CORPORATE GOVERNANCE IN NIGERIAN UNIVERSITIES:

A STUDY OF FINANCIAL MANAGEMENT IN THE UNIVERSITY OF

NIGERIA NSUKKA.

BY

CHINWE, DEBORAH UZOAMAKA

PG/MBA/08/47372

DEPARTMENT OF ACCOUNTANCY

FACULTY OF BUSINESS ADMINISTRATION

UNIVERSITY OF NIGERIA

ENUGU CAMPUS

JUNE, 2010

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 TITLE PAGE

CORPORATE GOVERNACE IN NIGERIAN UNIVERSITIES: A STUDY OF

FINANCIAL MANAGEMENT IN THE UNIVERSITY OF NIGERIA

NSUKKA.

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 APPROVAL PAGE

The project has been read and approved by the undersigned as meeting the

requirement for the award of Masters in Business Administration, Department

of Accountancy, University of Nigeria, Enugu Campus.

…………………… …………………………

Dr. (Mrs) Regina Okafor Date

(Supervisor)

…………………………… …………………………….

Dr. (Mrs) Regina Okafor Date

(Head of Dept)

…………………………… …………………………..

Name: Date

(External Examiner)

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 DEDICATION

The project work is dedicated to the most High God who has been my strength,

my helper and my guardian throughout the period of this study and always.

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 ACKNOWLEDGEMENT

My greatest appreciation goes to the Highest God and my Lord Jesus Christ

without whom the knowledge and the ability to complete this course would not

have been possible.

I also thank my parents and siblings for their encouragement and support

throughout the period of the course. May God bless you all.

My special regards to my project supervisor, Dr. (Mrs) Regina Okafor for her

motherly encouragement, guidance and patience she took to go through the

project work. I say thank you Ma.

I also give profound gratitude to Prof. Geraidine Ugwuona and Mr. Sunday

Omenuko for their unquantifiable support during the period of this project work.

I will remain indebted to my Finance, Engr. Macdenis O. Egbuhuzor, for being

there with me, his support and encouragement caanot be measured. This

acknowledgement will not be complete without saying thank you to the

following friends and colleagues who are always there for me

Obadiah,Ngozi,Ode,Emeka,Elivs,Mrs.Nwufo,Calista,Chika,Innocent Okolo,

Maureen and many others.

I thank you all.

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 ABSTRACT
The quest for improving corporate governance as a pre-requisite for better
performance has become an increasingly important issue in Nigerian
Universities.

Efficient corporate governance is the bedrock for proper and effective

management of institutions world over including managing finances in Nigerian
Universities of which this study examined. The obvious corporate failures in
Nigerian universities are associated with poor management for recognising risk
management and poor internal audit. Therefore the problem this study unravels
was the value of corporate governance in financial management of the
University of Nigeria. The data for this study was generated through structured
questionnaires and interpersonal interviews. The data obtained were analysed
using frequency percentage, mean and chi-square statistical method. From the
result of data analysed, it was found out that the major sources of finance to the
university include Government grant, student school fees, Income from
investment, donations from friends of the university and income from subsidiary
companies. The objectives of financial management in the university were also
identified to include reduction of fraud in the system, increase accountability
and transparency in the system and to promote effective financial regulation.

Furthermore, the value of corporate governance was found to include the

following; independent of Auditor is emphasized, effective internal control is
maintained and due process of financial management is ensured. The study
recommended among others that the Bursar, who is the head of finance, should
be a member of related accounting professional bodies like ICAN, ANN, ACCA
.Also, since it was obvious that corporate governance aims to minimise chances
of corruption, mal-practice and financial fraud. The object of good corporate
governance is attained when an institution demonstrate their public
accountability and conduct their businesses within acceptable ethical standard.

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 TABLE OF CONTENT

Title Page: - - - - - - - - - - - i
Approval Page: - - - - - - - - - - ii
Dedication: - - - - - - - - - - iii
Abstract: - - - - - - - - - - - iv
Acknowledgement: - - - - - - - - - v
Table of Contents: - - - - - - - - - vi

CHAPTER ONE: INTRODUCTION

1.1 Background to the Study: - - - - - - - - 1
1.2 Statement of Problem: - - - - - - - - 4
1.3 Objectives of the Study: - - - - - - - - 4
1.4 Research Questions: - - - - - - - - 5
1.5 Hypotheses: - - - - - - - - - - 6
1.6 Scope of the Study: - - -- - - - - - - 6
1.7 Significance of the Study: - - - - - - - - 7
1.8 Operational Definition of Terms - - - - - - 8

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.1 Financial Management and Public Accountability: - - - - 9
2.2 Financial Management: - - - - - - - - 11

2.3 Corporate Governance and Higher Institutions: - - - - 16

2.4 What is Corporate Governance? - - - - - - - 17

2.4.1 Higher Institution`s Governance: - - - - - - 21

2.5 Good Corporate Governance in Ensuring Sound Public
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 Financial Management: - - - - - - - - 24
2.5.1 Corporate Governance Promotes: - - - - - - 25
2.6 The need for Proper Standards of Financial Management: - - - 25
2.7 Financial Management and an Approach to Managing for
Results: - - - - - - - - - - 26
2.8 The Aim and Goals of Financial Management in Public Sector: - - 27
2.9 Performance Requirements for Management in the Public Sector: -- 27
2.10 Financing Higher Education in Nigeria: - - - - - 29

