Stewardship Accounting in Government Parastatals

7/26/2019 Stewardship Accounting in Government Parastatals

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CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF THE STUDY

In every succeeding or successful organization either small or large,

important information of the business day-to-days operation is kept for future

usage. The cumulated information recorded so far by management is used as data

base for management analysis, policies formulation, planning and control of

available resources foe effective and efficient operation of the business.

Information recorded aid decision makers to make effective analysis I achieving a

predetermined goal of the organization efficiently.

The essence of accounting is centered on book keeping of account and

making analysis of this information recorded to issue a valid and unbiased report of

financial statement to interested users for decision making. It is therefore essential

to set up a strong and effective accounting control system for effective and efficient

utilization of available resources so as to show the effect of managerial actions and

qualify of management performances on the organizations operations.

It is pertinent to note here that an effective accounting system opt to function

effectively in the operation of any organization that would succeed maximally in

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her dealings. This will necessitate the optional efficient utilization of limited

resources available to the organization. The successful going concern any

organization depend immensely on the potentiality and quality decision making

analyst in the application of his technical know how! and to allocate available

resources appropriately. "ccounting information provides the basis for analysis to

help management in her day-to-day and long-term planning.

The analyzed accounting information provided are needed by investors who

invested their money in business for dividend, the government for the purpose of

tax, creditors for interest on loans, e.t.c. #or accounting information to be useful as

a basis for decision making, it must be relevant, complete, reliable, understandable

and timely as well.

The establishment of accounting system and its implementation as well in

any sector of business enhances the appropriate, effective and efficient use of

scarce resources for the benefit of organizations and the society of irregularities.

Therefore the purpose of this research work is an attempt to examine the role

accounting play in government parastatals with reference to the $ower %olding

&ompany of 'igeria ($.%.&.') *apele undertaking as a case study for this work.

The history of electricity development in 'igeria can be trace back to the

end of +thcentury when the first generating power plan was installed in the city of

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agos in +, from then to +/0 the pattern of electricity development was in the

form of individual electricity power undertaking scattered all over nations. *ome

of the few undertaking was federal government bodies under the public work

department, some by the 'ative "uthorities and others by 1unicipal "uthorities.

The then colonial government passed the 2.&.' ordinance '0 +/ of +/0. 3ith

this ordinance in place, the electricity department and all those undertakings which

were in control came under one body.

The 2lectricity &orporation of 'igeria (2&') and the 'iger 4am "uthority

('4") were merged to form the 'ational 2lectric $ower "uthority ('2$") with

from the +stof "pril +56. The actual merger did not take place until the 7thof

8anuary +59 when the first general manager was appointed.

4espite the problems faced by '.2.$." the authority has played an effective

role in the nation socio-economic development thereby steering 'igeria into a

greater industrial society. The success story is a result of careful planning and hard

work. The statutory function of the authority is to develop and maintain an

effective economy system of electricity supply throughout the federation.

4ecree '0 +/ of +/0 ordinances states that the monopoly of all commercial

electricity supply shall be en:oyed by '.2.$." to the exclusion of all other

organization. This however, does not prevent private individual who wish to buy

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and run thermal plants for domestic uses from doing so. '.2.$." has from +

gained partial autonomy and by implication is it to feed itself. Immediately after

civil war the management changed the nomenclature of 2.&.' of '.2.$." which

was later changed to the $ower holding &ompany of 'igeria ($%&') on the +9th

8une 600/.

In spite of considerable achievement of recent time with regard to $.%.&.'

generating capacity, additional power plants would be needed to cover expected

future loads. "t present, efforts have been made to complete the on-going power

plant pro:ects. $lants are already nearing completion for the extension and

reinforcement of the existing transmission systems to ensure adequate and reliable

supply of electricity to all parts of the country. #or several years, despite the

persistent perceived cash invested by the federal government, power outage has

been the standard for the 'igerian populace.

;enerally, the tariff has been criticized as being too low compare to the cost

of generating power. The #ederal government of 'igeria has recently increased the

tariff to attract foreign investors into the sector since the +stof 8uly 60+0 in order to

meet up with going concern for foreign investors into the electricity sector.

