IOSR Journal of Business and Management (IOSR-JBM)

e-ISSN: 2278-487X, p-ISSN: 2319-7668. Volume 22, Issue 1. Ser. III (January. 2020), PP 44-55
www.iosrjournals.org

#Role of Accounting in the Control of Public Expenditure in

Nigeria
Onuora J.K.J. (Ph.D)1, Eziashi2,
1
Department Of Accountancy Chukwuemeka Odumegwu Ojukwu University, Igbariam Campus
2
Josephine Ngozi Department Of Accountancy Chukwuemeka Odumegwu Ojukwu University, Igbariam Campus

Abstract: This research work is titled the role of Accounting in the control of public expenditure in Nigeria the
incessant incident of budget deficit, misappropriation and embezzlement of project fund due to lack of good
accounting system constitute the problems that necessitated this research. The population for the study entails
all the workers in the State Board of Internal Revenue in Anambra State, Nigeria. Out of which the sample size
was selected using the Taro Yamani’s sampling techniques. Data for this study were primarily and secondarily
sourced. Linear regression analysis was used to analyse the data collected with the aid of SPSS version 21 to
examine the role of accounting control characterized by internal control (Risk assessment, Control procedures
and information and communication system) and internal audit on total government expenditure in the public
sector in Nigeria. The study reveals that there is insignificant positive relationship between internalcontrol on
total government expenditure a significant positive relationship between internal audit and total government
expenditure in Nigeria. The study therefore, recommends that; organization should pay more attention on
internal audit than on internal control to ensure effective accounting control and improve on accountability,
Management should establish and implement periodic review of internal audit performance to ensure that its
performance and value to the Institution is maximized and to ensure compliance with appropriate standards and
guidance and Internal control activities, procedures and policies should be regularly revised to ensure that they
are effective.
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Date of Submission: 30-12-2019 Date of Acceptance: 14-01-2020
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I. Introduction
In most developing countries including Nigeria, government participation in economic activity is
usually significant. One of the ways through which government has intervened in Nigeria economy is through
the establishment of public enterprises and statutory bodies delivering goods and services of an economic or
social character on behave of the government. The rationale behind the role of accounting in control of public
enterprises in Nigeria are many, some of the reasons include: due to the high level of corruption,
mismanagement, misappropriation and outright embellzement of public fund by a few individual. According to
Abu-bader, (2003) it is possible for important profitable enterprises to be controlled by a few individuals or
group, this organization provide certain critical activities, like economic stability and providing employment
opportunities.
Public expenditure is the spending made by the government of a country on the collective needs and
wants of her citizenries such as spending on; the provision of infrastructures, pension provision etc. Until the
19th century, Public expenditure was limited as Laissez faire philosophies which believed that money left in
private could bring better returns. In the 20th Century John Maynard Keynes argued the role of Public
Expenditure in determining levels of income and distribution in the economy (Adeniji, 2009). Since then
government expenditures has shown an increasing trend. In the 17th and the 18th Century Public Expenditure
was considered as wastage of money. Thinkers are of the view that Government should stay with their
traditional functions of spending on defense and maintaining law and other.
According to Okwo (2011) public expenditures are incurred through budget implementation. The
macro- economic goals of the state budget are administered in specific and complex systems which were
developed in the managerial information unit of the general accounting department under the name of “budget
implementation macro system” The role of accounting in the control of public expenditures relates mostly on
setting of standards via budgeting and ensuring that the standard set are adhered to. The accounting controls also
ensure the actualization of the macro-economic goals which are viz: maintaining the total framework of the
planned expenses, adjustment of expenditure rate to the rate of the reception of incomes, regular follow-up of
compliance with deficit goals, planning of the financing of the deficit in order to reduce the national debt-
product ratio etc.
In Nigeria, public enterprises are engaged in a wide spectrum of economic activities including