2.10.1 A Brief Description of the Nigerian Higher Education System: - 32

2.10.2 Financing Higher Education in Nigeria: - - - - - 34

2.10.3 Cost Sharing Measures in Higher Education in Nigeria: -- - 37

2.11 Historical Background of The University of Nigeria, Nsukka.- - 40

2.12 UNIVERSITY Financing and Management: - - - - - 43
2.12.1 Task of Financial management: - - - - - - 44
2.13 Under funding Problems of Financial Management in Nigerian
Universities: - - - - - - - - - 45
2.14 Organ gram of the University of Nigerian Nsukka: - - - - 52

CHAPTER THREE: METHODOLOGY

3.1 Research Methodology: - - - - - - - - 52
3.2Research Design: - - - - - - - - - 52
3.3 Area of the Study: - - - - - - - - - 52
3.4 Sampling Technique- - - - - - - - - 53
3.5 Sampling Population: - - - - - - - - 54
3.6 Data Collection: - - - - - - - - - - - 55
3.7 Validation and reliability of the Instrument - - - - - 55
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3.10 Method of data Analysis: - - - - - - - - 55
3.11 Chi-Square: - - - - - - - - - - 55

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS,

TESTING OF RESEARCH QUESTION AND DISCUSION OF
FINDINGS.
4.1 Data Presentation and Analysis: - - - - - - - 57
4.2.1 Research Question One: - - - - - - - - 61
4.2.2 Research Question Two: - - - - - - - - 64
4.2.3 Research Questions Three: - - - - - - - 67
4.2.4 Research Question Four: - - - - - - - - 71
4.2.5 Research Question Five: - - - - - - - - 74
4.3Instrument of Analysis: - - - - - - - - 78
4.4 Data Analyses: - - - - - - - - - 78
4.5 Findings: - - - - - - - - - 84

CHAPTER FIVE: SUMMARY, CONCLUSION AND

RECOMMENDATIONS
5.1 Summary: - - - - - - -- - - 86
5.2 Conclusion: - - - - - - - - - 88
5.3 Recommendations: - - - - - - - - 89
References

Appendices

viii
 CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO THE STUDY

The higher education system in Nigeria is composed of universities,

polytechnics, technological institutions, colleges of education that form part of,
or are affiliated to universities and polytechnic colleges, and professionals,
specialised institutions (IAU, 2000). They can be further categorised as federal,
state or private universities, and as first, second or third generation universities
(Harnett, 2000:1).

Federal universities are owned and funded by the federal government while
state universities are owned and financed by the states . The private universities
are owned and financed by individual owner(s).All federal universities receive
the backup of their financing (almost 95%) from the federal government
through the National University Commission NUC, (Harnett, and 2000:1).

Furthermore, the federal university budgeting processes and expenditures have

to adhere to budgeting and expenditure formula stipulated by NUC as follows:
60 percent total academic expenditure; 39 percent for administrative support;
and 1 percent for pension and benefits (Harnett.2000: 7).

Ogunlade sighted in Ania (2004), stated four sources of finance in Nigerian

university education: (a). Support from federal and state governments consisting
more than 98% of the recurrent cost and 100% of the capital cost. (b). student
fees/ educational fees; (c). Occasional grants, (d). interest earnings on short term
bank deposits and rents of university properties. Other sources of finance to
higher education in Nigeria include endowments, fees/levies, gifts and

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international aids from international organisation, for example, World Bank,
(Sikiwibole and Suleman, 2000).

Within the Nigeria university system and management function, the Bursary
department is in direct control of finance. The Bursar is the chief financial
officer of the university, and is appointed by the council and is responsible to

the Vice Chancellor, Rector, Provost.. The Bursar ensures that the funds of the
institution are spent in accordance with the provisions of Government financial
regulations and university Act laid down by the council and that no funds of the
institutions are spent without proper authority and accounting. Financial
management is a necessary tool for supporting the organisations goals and
objectives. Financial management according to (Miller, 2000:2) states that
financial management involves controlling, conserving, allowing, and investing
the organisation’s resources including personnel, equipment, supplies and the
non monetary contributions of volunteers and donations.

Federal government controls the universities through the following organs:

Federal Ministry of Education, national University Commission (NUC), which
among other things allocates funds to federal universities and also prescribes the
spending formula .Each university, is administered by a council and the senate
and is headed by and appointed. The duties of the bursar as the financial
manager are controlled by the Vice Chancellor while the Vice Chancellor is the
Accounting officer of the university answerable to and appointed by the
Council. The governing council of a university is the highest regulating and
policy making organ of the institution, while the Senate is highest authority in
terms of academic matters in the university. The Council of every higher
institution is been headed by a pro chancellor who is appointed by the Federal
Executive council. The Senate equally have members representing them at the
Council level while the congregation and convocation have two of their
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members each representing them at the council. The council have so many sub
committees under it that assist it in different capacities. The Council is like the
board of directors (BOD) of any public enterprise. The governing council has
absolute responsibility for the university and is fully accountable to the
shareholder for such performance. The university governance represents the
structure of corporate governance.(see fig .1)

Corporate governance is the system by which organisations are directed and

controlled. Typical objectives are clear rights and responsibilities among
different participants, transparency, accountability and probity (Wilmoth, 2004).
Business corporations in all countries including Nigeria are addressing these
issues as a matter of good practice and of some famous scandals, corruption and
different species of financial mismanagement. Corporate governance is no
longer an issue with universities in developed countries like U K, USA, etc. The
Nigerian universities face greater requirements for good corporate governance,
particularly with respect to the way that governing do their business and the
roles of owners, governing councils, management, staff, students and clients.

