TITLE PAGE

AN ASSESSMENT OF BUDGETING CONTROL IN LOCAL GOVERNMENT

(A CASE STUDY OF IDAH LOCAL GOVERNMENT)

BY

ALHASSAN OJONOKA BLESSING

REG. NO: FPI/ND/ACC/09/802

BEING A PROJECT SUBMITTED TO THE DEPARTMENT OF ACCOUNTANCY

FEDERAL POLYTECHNIC IDAH KOGI STATE

IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF

NATIONAL DIPLOMA (ND) IN ACCOUNTANCY

SEPTMBER, 2019
 APPROVAL PAGE

This is to certify that this project has been approved by the supervisor and as met the

requirement for the award of National Diploma (ND) in Accountancy.

_________________ __________________

Mrs. Yunusa A.A Date

(Supervisor)

_________________ __________________

Mr. Achimugwu A. Date

(Head of Department)

________________ __________________

External Examiner Date

 DEDICATION

This research work is dedicated to Almighty God, the giver of knowledge and understanding

for his mercy and protection throughout my academic pursuit.

I also dedicate this research work to my mother Mrs. Abigail Ebune for her moral and

financial support. Mummy, you are immeasurable, I love you.

 ACKNOWLEDGEMENT

Certainly where success is achieved there must be people behind the achievement, what

started as a mirage two years ago later ended as a reality and of course mention must be made of the

names of those responsible for it.

Firstly and most importantly I express my profound gratitude to God. The author and the

finisher of my faith, the beginning and the end, who has given me the inspiration, courage and power

to survive throughout my academic years with Federal Polytechnic Idah and his immeasurable

blessings over me and my family despite the hardship of the world.

In gratitude they say is ungodliness I make my heartfelt and profound gratitude to my parent

Mrs. Abigail Ebune for her unshaken support since I started by academic pursuit in this world and

her support in every aspect of my life to make me what I am today.

Mum, I don’t know if thank you will be enough to appreciate you, but it is my prayer that

God in his affectionate mercy give you long life to reap the fruit of your labour (Amen).

I wish to express my appreciation to my able supervisor Mrs. Yunusa A.A. and Mr. Timothy

U.O. for his correction and guidance, and for using his leisure time for the supervision of this project.

My appreciation also goes to my dad Mr. Gabriel Ebune, Pastor Itodo, Mr. and Mrs. Deborah

Emmanuel, Pastor Mrs. Joseph Eleojo.

I also appreciate the effort of my brothers and sisters, Master Tee, Abuh John, Ojibo Michael,

Emmanuel Omale, Comfort, Mr. and Mrs. Ernest. May God continue to bless you all in your

endeavors (Amen).
 ABSTRACT

This research work was an attempt to examine an assessment of budgetary control in the local
government, a case study of Idah Local Government. The primary objective of this study is to assess
whether budgetary controls ensure that the local government budget is properly planned, prepared
and executed according to the legislation and entities, objectives to assess how budgetary
preparation, allocation distribution, approval of virement/supplementary allocation, monitoring of
expenditure/performance and reporting are evaluated. The research methodology which shows the
various sources of data collected through questionnaire and personal interviews were made based
on the use of tables and simple percentages. The researcher discovered from the analysis and
interpretation that budgetary control assessment is vital in the local government because majority of
the respondents attested to that. The researcher went to make some recommendations which will be
of a great benefit to the local government.
 TABLE OF CONTENTS

Title Page -- -- -- -- -- -- -- -- -- -- i

Approval Page-- -- -- -- -- -- -- -- -- -- ii

Dedication -- -- -- -- -- -- -- -- -- -- iii

Acknowledgement -- -- -- -- -- -- -- -- -- iv

Abstract -- -- -- -- -- -- -- -- -- -- vi

Table of Contents -- -- -- -- -- -- -- -- -- vii

CHAPTER ONE: Introduction

1.1 Background of the Study -- -- -- -- -- -- -- 1

1.2 Objectives of the Study -- -- -- -- -- -- -- 3

1.3 Statement of Problem -- -- -- -- -- -- -- 4

1.4 Scope of the Study -- -- -- -- -- -- -- -- 4

1.5 Significance of the Study -- -- -- -- -- -- -- 4

1.6 Limitation of the Study -- -- -- -- -- -- -- 5

1.7 Definitions of terms -- -- -- -- -- -- -- -- 6

CHAPTER TWO: Literature Review

2.1 Budget and Budgeting -- -- -- -- -- -- -- -- 10

2.2 Types of Budget -- -- -- -- -- -- -- -- 11

2.3 Budgetary Control -- -- -- -- -- -- -- -- 14

2.4 Benefits of Budgetary Control -- -- -- -- -- -- 15

2.5 Weakness of Budgetary Control -- -- -- -- -- -- 17

2.6 Stages in Budgeting -- -- -- -- -- -- -- -- 18

2.7 Source of Fund to Local Government -- -- -- -- -- 19

2.8 Government Budgeting Control -- -- -- -- -- -- 25

2.9 Government Budgeting Control -- -- -- -- -- -- 28

2.11 Accounting Control in Government Accounting -- -- -- -- 32

2.12 Budgets is an aid to Control -- -- -- -- -- -- -- 38

2.13 Profile of Idah Local Government -- -- -- -- -- -- 40

CHAPTER THREE: Research Methodoly

3.1 Introduction -- -- -- -- -- -- -- -- -- 44

3.2 Population -- -- -- -- -- -- -- -- -- 44

3.3 Sample Selection -- -- -- -- -- -- -- -- 44

3.4 Sources of Data Collection -- -- -- -- -- -- -- 45

3.5 Method of Analysis of Data -- -- -- -- -- -- -- 46

CHAPTER FOUR: Data Presentation and Analysis

4.1 Introduction -- -- -- -- -- -- -- -- -- 47

4.2 Data Presentation Analysis and Interpretation -- -- -- -- 47

CHAPTER FIVE: Summary of Findings, Conclusion and Recommendation

5.1 Summary of Findings -- -- -- -- -- -- -- -- 57

5.2 Conclusion -- -- -- -- -- -- -- -- -- 58

5.3 Recommendations -- -- -- -- -- -- -- -- 60

Appendix -- -- -- -- -- -- -- -- -- 64
 CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND TO THE STUDY

In business, planning and control are indispensable tools for the achievement of organization

goals. The twin goals of efficiency in the utilization of scare resources, and effectiveness in the

realization of corporate objectives, cannot be attained in the absence of good planning and effective

controls. Planning is the management function concerned with the identification of objectives and

targets and the selection of policies and method necessary to achieve those objectives.