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

agriculture, mining, construction, manufacturing commerce and services. The classification of public enterprises
in Nigeria has been made according to varieties of criteria by different authorities. The Public Service review
commission (2015) classified public sector into: public utilities, regulatory of service body, financial Institutions
and commercial and industrial enterprises.
Nigeria being mixed enterprises. Eze (2013) opined that a firm is classified as private enterprises when
it is funded, owned and managed by an individual or group of individuals. These firms are expected to be
registered in the state within which they operate. The activities of the public enterprises have been on the
increase in recent times which necessitated the introduction of the accounting to check and monitor the financial
activities of these enterprises.
According to Onyekwelu (2010) Accounting is defined as the process by which data relating to the
economic activities of an organization are measured, recorded and communicated to interested parties for
making informed decision. The earliest methods of accounting records were kept in physical quantities. These
records came from Eastern early civilization which involved countries around the Mediterranean Sea such as
Mesopotamia, Egypt, Greece Italy etc. Money was recorded as soon as it was received. Money took the place of
barter as a medium of exchange and unit of account. This practice has been closely related to economic
development of countries. If the operation of Public enterprise grows in size and complexity, management and
other stakeholders will like to be informed on the enterprise’s operation. Accounting is the only means via
which such information which are financial in nature can be communicated to the stakeholders.
The role of accounting in enterprises in Nigeria is primary to ensure accurate accountability in these
sectors and true and fair financial position of the enterprise. This role is of utmost importance in any
organization. An organization can only grow or profit when the resources at its disposal are well managed. The
role of accounting seems to be more pronounced public enterprises. In recent times, there are cases of mis-
appropriation of funds in the public enterprises and improper accountability. These factors have led to a lot of
public enterprises into oblivion, if the government had recognized the role of accounting all most of the
problems witnessed would not have occurred. No Enterprise can move forward without having a well-
organized and functional account department which will provide accurate financial information for the
Enterprise and other interest group(s) (Nweze, 2014). The role of accounting in the control of public expenditure
deals with the process of setting cost standards and ensuring that the standard set are maintained. However, if
the already set standards appear to be in realistic such standard can be reviewed and adjusted for it to be more
realistic. Control of public expenditure can be done through adequate budget implementation.

II. Statement of Problem

The amount of public expenditure to be incurred by the government in any fiscal year is contained in
the annual budget. It is the goal of government to maintain balanced budget, but many countries especially the
developing ones have rather witnessed budget deficit this implies excess of expenditure over revenue. The
resources to finance this deficit are always unavailable and most government has failed to acknowledge the need
for adequate forecasting and adjustment of forecast to ensure that a balanced budget is attained.
There are increasing cases of financial mismanagement and misappropriation in virtually all public enterprises
in Nigeria, this is occasioned by non-existence of proper accounting system that will ensure accountability and
transparency in the execution of public expenditures.
Furthermore, non-application of standard costing during forecasting by public administrators has made
the control of public expenditures a difficult task. Standard costing, which is a good accounting technique for
cost forecasting and control has not been adopted by public administrator hence, there are numerous cases or
incidents of unfavorable or adverse variance between the budgeted or standard amount of public expenditure
and the actual amount of public expenditure. Thus, there is need to evaluate the role of accounting in the control
of public expenditure in Nigeria.

Objectives of the study

The aim of this research work in general is to vividly evaluate the role of accounting in the control of public
expenditures in Nigeria. The specific objectives for this research work are:
1. To examine the relationship between internal control and total government expenditure in public sector in
Nigeria.
2. To determine the relationship between internal audit and total government expenditure in public sector in
Nigeria.

Research Questions
1. To what extent does adequate internal control affects public sector total expenditures in Nigeria?
2. How does internal audit affect public sector total expenditures in Nigeria?

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

Research Hypotheses
H0: The Relationship between Internal Control and total expenditure in the Public Sector.
H0: The Relationship between Internal Audit and total
expenditure in the Public Sector.