1.2 STATEMENT OF THE PROBLEM

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operation, '2$" was charged with the responsibilities of generating, transmitting

and distributing of electricity power. *apele undertaking in particular with the view

of coming out with recommendation on its improvement.

1.3 OBJECTIVES OF THE STUDY

+. To boost the efficiency and effectiveness in the operation of government

corporations.

6. To ensure the efficient distribution and utilization of available resources.

9. To encourage accountability accounting of individual officers entrusted with

public offices.

?. To reduce if possible eliminate impropriety (irregularities) in government

sectors.

/. To improve accountability in public sector thus by rewarding sincere public

officers.

1.4 RESEARCH QUESTIONS

+. Is the accounting system in $%&' equipped with modern facilities@6. 3hat does accountability accounting contributes towards electricity

generation and distribution@

9. &an accounting qualified personnel contribution add to the efficient

improvement of electricity in 'igeria@

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1.5 STATEMENT HYPOTHESIS

+. %iA "ccounting system has significant relationship with government

parastatals and can enhance productivity and efficiency.

%oA "ccounting system has no significant relationship with government

parastatals it therefore has no impact on productivity and efficiency.

6. %iA accounting has a significant relationship with electricity generation

and distribution.

%oA "ccounting has no significant relationship with the electricity

generation and distribution.

9. %iA Bualified accounting personnels services has significant relationship

with efficient generation and distribution of electricity.

%oA Bualified accounting personnels services have no significant

relationship with generation and distribution of electricity.

1. SIGNIFICANCE OF THE STUDY

The significance of this research work in the accounting system in

government parastatals with respect to $ower %olding &ompany of 'igeria

($%&') special focus on the *apele undertaking in particular will be useful to the

government. It will also be found useful to $%&' in improving the effective

operation of electricity power management and to the benefit of the public at large.

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1.! SCOPE OF THE STUDY

The scope or delimitation of this research work is restricted to the $ower

%olding &ompany of 'igeria $%&' *apele undertaken in particular as

government parasatals, and as such whatever way this work might be looked at in

order to broaden it, it shall be limited to the following area of concern to this

research work.

+. ;eneral financial position6.


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CHAPTER T#O

2.0 LITERATURE REVIE#

2.1 AN OVERVIE# OF GOVERNMENT PARASTATALS

;overnment parastatal is defined as enterprise own by the government

established with the interest of profit making. It is normally used in 'igeria

synonymous with public corporation.


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The basic reason for the establishment of the parastatals is to provide certain

essential goods and services for the general public and void of profit motive to

citizenry or the public, and it is different from government ministries or extra-

ministerial department. 3hile ministries under the control of ministries in charges

of ministries such as the ministry of defence, ministry of education e.t.c. while

parastatals are directly under the control board of directors appointed by the

minister in charge of a particular ministries. These enterprises are therefore legal

entities such as the 'igeria "irways "uthority, 'igeria Cailways &orporation e.t.c.

It is clear here that in 'igeria, both the #ederal and state government are

empowered to own a corporation, for instance, the 4elta *tate Transport *ervices,

delta 3ater Doard e.t.c. 1a:ority of these parastatals are set up to strike balance in

the price determination of goods and service which may likely be inflated by

unsuspicious businessmen in the private sector and to avoid the private sector from

exploiting the member of the public. It can also be used as machinery for economic

development. Their sources of funding were formally granted from government

which is now established to loans and aids from other sources.

*ince parastatals are autonomous, there is a need for proper planning and

control to avoid mismanagement. Esually their annual reports are presented to the

parliament for debate. The board of directors should check the managing directors

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the ministries who are the overall check boss should as well checkmate the

activities of the board of directors to ensure proper efficiency performances of the

personnel. There should be :udicial control during a review as well as public

control criticism.

2.2 PROBLEMS OF GOVERNMENT PARASTATALS

There are numerous problems facing the 'igeria parastatals today which

have been in existence for decades now. The most and lasting problem of these

parastatals is bribery and corruption. These officers holding government positions

see it as an opportunity to embezzle public funds listed of using it for the purpose

itFs meant for. The attitude of 'igerias towards public service of officers is not

encouraging, which shows the negative nomenclature of 'o be my father

business!.