Control, on the other hand, is the regulation of activities within an organization so that

performances are in accordance with the expectations established in the policies; it involves also

dragging performance to conform to plans.

The budget as accounting tools effectively brings together the planning and control activities of

an organization, in financial and quantitative terms.

A budget is a formal expression of managerial plans in quantitative and financial terms,

encompassing different phases of operation and aimed at helping management towards the

attainment of the organization objectives. Budgeting control is the use of budget for assigning duties,

planning and controlling performance and guiding management and other activities towards the

achievement of organizational objectives.

Thus, budgeting control involves five clearly distinct.

i. It set out clearly defined targets of performance in terms of output, income expenditure or

other desire services, for each section of the organization;

ii. Embodying these target of achievement in sectional unit, divisional and department

budgets;

iii. Comparing these budgeting standards and estimates with actual or real performance;

iv. Identifying deviations from the budgeting;

 v. Taking corrective action to bring performance into line with budgeted targets;

Budgeting control is crucial not only in business, but also in government. The basic control

procedure remains the same, whether or not the organization is private or governmental. The

budget is stronger instrument of control in government than in business, if any.

1.2 OBJECTIVE OF STUDY

The researcher has chosen particularly to write on budgeting control in local government with

emphasis on Idah Local Government Area of Kogi State not only because of the important or

significant role played by budgeting control as a tool for effective management but examine and

what extent budgeting control is practiced in Idah Local Government Area as what is obtained

in the theoretical frame work.

The bearer been faced in the exercise of budgeting control will looked into and consequently

give some recommendation for betterment of the Local Government.

1.3 STATEMENT OF PROBLEM

Budgetary control in local government is the focus in this research work, attention would be

given to the budgeting control system as well as the benefits and weakness of the budgeting

control.

1.4 SCOPE OF STUDY

This research covers all the practical aspect of budgeting control in Idah Local Government

Area of Kogi State. The research will examine government budgeting, the structure of financial

and budget controls in local government accounting.

This study will also examine weakness and benefits of budget control. It shall also evaluate

the limiting factors of budgets in local governments.

1.5 SIGNIFICANCE OF STUDY

The significance of this study cannot be over emphasize the topic, budget control is selected

to show on important aspect of budgeting system as it relates to local government. The

 researcher wishes to stress that this study will help to enhance the act of budgeting in local

government areas.

The study is also significant in the sense that it points out the areas of weaknesses as well as

benefits of budgetary control system in Idah Local Government Areas and advice its

management on necessary measure to be adopted in order to accomplish the objectives of the

practice.

Another importance of this study stems from the control aspect of the budgeting which enable

the executives to take necessary corrective steps, during the period of budgeting.

This aspect of budgeting promotes efficiency of operation and prevents waste.

1.6 LIMITATION OF STUDY

It is note that the topic is of a nature and focuses its attention on the budgeting control aspect

of Idah Local Government Area that is it has a persistent life span that stretches beyond the

deadline for this project work. Therefore, the limitation of the study or research work includes;

Time constrains which is the limiting factor in the proper analysis and adequate investigation

of some of the various aspect of the Local Government.

This because this work is combined with academic work another handicap mainly was

informative constraints; the researcher was unable to achieve of the information and wanted

because of the protocols that exist in the local government. The research subjected to the usual

“check next week” syndrome found in the local government and in case, some vital information

were not released by the officers whom they consider or seen as viable and secret.

1.7 DEFINITION OF TERMS

1. Budgeting

According to Iydon A. M. budgeting is the process of preparing budgets. It is the word

given to the formulation of plans for a given future period, expressed in financial terms.
2. Budgetary Control

Budgeting control is defined by (I.C.M.A) the establishment of departmental budget

relating the duties of executives to the requirements of a policy and persistent comparism of

real which budget results either to ensure that individual action are in line with the objective

established in the budget.

3. Warrant

As defined by professor Osisnal in the Nigeria Financial Revenue, “A warrant is the

executive authority issued and released through the office of the accountant general

permitting the expenditure or expenses of funds voted for a particular heads and sub-heads”.

4. Consolidated Revenue Fund

Section 80(1) of the 1999 constitution defined consolidated revenue fund as the fund

in which all receipts accruing to the government from the general taxing and revenue powers

of government (except those specific laws) are paid.

5. Federation Account

Section 163(1) of the 1999 constitution of Nigeria defines a federation account as one

into which shall be paid all revenue collected by the government of federation, except the

proceeds of the personal income tax from the residents of the federation territory, the

Nigerian Police Forces, the ministry of department charged with the duties for external

affairs.

6. Budgeting Limiting Factors

The institute of Cost and Management Accountants defines limiting factors as “a

factors which at anytime or cover a period might limit the activities of an entity, always out

where there is shortage of supply”.

7. Budgeting Planning
This is defined as an establishment of a short term plan designed to achieve a short
term goals of an organization
 REFERENCES

Adeniyi, A. A. (2002). Simplified Management Accounting. Lagos: EL-TODA Ventures Ltd.

Rasheed, A. A. (2006). Public Sector Accounting and Finance (3rd Ed.) Ibadan: Micho Production.
 CHAPTER TWO

2.0 LITERATURE REVIEW

2.1 BUDGET AND BUDETING

The thrust of deliberate skillful planning is to take merit of strengths and opportunity of an

organization such that the identified weakness pale into insignificance while the threats posed

by the activities of competition are permanently neutralized.

Horgnen (1977) for instance, defined budget as a quantitative expression of plans of action

and an aid to co-ordination and enforcement or implementation.

Puandy (1995) defined it as an understanding and coordinated plan expressed in finance

terms for the operation of an organization for some specific period of the future.

Budget is the mechanism for ensuring effective performance. The Oxford Dictionary of

Accounting defines budget “as a financial statement prepared prior to a specified period,

containing the plans and policies to be pursued during that period”. Thus, a budget can be

viewed as a process whereby cost is assigned to specific tasks that are planned within a definite

time period.