Review of Related Literature Accounting Control

Accounting control is a procedure designed to protect assets and ensure that all financial transactions
are recorded to prevent and reduce errors and fraud (Block & Geoffrey, 2008). It is the process which assures
that financial resources are obtained economically and utilized efficiently and effectively in the attainment of the
desired goals (Okezie, 2004). It varies from organization to organization and is part of both the financial
management as well as internal controls, put in place by management, encompassing planning, budgeting and
budgetary control, accounting, reporting and review.
The aim of accounting controls is to provide an overall guiding framework for a sound and efficient
management of resources in all institutions. The goal of having a strong system of financial control is to
promote the institution’s ability to reach its objectives, providing reliable financial data, safeguarding assets and
records, evaluating operational efficiency through budget, organizational control and encouraging adherence to
prescribed policies and regulations (John, 2014). Subomi (2010) opined that financial controls in an
organization focus on the key transaction areas, with emphasis being on the safeguarding of assets and the
maintenance of proper accounting records and reliable financial information. Financial controls facilitate
effectiveness and efficiency of operations, thus helping to ensure the reliability of internal and external financial
reporting and assist in compliance with laws and regulations (Hayles, 2005). Effective financial controls
including the maintenance of proper accounting records help ensure that the institution is not unnecessarily
exposed to financial risks and that the financial information is used only within the business (Hayles, 2005).
This also contributes to the safeguarding of assets, including the prevention and detection of fraud (ACCA,
2010). Walters and Dunn (2001) have stated that obtaining sufficient knowledge of the internal financial
controls, both information technology controls and application controls, are needed to facilitate the
determination of the audit strategy and to carrying out subsequent steps.

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 (Sebastian,
2005). 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:
1. Legislature authorizes expenditure.
2. The Executive controls the collection and issue of funds. In addition, it prepares the accounts.
3. The prepared accounts statements are audited by the Auditor-General.
4. The Auditor-General submits the results of his audit to the Legislature through its Public Accounts
Committee (PAC). Thereafter, PAC acts on the report by inviting accounting officers to appear before it
where need be. 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 these very vital stages. Their involvement in public sector financial control is only visible
when funds have been expended. Informal institutions of accounting 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 (Sahgal, 2001).

A vibrant media may promote financial accountability by reporting the findings of the Auditor-
General. By exposing wrongdoings 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.

Limitations of Accounting Control

Effah (2011) disclosed that; a foundation concept underlying the definition of accounting control is that
a accounting control structure provides only reasonable assurance that agency objectives will be achieved.
Limitations are inherent in all financial control systems. These results from poor judgement in decision-making,
human error, management’s ability to override controls, collusion to circumvent control, and consideration of
costs and benefits relative to financial control. No matter how financial control operates, some events and
conditions are beyond management’s control (Lannoye 1999). No system of controls can be an absolute

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

guarantee against the risk of wrongdoing or honest error. Any system that attempted to reach that goal,
especially in a complex organization, would impose costs far out of proportion to the risks and create rigidities
for the organization. Thus the proper goal of the control system should be to provide reasonable assurance that
improprieties will not occur or that if they occur, they will be revealed and will be reported to the appropriate
authorities (Pridgen, 2007).

Internal Control
The British Auditing Guideline defined internal control as “ The whole system of controls, financial
and otherwise, established by the management in order to carry on the business of the enterprise in an orderly
and efficient manner, ensuring adherence to management policies, safeguard the assets and secure as far as
possible the completeness and accuracy of the records”. Horngren and Foster (1990) defined internal control as
the set of accounting and administrative controls and practice that help to ensure that approved and appropriate
decisions are made in an organization. They further stated that internal controls include both accounting control
and administrative controls. To them, accounting control comprises the methods and procedure that are mainly
concerned with the authorization of transactions, safeguarding of assets and the accuracy of the accounting
records while the administrative controls comprises the plan of the organization and all methods and procedures
that help management planning and control of operations. Okezie (2004), internal control is an integral part of
Accountancy and Auditing Profession. To him, it is a system within an organisation consisting of the plan of the
organization; the assignment of duties; the design of accounts and reports and all measures and methods
employed to; protect its assets, encourage the accuracy and reliability of accounting records, promote and judge
the operational performance of organisation’s activities and communicate managerial policies and measure
compliance there from. He likened it to the “heart” which operates the business “blood”. He added that, no
business can succeed without effective internal control system.

Internal Audit
According to Gupta (1999), internal audit is an independent appraisal function established within an
organization to examine and evaluate its activities as a service of the organization. Similarly, B.N. Okezie
(2004) sees internal audit as an independent appraisal function within an organization for the review of system
of control and quality of performance, as a service to the organization. According to Azubike (2007), internal
audit is the process of continuous review of the financial transaction in order to ensure that they are working as
the management intends. All regulations, instruction, and accounting systems or procedures and rules set should
be controlled to ensure that they are working as prescribed. He added that it assures management of adequacy
and appropriateness of the system of internal controls by testing their operations. To him the Auditor of the
government accounts should ensure that the internal controls are functioning properly and attention should be
paid on: Internal Checks (segregation of duties), procedures and rules, internal audit. Internal audit measures,
analyses and evaluates the efficiency and effectiveness of other controls established by management in order to
ensure smooth administration, control cost minimization, and ensure capacity utilization and maximum benefit
derivation (Unegbu & Obi, 2007).

