
 174

Table 43: Budget implementation as approved by Legislature.

Whether budget is
implemented as approved by Frequency %
Legislature
YES 0 0
NO 9 100
Total 9 100

Source: Field Survey, (2004)

 175

Table 44: Influence of budget implementation on Legislative oversight function

Type of Influence Frequency %

Positive Influence 0 0
Negative Influence 8 88.89
No Influence 1 11.11
Total 9 100

Source: Field Survey, (2004)

 176

Public budgets are instruments of legislative control on the Executive. All

expenditure must be contained in the budget. Legislative approval is sought every

year before spending commences. Legislators who participated in this research

indicated that the Executive does not comply with legislative approval on budgets

implementation (table 43). This implies that the Executive implement budgets in

manner not contained in the appropriation acts. The legislators appear to be helpless

over this issue. They also indicated that this affects them negatively (table 44). This

might be an admittance of failure to discharge the duty of financial oversight.

The non-implementation of the budget as approved by the legislature is not the only

non-budgetary compliance. The other non-budgetary compliance include:

(a) Expenditure without Legislative Approval

Two types of offences are documented here - expenditure on items not

included in the approved budgets and exceeding approved budgetary limits.

Offences of expenditure without budgetary provision and cases of exceeded votes

received high degree of occurrence by respondents (tables 26 and 27). Respondents

stated these offences occur quite frequently in their establishments, 47.06% and

57.98% of respondents rated these offences as occurring frequently. (See other

analyses for details). This accords with the findings of Teriba and Oji (1973) who

stated that the Executive does not usually follow the due process of obtaining

legislative approval before incurring additional expenditure. The research finding

also tallies with the finding of Oshisami (1992) who alluded to the fact that cases of

exceeded votes were quite high in the Nigerian public sector.

 177

(b) Non-funding and under-funding of approved budgets

Another budgetary offence revealed by this research is the non-funding and

under-funding of approved budgets. These budgetary offences where also rated by

respondents as occurring frequently at 51.26 and 39.5% respectively. (See tables 28

and 29 for details in appendix B). This implies that items which were budgeted for

may end up not being implemented. The funds meant for such projects being

diverted to other areas. These are cases of budgetary indiscipline or fiscal

indiscipline. Earlier researchers were not targeted at these abuses.

The legislature has often accused the Executive of neglect, failure and refusal to

implement Appropriation Acts duly passed and assented to. However, the Executive

at the Federal level has often advanced two reasons for under-funding the budget.

The first is that the budget is usually marked-up beyond implementation by the

legislature. Second, low revenue profile has often been given as another reason for

the inability of the Executive to implement the budget as duly passed. These reasons

are usually not considered good enough by the legislature.

What is the scenario in the States? Budgets are also under-implemented at

the States level. Charges of budget mark-up beyond implementation have not been

reported at the States level (see table 45 below). If charges of mark-up is a good

reason for not implementing the budget, then the states should be implementing the

budget as approved. But this is not what we find.

Has the Executive been implementing the budget without recourse to what

was not approved? The answer is partially Yes. This is because there are limits to

non-observance to what was approved. The budget has two major components,
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recurrent and capital. In Nigeria, the recurrent portion of the budget is usually high-

often more than 50% of the total budget. Within the recurrent portion of the budget,

personnel cost is a significant cost item. In short salaries and allowances must be

paid. This suggests compliance to budgetary approvals. Recurrent administrative

costs are usually also high. They must be implemented.

Discrepancies usually exist between budgeted and actual expenditure.

However, reported actual expenditure may comprise both budgeted and un-budgeted

expenditure. In the end, there may be no significant difference statistically between

budgeted and actual expenditure, as shown in table 45.

Table 45 indicates that there is strong statistical correlation between budgeted

amount and actual expenditure. This suggests that actual expenditure moves closely

with budgeted expenditure, although some expenditure items reported as actual

expenditure may not have been included in the approved estimates.

The finding in this hypothesis suggests that the Executive arm of government

possesses over bearing dominance on public sector financial control. The

involvement of other institutions of public sector financial control - notably, the

legislature and the Supreme Audit Institution are excluded from the critical stages of

financial management - raising of revenue and spending. Budgets are prepared and

approved every year, but their level of implementation is determined by the

Executive arm of government. This is because the Executive has over-bearing

dominance on public finance.

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Table 45: Budget Size and Actual Expenditure

Year Budget Size N Actual Expenditure N

2004 20,490,956,373.00 4,905,423,713.40
2003 16,761,207,261.00 3,375,783,892.00
2002 15,429,302,164.00 6,788,806,453.00
2001 17,985,462,789.00 6,651,942,392.15
2000 7,856,580,661.00 9,853,956,316.00
1999 3,647,553,703.00 1,553,026,813.00
1991 961,240,000.00 861,341,828.00
1990 519,326,426.00 720,578,089.36
1983 560,210,600.00 248,961,120.00
1982 576,908,812.00 246,196,460.00
1981 426,989,000.00 243,431,800.00
1980 198,168,617.00 161,536,690.00

Source: Plateau State Ministry of Budget and Planning, (2004)

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4.4.1.2 Hypothesis Two

Hypothesis two sought to find out if the reliance of the Auditor General on

the financial statements prepared by the Executive arm of government significantly

influences his performance as government auditor. Our finding showed that the

performance of the Auditor - General is independent of his reliance on the financial

statements prepared by the Executive. This finding is consistent with the philosophy

of auditing as a profession. Auditors in both the public and private sectors rely on

data supplied by the custodians of such information. The Auditor - General is able to

exercise the duties of his office although the data for the performance of this duty is

supplied by the Executive. Although our finding is in harmony with the philosophy

of auditing, it should be noted that audits have an inherent limitation - that is - audits

are conducted based on information presented for audit. It is clear from our finding

in this hypothesis that reliance on financial statement prepared by the Executive does

not influence his performance, but other factors may, which of course are not

examined in this hypothesis.