Budget are may be defined as a monetary statement in terms of finances and or a quantitative

cause of action prepared and approved prior to a defined period of implementation. The budget

contains the goals and aspiration of a business organization.

From the definition above, it can be deduced that budget has the following features

1. It is an understanding and coordinated plan.

2. It is expressed in financial terms.

3. It is a plan for organization operation and,

4. It is a future plan for a specified period.

2.2 TYPES OF BUDGET

Local government is usually prepared annually which concerns the income and expenditure

of the local government and it is categorized into two parts that is recurrent and capital. The

budget as authorized by the appropriate edit.

a. According to Burkhead Jesse in Government Budgeting, the recurrent and expenditure which

are concerned in both revenue and expenditure which are concerned in the daily running of

local government (personnel and over head cost), the amount expected as revenue throughout

the year and the amount authorized as expenditure are shown against the appropriate head

and sub-head.

b. Capital budgeting is the making of long term planning decisions for investments and how the

investments are to be financed. The word capital refers to fixed assets used in production e.g

building or plant and machinery while a budget is a plan detailing projects and deciding if

they should be included in the budget or not depending on the richness of the project or

investment and available resources. Individuals, local government and corporate investors

usually have a notion of a minimum rate of return that should make project desirable or

otherwise. The quantitative approach to the selection of projects generally compares

predicted cash flows to the required investment. This, all project having rates of return in

excess of the minimum rate of return would be desirable and vice versa.

The barrier of choosing the minimum acceptable rate of return is extremely complex or

difficult and far from easy. The capital budget contains all the heads and sub-heads in the

Capital Development Fund, the payment being in respect of capital assets such as roads,

building, etc. while the receipts are generally grants and loans made to the local government

in order to pay for those dividend accruing from the assets.

 It has to come to our notices that in capital budgets, the calculated total cost during a

development fund plan period is highlighted as well as the amount authorized for payment

during the year.

The amount surplus or deficit in the capital budget at the end of the financial year is

transferred to the capital development fund while the surplus and deficit on recurrent budgets

is transferred monthly to the surplus and deficit accrues to or decreased from the consolidated

revenue fund.

2.3 BUDGETARY CONTROL

The control stages of the management planning and control cycle parts starts with budget and

also included controlling and measuring and reporting analyzing and feedback. These stages are

always referred to collectively as budgetary control.

Budgetary control is concerned with making sure that real expenditure is in line with

budgeted amounts and that the objectives and levels of activities envisaged in the budget are

achieved.

A critical role of management accounting is that of introducing and maintaining a sound

system of budgeting control.

The first thing require of a good system of budgeting is to set up accounts for collecting data

on input and output at the lowest distinct level of activity. These accounts are called cost

centres.

Individual’s managers will be responsible for one of these cost centres and together such cost

centres forms a responsibility centre. The responsibility centre at the programme or service

responsibility centres makes up the individual departments of the organization.

The complexity of the budgets many public sector bodies can produce unwanted effects. It is

always suggested that the budget restricts flexibility and acts as a strait yachet on managerial

action. It might result to expenditure being incurred merely because it included in the budget,
 even though is no longer required, whereas activities, which might be much more beneficial in

terms of objectives of the organization, are ignored because the presence of budgetary provision

is not there.

2.4 BENEFITS OF BUDGETARY CONTROL

Budgets have various different benefit; they are designed to carryout variety of functions like

planning, classification of authority and responsibility, coordinating activities, motivating,

communication and performance evaluation.

In the light of the above categories, budget benefits might be to as stipulated by J.A Scott.

a. Compelling Planning: This is probably the most essential feature of budgeting because

planning focus executives to the look ahead, set targets, anticipated barriers and gives

purpose and direction to the organization.

Corporate planners would see budgeting as an essential techniques whereby long term

strategies are change into short term action.

b. Motivation: Budget encourages motivation which is the desire or will to achieve a target or

goal or objective together with executive effort necessary to achieve that target or goal.

c. Communication: The budget usually serves as a means of communication between

executive and subordinates role and problem.

d. Performance Evaluation: The preparation of budgets, the timely analysis of real

expenditure and the preparation of variance provided a basis for budgeted centre evaluation

and financial health of the organization.

2.5 WEAKNESS OF BUDGETARY CONTROL

a. Lack of Flexibility: Some budgets are prepared without enough flexibility to allow for

unexpected situations which may arise during the currencies of the budget.

b. The Barrier of Setting Realistic Targets:If the level is too high and as unattainable, then

morale will face the consequences and if too low, then inefficiency will result.
 c. Budget can become and end itself, and self perpetuating without regular review and

evaluation.

d. It can be used as a pleasure to promote the ends of sectional interest.

e. Resistance to Control: Some staff might regard budgeting as a witch-hunting exercise

rather than seeing it as means of improving performance. They stand as resistance to the

attainment of the targets or goals (By Walts 1976).

2.6 STAGES IN BUDGETING

The following are the stages of budgeting:

1. Formulate Standing Instruction or Budget Manual: This is a document, which states

standing instructions governing the responsibilities of persons, and the procedures, forms and

records relating to the preparation and use of budgets.

2. Form a Budget Committee: This committee will consist of the chief executive and the

representatives of the functional or departmental areas. The committee will formulate a

general programme for the preparation of the budget.

3. Identify a Limiting or Principal Factor: This is the factor which at a particular time or over

a period will limit the activities of an undertaking. The limiting factor is usually there of

demand for the product or service of the organization, but it could be shortage of the

productive resources e.g. skilled labour, raw materials.

4. Appoint a Budget Officer: This is normally the accountant. His functions would be as

follows:

a. Using instructions to various department

b. Receiving and checking budget estimates

c. Providing historical information to departmental managers to help them in their forecasting

d. Suggesting possible revisions

e. Coordinating all budget work.

 5. Establishing Budget Period: This is the budget period would be establish into control

periods such as weekly, monthly, yearly. This might be a current budget or basic budget.

6. Prepare Master Budget: Functional budgets that are a subsidy to the master budget would

be prepared by functional heads.

2.7 SOURCE OF FUND TO LOCAL GOVERNEMNT

Finance is seen to be bedrock of any government for effective prosecution of its goals and

objectives as no organization exist without finances.