The lack of qualified personnel appointed into fitting officers is another

ma:or problem. $ersonnel are appointed by politicians who base on favourism and

finally limiting resources or capital into these created monopoly sector. $oor

financial management arising from poor accounting system resulting to distress

and folding up of some parastatals in recent time, all these problems shields these

parastatals.

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2.3 AN OVERVIE# OF PHCN

#or several years, despite consistent perceived cash investment by the

federal government power outages have been the standard for the 'igerian

populace, however citizens of country still do not see this as normal because of

such outage, the government has divided the current $%&' distribution sector into

separate companies or entities that will be called ocal 2lectric 4istribution

&ompanies or ocal 4istribution &ompanies (4&) among the regions.

"s of "pril 60+? there are ++ 4istribution &ompaniesA

"bu:a 4istribution &ompanies

Denin 4istribution &ompanies

2ko 4istribution &ompanies

2nugu 4istribution &ompanies

Ibadan 4istribution &ompanies

Ike:a 4istribution &ompanies

8os 4istribution &ompanies

=aduna 4istribution &ompanies

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=ano 4istribution &ompanies

$orthacourt 4istribution &ompanies

>ola 4istribution &ompanies

1ost of these distribution companies now stand as parent distributors to

some near-by towns, such as Denin 4istribution &ompany serves as a parent

distributor to *apele. Emez bedford 'wabueze (600/), Ifedi.v. (600/).

2.4 ORGANI$ATIONAL STRUCTURE


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supervision of staff, who does what and when, and who is to head the financial

matters. The implication of this entire question is the structuring of activities to be

set up by $%&' board.

There should be explicit delineations of responsibilities and authority in all

activities of $%&' known as organizational structure. The organizational structure

of parastatals in 'igeria has the ministers as the highest ranking officer at the most

top followed by the board of directors appointed by the minister. The board usually

has a chairman as well as other members who over sees the day-to-day affairs of

the parastatals in accordance with laid down policies and procedures to follow. The

boards are usually responsible for the recruitment of staff and personnelFs and the

provision of remuneration while the managing directors and other extensive

director execute policies to achieve a predetermined goal.

The diagram below shows the organization structure of parastatalsG

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1inisters

Doard of 4irectors

1anaging 4irectors

2xecutive 4irectors


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gather are very important to guiding in decision making towards optimal

performance for achieving management goals.

It is generally believed that most significant distinguished factor between a

successful and functional system. This necessitated the serious attention to private

entities to the development of good and efficient accounting system. Their basic

rudiment is not recognized in government parastatals that is $%&' in particular.

2. POLICY FORMULATIONS

In policy formulation for an organization to be regarded with the accounting

system must operate in accordance with the ;enerally "ccepted "ccounting

$ractice (;""$) as well as the accounting concept and convention. The sub:ect of

accounting provide rules, regulation and guidelines on how to treat transaction in

difference *pheres of human endeavor, be it private or government entity, it is

generally practice that most parastatals and organizations restricts themselves to

those conventions and principles in formulating policies. #or instance, the use of

double entry system of accounting does not actually base on accounting in

formulating policies for government entity. The actual basis of accounting is not

the underlying principles to be adhered.

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2.! ACCOUNTING PROCEDURE AND METHOD

In a bit to look into the accounting procedures and method, according to

Terry and #ranklin (+6, pg +5) a procedure is a series of related taker that

make up the chronological sequence and the establish ways of performing and to

be established!.

" procedure is therefore specific and dailored made planned to achieve

certain work.

There are different methods for the calculation of profit, depreciation, stock

evaluation e.t.c. it is therefore a usual practice for management to use the

appropriate accounting method in their usefulness and providing reliable and

accurate accounting information. Doth the procedure and method of accounting are

to be adopted by any organization management which should be spelt out in the

organizational accounting manual.

2." INTERNAL CONTROL AND AUDITING

The basic purpose of internal control is to provide efficient operation of an

organization. The system of internal control consist of all the measure employed by

an organization to safe guard asses from waste, fraud, promote accuracy and

reliability in the accounting record, encourage and evaluate effectiveness of

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operation. In other words, internal control consists of all measure taken to provide

management with assurance that everything is functioning well as it should.