Corporate governance aims to minimise chances of corruption, malpractice,

financial frauds and misconduct of management. The object of good corporate
governance is attained when institutions demonstrate their public accountability
and conduct their business within acceptable ethical standards. This
demonstration will take the form of effective financial reporting, both internally
and externally, and the unqualified encouragement of public debate in respect of
such financial reports.

To this extent, the aim of this study is to look at corporate governance in

financial management of the University of Nigeria.

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1.2 STATEMENT OF PROBLEM

The issues of corporate governance and the role of institutions in the

development of corporate governance are widely discussed in the literature.
The academic have paid attention to variety of issues regarding corporate
governance. The likely arrears of reference are ethics, management principles,
owners’ role regarding mechanism and policies of state centred for good
governance.

From personal studies, the obvious corporate failures in Nigerian universities

are associated with poor arrangements for recognising risk management and
poor internal audit. Arrangements have failed to uncover report and remedy
poor performance, greedy remuneration, excessively risky behaviour, fraud and
corruption.

It is surprising that the issue of critical importance such as corporate governance

in financial management in the Nigerian university education system has not
attracted the attention of researchers in Nigeria. Therefore, the problem the
study intended to unravel was the value of corporate governance in financial
management of the University of Nigeria.

1.3 OBJECTIVES OF THE STUDY

The primary objective of this study is to examine the practice of corporate

governance in the financial management of the University of Nigeria.
Specifically the objectives include:

(1)To ascertain the sources of finance in the university of Nigeria

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(2) To identify the objectives of financial management in the university

(3) To determine the value of corporate governance in the financial management

of the university.

(4) To examine the impact of corporate governance mechanisms on the

University management performance.

(5) To examine the challenges to the implementation of corporate governance in

the university financial management.

1.4 RESEARCH QUESTIONS

The following research questions will guide this study.

(1) What are the sources of finance in the University of Nigeria?

(2) What are the objectives of financial management in the university?

(3) What is the value of corporate governance in the financial management of

the university?

(4) What is the impact of corporate governance mechanisms on the university

management performance?

(5) What are the challenges to the implementation of corporate governance in

the university financial management?

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1.5 RESEARCH HYPOTHESES

Ho Effective Corporate Governance has no significant influence on the sources

of finance in the university
Ho Effective management of finance has no significant influence on
accountability and transparency in the university system
Ho There is no significant influence of Corporate Governance in management
of finance in the university.
Ho Corporate Governance mechanisms have no significant influence on
university management performance.
Ho There is no significant influence challenges to the implementation of
Corporate Governance has on the university financial management

1.6 SCOPE OF THE STUDY

The study will be delimited to the University of Nigeria Nsukka. The choice of
this university is because of its historic position as the first indigenous
university in Nigeria and its administrative standards. The time frame of this
study will cover the years between 2004 and 2009. This period of time is
significant in the sense that it marked the beginning of new administration
innovations within some sector of the economy of which University is part of,
and also when the concept of Corporate Governance gained currency in Nigeria
economy. It also covers the span of administrative of the immediate past Vice
Chancellor of the university of Nigeria, Prof. Chinedu Nebo(2004-2009).

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1.7 SIGNIFICANCE OF THE STUDY

This study will assist current and future members of council, heads of units,
deans and heads of departments of the university in carrying out their specific
responsibility financial management. Furthermore, it is intended to inform staff
and student members of the broader university community about governance
processes at the university, while also serving a similar purpose for the external
community including stakeholders such as government.

Finally, this study will add to the body of knowledge existing in the area of
financial management. It will also encourage researchers for further studies in
corporate governance and financial management in Nigeria universities.

1.7 OPERATIONAL DEFINITION OF TERMS

CORPORATE GOVERNANCE: Corporate governance is the system by

which organisations are directed and controlled.

FINIANCIALMANAGEMENT:

Financial management involves controlling, conserving, allowing, and investing

the organisation’s resources including personnel, equipment, supplies and the
non monetary contributions of volunteers and donations.

UNIVERSITY GOVERNANCE: This is a means by which university is

formally organised and managed.

UNIVERSITY EDUCATION SYSTEM: This refers to all the federal

universities, State universities and Private universities.

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FINANCE: Finance is the science and art of determining if the funds of an
organisation are being used properly, through financial analysis, companies and
businesses can take decisions and corrective actions towards the sources of
income and the expenses and investments that need to be made in order to stay
competitive.