Basically, there are two sources of local government fund and these can be grouped into:

1. Internal source and,

2. External sources.

INTERNAL SOURCES

Revenue from these sources is generated from within the local government areas and

is expected to be collected through the effort of the local government itself. They include:

(i) Local Government Tax/Rates:

Taxes/rates are the major sources of locally generated revenue with the rates devisable

from capitalize rates and property. In a simple term, there are obtained or gotten from

sources such as flat/community tax, property rates, specially development levies and

water levies.

(ii) Local License Fees and Fines:

This comprises of liquor licenses, fees, market stall age, garage fees, environmental

fees.

(iii) Earnings From Commercial Undertakings:

The local government can undertakes a commercial activities such as purchase of a

masses transit bus, the earning from such activity could be well meaningful.
 (iv) Rent Local Government Property:

The local government might also obtain fund or finance through renting out of its

property such as building, motor vehicles etc.

(v) Other General Sources:

The other general sources here might include areas such as interest payment, dividend

and miscellaneous.

EXTERNAL SOURCES:

External sources refer to the revenue that are obtained or gotten from sources other

than the internal sources that is, outside the local government. They include the following

(i) Federal Government Statutory Allocation:This is the money given by the Federal

Government as part of it development activity. It normally given monthly with a certain

percentage. It forms the major part of the local government finance or fund.

(ii) State Government Allocation: The state government also has an obligation to pay

certain percentage of its total revenue to the local government joint account and this also

form the local government sources of fund.

(iii) Government grant-in-aid and other grants revenue to the local government. Such grants

are either gotten through some viable philanthropists organizations or societies that are

committed to the welfare of their community. It would either be cash or in kind.

(iv) Loans: Loan taking is another source of fund or finance to the local government. It is

done by private individual, bonds, commercial or from foreign countries to finance the

project.

2.8 PROCEDURES FOR THE APPROVAL AND RELEASE OF FUND

Expenditure control is another which the local government, formal approval of the annual

estimates by the department of political and chieftaincy affairs which constitutes the legal
 authority for expenditure shall be subjected to compliance with the financial procedures of

control of expenditure.

In other to make sure adequate control of local government funds, the council shall delegate

in writing to the officer of the local government each of whom shall be known or regarded as

“officer controlling vote”.

He controls the expenditure under specific heads and sub-heads of the approval estimates.

If officer controlling vote may, with the approval of the local government council delegate

control of a vote or part of its another senior local government officer. The process of issuing

these authorities is as follows:

i. Three duplicate of the authority to incurred expenditure must be prepared on Local

Government Treasury (LGT) form 41 signed by the officer controlling vote and submitted

to the local government treasury.

ii. The treasury shall check the authority to incurred expenditure (A.I.E) in order to make

sure that enough funds are available in the vote of cover.

If funds are available, the treasury must number the A.I.E serially or accordingly from the

beginning for example starting from January to December of each year. He must also sign

the certificate on the A.I.E.

iii. The copies of the authority to incur expenditure should be shared as follows:

A. The original and the duplicate to the officer controlling vote who shall in turn send the

original to the person to whom the A.I.E as authorized.

B. The triplicate copy shall be filled in treasury the head of the department shall be

responsible for the overall control of the funds of his department.

An officer control vote, his duty or any officer or person with A.I.E shall be

personally responsible for seeing that expenditure, and is not authorized in excess of

the approved votes for the term under the control, where an officer authorize any
 expenditure over and above what is approved at the estimates, then such an officer

shall be liable to surcharge or consequences or an advance account shall be opened in

the name of the officer for the recovery of these excess amount spent. Financial

memoranda, par. 2.1 (16)

2.9 GOVERNMENT BUDGETING CONTROL

A government budget can be described as equipment which contains a package of office

expenditure, plans and tax legislation for a giving period, usually annually (Umealia, 1992).

It can also be seen as a financial plan of operation for a specified period of time, which

provides information about kinds and amounts of proposed expenditures, the purpose for which

they are to be made, and the purposed means of financing them (Osisima and Osisioma 1992).

It is indeed, a combination of fiscal and monetary activities in which a government engages

during a specified period of time.

In governmental budgets are not just required for reason of financial carefulness, they are

constitutional and statutory requirements. For instances, at the federal level, section 79 of the

1989 of the constitution of the Federal Republic of Nigeria, provides that;

The president shall course to prepared and laid before each house of the National Assembly,

not later than 60 days before the expiration of each year, estimate of revenue and expenditure of

the following financial year. The model financial memorandum for the local government.

The major objectives of governmental budgets as follows:

a. To provide financial plan of action, incorporating a statement of objectives of government in

financial terms.

b. To provide legal authority for incurring expenditure.

i. To provide mechanism for ensuring that enough controls are maintained over expenditure

and revenue.
 ii. To establish the financial position of the local government even is as estimates; at the

beginning and end of the appropriate financial year. In its function, government budget

make sure among other, that all receipts and disbursements by government, are in

accordance with budget classification and specifications that I, the line item

appropriations as approved in the estimates.

Government revenue and expenditure are classified into heads and sub-heads called votes.

The head is a major division of the estimates established formally for the purpose of

accountability and control, and relates to the major function of the government.

The estimates follow this classification into heads and sub-heads. Also the budget

appropriate as approved by the local government council (or states/federal legislation) is

both on authorization to spend and in limitation to that expenditure public monies might

not be spend in excess of the amount approved by the approving authority; and any

expenses which is incurred in excessive of the amount approved by the authority: “and

expenses which is incurred in excess of the approved estimates and which has not been

approved by the appropriate authority, shall be chargeable to the chairman, supervisors,

councilors or any superiors officer who have directed the unauthorized expenditure”.

Budgeting memoranda, par. 2.1 (6) utilizing the accountability tenets of the government.

2.10 THE STRUCTURE OF THE FINANCIAL AND BUDGETARY CONTROL IN LOCAL

GOVERNMENT

The financial memoranda for local government laid down process for authorizing controlling,

custody, collection and accounting for public finances or funds. Besides the local government

reforms since 1987, has clearly spelt out authority-responsibility relationship in financial matters

with a view to stating clearly responsibilities where they supposed to lie.

The local government council being the legislature arm of the local government, is charge

with among other things, the responsibility for debating, approving and possibly amending local
government annual budget, subject to the chairman veto, which could be overridden by two

third majority of the council “(par. 1.1(2)”.