Internal control cannot be narrow to only a segment of the organization. The

relevant of principle of internal control system is to measure the practice of internal

control to boost the effectiveness and efficiency in $%&'. The convention of the

internal control system includes the followingG

+. Internal &heckA This is defined as the delegation of authority and in such a

manner as to effect check on the routines transaction activities which means

the proving of one persons work dependently by another person or

complimenting one person work to another! (%oward +5 pg 67). &ertain

key factor can be identified from the day-to-day and continuously internal

check is the continuous checking in order to ensure that mistakes and frauds

are defeated in its earliest possible occurrence.

6. Independent &heckA The work is so sub-divided that one person

independently has to check and verify the work of another person.

9. &omplementary dutyA This is completely division of labour where the check

of two, three or more responsible officers are involved in, for instances

various stage in the computation of salaries and wages so to avoid one

person carrying out a whole work from the beginning to the end.

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Internal auditing is quite different from the required statutory audit whose aim is to

verify data. 4etermine the accuracy and reliability of accounting statement

reported by an independent auditor to state whether the financial statement shows a

true and fair view.

Internal audit is a part of the accounting department in an organization. It is an

independent appraisal functioning within an organization. Its ob:ectivity is to

examine, evaluate and report on the adequately of control in contribution to the

proper, economical, effective and efficient use of resources! (1illichang +0 pg

?9?). The relevant of internal audit control measures established management is to

make sure that the internal auditor report to management any detect or

incomplianceFs with the organizational accounting procedures and policies.


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"n accounting system itself cannot generate meaningful information and

report without complete staff. The effectiveness of any parastatals inevitable

depends largely upon the quality of staff it employed. *taffing involve the process

of recruitment, selection pricing, appraisal and developing the people to carry out

various function in the organization. These processes have a lot of complexities

state belowA

+. The selection of the right persons

6. $lacement into right positions9. Training scheme to enhance quality and effective performance.

2.10 MAN PO#ER PLANNING

#or $%&' as government parastatals to achieve its aims, there must be the

need for man power planning. 1an power planning seems to maintain and improve

an organization capacity to achieve its corporate goals by developing strategies

which are designed to increase the present and future contribution. 1an power

planning is particularly relevant because of the changes in the

following areasA

+. Technological changes in materials, technical system and method of power

supply.

6. 2conomic, marketing and capital formation.

9. *ocial, population trends, social mobility and education.

?. $olitical industrial legislation (wages and salaries), monetary policy.

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2.11 HUMAN DEVELOPMENT

Training for human development is of relevant in order to get the right staff

equipped after staff recruitment and selection must have been made. Training is

important for staff efficiency needed at all level of management of any

organization. It gives new techniques for broader outlook.

2.12 THE EFFECT OF TRAINING SCHEME

+. Improve efficiency and effectiveness

6. Increase staff morale

9. Introduce new techniques

?. 2nabling quality personnel for replacement

/. Cate the standard of qualified staff in helping to overcome labour shortage.

"ccounting system as a bed rock of any successful organization is very

paramount if effectively established and managed. 2very organization needs

capital as an inter-wire to survive and it also need the efficient utilization of

available resources (money) and proper allocation of these scarcely available

resources under effective control by management. "ccounting information are

gathered and analyzed which could be need for policy formulation in decision

making. Therefore, with accounting system properly established and managed by

qualified personnelFs (accountants) who would use the information gotten to

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ascertain cash flows and emanate pro:ects to embark on, in the $%&', the problem

face by $%&' would eradicate totally or reduced to the minimum.

This is because accounting produces the basis for any financial policy

formulation which is the first factors backing up the going concern concept.

3ithout capital and it proper management, no organization would survive in a high

competitive business environment.

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REFERENCES

"ppleby, C.& 1odem Dusiness "dministration (++). ondon $itman $ublishers


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CHAPTER THREE

RESEARCH METHODOLOGY AND PROCEDURES

3.0 INTRODUCTION

4ue to the peculiar nature of this research study which cannot relent itself to

wholly scientific experiment and test. It was considered to adopt the internal

auditing system to approaches on techniques of investigation for gathering,

analyzing, summarizing data and facts necessary to draw a valid conclusion on the

study.