Duties of the Internal Auditor

The duty of the internal auditor who should be responsible to the accounting officer will be to audit
accounts and records and for the examination of the system and procedures in force (Azubike, 2007). His report
should be submitted to the accounting officer copying Auditor-General of the State who should have an audit
programme which should be submitted to the accounting officer and the acceptance of the Accountant- General
and Auditor-General. These audit programme should ensure that the programme of audit would extend to cover
all the records of the ministry, departments or units in order to satisfy himself that there are adequate means for
the verification of all cash, stores and plants held; the system for control of expenditure and collection of
revenue is adequate, also that the accounting records are accurate.

Public Expenditures
Public expenditure refer to the expenses that government incurs for its own maintenance, for the
society and the economy as a whole (Weil, 2009). Public expenditure reflects the policy choices of government.
Once government has decided upon the type and quantity of goods and services to provide, public expenditure
represents the cost of carrying out these policies (Weil, 2009).
The rationale behind the need for expenditure is associated with the existence of externality or market
failures; there is no reason to assume that additional public sector investments would be more productive than
the private sector investments (Tanzi, 2007).
Public expenditure on public services has profound effect on the citizens’ standard of living and
opportunities. Public expenditure on public services has the objectives of given the citizens chance to realize

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

their fool potential (through education, training and work), building an inclusive and fair society and
strengthening a competitive economy (Lin, 2004). Thus the objectives of public expenditure encompasses both
equity and efficiency elements.
It is argued by some economists that efficiency improvement must be achieved at the expense of
equity. However, inefficiency in the provision of public services has shown that opportunities for improved
equity are lost because of wasteful use of resources (Bailey, 2002). This point is exacerbated to the point that
both the provision and financing of public services crowds out the private sector and leads to reduced economic
growth. Lower economic growth results too few resources being available for to pursue social programmes.
Public expenditure can be represented by two broad categories of government activity: exhaustive
expenditures and transfer expenditures. (Bhatia, 2008) Exhaustive public expenditures correspond to
government purchases of current goods and services (labour, consumables etc), and capital goods and services
(i.e. public sector investment on roads, electricity, schools, hospital etc). These expenditures involve purchases
of inputs by public sector and are estimated by multiplying the volume of inputs by input prices.
Exhaustive public expenditures are viewed as claim on the resources of the economy. Use of these
resources by the public sector precludes use by other sectors. The absorption of resources by the public sector
means that the opportunity cost of these public expenditures is the forgone output of the other sectors. It is the
opportunity cost argument of this kind that underlies the argument for those who frown upon larger size of
public sector and that also form the basis of many techniques used to measure public sector efficiency. This
argument underpinned the crowding-out debate (Bhatia, 2008).
Thus, according to economists, an increase in government expenditures does not necessarily imply an
increase in public output; neither does it always imply a reduction in efficiency, which makes efficiency
calculation using national income data tricky (Brown and Jackson, 2006). Transfer expenditures on the other
hand (which includes expenditures on pension, subsidies, debt interest disaster relief packages, etc.) do not
represent a claim on the society’s resources by the public sector as in the case of exhaustive public expenditures.
Transfers are seen as a redistribution of resources between individuals in society, with the resources flowing
through the public sector as intermediary (Bhatia, 2008).
Public expenditure can also be seen from the perspectives of the tiers of government. Generally
speaking, expenditures by the central government (Federal government in the case of Nigeria) include:
expenditure on social security, defense, health, education, road, transport, trade and industry, agriculture,
international relations, etc. On the other hand, major expenditures by states and local governments include
expenditure on education, personal social services, local environmental health, feeder roads, leisure and
recreation etc (Perkins, et al, (2001).
Public expenditure can be classified as functional (sectorial) categories of expenditure. Sectorial
classification can further be decomposed into current and capital expenditures. On the other hand, functional or
sectorial expenditure include general public service, defense, public order and safety, education, health,
agriculture, manufacturing and construction, mining, and quarrying water supply, transport and communication
electricity, environmental protection etc (Akrani, 2011; IMF, 2001; Heller and Diamond, 2000).
Barro, (2000), and Akrani, (2011) categorized government expenditure as productive and non-
productive. Productive public expenditure includes resources devoted property rights reinforcement, as well as
government spending activities that enter directly into the production function. On the other hand, those
expenditures that could not enter into production function (such as government consumption services) are
considered unproductive. Bleaney, et al, (2001) also classified general public expenditure, into: defense
expenditure, educational expenditure, health expenditure, housing expenditure, and transport and
communication expenditure as productive expenditure. Bleaney and his associates treated health and education
spending as investments on human capital because of the additions to human capital they entailed. They
classified social security and welfare expenditures, expenditure on recreation, and expenditure on economic
services as unproductive expenditure.