Operating mainly through its finance and budget committee, the council monitors the

enforcements of the project and programmers in the annual budgets and make sure compliance

with the provisions of the financial memoranda.

It sees to it the executive committee with the chairman of the council presiding, lays policy to

be abided in the framing of estimates by the departments of the local government, receives and

considers and departmental annual draft estimates submitted by the treasurer, and submit the

agreed draft annual estimates for the consideration of the local government council. It is also

responsible for examining all applications for supplementary estimates or the reallocations of

funds and approving or recommending same to the council carrying out such test-check are they

are necessary to make sure that the local government revenues are promptly collected and

accounted for, and exercising a general supervision over the financial management of the affairs

or the local government. Through the committee meets at least once a week, it expected to meet

every month to consider specifically, among other things the monthly reconciliation of accounts

the book reconciliation statement and the revenue collector chart.

The financial department under the treasury is responsible for the day-to-day control of funds

in the local government care and custody of government funds, prompt allocation and

accounting for all the revenue due, making sure proper authority for all payments, participation

in the preparation of local government plans preparing all financial return and dealing with

queries arising from audits.

Between them, chairman of the council, the executive committee of the local government,

and the treasurer bear the duties for effective day-to-day budgeting controls in the local

government.
 Since 1987, the local government chairman has become its chief executive and accounting

officer. He collects the report of the internal auditors, sits at the head of executive committee

and interest closely with the council in the handling of financial and accounting matters. As for

the treasurer, his duties or responsibilities have already been considered in 2.7 above.

In general, the memorandum requires that year estimates shall not provide for alterations in

the existing approved by the local government council (par. 2.1).

It does not obviate the need for making allowances for foreseeable salary increments and full

annual recurrent cost of improvement to services which were operative for part only of the

previous year (par. 2 iii).

The memoranda also provides that in framing the annual estimates, the aim or purpose must

be ensure that the total calculation of recurrent revenue is sufficient to come to the total

estimated recurrent expenditure on all heads, provide such contributions as may be directed

towards meeting the cost of capital projects, and maintain sufficient working capital to ensure

that heavy bank overdraft charges are not incurred nor idle surplus cash left in tills (par. 212).

2.11 ACCOUNTING CONTROLS IN GOVERNMENT ACCOUNTING

The financial memoranda also provide for some accounting controls. Chapter two of the

memoranda requires that local government estimate be prepared on a programme budgeting

basis, in which homogenous activities will be grouped together into a programme. Each

programme will become a cost centre for collecting details during the preparation of year

estimates, a control centre during the enforcement of the approved annual estimate, and

reference point during the reviews of the annual transactions.

The accounting system should provide:

1. A management accounting service to the councils to facilitate the reaching of prompt policy

and management decision.

2. A financial accounting service by means of extract and appropriately analyzed records of

finances the funds lawfully collects and expended in discharging the functions of

government.

3. Monthly statements, the end of the year stamen and periodic statement, summarizing the

financial transactions of the government.

4. Detail cost of individual establishments, services and projects to enable the cost so

ascertained to be used for control purposes, thereby removing excessive expenditure are

expected to keep daily records of all receipts and disbursements of public finances analyzed

over the various heads and sub-heads contained in the approved yearly, estimates, and

providing information on the progress of the collection of taxes, rates and other revenues, and

expenditure as compared with the target figures in the year of annual estimates (par. 18.2).

It is also required that a treasury receipt be issued in respect of every payment into the

treasury, and a payment voucher raised for each items of expenditure.

Period cash checks, reconciliation of government bank account with the cash book,

verification of treasury receipts and payment vouchers to make sure proper custody and

security of paying-in slips, are monthly checks which the treasury carries out to ensure that

there is proper custody of public funds.

Besides, the preparation of daily abstracts on form IGT 73A, of revenue and expenditure

of the government is required by memoranda (par. 21. 3-4) moreover, the abstract shall

contain a separate page for every other accounts remittance, advances deposits, investment

and renewal of fund. The abstract shall provide the following information:

a. The amount of the approved estimate (where appropriate):

b. The amount of the daily revenue or expenses (as appropriate):

c. The balance of revenue still to be collected (as appropriate):

 Furthermore, each department is expected to keep its department vote, revenue account

book and department vote expenditure account book by the memoranda.

The book shall each contains a separate page for easy sub-head of revenue or expenditure.

They are also to provide information on the amount of approved estimate on each sub-

head, the details and the summary of revenue or expenditure transactions, a running total of

revenue or expenditure and the balance of revenue still unspent.

The monthly abstract which summarized the monthly totals in the daily abstracts of the

revenue and expenditure sub-heads and also highlight the progress of revenue and

expenditure against the amounts show in the yearly estimates, shall be kept in a vote service

ledger containing separate divisions for revenue and expenditure.

Again, paragraph 23.20(5) requires every officer controlling a vote and every official to

whom an authority to incur expenditure has been issued, shall keep a department vote

account to records the payments made and the liabilities incurred against each vote or part

there of under his control, and the balance of fund available.

Finally, all the financial transactions, documented and record and the statement prepared

therefore, are subjected to internal examination by internal audit and external examination by

the Auditor-General of the state.

The internal auditor of the government carries out appraisal activities for the review of the

accounting, financial and other operations, as a basis for prospective and constructive for

service to government.

His responsibility is to reveal the condition of the government records and effectiveness

of its procedures, assist in preserving the assets and interest of the government, review and

recommend for improvements systems, controls and procedures, and monitors the use of

resources in the pursuit of the defined objectives of the government.

 At least four times each year, he is expected to report to the chairman of the council the

following issues:

i. The collection of revenue.

ii. The recurrent and capital expenditure.

iii.The protection of physical and other assets of the government.

iv.Efficiency and effectiveness of systems, controls and procedures.

v. The use of resources of the government achieving its objectives.

vi. Any instance of fraud, is appropriation, irregular expenditure, waste and so on.

Under paragraph 40.10 the internal auditor should carryout repayment audit vouchers

and supporting documents, to verify that the provisions of the financial memoranda have

been followed in all respects.

Also paragraph 39.2 made mentions the internal auditor as one of the facilitators to

the work of the audit alarm committee to prevent irregular and illegal payments in a

governments.