The Auditor-General relies on professional standards developed for the

efficient and effective discharge of his work. In Nigeria, two standards have been

developed by the Office of the Auditor-General for the federation in conjunction

with the States’ Auditors-General. Although he relies on data supplied by the

Executive, he develops his own work programme to guide his audit. His reliance on

the Executive for audit information may impair his audit work where access to

information is denied or restricted. But the Constitution of the Federal Republic of

Nigeria, 1999 grants him the power to seek and obtain any information he requires
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for the purpose of his audit. With adequate operational independence, the Auditor-

General determines what to report on and the reporting format. Since auditing adds

credibility to reported information, public officials should extend the necessary co-

operation to the Auditor-General to work and report according to professional

standards. The implication arising from this is that the Executive should maintain a

zero level resistance to audit.

4.4.1.3 Hypothesis Three

Hypothesis three investigated the influence of the quality of legislative

financial oversight on State Audit performance. Our finding indicates that State

Audit performance is significantly dependent on the quality of legislative financial

oversight. This accords with the findings of Stapenhurst and Titsworth (2001) who

found out that a weak legislature undermines the performance of the Auditor-

General. Where the legislature is strong and influential, the performance of the

auditor General or State Audit is enhanced. This is so because the Auditor General

is an agent of the legislature. And being an agent of the legislature, they find

protection in the Legislature against either harassment or intimidation in the

performance of their work when the Legislature is strong.

Dominant Chief Executives would want to override established financial

controls. State Auditors rate the quality of legislative financial oversight as average

which influence them negatively (see table 15). State Auditors need protection and

the protection should come from the legislature. When the protection is not forth

coming, the risk to State Auditors increases. Where such is the case, the zeal,
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motivation and commitment to do what is proper may be lacking. Both the

accounting and audit work may then be sabotaged. Audit reports may be ignored.

There may be no penalty for non-preparation and submission of final accounts for

audit. In Plateau State the last audited account was in 1994. When accounts are not

presented for audit, the Auditor-General has no report to present to the legislature.

Little wonder, the Public Accounts Committee (PAC) of the Plateau State House of

Assembly has not met even once between 1999 to 2004.

Our finding in hypothesis one reveals that the legislature is unable to

discharge its financial oversight function by using the approved budget. The

implication of this finding for hypothesis three is that the legislature cannot shape a

model of financial accountability in Plateau State. Recent corruption revelations at

the National Assembly in Nigeria suggest that the legislature is not interested in

financial accountability. This is a major obstacle towards the discharge of financial

accountability in Nigeria. One glaring implication of this is that State Auditors

cannot draw inspiration from the legislature in discharging their work. Currently, the

legislative arm is an obstacle to the discharge of effective financial accountability in

Plateau State. Therefore persons interested in good governance will have to look

elsewhere in their search for a body that will enthrone the discharge of financial

accountability.

4.4.1.4 Hypothesis Four

The link between qualification of treasury staff and the number of financial

records kept by them was examined by hypothesis four. The result showed that the

number of financial records kept is independent of the qualification of those who

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maintain them. While there is a consensus on the fact that financial records are not

properly maintained in the Nigerian public sector, there has been no agreement as to

the reason for this. Oshisanmi (1992) and Adejinokeun (2004) found out that

qualification is the major reason for poor record keeping in the Nigerian public

sector. When this assertion was empirically examined, it was discovered that

qualification is not the major reason for the poor nature of financial record keeping

in the Nigerian public sector. We would expect those who hold higher

educational/professional qualification to keep more financial records than those who

hold lower qualification if qualification and record keeping are positively related.

However this is not the case. This research found out that an average of between 2 -

4 financial records only are maintained in all ministries and departments studied

irrespective of the qualification of those who keep them as against the required 54

(see table 34 in appendix B). This obviously reveals that most of the financial

records are not kept. Those that are kept have to do with payments of salaries and

other payments. Even returns from ministries to the office to the Accountant -

General which is supposed to be made monthly are hardly made. We may be

tempted to ask whether the financial records are up - dated.

If qualification is not the major reason for poor financial record keeping,

what could be the reason(s)? In a supportive analysis, the research sought to find out

from treasury operating staff (see table 33). The likely reasons were given as

inadequate number of qualified staff, inadequate number of accounting staff,

carelessness on the part of accounting staff and lack of interest from accounting

officers.
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From table 33 respondents representing 39.50% attributed the poor nature of

financial record keeping to carelessness on the part of accounting staff. But if it

were so, what happens to the machinery for supervision. Every accounting officer is

expected to ensure that proper financial records are maintained in his

ministry/department. All the items listed-lack of qualified staff, inadequate of

accounting staff, lack of interest from accounting officers (table 46) were all chosen,

implying that the reasons for the poor nature of financial record keeping are many.

Other respondents, who chose other reasons other than those listed, stated that

accounting staff were not being properly motivated.

The accounting system is designed by the Executive. The system is also

manned by the Executive. The failure to maintain those records is by the Executive.

This brings to light the over bearing dominance of the Executive on financial control

in the Nigerian public sector. The journey for financial accountability starts with

financial record keeping. Where these records are scarcely kept, then the discharge

of financial accountability will be very difficult to achieve.

4.5 OTHER DISCUSSIONS

4.5.1 Discussion of Findings in Other Analyses

We discuss our findings in other analyses below:

4.5.2 Performance of the Formal Institutions of Financial Control

Our survey result indicated that the operation of financial control by the

Executive arm of government is just average, 46.22% or poor as claimed by 39.49%

(table 30). This finding suggests that the Executive has not performed well with
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respect to its role of utilizing public funds. The implication of this finding is that

other organs of control are needed to check the activities of the Executive.

Acting as an agent of the legislature, State Audit is supposed to provide the

immediate check on the management of public funds by the Executive. However,

from our survey, the quality of audit work is acclaimed to be average at 51.26% or

rated as outrightly poor at 29.41% (table 31). If the quality of State Audit work is

poor or just average, State Audit cannot provide the needed checks as required by the

Constitution. If the agent cannot perform the duties expected of it, perhaps the

principal, in this case, the Legislature may be able to exercise the needed checks.