Theoretical Framework
In an attempt to understand the role of accounting in the control of public expenditure in Nigeria, the study will
anchor on two theories (Financial theory and Agency theory) were employed.

Theory of Accounting Control:

According to (John, 2014) the present and future personal functions of human beings are asserted to
constitute the fundamental point of reference in a theory of accounting controls. This theory stipulates that
existing and possible functions of financial tools for organizations are most essential. In the same light, it is
stated that, payments, financial instruments, accounting, control models, economic calculations, and related
considerations, both within and outside of the organization, ought to be discussed in regard to inner
characteristics but also possible effects. It is noted that establishing the relationships between various activities

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

and financial processes, from a financial control point of view, is a general and basic issue (Ostman, 2009). The
theory of accounting controls for organizations places a natural focus on the organisation such that they are
viewed from several latitudinal areas. The first regards the human beings’ functions of what is accomplished
through organizations, their activities and output. The second is about the structure of the organization and
activities, and of transactions that various parties have with each other. The third area covers the control systems
in the sense of recurring procedures and methods that are employed to relate present and future functions to
resources both externally and internally. The aforementioned accounting control tools are argued to be crucial
from an individual organization’s perspective and also for larger economic systems. The fourth and last area
illustrates the specific processes of individual organizations for certain issues. The theory further states that
structure and financial control system works together (Ostman, 2009). The accounting control theory is very
relevant to the current study given that it assists in better understanding of the intricacies surrounding
accountability in an organization.

The Agency Theory:

The theory recognizes the incomplete information about the relationship, interests or work performance
of the agent described as adverse selection and moral hazard. Moral hazard and adverse selection affects the
output of the agent in two ways; not doing exactly what the agent is appointed to do, and not possessing the
requisite knowledge about what should be done. According to Anderson, Francis & Stokes (1993), Agency
theory describes firms as necessary structures to maintain contracts, and through firms, it is possible to exercise
control which minimizes opportunistic behaviour of agents. In order to harmonize the interest of the agent and
the principal, a comprehensive contract is written to address the interest of both the agent and the principal; they
further explain that the relationship is further strengthened by the principal employing an expert to monitor the
agent. This affects the overall performance of the relationship as well as the benefits of the principal in the form
of cash residual. Financial control is one of many mechanisms used in business to address the agency problem.
Others include financial reporting, budgeting, audit committees, and external audits (Chan, 2008; Ashbaugh,
2008).

