In this post, we discus the role of accounting in the public expenditure of Nigeria. Public expenditure refers to the spending made by the government of a country on the collective needs and wants of its citizens. This include but but not limited to spending such as provision, pension, infrastructure, light and any other thing required for the benefit of the country.
Causes of growth of public expenditure
There are several factors that have led to the increase in public expenditure over the years. Some of which are:
1) Population growth
The public expenditure of a country increases with the increase in population, more of investment is required to be done by government on law and order, education, infrastructure, etc. investment in different fields depending on the different age group is required.
2) Welfare activities
Provision of public and utility services – provision of basic public goods given by them.
Accelerating economic growth – in order to raise the standard of living of the people.
Increase in public revenue – with rise in public revenue government is bound to increase the public expenditure.
International obligation – maintenance of socio economic obligation, cultural exchange etc. (these are indirect expenses of government).
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3) Wars and social crises
Fighting amongst people and communities, and prolonged drought or unemployment, earthquake, hurricanes or tornadoes may lead to increase in public expenditure of a country. This is because it will involve governments to re-plan and allocate resources to finance the reconstruction.
This is the general rise in price level of goods and services. It increases the cost of all activities of the public sector and thus a major factor in growth in money terms of public expenditure.
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5) Defense expenditure
This is due to the modernization of defense equipment by navy, army and air force to prepare the country for war or for prevention causes for growth of public expenditure.
6) Foreign aid
Acceptance by the richer industrialised countries of their responsibility to help the poor developing countries has engineered some of the increased public expenditure of the donor country into foreign aid programmes.
Role of Accounting in the public expenditure of Nigeria
Accounting is the process of measuring the economic activities of an organization by recording financial details to be communicated to users to enable them make informed decisions.
In a country like Nigeria, accounting is a key factor in controlling the public expenditure of the country.
Accounting controls are measures instilled by a good accounting system to ensure accurate recording of transaction, adherence to rules, safety of assets and accuracy of financial statement.
The role of accounting in Nigeria’s enterprises is primarily to ensure accurate accountability, true and fair financial position of the enterprise. This role is of utmost importance to any organization. An organization can only grow or profit when the resources at its disposal are well managed.
Government ministries are not run for the purpose of profit making, many factors influence government accounting such as the role of government in the different fields like health and education and the methods set by government to achieve its set objectives.
The focus of accounting in government is to determine how much is being spent on a country, and the purpose for which it was spent. It also focuses on the amount of money a country received and the source to which it was received which includes taking record of the excesses after meeting the financial obligations.
Accounting has a major role to play in the control of public expenditure. They set standards by budgeting the company’s expenditure for a particular period of time and ensure that these standards are adhered to.
Public financial management is a system used by accountants to control a country’s expenditure. It is concerned with the planning, organizing, procurement and utilization of government financial resources as well as the formulation of appropriate policies in order to achieve the aspirations of members of that society.
Some of the roles accountants play in the control of a country’s expenditure are:
1) Formulation of Policies
Formulating policy is one if the most important aspects of managing a country’s expenses. It usually entails a clear defined structured and articulated system that moves to promote cost consciousness in the use if resources. The government is expected to have an estimate of the revenue and expenditure to achieve the policy objective of government.
2) Budget formulation
The budget formulation is the step that involves the allocation of resources before the submission to the legislature for review and final approval. It involves the articulation of the fiscal, monetary, political, economic, social and welfare objectives of the government.
3) Budget structure
Accounting plays a vital role in controlling the public expenditure of a country by setting up a budget structure. The budget structure emphasises on how a country’s budget is actualized. It entails the revenue and expenditure plan for a given period of time.
4) Payment system
This involves the operational procedures for receiving monies for the public and for making payments to them. In Nigeria, governments make payment using various procedures. These include book adjustments, issue of cheques, payment authorities, and electronic payment systems.
5) Government accounting and financial reporting
Government accounting entails the recording, communicating, summarizing, analyzing and interpreting financial statement in details. Government financial reports should be prepared with the objective of providing full disclosure on a timely basis of all material facts relating to the government financial position and operations
Audit is the process carried out by suitably qualified Accounting Auditors. It is a process of inspecting the financial transactions and records of the government. With the rate at which corruption is in the increase in Nigeria, Accounting helps in checking for errors omitted in the financial analysis of the government expenditure and revenue.
No matter the amount of funds received by the government, except the government’s expenditure is controlled by certified accountants, it will never have a positive impact on the public.
The management and control of public funds is the heart of any government which is why accounting is important in the government.
This is because, accountants safeguard the government assets from loss by fraud or errors. They also check the accuracy, accountability and reliability of accounting data which the government uses in decision making.Click here to see the latest work from home jobs
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