However, as shown below (see section 4.5.3), the legislature is also unable to

perform this important duty. Therefore, both the agent (State Audit) and the

principal (the legislature) have not provided the needed checks on the Executive.

This is corroborated in table 32 where 71 respondents representing 59.66% stated

that the needed checks and balances are ineffective.

4.5.3 Legislative Funding and Performance

In Plateau State, the legislature is funded by the Executive. In other words,

the Executive allocates funds to the legislature for the discharge of its work. How

does this affect legislative performance in the discharge of its financial oversight

duty? A single majority of 6 or 60% of legislators, who responded to this question,

stated that they perform ineffectively under the influence of financial support from

the Executive. This finding is consistent with that of Martinez - Seliman (2003) and

Krafchik and Wehner (2003). This may be in line with the adage that says, “he who
 186

pays the piper, dictates the tune”. If it suites the Executive that the legislature is

weak, as a result of funding, then the Executive will continue to ensure it funds the

legislature.

The deployment of legislative financial oversight function can also be

frustrated by the Executive’s control of legislative leadership. The control of

legislative leadership by the Executive has become a rule rather than an exception in

Plateau State. Where the Executive is not financially accountable, it takes every step

to ensure that the legislature is under its firm control. With Executive control, the

legislature is deaf and blind to every breach committed by the Executive.

4.5.4 Executive Influence on State Audit Performance

Facts emerging form this research indicates that:

(a) The Auditor-General is usually a career civil servant employed and paid by

the Executive.

(b) State Audit staff enjoy their employment, promotion and training from the

Executive. They like other civil servants are loyal to the government of the

day.

(c) State Audit is funded like any other unit of government and

(d) The appointment and removal of the Auditor-General is controlled

substantially by the Executive.

On the light of the facts listed above, this research found out that State Audits

lack the operational independence to discharge their Constitutional responsibilities.

Both State Audit and the legislature are Constitutionally required to provide the
 187

needed checks on the Executive. They cannot perform this vital role when they are

handicapped by the factors listed above.

Our research finding indicates that there is no prompt and proper disposal of

audit queries and there is no follow-up on issue raised by State Audit - State Auditors

who participated in the research indicated their dissatisfaction with the Executive on

these issues.

Although the Executive funds State Audit, what however matters most is not

the source of support, but that the funds are inadequate to support State Audit

functions. As a result, State Audit performs ineffectively. This finding agrees with

the finding of Daniel (1999) and Staphenhurst and Titsworth (2001)

One basic limitation of the audit exercise discovered by this research is the

fact that the audit is based on only the expenditure profile presented by the

Executive. There is no attempt to march revenue with expenditure. Documents do

not exist to suggest that those transactions ever took place. Since there is usually no

reconciliation of the revenue with expenditure, such unauthorized and unbudgeted

expenditure always go unnoticed. Table 47 tabulates the revenue profile of the

Plateau State Government between 1999 and 2003.

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Table 46: Statement of Statutory Allocation and Vat 1999 – 2003

Year N
1999 2,138,025,976.25
2000 6,669,340,002.69
2001 8,546,594,407.82
2002 7,748,162,017.23
2003 4,614,995,331.34

Source: Office of the Accountant-General for the Federation, Abuja,

(2005)
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A review of table 46 excludes internally generated revenue. An examination of the

table of actual expenditure (table 45) indicates that actual expenditure is less than

receipts from statutory allocation in 1999, 2001 and 2002. When internally

generated revenue is added to statutory allocation, the difference between receipts

and reported expenditure will be higher as shown in table 47.

The total revenue for the year 2003 is N5,432,923,247.82, while the reported

actual total expenditure for that year is N3,375,783,892.00. This means that reported

actual expenditure is less than total revenue for that year. A total sum of

N2,051,139,355.82 has not been reported.

It is important to note that in those years where actual spending is less than receipts

from statutory allocation, budget surplus have never been reported. This confirms

our finding in this research that some expenditure are not usually reported. The

formal Institutions of financial control are therefore unable to provide the needed

checks and balances expected of them.

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Table 47: Total Internal Revenue Collection

Year N
2003 817,927,916.48
2004 1,263,202,226.66

Source: Plateau State Board of Internal Revenue, Jos, (2005)

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4.5.5 Financial Offences

Financial offences are offences against financial rules and regulations. These

offences include: Payment without authorization - table 22 in appendix B;

Payment without vouchers - table 23 in appendix B; Absence of prepayment

audit - table 24 in appendix B; Payment without supporting documents - table 25 in

appendix B, and Cash and stock shortages - table 36; Unretired advances - table 36.

Payment is a critical event in the financial control cycle. It is observed that

payments are sometimes made without authorization. They may also be made

without the receiver signing payment vouchers and also prepayment audit may be

lacking. Oral interview conducted in the course of this research reveals that

established financial controls are usually being overridden by those that should

protect them. Established procedures are often not followed because they will bring

about “delays”.

Cash and stock shortages have also been reported (table 36). Advances may

also remain unretired (table 36). However, these offences can be reduced with

proper supervision. Cashiers and stock keepers can be checked more frequently.

The will to commit these financial offences will also exist when it is

established that the needed checks and balances are not being exercised. Offenders

may not be punished because even audit queries may remain unanswered (table 35).

The failure of the legislature to exercise its financial oversight function has a

negative influence on State Auditors (table 15). This clearly brings the importance

of the legislature’s financial oversight function.

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4.5.6 The Dominance of the Executive Arm of Government on Financial

Control

A review of the cycle of financial accountability indicates the dominance of

the Executive arm of government on public sector financial control. The Executive

raises revenue, prepares and implements the budget. The Executive is also vested

with the power of follow-up on issues raised by State Audit. The Executive allocates

funds to the legislature and the Office of the Auditor-General. The Executive

controls so much of the powers over finance that the other two formal institutions of

financial control has limited involvement.

Financial matters are very important. There is an imbalance in the

distribution of financial powers between the formal institutions of public sector

financial control. Power corrupts. Financial powers also corrupts. To ensure

equitable balance in the distribution of financial powers to the formal institutions of

financial control, should the Executive shed some of its powers?