Empirical Literature
El-Nafabi (2009) when studying the role of public sector audit and accounting control systems in
Sudan, found that audit and control system is paramount in ensuring accountability for the use of public funds,
and safeguarding the limited public resources against corruption and other misappropriation and unlawful
practices. The study found out that weak and ineffective financial control systems and deficiencies in accounting
systems are some of facilitating factors of financialcorruption in Sudan.
Alin. (2006) argued that financial control is achieved by designing systems and procedures to suit the
specific needs of an organization. Just like in public sector’s organizations, for there to be financial control and
accountability of NGOs, it is crucial that an overall financial policy be put in place. In order to have effective
financial control, a firm’s staff and other stakeholders are supposed to be privy with and participate in the
budgeting process that affects the line items for which they are held responsible (Vincent & Emil, 2000). Case
studies on internal controls in Belgium illustrate the importance of the control environment when studying
internal auditing practices.
Sarens and De Beelde (2006) found that certain control environment characteristics like tone-at-the-
top, level of risk and control awareness, extent to which responsibilities related to risk management and internal
controls are clearly defined and communicated are significantly related to the role of the internal audit function
and fraud detection within an organization.
Gwilliam and El-Nafabi (2002) in their findings discovered that ineffective government financial
control systems in most developing countries is responsible for facilitating the misappropriation of public
resources and financial corruption in these countries. The lack of adequate auditing and accounting systems in
most African countries is exemplified by ineffective internal control and internal check, unqualified auditing and
accounting staff, and unreliable and untimely accounting information systems. This has led to inadequate
safeguards against corruption, fraud and other related malpractices. In Nigeria’s public sector, policies are not
adequately followed. Owizy (2011) assessed the effectiveness of internal control in government ministries
taking a case of Benue State ministry of finance. According to the study findings, it was established that Benue
State ministry of finance prepare annual budget promptly and also have adequate expenditure tracking to
prevent financial recklessness. Consequently, it was recommended that, the ministry of finance should strictly
abide by the principles and procedures in order to ensure that slack are built into the budget.
Amudo and Inanga (2009) carried out an evaluation of Internal Control Systems on the Regional
Member Countries (RMCs) of the African Development Bank Group (AfDB) focusing on Uganda in East
Africa. The study established that some control components of effective internal control systems are lacking in
these projects which renders the current control structures ineffective. The study recommended an improvement

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

of the existing internal control systems in the projects.

Wanyama (2001) studied the sustainability of CBOs in Western Kenya and found that many CBOs do not have
qualified personnel, lack sufficient resources, have inefficient systems in place, and have egocentric and corrupt
officials. To aggravate the situation, they are financially incapacitated to outsource auditors. Factors influencing
financial control practices in community based organizations (CB0s) in Baringo County, Kenya have also been
analyzed (Koitaba, 2013). The findings indicated that majority of the CBOs in the County were audited
annually. However, the study suggested that there was need to ensure compliance among those to be subjected
to audit at least once a year. It was further recommended that standardized accounting and reporting should be
provided by the government so as to enable tractability of CBOs‟ financial activities through information
sharing on a common and acceptable platform.

III. Methodology
The study adopted survey research. Survey research is the method of gathering data from respondents
thought to be the representatives of some population using an instrument composed of closed structure or open
ended items (questionnaires). This survey research design was adopted through the use of questionnaire, oral
interview and personal observation. The survey design was used so as to ensure originality and reliability. That
is, to ensure that all information gotten were from primary source and not secondary data hence their reliability.

Area of the Study

The area of the study is the State Board of Internal Revenue Service in Anambra State.
Population of the Study
The population of workers in the state board of internal revenue is 115 comprising of managers and head of
units in the SBIR and the general public comprising other experts in the field. Determination of Sample Size
In deciding the sample size to be used, the researcher believed that the sample size will be a good representation
of the whole population. To determine the sample size for this research, the Taro Yamani method was
employed. This is designated by the formulae:

The formula is stated thus: n = n .

1+�(�)2
Where:
n = the desired sample size N = Total population = 115 e = Tolerable error = 0.05 1 = constant
The researcher assumed 5% level of tolerable error would be used for this research work. Hence, the sample size
is computed thus; n = 89
Sources of Data Collection
Basically there are two sources of data: Primary sources and Secondary sources

Primary Sources of Data: These are data obtained from the SBIR, citizens, business organization, civil
servants etc that are residing in Awka with the aid of some prepared questionnaires which are differently
answered by them. In addition, oral interview were conducted with some accounting clerks of the Ananbra State
Board of Internal Revenue and Federal Inland Revenue.
Secondary Source of Data: The secondary data consists of data from several sources, they include; textbooks
on business and investment analysis, accounting and finance, taxation, business management, journals,
newspapers and periodicals. The secondary data is very important in this resource study as it provided the
direction and preview of the work, and moreover, its reliability is based on the strong belief that the people
whose ideas were expressed are experts in their chosen fields.

IV. Method of Data Analysis

The result of the questionnaires was analyzed by the use of tables. Simple percentages were computed and
findings were presented, discussed and interpreted, deductive reasoning relevant to the research objective and
hypothesis were also used. The Simple Regression was used in testing the hypothesis.