GOVERNING COUNCIL: This is a body charge with the responsibility of

over seeing the affairs of the Universities, Polytechnics and Colleges of
Education

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 CHAPTER TWO

2.0 REVIEW OF RELATED LITERATURE

2.1 FINANCIAL MANAGEMENT AND PUBLIC ACCOUNTABILITY

Accountability is as old as man himself. Thus, according to the scriptures, after

creation, God not only appropriated all the resources of the universe to Adam,
but also put him in charge of, and superior to, both living and non-living things
in the universe. He made man accountable to Him, though, by forbidding man
from eating from the fruit of only one tree in the Garden of Eden, (See Gen.2:9,
3:1-24).According to Biblical accounts, man failed this accountability test by
misappropriating the fruits of this very tree he was forbidden to eat. In fact, the
Biblical accounts of both the old and New Testament are replete with stories of
man’s failure of several such subsequent accountability tests. In the old
Testament, for instance, David failed to behave as customs and moral ethics
required of him, when he plotted and expropriated as his wife, Bathsheba, the
wife of the slain Uria (see Samuel, Chapter 11 vs 6).Most of the parables of
Jesus on earth had to do with expectations of positive or fruitful behaviours of
individuals towards their fellow individuals, towards groups or towards God,
their creator.

In fact, there were other several documented accounts in the bible stories of
similar role expectations that involved financial or material accountability. For
instance, in St. Mathew`s Gospel (chapter 25), when the rich man went on
journey, he asked each of his servants to account for the goods with which they
had been entrusted with. He was not pleased with the servant who had not
profitably used the goods he was entrusted with. Another story of financial
accountability contained in the Bible was when Ananias and Sapphire failed to
account properly, to the early apostles, for all the proceeds from the sale of
piece of their properly(Acts of the Apostles Chapter 5).From the above Biblical
9
accounts of accountability, we realize that it has been as old as man himself. In
fact, the entire Christian and Muslim Faith(s) revolve around the principle of
accountability of man while on earth since Christianity and Muslim religion
maintain that on judgement day, the dead will resurrect and, with the living,
they shall give account of their stewardship. Accountability, therefore, concern
both material and non-material expectations of behaviour or restraint from
behaviour, required of a lesser to a higher person or authority.

During the twentieth century, struggle to enforce accountability have taken

parallel routes and consequences as they did in various historical epochs. As
Akpan (1982:43) rightly noted, those who were expected to render services
must account to the people for their successes and failures, and those who were
entrusted with the custody and disbursement of public funds must appropriately
give account of the people.

From the historical accounts, it is quite evident that proper financial

management which is an aspect of accountability is not to be toyed with.
Accountability is necessary and almost sufficient condition for acceptance of
any government. The principle of public accountability works on the basis of
fact that any public office-holder especially the electable public office –holder,
holds his office for the people. Accountability is, therefore, an indication that
the holder of such power is doing so on behalf somebody else.

The issue of public accountability in practice revolves around financial

appropriation and expenditure. This is because of strategic and crucial role
finance plays in any nation. Finance is the life-wire of any organisation, be it
private or public. It determines the success or failure of any organisation. In
fact, successive governments in Nigeria have consistently emphasized the need
for prudent financial management, especially in our institutions of higher
learning because they are citadel of academic excellence, centre for character
10
moulding and training of future leaders. Our institutions of higher learning
should cultivate the culture of proper financial management. It is for this reason
that literature on financial management will be reviewed first.

2.2 Financial Management.

Financial management involves modern management decision model on

financial matters, thoughtful budgeting, investment appraisal, working capital
management, capital rationing, stores and material control, risk and port-folio
management, appropriate accounting, meaningful financial reporting and timely
audit by qualified Auditors. It is the use of accounting knowledge, economic
models, mathematical rules, systems analysis, and behavioural sciences for
specific purposes of assisting management in its functions of financial planning,
analysis and control(Anyafo: 1994). It entails proper cash administration or cash
budgeting. This is one of the most important areas of financial management
because, it helps an organisation to plan for increasing or decreasing stock, and
for investing in fixed Assets, and for advising the organisation in advance in
other to know if it will run out of cash or have idle cash. Be as it may, the
responsibilities of financial managers in any organisation are very crucial.

Financial Management in other words, “is that management activity which

concerned with the planning and controlling of the firm’s financial resources”
(Pandey1979:3).Oshisami and Dean (1984:39) see Financial Management ‘as
that part of mgt which is concerned mainly with raising fund in the most
economic and suitable manner, planning future development through financial
accounting, cost accounting, budget, statistical analysis and other means.”

Nwoke (2000:6) defined financial management as “The forecasting, planning

,organizing, directing, coordinating and controlling of all activities relating to
the acquisition and application of financial resources of an undertaking in

11
keeping with its financial objectives’[.He further defined it as” The series of
managerial tasks(decision-making, facilitation and review)which are directed to
the provision, use and disbursement of the economic resources of the
organization in ways consistent with the functions of the organization. The
author did not see that financial management is a superior kind of accounting;
but rather, an issue, which brings into focus the strictly financial aspects in the
evolution of all courses of action and the consequences.