4.5.7 Measures to Promote Financial Accountability

One of the ways to promote the discharge of financial accountability,

according to our respondents, is to establish the Budget Monitoring and Price

Intelligence Unit otherwise known as Due Process. This unit has been established at

the Federal level under the office of the President. Due Process became necessary

because rules and regulations governing government contracts are usually not

followed. If rules and regulations are followed and government contracts are not

over-valued, there may be no need to establish Due Process. The establishment of

Due Process ensures that financial rules and regulations are followed. Budgets are
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implemented as approved and financial corruption, taken care of. But Due Process

can only work at the pleasure of chief Executives.

Our respondents also suggested that financial offenders be punished

according to existing laws. Punishment would deter potential offenders. The

punishment should be graduated according to the gravity of the offence. It should be

able to reform and deter.

Training of new employees was suggested by our respondents as one way by

which to promote financial accountability. However, training should not just be

mounted for new employees alone, but it should be conducted to include all serving

staff. The training should be relevant to the needs of the staff to enhance their

productivity.

Treasury operations are very sensitive. Supervision is an essential

component of internal control. The mechanism for supervision of treasury staff,

from our research observations, appear to be non-functional. We agree with our

respondents on the need for close supervision of treasury operating staff.

Our respondents also suggested that audit advise is usually ignored. The

mechanism of control of public funds provide for both internal and external audit.

Internal audit is a service to management. It is a tool of control. Both internal and

external audit exist to provide control against misuse of resources. To achieve this

aim they usually provide reports to management. To promote financial

accountability, we support the views of our respondents that the reports should be

carefully studied and recommendations that will achieve organizational objectives be

implemented.
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Financial autonomy of parliament and the need to adequately fund the Office

of the Auditor-General have been addressed in the appropriate sections in this

research.
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CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 SUMMARY OF FINDINGS

This research empirically examined the role of the formal institutions of

financial control in Plateau State. The summary of the major findings of this

research are as follows:

(a) The public budget is not a significant instrument of legislative control over

public finance in Plateau State.

(b) The reliance of the Auditor-General on the financial statements prepared by

the Executive does not significantly enhance his performance.

(c) State Audit performance is significantly dependent on the quality of

Legislative financial oversight.

(d) Financial record keeping is independent of the qualification of those who

maintain them.

(e) Budgetary non-compliance such as expenditure without budgetary approval,

exceeding of approved budgetary limits, under funding and non-funding of

approved estimates are quite common.

(f) Breaches of financial rules and regulations include expenditure without

supporting documents, absence of prepayment audit, stock and cash shortages

and refusal to answer audit queries. These offences occur quite frequently.

(g) The Executive arm of government dominates the financial control process in

Plateau State.

(h) State Audit lacks the operational independence to carry out its functions.
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(i) The legislature lacks financial autonomy to effectively deploy its weapon of

financial oversight over the Executive.

(j) Because of (g), (h) and (i) above, the other formal institutions of financial

control are unable to provide the needed checks and balances on financial control

in Plateau State.

5.2 CONCLUSION

This research set out to empirically investigate the role of the formal

Institutions of financial control on public funds in Plateau State of Nigeria. Based on

the findings of this research, the following conclusions are drawn in the context of

Plateau State of Nigeria. The public budget has not been a significant instrument of

legislative control on public funds. The quality of financial oversight is adjudged to

be poor. Financial records are hardly maintained. Accounts are not prepared for

submission for audit. The Auditor-General as a result has no report to present to the

Public Accounts Committee (PAC). The legislature cannot call the Executive to

order because it lacks financial autonomy and may have little or no financial interest

in financial accountability. The distribution of financial responsibility is skewed in

favour of the Executive. The other formal institutions of financial control - the

legislature and audit - do not exercise as much influence on financial matters as the

Executive. The needed checks and balances on public funds are not exercised as

expected. Financial accountability can only be discharged when the established

checks and balances are exercised; when the excess financial powers of the

Executive are reduced and when the legislature demonstrates a serious commitment
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to financial accountability. The Executive which is the custodian of public funds has

little regard for the rules governing the efficient and effective use of such funds. The

legislature that should provide the needed checks on the Executive may not be

interested in discharging their Constitutional duty of financial oversight.

5.3 RECOMMENDATIONS

5.3.1 Recommendations Based on Findings in the Research

Based on our findings in the research, we wish to make the following

recommendations to improve financial accountability in Plateau State:

5.3.1.1 Budget Implementation

It has been revealed in this research that the public budget is not an effective

instrument of legislative control on public funds in Plateau State. However, since the

Executive has not been implementing the budget as approved by the legislature we

therefore recommend that the legislature should establish a standing committee

specifically on budget implementation. This committee should report to the whole

house the progress of budget implementation quarterly. Where it is observed that the

level of implementation is not satisfactory, the Chief Executive of the State should

be summoned by the legislature to provide explanation on the level of budget

implementation. This recommendation has been made on the assumption that the

legislature is strong and influential in line with recommendation 5.3.1.4 below.

We also recommend that the issue of budget implementation is very important to

warrant Constitutional prescription. The Constitution should clearly provide that an

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approved budget must be implemented to at least 80% in the absence of serious

decline in budgeted revenue.

It has been revealed in this research that the Executive’s implementation of

the budget with respect to capital projects has been called to question. Since the

Executive may even introduce capital projects that may have no budgetary provision.

Supplementary appropriations may be sought after the project would have been

executed. We recommend that all capital projects must be included in yearly

appropriation acts before they are executed. In addition, clearance should be

obtained from the legislature and the Office of the Auditor-General before such

capital projects should be executed. The contract for the construction of these

projects should receive endorsement from these two other formal institutions of

financial control. The execution of capital projects not included in budgets should

constitute impeachable offence.

5.3.1.2 Compliance with Financial Rules and Regulations

Financial rules and regulations are often violated according to our research

findings. We therefore recommend that the mechanism provided in the financial

rules for supervision should be enforced by the internal audit department to be

constituted by the recommendation of this research. Sanctions must be applied on all

defaulters.
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5.3.1.3 Audit Queries

It has been revealed in this research that audit queries are often ignored or

improperly disposed of. We recommend that all audit queries issued should be

copied to the Public Accounts Committee (PAC) and that PAC should summon the

Accounting Officer of the affected ministry or department to appear before it when

there is failure to respond to the audit query within the time allowed.