After the final accounts of the government have been prepared, duplicate are sent to

the Auditor General of the state, and the account books are released by the treasurer for

examination.

The auditors make sure among other things that:

a. The operation of the government contributes effectively towards the attainment of its

objectives, as spell out in the yearly budget. This aspect of the audit is called

effectiveness audit or programme result audit;

b. The council executives its programme with a high degree of economy and efficiency.

This will bring into focus, cases of wasteful, extravagant and unrewarding

expenditure and failure to maximize receipts. This is called economy and efficiency

audit or value for money audits;

 c. All illegal provisions relating to the finance and regularity of fiscal operations are

complied with. This is the compliance audit;

d. The financial statements present fairly the financial position and results of operation

of the government in conformity with the generally accepted accounting principles.

This is called financial audit.

Thus the examination is aimed at verifying that limits and objectives spell out, in the

estimates, have been observed and effectively fulfilled and that public funds have

been well manage and safe guarded.

2.12 BUDGETS AS AN AID TO CONTROL

Implicit in the budget procedure is the crucial component of control which is the American

College Encyclopedia Dictionary defines” to excusive restraint over… to hold in check, to

curb”. Control is an element of managerial task which involve the measurement and correction

of performance of subordinates to make sure that the objective of the organization and plans

devised to attain them are accomplished efficiently and economically by clearly defining tasks

and specifying how they will be implemented and financed. A budget helps not only to revenue

the use of a rule of thumb in allocating corporate resources, but also assist to direct the efforts of

employees towards the achievement of corporate goals.

A budget is, therefore, a control mechanism as it entails the setting of targets to be

accomplished in a given period of time backed by cost of implication.

Always, budget review sessions are held to compare performance with set standards such as

efforts are made to correct deviations.

A budget provides a bench mark for the measurement and control performance. In it addition

provides feedback information which facilitates the taking of corrective measure.

 It follows from these that, for a budget to achieve the set goals, it must not only receive the

support of top management and clearly assign authority and responsibility, it must also have

realistic goals.

All stokeholds in the system must fully take part in the formation and implementation while

adequate information must also be made available at every of the implementation stage.

2.13 PROFILE OF IDAH LOCAL GOVERNMENT KOGI STATE

Idah Local Government Area derives its name from the ancient town of IDAH which means

“where everything ends” IDAH IS THE HISTORIC, CULTURAL AND TRADITIONAL

HOME OF THE Igala People; the seat of the Attah Igala, the gran monarch of the Igala race

who regard him as father. Idah was also the headquarters of the old Igala Native Authority. It

was carved out of the East while geo-political and administrative structure called Igala Native

Authority in 1967 now covering all the local governments in Igala and Bassa speaking areas of

Kogi State usually referred to as Kogi East.

Geographically, the Local Government Area is at South East of Kogi State and located at the

left bank of the river Niger. Bounded by Ibaji Local Government to the North East while to the

South is a part of Edo State by River Niger. On the Northern part of Idah Local Government

along with Ibaji Local Government 1996 by the late General Sani Abacha Administration.

POPULATION

Through, the 1991 provisional census figure placed the population of Idah Local Government

Area at 214, 785 realistically based on projection and other reliable data, the population of the area is

over 473, 526 who are predominantly of farmers.

CLIMATE

There are two major seasons experienced in the area. These are wet and dry season

dichotomy. The wet season set in from April and lasts up to October while the dry season starts from

November to March.
RELIGION

According to the 1991 projected figures, about 48% of the total populations are Muslims

while the rest are Christians and traditional worshipers.

LANGUAGE

The people of the area generally speak “Igala” as a lingua franca, but there are others like

Hausas, Nupes, Yorubas, Igbo etc.

 REFERENCES

Robert, H.J. et al (2009). Public Expenditure and Public Strategies. Chicago: Hand Mic Navy

College.

Opanachi, M.A. (2006). Principles of Economic. Ibadan: Printing Press Ikeyaba.

Okechukwu, K.M. (2006). Path to Success, Cost Accounting. Enugu: EL-MUSO Venturs Ltd.
 CHAPTER THREE

3.0 RESEARCH METHODOLOGY

3.1 INTRODUCTION

The concept of this chapter (Research Methodology) as the technique or approach by the

researcher in carryout the research. It is the peculiar method employed in conducting the

research.

In this course of this work the researcher embarked oral interview and distribution of

questionnaires in acquiring the necessary below:

3.2 POPULATION

The population of this study is the entire local government in the federation. Due to

unavoidable limitations, the researcher has been only able to carryout the research work on

Idah Local Government Area of Kogi State.

3.3 SAMPLE SELECTION

The research made use of judgment sampling in selecting which person or group of

individuals that will be used.

This is to warrant a situation where a researcher can make use of his own senses or

expect view to select those to be used depending on the kind of information they want to get

from such person(s). This is to avoid sampling of person irrelevant.

3.4 SOURCES OF DATA COLLECTION

In order to produce a comprehensive research work on the subject, the method in

gathering facts/data for the write up where mainly centred on the primary and secondary

sources of data collection which are mainly analysis below:

The Primary Sources:The primary sources of information consists of information

accumulated from observation, personal interviews and questionnaires aimed at improving

the characteristics of budgeting control in the local government.

 The Secondary Sources: The secondary sources of information where obtained from

various text, numerous journals and some work relating to the topic in library, textbooks,

magazines, seminars papers, lectures comment from lecturers professional journals,

workshops and newspapers and other written/visual materials.

3.5 METHOD OF ANALYSIS OF DATA

In the course of the study, the method oral interview as used to collect data from

officers and staff of the local government.

This was administered on the staff of the local government. And the questionnaire was

particular used in the finance department.

Based on the sampling, the method used in analyzing the data, is through the use of table

and percentage and it will be analysis in the next chapter.

 CHAPTER FOUR

4.0 DATA PRESENTATION AND ANALYSIS

4.1 INTRODUCTION

The chapter analyses the data collected through questionnaires and interviews carryout by the

researchers with some of the officers of the case study Local Government Idah Local

Government Area of Kogi State.

Relevant questionnaires to the research topic are critically analyzed and interpreted.

4.2 DATA PRESENTATION ANALYSIS AND INTERPRETATION

In analyzing the data, the researcher made use simple percentages to determine the various

responses from the respondents.

