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1.1Background of the study

History has it that the concept of accountability of public funds dates backs to the history of ancient Greece.  As old as theory is, it would not be erroneous to say that the idea has been equally lost to antiquity although not much is known about it, this makes the subject, government accounting to remain a myth.  Accounting in the public sector has received such a wide attention from scholars that the field of public sector accounting scans to be neglected.  However, there is general awareness all over the world of the need to pay greater attention to the development of government accounting and financial control.  The reason is obvious, government, in most, if not all nations constitute the largest single business entity in many places, the core of the economy.  Government in any society is basically for maintaining law and order.  With changes and the complete nature of the society, government responsibility has automatically changed from the role of maintaining law and order to business like nature in the modern era.  The enormous activities of government, equally call for enlarged government accounting in order to accommodate the immense task.  As a result of this development, the traditional cash procedures of accounting can hardly meet the demands of reasonable accounting for modern government in providing necessary services or information. Therefore, there is need for government accounting to be dynamic in order to accommodate both the fundamental roles and the developments. Government accounting is the process of recording, analyzing, classifying, summarizing, communicating and interpreting financial information about government in aggregate and in detail, reflecting all transactions involving the receipts, transfer and disposition of government funds and property.  The purpose is to demonstrate the propriety of transactions and their conformity with established rules to give evidence of accountability for the stewardship of government resources and to provide useful information for the good control and efficient management of government operation. Financial management in the public services as can be observed has failed to encourage and promote the efficient utilization of public funds or serve as effective basis for planning and decision making as well as to ensure proper accountability.  Besides, it does not mean that financial irregularities being detected in public sector at large is basically based on traditional cash procedure of accounting but it does arouse a question whether the modern system of accounting will make both modern management and financial management viable.


The problem of this research is to identify these weaknesses and limitations inherent in the cash accounting system of the public sector (in relation to the accounting system of the sample ministry).  This is with a view to propose means of eliminating them completely or at least reducing them to the barest minimum.  Put in question form, what are those weaknesses and limitation that militates against adequate and efficient accounting system and financial reporting in the public sector and how can they be eliminated?
Some of these problem witnessed in the public sector includes: the lack of accountability and abuse of delegated authority by the officers in authority, fraud and misappropriation of government funds, as well as lack of expertise and business acumen on the part of those officers.  Due to the fact that government operation has been termed “Non-profit oriented operations”, there is no pressure on the part of these government officers to perform up to optimum expectation, accounts are kept in messy shape while the officers get away with lack of proper accountability.  This research is carried out in order to examine the extent to which proper accounts are being kept in the public sector and to offer solution to the inherent problem discovered. The study use Oyo state water corporation as a case study


The objectives of the study are;

  1. To determine the extent to which Oyo state water corporation has installed an accounting system.
  2. To determine the factors that promote or constrain the accounting system of Oyo state water corporation
  3. To determine the impact of the accounting procedures of the Oyo state water corporation upon its financial reporting


For the successful completion of the study, the following research hypotheses were formulated by the researcher;

H0: there are no factors that promote or constrain the accounting system of Oyo state water corporation

H1: there are factors that promote or constrain the accounting system of Oyo state water corporation

H02: there is no impact of the accounting procedures of the Oyo state water corporation upon its financial reporting

H2: there is impact of the accounting procedures of the Oyo state water corporation upon its financial reporting


The significance of this study is that it will expose the inherent limitations of accounting system operating in Oyo state water corporation. It will highlight areas of inefficiency and delay, “red tepism” in the civil service. The most important significance is that it will attempt to bridge the gap that exists in the teaching and learning of accounting as practiced by government and in government ministries.

The facts embodies in this research will present to the uninitiated, accounting students, the new professionals and the general reading public, a complement to other existing accounting text books.




The scope of the study covers appraisal of accounting systems in government ministries, the department and the agencies. The researcher encounters some constrain which limited the scope of the study;

  1. a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study
  2. b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
  3. c) Organizational privacy: Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities.


In order to avoid misconception of the framework that is being laid down, the following definition of terms are given.

  1. a) Accounts general: means accountant general of Enugu state of Nigeria who is the chief accounting officer of the state.
  2. b)   Accounting officer: any officer charged by the ministry with the duty of accounting for any service in respect of money.
  3. c)   Appropriation law: means the law enacted in each year, the principal purpose of which is the appropriation of public funds for such services as are specified in such law.
  4. d)    Consolidation revenue fund: means the consolidated revenue fund established by section 56 of the constitution of eastern Nigeria.
  5. e)    Legislature: means the state house of assembly
  6. f)     Accounting system: means a systematic way of recording, analysis, interpretation and presentation of organizations in financial terms.
  7. g)     Estimates: means budget for revenue and expenditure of Enugu state government for a particular financial year.
  8. h)   Remittance: means disposition of government cash balance to different stations.
  9. i)   Financial instruction: means financial document which embodies a number of methods or uniformity in the recording of certain financial transactions, events and positions to aid the achievement of accountability.