5.3.1.4 Financial Autonomy/Audit of the Legislature

We strongly recommend that the legislature should be funded directly from

the Consolidated Revenue Fund (CRF). The quality of legislative oversight may

improve when the legislature is not funded by the Executive arm of government.

Since the legislature by our recommendation will control the appointment of the

Auditor-General, the audit of the Legislature should be conducted by external

auditors appointed by the Executive.

5.3.1.5 Strengthening the Office of the Auditor-General

The Office of the Auditor-General should be strengthened in the following

ways:

(i) The Auditor-General should not be appointed by the Executive arm of

government. The Constitution should be amended to invest in the Legislature

the power to appoint the Auditor-General and sworn in by the Chief Justice

for a single term of ten to fifteen years. The appointee must not necessarily

be chosen from the Civil Service. The person to be so appointed should be a

person of high integrity with the requisite qualification and experience.

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(ii) Funding: The Office of the Auditor-General should be funded directly from

the Consolidated Revenue Fund of the federation and the states. The

Executive arm of government should cease to fund the Office of the Auditor-

General.

(iii) The Auditor-General should be granted powers to recruit, promote and

discipline his staff.

To provide a check on the Auditor-General, his accounts should be subjected

to Audit by a firm of external auditors. The external auditor shall be appointed by

the Executive.

5.3.1.6 Financial Record Keeping and Financial Reporting

The requirement for the preparation of financial statements specifies fifty-

four financial records to be kept. This number is too large. As a result many of

these records are not kept. The statements required are too many, and very difficult

to understand. The financial statement is too voluminous. This adds to the delay in

production. We recommend that the number of financial records be reduced

drastically to only what is important. The resulting financial statement should be a

document of not more than 50-70 pages. It should be concise, easy to understand

and user friendly and be relevant to users.

5.3.1.7 Submission of Financial Statements for Audit

Section 125(5) of the Constitution of the Federal Republic of Nigeria 1999

requires the Auditor-General of a State to submit his report to the legislature within
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90 days of the receipt of the Accountant-General’s financial statement. However,

the Constitution is silent on when the Accountant-General should submit his

financial statement to the Auditor-General for Audit. We therefore recommend that

the Constitution should provide that the Accountant-General should prepare and

submit the State’s consolidated financial statements for audit not more than six (6)

months into a new fiscal year.

5.3.1.8 Audit Scope

The present scope of audit by the Auditor-General focuses on only reported

expenditure. The audit scope should be expanded to cover both revenue and

expenditure. When this is adopted, cases of unreported expenditure will be brought

to light.

5.3.1.9 Internal Audit

Presently in Plateau State, internal audit duties are carried out by the staff of

the Accountant-General. Treasury staff function both as accounting staff and

internal audit staff. This is not an adequate method by which internal control in

plateau State can be achieved. To enhance internal control in Plateau State, we

recommend that an internal audit unit be established. The Head of Internal Audit

should be answerable to the Chief Executive of the State, that is, the Governor. The

Internal Audit department or unit should have its own staff.

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5.3.1.10 Computerisation of Government Accounts

We have recommended in this research (see section 5.3.1.7) that the

Accountant-General should be mandated to present his financial statements for audit

not more than six months into a new fiscal year. To achieve this purpose, we

recommend that government accounts should be computerised. Financial recording

keeping will receive a boast when the accounts are computerised. Computerisation

will require that staff be trained to man the new system.

5.3.1.11 Segmental Reporting

Each ministry/department should be directed to publish its own financial

statement. The format should be clearly stated. To encourage compliance, we

recommend that a certificate of achievement be introduced for the reporting entities.

The published accounts must be ready at most four (4) months into the new fiscal

year. The Accountant General will prepare the State’s Consolidated Financial

Statements.

5.3.1.12 Organised Civil Society

The organised civil society and the media should show greater interest in

public sector financial accountability. They should educate the public on the

importance of financial accountability, with a view to encouraging governments to

be financially accountable.
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5.3.1.13 Establishment of Due Process

It has been stated in this research that Due Process aims to eliminate non-

compliance to financial rules and regulations and also over-invoicing of government

contracts. We recommend the establishment of a functional Due Process Unit. We

also suggest that the chief Executive of the State should take an active interest in the

activities of the unit to ensure that it works.

5.3.1.14 Other Measures to Promote Financial Accountability

The research recommends that:

(a) Appropriate punishment be meted out to financial offenders according to

existing laws. While the punishment should be reformatory, it should also

serve as deterrent to potential offenders.

(b) The mechanism for supervision should be resuscitated and;

(c) Relevant recommendations from both internal and external audit reports

should be implemented to help achieve organizational objectives.

5.3.2 Suggestions for Further Research

a) Krafchick and Wehner (2003) suggest that the organised civil society and the

media play an important role in promoting financial accountability in the

pubic sector. This needs to be investigated empirically.

b) There is an unsettled debate as to whether the cash basis of accounting or the

accrual basis of accounting is most suited for recording financial transactions

in the public sector. This research did not go beyond a review of literature in
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this area. Researchers, we suggest, should investigate this empirically.

c) We also reviewed relevant literature on methods of budgeting in the public

sector. We suggest that an investigation is required to determine the most

suitable method of budgeting for Nigeria.

5.4 CONTRIBUTION TO KNOWLEDGE

a) The existing gap in literature has been filled by this research. The research

has demonstrated that there is a significant relationship among the three

institutions of financial control namely; the Executive, the Legislature and the

Auditor General.

b) The Government of Plateau State will find this research useful in the area of

financial control and accountability because of the dearth of the research

work of this kind.

c) Scholars will find this work of great value as it relates to Plateau State in

particular and public sector in general in pursuing further work.