Financial Management according Anyanwu(1990:10) is “That part of

management which is concerned mainly with raising fund in the most economic
and suitable manner, using those funds as profitable as possible, and in ways
consistent with the objectives and functions of the entity”. He further spelt the
reason we manage. According to him,” we manage in order to use little
resources available to a maximum satisfaction”. The reasons behind the
management of our fund are due to economic, social, and environmental factors.
Man’s resources for attainment and satisfaction of wants are always unlimited.
Incidentally, it is always faced with the problem of allocating out valuable
immediate resources at its disposals in such a way that maximum benefit is
derived from the utilization. The same principle is applicable to the government
or institution of any type, as its resource, which flows from taxation and other
relevant sources are not always sufficient for solving the ever-growing needs of
the nation due to complexities in economic and social environment .Hence, the
government institutions and /or non-governmental organizations are always
faced with the problem of allocating out valuable immediate resources at their
disposal in such a way that maximum benefit is derived from the utilization

In business organizations, efficiency in management of financial resource could

be determined by comparing input and output (cost against benefit), which
could measured in terms of monetary units. But in the case of academic

12
institutions and /or government organizations/departments, the outputs and
mainly in terms of services and sometimes goods which cannot be easily
quantified in monetary units and measured against inputs otherwise known as
goods and services. Typical examples are; Education, Defence Services, and
Health Services usually undertaken by the government.

Financial Management according to Obinna(1986:11)concerns itself with the

allocation and management of scarce financial resources among competing
uses. Maurice (1977:3-4) earlier agreed with Obinna (1986:11) and adds that
“FM is closely related to economics which is sort of “mother of science” to
finance, however, the two sees to the allocation of resource to the competing
ends”.

Management is hereby seen as “the creation and maintenance of an internal

environment whereby individuals working as a group can perform effectively
and efficiently toward the attainment of a set of goals”(Kaonts et al
1974:10.Taking a cue from monetary ends, litterer(1978:11) said “Financial
Management is the raising and administering of Funds under a guidance of a
body of knowledge and disciplined way of proceeding. ”This, he said,” involves
taking actions, getting things done and utilizing possibilities to achieve financial
objectives and accomplish human purpose.

Harper (19790, cited in Ojo (1996), define the term financial management as the
planning of finance, cash budgets and sources of finance in an organisation.
Oshisami(1993) said that financial management is the process of planning and
programming, budgeting, budget execution accounting and control, and audit
and review. According to Nwakwo(1996), Morden resource allocation/financial
management is a –term-point-step process.

1. Determining what resources available,

13
 2. Determining the objectives or target to which the resources will be
allocated.
3. Defining the objectives,
4. Ranking the objectives in order of priority,
5. Determining the alternative courses of action for attainment of objectives,
6. Evaluating the alternative courses of action for the attainment of
objectives,
7. Establishing decision criteria.
8. Allocating the resources,
9. Establishing control measures and feedback mechanism necessary or
required for performance evaluation,
10.Adjusting future plans and objectives for purposes of future allocation.

According to Nwankwo(19960) following the above mentioned steps would

ensure careful and prudent utilization of available financial resources in an
organisation, thereby, engendering accountability and transparency.

The term “Financial Control” is defined by Oshisami (1993), as the process,

which assures that financial resources are obtained economically, and used
efficiently and effectively in the accomplishment of desired goals. He
(Oshisami) further stated that the control parameters or benchmarks, which
become the standards against which subsequent actions are compared, are
themselves the product of financial planning decisions.

According to Oshisami (19930, the control parameters are structural controls,

procedural controls, custodial and efficiency control.

(a) Structural Control: Structure control, according to Oshisami(19930

refer to control built along institutional lines or built into powers
vested in certain functionaries or governmental units. These are often

14
 referred to as “checks and balances”. Examples, a payment voucher is
invalid without the approval of the vote controller, no new established
post can be included in the proposals for the estimates of recurrent
expenditure without the prior approval of the establishments
department e t c.
(b) Procedural controls: On the other hands, procedural controls refer to
those built into the operational rules and processes such as once those
rules and processes are not breached, the built-in controls will ensure
accountability and controllability. An example in the area of
procurement is the tender procedure which, amongst other things,
mandates open competitive tendering from a minimum of five tenders
in cases of selective tendering, and the rigid procedure for opening,
deliberating on and selecting the winning tender. It is believed that
economy of procurement together with fairness and public probity will
result if the procedure is followed.
(c) Custodial Control: Oshisami (1993), define custodial control as a
system of control installed to check abuse and misuse or of resources.
The system is based on two principles; to check the honesty of those
persons who are entrusted with the custody, use and control of public
properties as well as their stewardship.
(d) Efficiency Control: Efficiency control is supplementary to custodial
control. It seeks, primarily, to check the ability, and the actual
performance in achieving objectives, which contribute to the overall
goal(s) of the organisation. This may be on individual, sectional basis
or may take the form of control on policies, programmes, projects and
activities.
Thus, financial management as the name implies, connotes effective
accountability of fund appropriated for disbursement. It is that part of
15
 management which is concerned mainly with raising funds in the most
economic and suitable manner, using these as profitably(for a given
risk level)as possible, planning future operations; and controlling
current performance and future development through, accounting,
budgeting, statistical analysis and other means.
In a related observation, Chambers (1974) in Heilbronn John and
Philip Keefer (1999), viewed it as forecasting, and controlling all
activities relating to the acquisition, application, and keeping with
financial objectives of any establishment. From the foregoing, it is
quite clear that financial management involves the imaginative and
creative use of a company`s financial resources. It encompasses the
knowledge and utilization of such terms as capital – generating,
liquidity and profitability, control, cash budgeting, returns on capital
investment and discount ratio on capital invested on project(s). Other
areas of financial management are control of stocks and work at hand,
which are product rationalization and debt(s) administration.