3.1 RESEARCH DESIGN

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The researcher in his research decided in collection and the analysis of data

to use the experimental and description method to design and present his findings.

The data gathered so far by the researcher from the $%&' was examined and

tested to prove validity of its findings at the end of the work.

3.2 POPULATION OF THE STUDY

This is the totality of data collected and available from $%&' stations in

'igeria. The $%&' as government parastatals operates and functions all over the

federation with equal legal capacity and back up. The data collected and selected

from all reliable sources whose validity were also tested and confirmed by different

researcher on this same field.

3.3 SAMPLE AND SAMPLING TECHNIQUES

4ue to time and financial constrain, out of the pollution of data gotten from

$%&' in 4elta *tate. The researcher took a sample of it for is work. %e used a

simple sample random sampling technique to get and arrive at a valid result. These

samples of data are also valid and reliable to use and in forming decision and more

appropriate conclusion on the impact of accounting in government parastatals with

special focus on the *apele undertaking.

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3.4 RESEARCH INSTRUMENT

In conducting this research work, the researcher employed the tools of

questionnaire, personal observation and also a personal brief interview with the

staff of $%&' to information from respondents.

3.5 METHOD OF DATA COLLECTION

The researcher elicited this research work data from two sources which are

the primary and secondary sources.

+. In search for primary information, the researcher distributed a number of

questionnaires to staff.


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CHAPTER FOUR

DATA ANALYSIS PRESENTATION AND INTERPRETATION

4.0 INTRODUCTION

In sourcing for data to be used for this research work, a total number of a

hundred questionnaire copies were distributed to the $%&' staff (management and

subordinates) of the *apele Endertaken. "nalyses were made based on the

information elicited and presented with vivid interpretation to enhance

understanding of any interested party of this research work.

%0A There is no significant relationship between accounting system and

government parastatals ($%&') for efficiency.

%+A There is a significant relationship between accounting system with

government parastatals ($%&') for efficiency.

4.1 DATA ANALYSIS

The table below shows the relationship between the parastals ($%&') and

accounting system for efficiency operation.

evel of 2fficiency *enior *taff 8unior *taff Cow total

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*atisfactory +/ 7 6+

#airly *atisfactory / +0 +/

Ensatisfactory 60 90 /0

&olumn Total ?0 ?7 7

The above figure is observed frequency (#o) from the field. The expected

frequencies (#e) can be arrived at by multiplying each column total by the row total

and dividing by the grand total.

2xpected for +/ J=9.76

2xpected for / J J 7.5

2xpected for 60 J=23.25


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2xpected for +0 J=8.02


In order to apply the real formulate for chi-square, the real expected frequencies

have to be imputed into the table.

evel of 2fficiency *enior *taff 8unior *taff Total

#o #e #o #e

*atisfactory +/ . 7 ++.6 6+

#airly *atisfactory / 5 +0 +/

Ensatisfactory 60 6/.9 90 67.5 /0

?0 ?7 7

The formula for arriving at the calculated value in chi-square is thisA

2

= o e

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.

=2.76

=0.57

.

=0.46

. J 6.?+

=0.50

.

=0.40

J 5.++

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The total value or critical value can be arrived at by determined the degree

of freedom (df) and relating it to the level of significance which is /K (0.0/) in

chi-square table.

df J (r-+) (&-+) J (6-+) (9-+)

+ x 6 J 6

df J 6

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4.2 DATA PRESENTATION AND INTERPRETATION

The table value of degree of freedom 6 and level of significance 0.0/ (/) is

equal to /. in chi-square table.