 205

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 211

APPENDIX A
Department of Accounting and
Management Sciences,
University of Jos, Jos.
July 2004
_____________________________
_____________________________
_____________________________

Dear Respondent,

QUESTIONNAIRE

I’m a doctoral student of the School of Postgraduate Studies of the University of Jos.
I’m carrying out a research on “The Role of Financial Control Institutions in
Promoting Financial Accountability on Public Funds under a Democratic Setting” in
partial fulfillment of the requirements for the award of the Doctor of Philosophy
(Ph.D.) degree in Management of the University of Jos.
Financial accountability implies a duty upon government
ministries/departments to account for funds entrusted to them to the legislature. The
Auditor General has the Constitutional responsibility to assist the legislature in
making the Executive accountable.
You have been chosen as someone who is an active participant in the
financial accountability arrangements in the public sector. We believe that you hold
important opinions on this topic from which this research can benefit.
I know you are very busy, but I shall be very grateful if you would spare part
of your busy time to complete the attached questionnaire to enable me complete the
research project. All responses will be anonymous so I hope you’ll be very honest in
your replies. The questionnaire is designed for research purposes only and will be
treated as such.

Thanks,
Yours sincerely,

S.S. Maimako.
 212

SET “A” (For Treasury Staff – Ministry of Finance)

SECTION A: BACKGROUND INFORMATION

1. 1. Gender: Male Female

2. What is your highest educational/professional qualification?

(a) ACCA/ACA/CNA

(b) M.Sc./MBA

(c) B.Sc./HND

(d) Diploma

(e) GCE/SSCE

(f) Primary School Leaving Certificate

(g) Others, Please specify

3. List all required accounting records you maintain (use additional sheet if
necessary)

SECTION B: BUDGETARY AND FINANCIAL INFRINGEMENT

4. How frequently do the following occur in respect of financial control in your

establishment?
(a) Expenditure without budgetary provision
i) Highly frequent
ii) Frequently
iii) Infrequently
iv) Never
 213

(b) Cases of exceeded votes

i) Highly frequent
ii) Frequently
iii) Infrequently
iv) Never

(c) Under funding of approved estimates

i) Highly frequent
ii) Frequently
iii) Infrequently
iv) Never

(d) None funding of approved estimates

i) Highly frequent
ii) Frequently
iii) Infrequently
iv) Never

(e) Payment without authorization

i) Highly frequent
ii) Frequently
iii) Infrequently
iv) Never

(f) Payment not supported by payment vouchers

i) Highly frequent
ii) Frequently
iii) Infrequently
iv) Never

(g) Absence of prepayment audit

i) Highly frequent
ii) Frequently
iii) Infrequently
iv) Never

(h) Payment without supporting documents

i) Highly frequent
ii) Frequently
iii) Infrequently
iv) Never
 214

SECTION C: PERFORMANCE OF THE FORMAL INSTITUTIONS OF

FINANCE CONTROL ON PUBLIC FUNDS

5. Rate the Executive’s compliance to the rules and regulations governing the use of
public funds.
(a) Very Good (76% - 100%)
(b) Good (51% - 75%)
(c) Average (26% - 50%)
(d) Poor (1% - 25%)

6. Rate the quality of State Audit work

(a) Very Good (76% - 100%)
(b) Good (51% - 75%)
(c) Average (26% - 50%)
(d) Poor (1% - 25%)

7. How would you rate the performance of the state legislature in performing its
financial oversight function over the Executive?
(a) Highly Effective
(b) Effective
(c) Ineffective
(d) Highly Ineffective

8. Rate the effectiveness of the checks ands balances on public funds

(a) Highly Effective
(b) Effective
(c) Ineffective
(d) Highly Ineffective

SECTION D: BUDGET IMPLEMENTATION

9. Indicate the level of the yearly budget implementation in your ministry/department
(a) 1% - 25%
(b) 26% - 50%
(c) 51% - 75%
(d) 76% - 100%

10. How is your rating in 9 above an assessment of the significance of the

legislature in using the public budget to control public finance?
(a) Highly Significant
(b) Significant
(c) Insignificant
(d) Highly Insignificant
 215

SECTION E: MEASURES TO PROMOTE FINANCIAL ACCOUNTABILITY

11. Suggest measures by which financial accountability can be improved in your

ministry/department

Thank you.
 216

SET “B” (For Audit Staff-Staff of the Auditor-General)

SECTION A: BACKGROUND INFORMATION

1. Gender: Male Female

2. How long have you been working with the Office of the Auditor-General?
__________________________________________________________

SECTION B: EMPLOYMENT STATUS

1. Which of these organs control your
(a)Recruitment
(i) Civil Service Commission
(ii) Parliament
(iii) State Audit
(iv) Civil Service Commission and State Audit
(v) Others, specify _____________________________________
(b) Promotion
(i) Civil Service Commission
(ii) Parliament
(iii) State Audit
(iv) Civil Service Commission and State Audit
(v) Others, specify _____________________________________
(c) Training
(i) Civil Service Commission
(ii) Parliament
(iii) State Audit
(iv) Civil Service Commission and State Audit
(v) Others, specify _____________________________________

2. Who is responsible for funding State Audit?

(i) The Executive arm of government
(ii) Parliament
(iii) Direct funding from the consolidated revenue fund
(iv) Others, specify __________________________________________

SECTION C: FINANCIAL AND MATERIAL SUPPORT

3. How satisfied are you with the financial and material support you
receive to carry out your audit work?
(a) Highly dissatisfied
(b) Dissatisfied
(c) Satisfied
(d) Highly satisfied
(e) Not sure
 217

4. How does the support you receive from the Executive arm of government
influence your performance as Auditor?
(a) Highly effective
(b) Effective
(c) Highly ineffective
(d) Others, please specify____________________________________

5. Indicate your level of reliance on the financial statements prepared by the

Executive for the purpose of performing your audit.
(a) 1 – 25%
(b) 26 – 50%
(c) 51 – 75%
(d) 51 – 75%
(e) 76 – 100%

6. How does this level of reliance in 5 above significantly enhance your audit
work?
(a) Highly Significant
(b) Significant
(c) Insignificant
(d) Highly insignificant
(e) Others, specify _________________________________________