2.3 CORPORATE GOVERNANCE AND HIGHER INSTITUTIONS

The issues of corporate governance and role of institutions in the development

of corporate governance is widely discussed in the literature. The academicians
have paid their attention to the variety of issues regarding corporate governance
such as ethics, management practices, owner’s role, regulatory mechanism and
policies of state centered for good governance. The ethical strength in a society
plays a supporting role in practicing the code of good governance. As Junichi
Mizuo (1998) in an empirical research on business ethics and corporate

Governance in Japanese corporations, urged for a fresh look at corporate values

and attitude of conformance to business ethics on the parts of both organizations
16
and individuals. Corporate governance is also driven from matured mindsets of
corporate executives towards corporate social responsibly (CSR).

2.4 WHAT IS CORPORATE GOVERNANCE?

Corporate governance refers to the organizational framework for decision

making and action taking within a corporate entity. In this regard it can be
defined as the structure of relationships within an entity for making decisions
and implementation. Simply put, it refers to how an organization is run, that is,
how the resources of an organization are employed in pursuant of the set
mission and goals of the organization.

Corporate governance is “The system by which organisations are directed and

controlled.” In effect, it is concerned with systems, processes, controls,
accountabilities and decision-making at the heart of and at the highest level of
an organisation. Corporate governance is about the way in which top managers
execute their responsibilities and authority and how they account for that
authority in relation to those that have entrusted them with assets and resources.
In particular it is concerned with the potential abuse of the power and the need
for openness, integrity and accountability in the decision-making processes of
the organisation.
Corporate governance is defined as the formal system of accountability and
control for legal, ethical and socially responsible decisions and use of resources
in business organizations. It is based on certain institutions like; laws, contracts,
norms and regulations that create self-governing system in the organization. A
corporation has various stakeholders, internal and external groups whose
support is essential for the survival and growth of any corporation ( Lozano
2000).
17
A business organization frequently interacts with commonly acknowledged
stakeholders who include employees, customers, shareholders, suppliers,
government agencies, managers, creditors and community groups. Business
students could also be treated as stakeholders, who collectively constitute the
future leadership of corporations and will eventually become members of all
stakeholder groups (Peterson and Albaum, 2005).

Hussey (1999) defines corporate governance more formally as “the manner in

which organizations, particularly limited companies, are managed and the
nature of accountability of the managers to the owners”. In other words,
corporate governance is not just a set of rules but also a structure of
relationships geared towards establishing good corporate practice and culture.

The Ultimate Business Dictionary (2003) defines corporate governance

functionally as “the managerial or directorial control of an incorporated
organization, which, when well-practiced can reduce the risk of fraud, improve
company performance and leadership and demonstrate social responsibility.”
Essentially, corporate governance is focused on controlling the activities of
those in whose custody the resources of an organization are entrusted with a
view to protecting the interest of the resource owners.

The above definitions are summarized into one by the Report of the Committee
on Corporate Governance of Public Companies in Nigeria (2003) which sees
corporate governance as “the system by which companies in Nigeria are
directed, and managers are held accountable for the performance of the
organisation.” This further emphasizes the fact that the concept of corporate
governance is principally on the structure of relationship within an organisation
which is directed at best practice in the overall interest of the organisation and
its owners/stakeholders.

18
Rwegasira (2000) cited in Oyejide and Soyibo (2001) sees corporate
governance merely as being concerned with the structures within which a
corporate entity receives its basic orientation and direction. Corporate
governance sets the pace that in turn determines the corporate culture of an
organisation on the long-run.

Corporate governance only seems to have attracted the attention of scholars on a

wide scale, over the last three decades though the issues in corporate
governance have always been around. This seemingly new interest arose from
the collapse of corporate giants in Europe and America, and the attendant
sufferings. For instance, when Enron collapsed towards the end of 2001, it not
only led to the loss of employment for thousands of employees it also took with
it the life savings of many more who were shareholders and creditors to the
world energy giant.

As observed by Hussey (1999) the topic of corporate governance assumed

increased importance in 1992 with the publication of the Cadbury Report. In
Nigeria the topic gained importance in the post structural adjustment
programme (SAP) era. This era witnessed the growth of private ownership of
productive resources and the multiplication of banks and financial institutions.
Because of the weak corporate culture in these banks, the nation witnessed a
very high incidence of corporate failure and distress. To regain the confidence
of the public the Securities and Exchange Commission set up a committee in
2000 whose report was the first to articulate a code of best practices for public
companies in Nigeria. This was followed by a similar code by the Central Bank
of Nigeria (CBN) in 2006 to address corporate governance practices in Nigerian
banks. And ever since there have been unending discussions on corporate
governance practices in Nigeria.