Model Specification
The linear regression model is used to ascertain the significant interaction between financial control and
accountability. The ordinary least square method of regression was used with aid of SPSS version 21 software
packages to analyze the data to assess the impact of the independent variables on the dependent variable. The
functional relation of the model is given as: TEXP = F(IC, IA)… (1)
Where:
TEXP = Total Expenditure IC = Internal Control IA = Internal Audit
The above equation when expressed in explicit econometric form gives;

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

ROCE=β0+ β1IC+ β2IA+ μ… (2)

Where
b0>0, b1>0, b2>0 β0, β1,
β2 = coefficient parameters and μ = the error term

V. Data Presentation and Analysis

The presentation of data collected means the way of presenting and arranging the different forms of
data obtained through various data collecting techniques to enable the researcher perform analysis and exact
new meanings from it. The data collected will be presented in simple table. The data analysis was based on the
answers to the key questions received from the various departments. The key questions in the questionnaires
will be analyzed by the use of simple percentage. A total of 89 questionnaires were distributed and all were
returned. So the analysis of data will be based on the returned questionnaires.

Adequate internal control affects public sector total expenditure

Frequen cy Perce nt Valid Perce Cumulati ve
nt Percent

Vali Strongly 42 47.2 47.2 47.2

d agreed
Agreed 25 28.1 28.1 75.3
Undecid 20 22.5 22.5 97.8
ed
Disagre 2 2.2 2.2 100.0
ed
Total 89 100.0 100.0
Source: field survey, 2019

The table above reveals that 47.2% of the respondents strongly agreed that adequate internal control
affects public sector total expenditure which exists almost in every organization. 28.1% Agreed, 22.5% were
undecided, 2.2% of the respondents disagreed.

Do excess expenditure result into loss in an organization?

Frequen cy Perce nt Valid Cumulati ve
Perce nt Percent
Vali Strongly 25 28.1 28.1 28.1
d agreed
Agreed 23 25.8 25.8 53.9
Undecid 26 29.2 29.2 83.1
ed
Disagre 15 16.9 16.9 100.0
ed
Total 89 100.0 100.0
Source: field survey, 2019

The table above reveals that 28.1% of the respondents strongly agreed that the excess expenditure
result into loss in an organization, 25.8% of the respondents Agreed, 29.2% of the respondents were undecided,
16.9% of the respondents disagreed.

The existence of Internal audit help in reducing excess expenditure in public organizations.
Frequen cy Perce nt Valid Perce Cumulati ve
nt Percent

Vali Strongly 28 31.5 31.5 31.5

d agreed
Agreed 37 41.6 41.6 73.0
Undecid 17 19.1 19.1 92.1
ed

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

Disagre 7 7.9 7.9 100.0

ed
Total 89 100.0 100.0
Source: field survey, 2019

The table above reveals that 31.5% of the respondents strongly agreed that the existence of Internal audit help in
reducing excess expenditure in public organizations. 41.6% of the respondents agreed, 19.1% of the respondents
were undecided 7.9% disagreed while 0% strongly disagreed.

Is there any internal audit in your organization?

Frequen cy Perce nt Valid Perce Cumulati ve
nt Percent
Vali Strongly 41 46.1 46.1 46.1
d agreed
Agreed 37 41.6 41.6 87.6
Undecid 5 5.6 5.6 93.3
ed
Disagre 2 2.2 2.2 95.5
ed
Total 89 100.0 100.0
Source: field survey, 2019

The table above reveals that 46.1% of the respondents strongly agreed that there is internal audit within the
organisation. 41.6% of the respondents agreed, 5.6% of the respondents were undecided, 2.2% of the
respondents disagreed. 4.5% of the respondents strongly disagreed.