SECTION D: INDEPENDENCE AND AUDIT PERFORMANCE

7. How do you rate the performance of the Public Accounts Committee (PAC)
in controlling public funds?
(a) Very good (76% – 100%)
(b) Good (51% - 75%)
(c) Average (26% - 50%)
(d) Poor (1% - 25%)

8. How does your rating in 7 above influence your job performance?

(a) Positive influence
(b) Negative influence
(c) No influence

9. Rate State Audit level of independence in the performance of its audit work.
(a) 76% - 100%
(b) 51% - 75%
(c) 26% - 50%
(d) 1% - 25%
 218

10. How satisfied are you with the response to audit queries by the Executive arm
of government?
(a) Highly dissatisfied
(b) Dissatisfied
(c) Satisfied
(d) Highly satisfied
(e) Not sure

11. How satisfied are you with the follow-up by the Executive arm of
government on queries and observations raised by State Audit?
(a) Highly dissatisfied
(b) Dissatisfied
(c) Satisfied
(d) Highly satisfied
(e) Not sure

12. Why are proper financial records not kept?

(a) Inadequate numer of qualified staff
(b) Inadequate number of accounting staff
(c) Carelessness on the part of accounting staff
(d) Lack interest from accounting officers
(e) All of the above
(f) None of the above
(f) Others (specify)

SECTION E : MEASURES TO IMPROVE FINANCIAL ACCOUNTABILITY

13. Suggest measures by which financial accountability can be improved
(a) _________________________________________________________
(b) __________________________________________________________
(c) _____________________________________________ ____________
(d) __________________________________________________________
(e) __________________________________________________________
(f) __________________________________________________________
(g) __________________________________________________________
(h)___________________________________________________________

Thank you.
 219

SET “C” (For Legislators)

SECTION A: BACKGROUND INFORMATION

1. Gender: Male Female

2. For how long have you been a member of parliament?

___________________________________________

3. Highest educational qualification

___________________________________________

4. Last position held before becoming member of parliament.

_______________________________________________

SECTION B: FINANCIAL OVERSIGHT

1. Are you aware of the Constitutional responsibility granted parliament to
exercise control over public funds?
(i) Yes
(ii) To some extent, yes
(iii) No

2. Is the involvement of the legislature in the budgetary process adequate?

(v) Yes
(vi) To some extent, yes
(vii) No

3. Has the Public Accounts Committee considered any report from the Auditor-
General in the last four years?
(i) Yes
(ii) No

4. If yes, how many times?

(i) 0
(ii) 1
(iii) 2
(iv) 3
(v) 4

5. How does parliament perform under the influence of financial support from
the Executive?
(a) Highly effective
(b) Effective
(f) Ineffective
(g) Highly ineffective
(h) Others, specify __________________________________
 220

6. Has the Executive been implementing the budget according to legislative

approval?
(a) Yes
(b) No

7. How does you rating above influence your oversight function?

(a) Positive influence
(b) Negative influence
(d) No influence

8. Does the Executive always seek parliamentary approval for supplementary

expenditure before incurring the expenditure?
(a) Yes
(b) No
(e) Not sure

9. Suggest ways by which financial Accountability can be promoted

(i) ___________________________________________________________
(ii) ___________________________________________________________
(iii) __________________________________________________________
(iv) ___________________________________________________________
(v) ___________________________________________________________
(vi) ___________________________________________________________