19
Corporate governance has been identified as one of the important tools needed
in managing any organization including corporation. Corporate governance has
been defined in several ways. This study essentially will use the definition of
corporate governance by the Organization for Economic Cooperation &
Development (OECD), which defines good corporate governance as the rules
and practices that govern the relationship between the managers and
shareholders of corporations, as well as stakeholders such as employees and
creditors, which contributes to growth and financial stability by underpinning
market confidence, financial market integrity and economic efficiency (OECD
2004).

Turkish Industrialists’ and Businessmen’ Association takes this subject from

Turkey’s point of view, defines the code of corporate governance in its report
called “The Structure of Board of Directors and Work” as follows ;

“Corporate Governance can be defined in several ways, but from the widest
perspective, it is a code that represents how attractive it can be to get financial
resources, how efficient it works, and thus it is a code which while showing
respect to values of the society it operates in, creates economic value in long
term.”

2.4.1 HIGHER INSTITUTION`S GOVERNANCE

University is the one of the primary agency of knowledge creation in a

knowledge society; it is the pathway to social mobility for a large proportion of
young people; it provides the skilled workforce and they are the vehicle for
continuous upgrading of qualifications an expanding economy needs (Ingrid,

20
2006).Whether countries regard higher education as an investment in their
future or as a cost, society, government, and a range of stakeholders have a
legitimate interest in the work of higher education institutions. And through the
governance of universities these various stakeholders may influence decision
making in and by a university.
Governance, then, is the system of decision making within and for the
university. The Australian National Audit Office defines corporate governance
as the “processes by which organisations are directed, controlled and held to
account. It encompasses authority, accountability, stewardship, leadership,
direction and control exercised in the organisation.”(ANAO, 2003).
Governance in this broad definition is dispersed, and we might distinguish
between various mechanisms, including (1) state regulation, that is the
government’s (or governments’) prescriptions as to how universities act in
particular circumstances; (2) guidance by external stakeholders, that is
government, intermediate bodies where they exist, representatives of industry
and commerce on university boards; (3) academic self-governance, is the
traditional collegial decision-making within universities, and at a broader level
“peer review-based self-steering of academic communities, for instance in
decisions of funding agencies”, for example research councils; and (4)
managerial self-governance, is the formal organisational hierarchies and their
roles in “internal goal setting, regulation, and decision-making “( Schimarnk,
2005). Responsive university systems around the world have been moving
towards more business-like forms of management and governance (CLARK
2001). In the process, accountability, quality assurance and performance
monitoring have become more important, and management innovation has
become a permanent quest.

21
In Nigeria, capacities for managing the university system and individual
institutions have struggled to keep pace with the increasingly large and complex
federal university system. Professional management techniques and training
generally have not been applied. Management information systems vary widely
in their use and their development is limited. Strategic planning is in its infancy.
Institutional communications with internal and external audiences are weakly
developed. Moreover, management innovation does not seem to be a conscious
pursuit.

Recognizing these shortcomings, the National Universities Commission took

steps in 2001 to promote more professional institutional management by
encouraging institutional strategic planning; organizing annual two-week
management training workshops for senior administrators; and establishing a
uniform accounting code for the university system. As yet, more efficient and
responsive management has been slow to materialize.

A possible explanation for this lack of progress is suggested by Burton Clark

(2001:10). He argues that an institution’s incapacity to respond is the outcome
of limits on government funding capability combined with rigid internal
organizational structures. These conditions seem to prevail in Nigeria. Funding
dependence has been demonstrated above, and organizational and procedural
rigidities are also apparent.

However, management rigidities are also found at the institutional level.

University management is based in large part on the highly participatory system
of senate and academic committees that characterized British universities at the
time of Nigerian independence. Very little movement can be observed from this
time-honored practice towards the leaner, more nimble and more corporate
management model that has now become the norm in the United Kingdom and
elsewhere.
22
It must also be recognized that efforts to improve university system
management and governance have been confounded by a pervasive culture of
corruption within Nigeria society. A long tradition of weak governance
oversight and limited management accountability under a succession of military
governments seems to have made corruption endemic to Nigeria at the end of
the 20th century. This led the global corruption watchdog organization,
Transparency International, to rank Nigeria as the world’s most corrupt nation
in 2000 (TRANSPARENCY INTERNATIONAL 2000). Not surprisingly, this
social malignancy has also extended to the federal universities. Reports of
resume falsification, plagiarism, cheating, examination malfeasance, sexual
harassment, contract kickbacks, and the obligatory purchase by students of
professorial lecture notes have regularly appeared in Nigerian newspapers in
recent years. Prior to becoming the head of the National Universities
Commission in 2001, Prof. Peter Okebukola denounced the “growing menace of
student gangsterism, cult practices, examination malpractice, and other forms of
violence and disruptive behaviours” within the university system Okebukola (
1998:310). Clearly, progress towards more responsive university governance
and more innovative university management will be difficult until the political
will can be found to tackle such deep-seated social dysfunction.