4ecisionA

*ince the calculated value is more than the table value, we re:ect the null

hypothesis (%o) and accept the alternative hypothesis (%i). That is to say that is a

significant relationship between accounting system and government parastatals for

efficient operation this result and the analysis can be put in a table to be seen at a

glance as shown below.

evel of

2fficiency

*enio

r *taff

8unio

r

*taff

Total 4

f

Tab.al

Tab.&al

4ecision

*atisfactory +/ 7 6+

#airly / +0 +/ 6

*atisfactory 60 90 /0

Ensatisfactor

y

?0 ?7 7

Total /. 5.++ *ignifican

t

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CHAPTER FIVE

SUMMARY OF FINDINGS& CONCLUSION AND RECOMMENDATIONS

5.0 INTRODUCTION

Deing conversant with the knowledge of accounting system functions and

impact on productivity and the implementation of same on existing power supply

before and during the course of carrying out this research work, the researcher

came out with findings to the summarized here as he conclude his work on the

sub:ect matter on $%&'. *he also came up with recommendations which if strictly

adhere to would help in the enhancement of effective and efficient power supply of

$%&'.

5.1 SUMMARY OF FINDINGS

"t the time of this research study, it was discovered that $%&' (*apele

undertaking) has a good recording system, an appropriate and timely recording of

books of account and a sound internal control system through the internal audit

system is weak, in spite of the sound internal control system, daily transactions and

revenue receipts were not fully documented for analyzing books of account to

produce a true and fair financial statement. There was no internal audit in different

branches which is very important because of the functions it performs such as pre-

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payment audit. There is a centralization of authority on branch, district or

undertaking operating an independent office.

Defore any decision is taken at the lower level it has to be referred to the

head office for approval.

"nother aspect the findings of this work relates to the quality and quantity of

staff in the accounting department. The number of staff engaged is relatively few.

1a:ority of staff working in the accounting field therefore, they do not have the

full knowledge of accounting but left with the choice of debiting and crediting

daily transactions. 3ell trained, qualified and competent staff in accounting

profession who could engage better planning for a proper recording resulting in

resource allocation to achieve a set goal is lacking.

5.2 CONCLUSION

The impact of accounting system in $%&' is examined and analyzed in this

research work. The correlation between accounting system and the present $%&'

is positive and this could be improve upon if $%&' could employ and implement

recommendations stated in this research work for the improvement of power

supply in 'igeria.

5.3 RECOMMENDATIONS

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#rom the observation analysis and the findings on this research work so far,

the following recommendations are considered imperative in order to stream-line

ma:or defects in the whole system.

Buality of staff could be enhanced through training scheme for the existing

staff and recruitment of great advantage for management. " qualified accountant

uses his professional know-how and skill to prepare and present information to

assist management in decision making for the purpose of formulating policies in an

organization. If the service of such personnel can be employed into $%&' it will

effect positive changes.

*imilarly, salary and allowance can be improve on to attract the service of

qualified worker into government parastatals to prevent the incident of defective

planning which could give room to waste, impropriety and financial irregularities.

"ccounting manuals should be revised regularly to help meet current changes in

accounting and the manual should contain a procedure for cash collection.

'evertheless, there should decentralization of authority so to facilitate decision

taking at the lower level without resulting to the usual practice of referring minor

issues to head office when it require an urgent attention that the lower level could

handle.

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REFERENCES

"ppleby C.& 1odern Dusiness "dministration (++). ondon $itman $ublishers.

&using and Darry "ccounting Information *ystem and Dusiness


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I am a final year student of the above mentioned institution currently undertaking

a research with a topic *tewardship accounting in ;overnment $arastatals!. "ttached

here is a questionnaire designed to elicit information to help in the course of this research

work.

This pro:ect is a requirement for the partial fulfillment of the %igher 'ational

4iploma (%'4) in accountancy. "ll information sought for are exclusively for academic

purpose and will be treated with utmost faith and confidential.

>ours #aithfully

=232 .&. ;D";


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*atisfactory (*)

#airly *atisfactory (#*)

Ensatisfactory (E*)

*2LA 1"2 ( ) #emale ( )

1"CIT" *T"TE*A *ingle ( ) 1arried ( )

BE"I#I&"TI


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+6.The tariff rate is too low ever since an increase will solve the problem of

$%&' * ( ) #* ( ) E* ( )

+9.The cost of generating power is higher than the revenue generated * ( ) #*( )

E* ( ) etc.

Stewardship Accounting in Government Parastatals

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