Test of Hypotheses
This section involves the test of the research hypotheses using the regression analysis. The test is based on the
data collected from the field survey on the study. The data is drawn question one (1) for hypothesis 1: and
question three (3) for hypothesis 2

Test of Hypothesis One

The Relationship between Internal Control and total expenditure in the Public Sector
Model Summaryb
Model R R Square Adjusted R Square Std. Error of the
Estimate
1 .863a .744 .659 .92363
a. Predictors: (Constant), Internal Control
b. Dependent Variable: Total Expenditure

ANOVAa

Model Sum of Squares Df Mean Square

1 Regression 7.441 1 7.441
Residual 2.559 3 .853
Total 10.000 4
a. Predictors: (Constant), Internal Control
b. Dependent Variable: Total Expenditure

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

Dependent Variable: Total Expenditure

The result from the analysis table 1, 2, 3 (Model Summary, ANOVA and Coefficient) shows that
internal control (as measure by risk assessment, control procedures and effective communication and
information system) has strong positive but insignificant impact on total expenditure in public sector. Looking at
the P-value of the internal control (as measure by risk assessment, control procedures and effective
communication and information system) on total expenditure in the public sector P-value is 0.06>0.05. The
value of R=0.863 (Model Summary) tells us that there is a high positive relationship between internal control (as
measure by risk assessment, control procedures and effective communication and information system) and total
expenditure in public sector. The Value of R2 of 0.744 (known as the coefficient of determination) tells us that
74.4% of total expenditure in the public sector could be explained by the institution of effective internal control
(as measure by risk assessment, control procedures and effective communication and information system) while
the remaining 25.6% could be not be accounted for. The Adjusted R2 of 0.913 is close to the R2 value of 0.935
meaning that the model is fit for making generalization. Therefore, internal control (as measure by risk
assessment, control procedures and effective communication and information system) has positive insignificant
impact on total expenditure of public sector in Nigeria.

Test of Hypothesis Two

The Relationship between Internal Audit and total expenditure in the Public Sector
Model Summaryb
Model R R Square Adjusted R Square Std. Error of the
Estimate
.916a .839 .785 .73314 2.469
a. Predictors: (Constant), Internal Control
b. Dependent Variable: Total Expenditure

ANOVAa

Model Sum of Squares Df Mean Square

1 Regression 8.388 1 8.388
Residual 1.612 3 .537
Total 10.000 4
a. Predictors: (Constant), Internal Control
b. Dependent Variable: Total Expenditure

Coefficientsa

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

Unstandar Standar 95%

dized dized t Si g. Confidenc e
Coefficient s Coeffici interval
Mo del ents for B
B Std Beta Lo Upp
. wer er
err or bou Bou
nd nd
1 (Const 1.00 .60 1.6 .1 - 2.92
ant) 3 3 64 95 .91 0
5
Intern .112 .02 .916 3.9 .0 .02 .203
al 8 50 29 2
Contro
l
Dependent Variable: Total Expenditure
The result from the analysis table 1, 2, 3 (Model Summary, ANOVA and Coefficient) shows that internal Audit
has strong positive significant impact on total expenditure in public sector. Looking at the P-value of the internal
Audit on total expenditure in the public sector P-value is 0.029<0.05. The value of R=0.916 (Model Summary)
tells us that there is a high positive relationship between internal Audit and total expenditure in public sector.
The Value of R2 of 0.839 (known as the coefficient of determination) tells us that 83.9% of total expenditure in
the public sector could be explained by the institution of effective internal Audit while the remaining 16.1%
could be not be accounted for. The Adjusted R2 of 0.785 is close to the R2 value of 0.916 meaning that the
model is fit for making generalization. Therefore, internal Audit has positive significant impact on total
expenditure of public sector in Nigeria.

VI. Conclusion and Recommendation

Based on the outcome of the two hypotheses which were empirically tested and the research finding stated
earlier in this work, the researcher therefore, concludes that there is a significant positive relationship between
accounting control and total government in the public sector. Based on the findings of this study the researcher
recommends that:
1. The organization should pay more attention on internal audit than on internal control to ensure effective
accounting control and improve on accountability thereafter due to the insignificant relationship internal
control has on total expenditure.
2. Management should establish and implement periodic review of internal audit performance to ensure that
its performance and value to theInstitution is maximized and to ensure compliance with appropriate
standards and guidance.
3. Internal control activities, procedures and policies should be regularly revised to ensure that they are
effective.

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Onuora J.K.J. "#Role of Accounting in the Control of Public Expenditure in Nigeria." IOSR
Journal of Business and Management (IOSR-JBM), 22(1), 2020, pp. 44-55.

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