Thank you.
 221

APPENDIX B1
CALCULATIONS FOR HYPOTHESIS ONE

4 X 6 = 0.20
119

4 X 65 = 2.18
119

4 X 45 = 1.51
119

4 X 3 = 0.10
119

42 X 6 = 2.12
119

42 X 65 = 22.94
119

42 X 45 = 15.88
119

42 X 3 = 1.06
119

61 X 6 = 3.08
119

61 X 65 = 33.32
119

61 X 45 = 1.54
119

12 X 3 = 0.31
119

12 X 6 = 0.61
119

12 X 45 = 4.54
119
 222

12 X 3 = 0.30
119

First merging

46 X 6 = 2.32
119

46 X 65 = 25.13
119

46 X 45 = 1.16
119

73 X 6 = 3.68
119

73 X 65 = 39.87
119

73 X 45 = 27.61
119

73 X 3 = 1.84
119

Second Merging

46 X 71 = 27.45
119

46 X 48 = 18.55
119

73 X 71 = 43.55
119

73 X 48 = 29.45
119
 223

APPENDIX B2

CALCULATIONS FOR HYPOTHESIS TWO

14 X 2 = 0.875
32

14 X 17 = 7.44
32

14 X 7 = 3.06
32

14 X 6 = 2.63
32

17 X 2 = 1.06
32

17 X 17 = 9.03
32

17 X 7 = 3.72
32

17 X 6 = 3.187
32

1 X 2 = 0.063
32

1 X 17 = 0.531
32

1 X 7 = 0.291
32

1 X 6 = 0.188
32
 224

First Merging

14 X 2 = 0.875
32

14 X 17 = 7.44
32

14 X 7 = 3.06
32

14 X 6 = 2.63
32

18 X 2 = 1.13
32

18 X 17 = 9.56
32

18 X 7 = 3.94
32

18 X 6 = 3.83
32

Second Merging

14 X 19 = 8.31
32

14 X 13 = 5.69
32

18 X 19 = 10.69
32

18 X 13 = 7.31
32
 225

APPENDIX B3

CALCULATIONS FOR HYPOTHESIS THREE

16 X 4 = 2
32

16 X 7 = 3.5
32

16 X 10 = 5
32

16 X 11 = 5.5
32

12 X 4 = 1.5
32

12 X 7 = 2.63
32

12 X 10 = 3.75
32

12 X 11 = 4.13
32

4 X 4 = 0.5
32

4 X 7 = 0.88
32

4 X 10 = 1.25
32

4 X 11 = 0.5
32

First Merging

16 X 11 = 5.5
32
 226

16 X 10 = 5
32

16 X 11 = 5.5
32

12 X 11 = 4.13
32

12 X 10 = 3.75
32

12 X 11 = 4.125
32

4 X 11 = 1.38
32

4 X 10 = 1.25
32

4 X 11 = 1.38
32

Second Merging

16 X 11 = 5.5
32

16 X 10 = 5.0
32

16 X 11 = 5.5
32

16 X 11 = 5.5
32

16 X 10 = 5.0
32

16 X 11 = 5.5
32
 227

APPENDIX B4

CALCULATIONS FOR HYPOTHESIS FOUR

71 X 6 = 3.58
119

71 X 6 = 3.58
119

71 X 32 = 19.09
119

71 X 68 = 40.57
119

71 X 7 = 4.18
119

41 X 6 = 2.07
119

41 X 6 = 2.07
119

41 X 32 = 11.03
119

41 X 68 = 23.43
119

41 X 7 = 2.71
119

7 X 6 = 0.35
119

7 X 6 = 0.35
119

7 X 32 = 1.88
119

7 X 68 = 4
119
 228

7 X 7 = 0.41
119

First merging

71 X 12 = 7.15
119

71 X 32 = 19.09
119

71 X 75 = 44.74
119

41 X 12 = 4.13
119

41 X 32 = 11.03
119

41 X 75 = 25.84
119

7 X 12 = 1.88
119

7 X 75 = 4.44.
119

Second merging

71 X 12 = 7.16
119

71 X 32 = 19.09
119

71 X 75 = 44.75
119

48 X 12 = 4.84
119

48 X 32 = 12.91
 229

119

48 X 75 = 30.25
119

Third merging

71 X 44 = 26.25
119

71 X 75 = 44.75
119

48 X 44 = 17.75
119

48 X 75 = 30.25
119
 230

APPENDIX B5
TABLES FOR OTHER ANALYSES

Table 22: Payment without Authorisation

Payment without Frequency %

Authorisation
Highly frequent 10 09
Frequent 41 34
Infrequent 38 32
Never 30 25
Total 119 100

Source: Field Survey, (2004)

 231

Table 23: Payment without Vouchers

Payment not supported by Frequency %

payment Vouchers
Highly frequent 10 8.40
Frequent 58 48.74
Infrequent 32 26.89
Never 19 15.97
Total 119 100

Source: Field Survey, (2004)

 232

APPENDIX B7

Table 24: Absence of Prepayment Audit

Absence of Prepayment Frequency %

Audit
Highly frequent 15 12.61
Frequent 59 49.58
Infrequent 23 19.32
Never 22 18.49
Total 119 100

Source: Field Survey, (2004)

 233

APPENDIX B8

Table 25: Payment without Supporting Documentation

Payment without Frequency %

supporting documents
Highly frequent 13 10.92
Frequent 46 38.66
Infrequent 31 26.05
Never 29 24.37
Total 119 100

Source: Field Survey, (2004)

 234

APPENDIX B9

Table 26: Expenditure not included in approved Estimate

Expenditure without Frequency %

budgetary provision
Highly frequent 14 11.76
Frequent 56 47.06
Infrequent 40 33.62
Never 9 7,56
Total 119 100

Source: Field Survey, (2004)

 235

APPENDIX B10

Table 27: Exceeding Approved Budget Limit

Cases of exceeded votes Frequency %

Highly frequent 16 13.45
Frequent 69 57.98
Infrequent 23 19.33
Never 11 9.24
Total 119 100

Source: Field Survey, (2004)

 236

APPENDIX B11

Table 28: Under-funding of Approved Budget

Under funding of Frequency %

approved estimates
Highly frequent 29 24.37
Frequent 61 51.26
Infrequent 20 16.81
Never 9 7.56
Total 119 100

Source: Field Survey, (2004)

 237

APPENDIX B12

Table 29: None funding of Approved Estimates

None funding of approved Frequency %

estimates
Highly frequent 19 15.97
Frequent 47 39.50
Infrequent 37 31.09
Never 16 13.44
Total 119 100

Source: Field Survey, (2004)

 238

APPENDIX B13

Table 34: List of Accounts to be Maintained

Ministries, Boards and Parastatals are required to maintain the following records in
Plateau State:
1. Summary cash book
2. Treasury cash book
3. Cheque summary register
4. Dishonoured cheques register
5. Proper money register for cheques received but yet to clear
6. Imprest cash, Register and Ledger
7. Revenue collector’s cash book
8. Return of revenue
9. General ledger account (Treasury)
10. Transcript
11. Deposit register
12. Project register
13. Contract register
14. Return of remittances/cash transfers
15. Remittance ledger/register
16. Unclaimed wages register
17. Bank Reconciliation Statements
18. Register of bank advices
19. Cash float register
20. Bank statements
21. Cheque Delivery Register
22. Cheque Stubs
23. Outstanding Payment Voucher Register
24. AIE/Warrants Register
25. Payment Voucher Register
26. Departmental Vote Expenditure Book
27. Bills/Invoices/LPO Register
28. Adjustment Voucher Register
29. PV and Payroll Number Register
30. Advances Register/Ledgers
31. Motor Vehicle Comprehensive Insurance Register
32. Analysis Abstracts Register
33. Receipts Register
34. Payment Register
35. Capital Expenditure Register
36. Recurrent Expenditure Register
37. Plant and Vehicle Register
38. Register of On-payment Deductions
39. Payroll
40. Payroll Control Register
 239

41. On-Payment Withdrawal Vouchers for Deductions on Payroll for Tax,

Union Dues etc.
42. Federation Allocation
43. Register of Deductions at Source
44. Register of Loans (Both Internal and External)
45. Register of Guarantees by the Government on behalf of Local
Governments and Parastatals
46. Register of Loans Granted but which draw down is yet to commence
47. Register of Funded, Unfounded and Floating Loans
48. Register of Arrears of Revenue
49. Consolidated Revenue Fund
50. Development Fund
51. Contingency Fund
52. Treasury Clearance Fund for Non-Personal Advances
53. Report on Loss of Funds or Stores Source
Source: Plateau State Ministry of Finance, (2004)
The list consists of cash books of various types, registers, ledgers and fund
statements