Questionnaires were drawn and distributed to 20 officials of the Idah Local Government and

were promptly returned and the rest lost due to unforeseen circumstance.

QUESTION ONE

Is budgeting handled by budget experts in the local government?

TABLE 1:

Responses Number of Respondent Percentage

Yes 12 75

No 4 25

Total 16 100

Source: Field Survey, 2011

The breakdown indicates that 75% of the respondents agreed that budgeting is been handled

by experts. 25% disagreed in their own view.

QUESTION TWO

Do different departments within the local government have their own budget?

TABLE 2:

Responses Number of Respondent Percentage

Yes 13 81.25

No 3 18.75

Total 16 100

Source: Field Survey, 2011

The data above shows that 81.25% of the respondents agreed that different departments

within the local government have their own budgets while on the other way 18.75% of the

respondents disagreed.

QUESTION THREE

Do the budgets as a control mechanism makes sure that enough or adequate controls are

taken care of over expenditure and revenue or profit of the local government?

TABLE 3:

Responses Number of Respondent Percentage

Yes 10 72.50

No 6 27.50

Total 16 100

Source: Field Survey, 2011

From the above table 72.5 of the entire respondents agreed in favour of the question that the

budgets as a control are mechanism make sure that enough control are maintained over

expenditure and profit or revenue in local government while 27.5% of the respondent disagreed.

The researcher then concludes that the budget ensures that adequate control is maintained

over expenditure and revenue.

QUESTION FOUR

Are all receipts and disbursement by the local government in accordance with budget

classification and specification?

TABLE 4:

Responses Number of Respondent Percentage

Yes 7 33.75

No 9 66.25

Total 16 100

Source: Field Survey, 2011

The data above shows that 33.75% of the respondents agreed that all receipts and

disbursements are in accordance with budget classification and specification while large

percentage of the respondent 66.25% disagreed.

QUESTION FIVE

Are all expenditure incurred in excess of the approved estimates chargeable accordingly

to officers who have allowed or directed the unauthorized expenditure?

TABLE 5:

Responses Number of Respondent Percentage

Yes 10 72.5

No 6 27.5

Total 16 100

Source: Field Survey, 2011

From the above table 72.5% of the total responses are of the mind that all expenditure in

excess of the approved estimates is chargeable to the officers who direct it while 27.5% are of

the contrary opinion.

QUESTION SIX

Do the local government council monitors the implementation of project and

programme in the annual budget?

TABLE 6:

Responses Number of Respondent Percentage

Yes 13 81.25

No 3 18.75

Total 16 100

Source: Field Survey, 2011

Observing the table above, 81.25% agreed that local government council monitor the

implementation of projects and programmes while 18.75% disagreed.

QUESTION SEVEN

Are the treasury receipts and payment vouchers verified properly by the local

government?

TABLE 7:

Responses Number of Respondent Percentage

Yes 12 75

No 4 25

Total 16 100

Source: Field Survey, 2011

Observing the table above, 75% of the entire respondents agreed that the treasury receipts and

payment vouchers are verified thoroughly by the local government treasury while 25%

disagreed giving a contrary opinion.

QUESTION ONE

Is budgeting handled by budget experts in the local government?

 TABLE 1:

Responses Number of Respondent Percentage

Yes 12 75

No 4 25

Total 16 100

Source: Field Survey, 2011

QUESTION 8

Does the local government carry out periodic cash, check and reconciliation of local

government bank account with cash book?

TABLE 8:

Responses Number of Respondent Percentage

Yes 11 68.75

No 5 31.25

Total 16 100

Source: Field Survey, 2011

The breakdown of the above table, indicates that 68.75% of the respondents agreed that the

government carryout periodic cash checks and reconciliation of local government bank account

with cash book while 31.25% disagreed giving a contrary opinion.

PERSONL INTERVIES:

The questions were asked by the researcher and the responses were given by one of the

officers of the account department.

QUESTION:

What can you say about the contribution of the audit unit in relation to budgetary control in

the local government?

RESPONSES:

All the local government financial transaction documents and records subject to internal

examination by the internal unit and external examination by the Auditor General of the State.

Over the years, the auditor report has shown in a true and fair view concerning the state of the

financial records in the local government.

However, in the auditor’s professional capacity, he has contributed to budgetary by way of

giving advice in the area where improvement are complied and this has led to a more official

effective budgetary control.

QUESTION:

How effective is accounting controls in the local government?

RESPONSES:

Every department in the local government keeps a department vote revenue accounts book

and a departmental expenditure accounts book. These books each contain a separate page for

each sub-head of revenue or expenditure.

They provides information on the amount approved estimates on each sub-head, the detail

running total of revenue or expenditure and the balance of revenue still to be collected or vote

still unspent.

All these put properly in shape has enhanced greatly the efficiency of accounting controls in

the local government.

QUESTION:

How do you tackle barriers that accompany rigidity in budget as a requirement of budgetary

control?

RESPONSES:

Rigidity is a requirement of budgetary controls which involves making sure that only those

items and amount of expenditure authorized in the budget should be incurred. However, it has
been recognized that some degree of flexibility will required to deal will changes in

circumstance or unexpected events.

An increment in the demand for a specific services might results in increase cost, the rate of

inflation may be higher than expected, income from fees and charges may be lower than

anticipated, and so on. One approach to this barriers will be to vary the budget by making a

supplementary allocation of resources.

Alternatively, it may be possible to meet over spending in one area by under spending fro

were else in the budget.

This process is refers to as vive men however, the local government takes adequate control to

see that the under expenditure has arisen as a result of genuine saving and is not merely

fortuitous.
 CHAPTER FIVE

5.0 SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION

5.1 SUMMARY OF FINDINGS

Idah Local Government Area of Kogi State came into being as part of the conscious effort of

the conscious effort of the Federal Government of Nigeria to see that the government is closer t

the ordinary man. So, for this essence, it is important that the accounting system and budgeting

should play a proper role in enabling the local government to actualize in full accountability.

In the presence situation, the value of budgeting to all public sectors regardless of size is so

generally recognized that it hardly necessary to ignore budgeting control.

It is in setting of this nature that budgetary control is of main essentials management or

executive needs all of the assistance operations.

