The term financial means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise. It is a means of applying general management principle of financial resources of the enterprise. Financial is the management of finance of a business/organization in order to achieve financial objectives. The goal of having a strong system of financial control is to promote the government’s ability to reach its objectives, providing reliable financial data, safeguarding assets and records, evaluating operational efficiency through budgetary control and encouraging adherence to prescribed policies and regulations (Wachira, Ngahu & Wagoki, 2014).
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitations of the Study and Definition of technical terms.
1.2 Background of Study
Public sector is a part of the economy set up, operated and financed by government and its agencies distinguishable from the private sector and is organized on behalf of the whole people. Public organizations in Nigeria signify the most leading economic force, as a result efficient and effective systems of government financial management which are also in form of internal and financial control are vital for budgeting the nation's resources.
The objectives of financial, the financial is generally concerned with procurement, allocation and control of financial resources of a concern. The objectives can be following to ensure adequate returns to the shareholders which will depend upon the earning capacity, market price of the share, expectations of the shareholders, plan a sound capital structure. There should be sound and fair composition of capital so that a balance is maintained between dent and equity capital, create wealth for the business, to generate cash and provide an adequate return on investment bearing in mind the risks that the resources invested.
Financial control is a critically important activity to help the business ensure that the business is meeting its objectives. Accountability is the system for ensuring proper stewardship of asset which involves a legal and moral liability for ensuring that public funds are used for public ends o purpose and that the best value is obtained for money spent.
The exact problems emphasized in this study were factors combating against effective internal control system in the Nigerian public sector institutions. These problems include; poor accountability and lack of sound financial control system. The level of accountability is very poor in Nigeria because the attributes of convenience, completeness, significance, quality, dependability and timely disclosure of financial, social and political information about government activities are completely not available or partially available for the citizens to assess the performance of public officers mostly the political office holders and also the management of public funds in terms of how public office holders give accountability report of their stewardship. Other problems include poor administration of government funds. Also, accounts of public sector organizations are characterized by inadequacies such as, improper book keeping of accounts and other necessary records, embezzlement of public funds most especially among top officials.
Therefore, in Owerri North Local Government Area where the research was carried out, the activities that was conducted is to know the Financial Control Tools in Public Sector Organization.
1.3 Statement of Problems
Investigation revealed that there is no gain saying of the fact that local government in Nigeria are established for political administrative and services provision purpose. The question that is yet to be answered is low the local government has been able to achieve the objective of its inauguration. This is evident by the prevailing lapses and short - comings are setting local government administrative operations which eliminate in the following phenomena:
- Persistent review of local government operation policies of modus operandi
- Indiscriminate appointment of accounting officers as chief executives of local government who lack the managerial ability of their position
- Gross mismanagement of public funds which has degenerate into financial crisis and poor performance of the local government in economic and social development of the country.
- Loss of sight in long and short run economic development of the country projects and ignorance of applicant of financial principles to investment.
- Short supply of professional staff in the field of accountancy and financial in the local government due to poor remuneration scheme.
1.4 Aim and Objectives of Study
The aim of the study is to examine the Financial Control Tools in Public Sector Organization using Owerri North Local Government Area as a case study. In achieving this aim, the following specific objectives were laid out as follows:
- To know how local government are keeping abreast with the policy of their establishment objectives.
- To investigate the administration structure of local government
- To know the financial resources and statutory allocation is enough for its efficient functioning.
- To know what is obtained as regards to financial and whether the new policy is working or not.
- To assess the raising of per capital income and standard of living and therefore of regional and national income.
- To investigate the factors militating the reduction of wealth and income inequalities between urban and rural areas.
1.5 Research Questions
The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
- Are there factors militating the reduction of wealth and income inequalities between urban and rural areas?
- Is the new policy obtained working or not?
- How does local government keep abreast with the policy of their establishment objectives?
- What is the administration structure of local government?
- What are the financial resources and statutory allocation is enough for its efficient functioning?
- What are the raising of per capital income and standard of living and therefore of regional and national income?
1.6 Research Hypothesis
In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.
- H0: The employment of incapable accounting personnel at the citadel of the local government has not degenerated into poor performance of many authorities
- H1: The employment incapable accounting personnel at the citadel of the local government has degenerated into poor performance of many local authorities.
- H0: There are no significant factors militating the reduction of wealth and income inequalities between urban and rural areas
- H1: There are significant factors militating the reduction of wealth and income inequalities between urban and rural areas
1.7 Significance of Study
Based on the forgoing, the need for development sound accounting and financial control systems especially in Owerri north local government and the developing state like Imo State cannot be over emphasized. This is because the government is at the Centre of the economy. It is also important to note that the pattern of expenditure or manner of resources allocation determines the extent to which accountability for economy, efficiency and effective can be achieved.
There is also the need for every public sector organization to establish and maintain, an effective accounting information which would be reliable timely and compatible for decision making and management control. The accounting information system should be understandable and disclose government financial condition as well as the results of its operations.
This study will be of immense benefit to other researchers who intend to know more on this study and can also be used by non-researchers to build more on their research work. This study contributes to knowledge and could serve as a guide for other study.
1.8 Scope of Study
This research work on financial in local government focused on a case study Owerri west local government area on which all findings and analysis are based. Owerri west local government was chosen in order to have representation of average local government in Nigeria, as it is one of the local governments in Imo State.
For organizations like local government with wide range of responsibilities for local services delivery and promotion of sustainable development, the prudent and efficient management of financial resources is a task that can only be ignored at the risk of the community's dissatisfaction and disaffection. This is more so when sordid event of the recent past have shown that to a large extent, the traditional explanation for poor performance of our local government that is, inadequate of funds no longer convincing.
1.9 Limitations of the Study
During the course of this study, many things militated against its completion, some of which are:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- Research material: availability of research material is a major setback to the scope of the study.
- Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
- Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
1.10 Definition of Terms
Financial: Financial is defined as the business function that deals with the management of capital source and uses so as to attain desired goal.
Control: Is he institutionalization of administrative and statutory measure that appropriate funds are spent according to set down rules and regulations minimize of waste, checking dishonesty and extravagance and the promotion of economic and effective in the conduct of the financial activities of government.
Accountability: Is a system for ensuring proper stewardship of asset which involves a legal and moral liability of ensuring that public funds are used for public ends or purpose and (that) the best value is obtained for many spent.
Auditing: Is an independent examination of and expression of opinion on the financial statement of an enterprise by an appointed auditor and in pursuance of that appointed and in compliance with any relevant statutory obligation.
Accounting Policy: Is the specific accounting bases followed or items considered to be material in the determination of profit or loss for the period and stating matters in the financial position.