Impacts Of Accounting System Common In Public Sector

IMPACTS OF ACCOUNTING SYSTEM COMMON IN PUBLIC SECTOR

Chapiter 1

1.0 Overview

1.1 The Study’s Background

According to history, the idea of public funds being accountable extends back to ancient Greece. Even if there isn’t much information on the subject, government accounting is still considered a myth because of how old the theory is, so it wouldn’t be a huge stretch to argue that the concept has also been lost to antiquity.

The area of public sector accounting has gotten so much attention from academics studying accounting in the public sector that it is now considered to be underdeveloped.

However, there is a widespread understanding that the advancement of governmental accounting and financial control need more attention. The explanation is simple: in many countries, if not all, government is the biggest single company and the engine of the economy. Any society’s government primarily serves to uphold law and order. Government responsibility has naturally shifted from upholding law and order to acting more like nature in the modern era due to changes and the fundamental nature of society. The massive tasks required by government activities necessitate an expanded government accounting system. This trend makes it difficult for traditional cash accounting techniques to provide the required services or information for modern government that reasonable accounting demands. Government accounting must be dynamic in order to take into account both the essential functions and the advancements.

Government accounting is the process of documenting all transactions involving the receipt, transfer, and disposition of public cash and property. It involves classifying, analyzing, summarizing, conveying, and interpreting financial information about the government in both aggregate and detail. In order to show accountability for the prudent use of public resources and to offer relevant information for the effective control and administration of government operations, the transactions must be shown to be proper and to correspond to set regulations.

As can be shown, financial management in the public sector has failed to maintain sufficient accountability, encourage and promote the efficient use of public funds, or serve as a useful basis for planning and decision-making. Furthermore, it does not necessarily follow that financial irregularities found in the public sector as a whole are primarily based on the conventional cash technique of accounting, but it does raise the question of whether the contemporary system of accounting will enable both modern management and financial management to be successful.

Situation Of The Problem

The goal of this study is to pinpoint the flaws and restrictions that the public sector’s cash accounting system has (in comparison to the sample ministry’s accounting system).

This is in an effort to suggest ways to entirely eradicate them or at the very least scale them back to the bare minimum. What are the shortcomings and constraints that prevent the public sector from having adequate and effective accounting systems and financial reporting, and how may they be removed?

Some of the issues in the public sector include: the officials in authority’s lack of accountability and abuse of their power, fraud and the misappropriation of public funds, as well as their lack of knowledge and business acumen. The fact that government activities are referred to be “Non-profit oriented operations” means that there is no obligation on these government officers to perform to their full potential, finances are kept in disarray, and the officers get away with a lack of basic accountability.

This study is being conducted to find out how well the public sector is keeping accurate records and to propose a fix for the underlying issue that has been identified.

For the purposes of this research, the Ministry of Finance and Economic Development of Enugu State would be used as an example ministry.

1.3 Study’s Objectives

These are some of the goals of this research project or study:

to evaluate the sample Ministry’s level of accounting system installation.

to ascertain the elements that either support or restrict the sample ministry’s accounting system.

to ascertain the effect of the sample ministry’s accounting practices on its financial reporting.

to formulate suggestions in light of my discoveries.

1.4 The Study’s Impact

In order to highlight and expose the system’s inherent flaws, this research study will explore the standard accounting method used in the public sector. The general public, the government, and the governed will all find the research paper interesting and beneficial as a result.

Since the government places public money in the hands of its representatives, stewardship has always been emphasized in government reports. The first focus of accounting was on quantifying the public cash produced and spent by government programs or activities. It is intended that this study would provide helpful recommendations on how to enhance the government’s accountability and financial reporting system because the existing reporting strategy has numerous flaws.

Government has an obligation to the general public to disclose all of its financial actions. This type of report is very sensitive and helpful to the public, but only a small portion of them (the public) can understand it. It will allow the people to know how the public funds entrusted to the government’s hands have been utilized. For those members of the public who find government financial reporting to be confusing and difficult to grasp, this study will be a helpful resource.

Many institutions of higher education provide accounting curricula that are specially designed to give students knowledge of financial reporting as it applies to for-profit businesses. For this reason, it frequently catches students off guard when they learn that eliminating the profit incentive fundamentally alters the fundamental structure of financial accounting. This study will be very helpful even though the accounting terminology may at first seem to be an alien language to all students of accountancy and allied professions who have always been ignorant of the public sector’s accounting system.

Additionally, this research article will serve as a very trustworthy reference for future researchers interested in this area of accounting.

Study Questions

The three primary queries examined in this study are;

Is the public sector’s accounting/accounting system efficient and sufficient?

Does the public sector’s accounting system ensure effective financial control and stewardship accountability?

Does the public sector’s accounting system offer pertinent data for the efficient oversight and management of governmental activities?

1.5 The study’s scope and limitations

The scope of this research is primarily focused on the accounting system of the sample ministry as a broad overview sample study of the accounting in the public sector, as the research topic would suggest at first look.

As a result, this study will examine the characteristics of the sample ministry’s accounting system, including its functionality, environmental relevance, issues, and future prospects.

Limitation

Lack of resources: Despite accounting’s long history and importance, scholars have paid very little attention to this area of accountancy (as was mentioned above). Since there are few literary works on students, the researcher was forced to review only a small number of works that are primarily original and pertinent to the study.

Administration of justice:

Government institutions are well known for maintaining the highest level of screening with regard to their operations. This is especially true when a study is conducted that focuses on their financial operation. The researcher found it challenging to obtain study-related materials (that is, literature) and encountered some officials who were evasive and uncooperative. Even more disheartening was the bureaucracy and protocol the research had to go through in order to get materials and an appointment.

Due to these limitations, the researcher is unable to say with certainty whether the study has examined the sample ministry’s accounting systems and procedures in great detail, but one thing is certain: enough information has been gathered to allow for the expression of an opinion about the sample ministry’s operations.

In addition to the restrictions already mentioned, this researcher also experienced a time crunch. This is a significant restricting factor because there wasn’t much time between the study’s approval and the submission date. Because the research supervisor is sympathetic to my situation, the researcher primarily relied on his good intentions. Another obstacle was the insufficient funding to carry out a comprehensive study.

I had to work with fewer people than originally anticipated because of this, in part.