5.2 CONCLUSION

In it broadest sense, budgetary control can be seen as the whole system of controls-

accounting statutory, administrative and organizational which exist in the local government

system, to make sure that public funds are raised, accounted for, and expended in accordance

with annual budget of the government, and ensures economy and efficiency in the handling of

these resources.

Nigeria local governments are not lacking in the existence of adequate controls aimed at

ensuring adequate protection of public funds. Any perceived failure of the system, must rest on

the implement of the system.

The budgetary control tools has proved all over the world to be an effective tool for the

control of government spending it has not been tool effective in Nigeria in the past for a number

of reasons and in particular Idah Local Government Area of Kogi State. Prone, at the federal

level, Nigeria boosts of a political leadership that is accountable to itself.

 The executive and the legislature controls which would have a free rein legislative controls

subverted by the ruling junta. This lack of accountability has seeped right down to the local

governments.

Executive style donations not supported by legislative appropriations, have been made known

by our military leaders who are not accountable to any elected house; and this autocratic style,

more always than not, is copied by their non military counterparts in government.

Our controls, as adequate as they may see on paper, will not achieve the desired result until

the integrity of the budget process is restored at all levels of government in Nigeria. Other

factors that have contributed to the subversion of budgetary control include corruption and

abuse of office, lack of imagination and sincere leadership at all level of government, and

enablement to broaden the sources of local government revenue.

The late Kwame Nkrumah, the Ghanaian statesman and leader, dream a large dream for his

native Ghana.

According to him, “our aim is to make this country a worthy for all its citizens, a country that

will be a shining light throughout the whole continent of Africa, giving inspiration for beyond it

frontiers by becoming the New Jerusalem, the golden city of our hearts desire”.

But large dreams are fulfilled, step by step, in routine drudgery of everyday living.

Unless we gain return those controls eliminating and fundamentals as they seem, and quietly

restore the building blocks of prudent planning and vigorous accountability, we never, ever can

build that “new Jerusalem, golden city of our hearts desire.

5.3 RECOMMENDATIONS

In view of the above observation and conclusion the following suggestions are recommended

to improve the administration of budgetary control in the local government set up.

PARTICIPATION IN BUDGETARY:It has been recognized that ideal solution to

organizational barriers has been in effective in the sense that, they have been resisted by some or
majority of the staff of the local government that is those who are meant to implement or

enforce or take part in budgeting preparations, hence, it is believed that participation by

subordinates increases the probability that decision will be effectively implemented.

REVENUE AND SUPERVISION: The researcher recommends that the local government

should intensify its effort in generating sufficient revenue from her alternative resources for its

operational costs as to able to channel whatever capital grant its acquires from the federal and

state subverts to capital project, there should be enough supervision of profit or revenue

collectors and prompt. Attention should be given to their claims when leaving their districts to

the headquarters to pay in revenue collected where necessary to avoid embezzlement.

TRAINING: The council members needs to be showed on budgetary controls and general

administration of local government affairs for a duration of at least one month before

assumption of office with the aims to improve their forecasting mechanism and set realistic

plans and goals so as to be able to effectively control its plan and programme in order to attain

its budget targets and objectives.

Moreover, it is also important the local government staff training scheme should be purely

educated on the main books of accounts maintained in the local government system.

INTERNAL AND EXTERNAL CONTROLS: The existence of effective internal and

external controls of the local government system is highly recommended.

Local government should be encouraged stand on their own feet and provided that they

demonstrated a sound understanding of their financial duties and of public accountability.

The government controls should be kept to a minimum and should invariably be exercised

with fact and understanding.

The most essential of the internal financial controls fund in local government are the
preparation of annual and supplementary estimates of expenditures both recurrent and capital
and the operation of a system designed to ensure that real expenditure does not exceed the
approved estimates and that profit or revenue of local government are well encouraged.
 APPENDIX

Department of Accountancy,
Federal Polytechnic,
P.M.B. 1037
Idah,
Kogi State.
17th September, 2011
Sir/Ma,

QUESTIONNAIRE ON AN ASSESSMENT OF BUDGETING CONTROL IN LOCAL

GOVERNMENT: A CASE STUDY OF IDAH LOCAL GOVERNMENT AREA OF KOGI

STATE

I am a final year student in the Department of Accountancy in the above institution.

Currently, I am carrying out a research work on the above topic. So, I solicit for your help in

giving me all the necessary information relating to the questions asked in the questionnaires.

I assure you that whatever information you supply will be treated as confidential, and for

academic work only.

Thanks for your co-operation.

Yours faithfully,

Alhassan Ojonoka Blessing

 APPENDIX II

QUESTIONNAIRE

INTRODUCTION: Please tick as applicable the option that best suit your response.

1. Age 18 – 35 years { } 36 – 45 years { } 45 and above

2. Status Male { } Female { }

3. What department are you?

4. Qualification: Bsc./Msc./MBA { } Others { }

5. Is budgeting handled by budget experts in the local government?

Yes { } No { }

6. Does different department within the local government have their own budget?

Yes { } No { }

7. Does the budget as a control mechanism make sure that enough or adequate controls are

taken of over expenditure and revenue of the local government?

Yes { } No { }

8. Are all receipts and disbursements by the local government in accordance with budget

classification and specification?

Yes { } No { }

9. Are all expenditure incurred in excess of the approved estimates chargeable accordingly to

officers who have allowed or directed the unauthorized expenditure? Yes { } No { }

10. Does the Local government councilor monitor the implementation project and programme in

the annual budget? Yes { } No { }

11. Are the treasury receipt payment vouchers verified properly by the local government?

Yes { } No { }

12. Does the local government carryout periodic cash, check and reconciliation of local

government bank account with cash book? Yes { } No { }

 BIBLIOGRAPHY

Rasheed, A.A. (2006). Public Sector Accounting and Finance (3rd ed). Ibadan: Micho Production.

Robert, H.J et al. (2009). Public Expenditure and Public Strategies. Chicago: Hand Mic Navy

College

Adeniyi, A.A. (2002). Simplieified Management Accounting. Lagos El-TODA Ventures Ltd.

Shisanir, O. (2006). Government Acounting and Financial Control. Ibadan: Spectrum Book Ltd.

Okpanachi, M.A. (2006) Principle of Economics. Ibadan: Printing Press Ikeyaba

Okechukwu, K.M. (2006) Path to success, Cost Accounting Enugu: EL-MUSO Ventures Ltd.