2.5 GOOD CORPORATE GOVERNANCE IN ENSURING SOUND

PUBLIC FINANCIAL MANAGEMENT
Corporate governance is the international term associated with the trend towards
greater corporate responsibility and the conduct of business within acceptable
ethical standards. Transparency, accountability and openness in reporting and
disclosure of information, both operational and financial, are internationally

23
accepted to be vital to the practice of good corporate governance.The object of
good corporate governance is attained when institutions demonstrate their
public accountability and conduct their business within acceptable ethical
standards. This demonstration will take the form of effective financial reporting,
both internally and externally, and the unqualified encouragement of public
debate in respect of such financial reports. Effective corporate governance in the
public sector means that public officials must demonstrate compliance with the
following six characteristics:
• They are composed of people with the knowledge, ability and commitment to
fulfill their responsibilities;
• They understand their purpose and whose interests they represent;
• They understand the objectives and strategies of the departments;
• They understand what constitutes reasonable information for good government
and do everything possible to obtain it;
• Once appropriately informed, they are prepared to ensure that the department’s
objectives are met and that operational performance is never less than
satisfactory; and
• They fulfill their accountability obligations to those whose interests they
represent by regularly and adequately reporting on their department’s activities
and effectiveness.
Financial reporting obligations support good corporate governance through
outwards and internal reporting.
• Outwards reporting is to Parliament and all external stakeholders which
include Ministers, Government officials, Electorate, Taxpayers and General
public
• Effective management and decision-making requires adequate internal
financial reporting systems, that consists of, timely and regular submission of

24
comprehensive and candid reports on every significant matter of financial
administration in a public sector institution to all levels of decision-makers.

2.5.1 CORPORATE GOVERNANCE PROMOTES

Good corporate governance seeks to promote the following:
• Efficient, effective and sustainable entities that contribute to the welfare of
society by creating wealth, employment and solutions to emerging challenges;
• Responsive and accountable institutions
• Recognition and protection of stakeholder rights;
• An inclusive approach based on democratic ideals, legitimate representational
and participation.

2.6 THE NEED FOR PROPER STANDARDS OF FINANCIAL

MANAGEMENT
The absence of the profit measure in the public sector makes analysis and
evaluation of management performance more difficult than in profit orientated
firms.
In the public sector the following are used to measure performance:
• Economy is to be measured by the relationship between quantity and quality
of resources inputs and its related cost.
• Efficiency is to be measured by the relationship between resource inputs and
outputs.
• Effectiveness is to be measured by the extent that outputs accomplish set
outcomes.
• Appropriateness is to be measured by the extent that outcomes of a
programme are the priority of Government and addresses the real needs of the
community.

25
2.7 FINANCIAL MANAGEMENT AND AN APPROACH TO
MANAGING FOR RESULTS
Several elements of private sector financial management provide a sound basis
for practices in the public sector. The PFMA aims to introduce an approach of
management for results instead of managing for compliance. Some
characteristics of this approach include the following:
• Accounting officers (departmental heads) enter into employment contracts
with executive authorities supported by performance agreements that include
performance standards;
• Clearly defined responsibility of the accounting officer and other role players
for resources committed and outputs produced;
• Greater alignment of planning and budgeting processes;
• Strategic planning
• Central regulations are reduced to the minimum and replaced with guidelines;
• Accounting officers are allowed flexibility in the use of resources;
• Management accounting and reporting;
• Appropriate internal control and risk management principles are followed; and
• Accounting practices similar to that employed in the private sector are being
followed (i.e. accrual accounting, capitalisation of fixed assets
and depreciation).

2.8 THE AIM AND GOALS OF FINANCIAL MANAGEMENT IN

PUBLIC SECTOR
Financial management in the public sector is defined as: “All decisions and
activities of management, as guided by a chief financial officer, that impact on
the control and utilisation of limited financial resources entrusted to achieve
26
specified and agreed strategic outputs.” The aim of financial management in
the public sector is the following: “To manage limited financial resources with
the purpose to ensure economy and efficiency in the delivery of outputs required
to achieve desired outcomes (effectiveness) that will serve the needs of the
community (appropriateness)”
Financial management ranges from daily cash management through to the
formulation of long-term financial objectives, policies and strategies in support
of the strategic and operational plans of the department. It includes the planning
and control of capital expenditure, working capital management, interaction
with the relevant Treasury, funding and performance decisions. It supervises the
supporting financial and management accounting functions, which are
predominately concerned with the collection, processing and provision of
financial information and the planning, operation and control of the supporting
financial information systems.

2.9 PERFORMANCE REQUIREMENTS FOR MANAGEMENT IN THE

PUBLIC SECTOR
National Treasury’s Normative Measures for Financial Management sets out
the following performance requirements:
• Financial resources must be optimally planned and allocated between required
outputs.
• The optimal investment in total assets required to support specified
departmental outputs must be quantified and economically funded.
• The use of financial resources to achieve specified outputs must be monitored
and controlled against the strategic and operational plans of the department by
means of quantitative and qualitative data.
• Internal controls must be designed, implemented and maintained to ensure
that:
27
Ø Transactions are executed in accordance with management’s general or
specific authorisation:
Ø All transactions are promptly recorded at the correct amount, in the
appropriate account, in the correct accounting period to which it relates
and in accordance with the departments’ accounting policies;
Ø Access to assets is permitted only in accordance with management’s
authorisation;
Ø Recorded assets are compared with existing assets and vice versa at
reasonable intervals and appropriate action is taken with regard to any
variances.
Ø Accountability must be established for performance associated with the
freedom to consume scarce financial resources in the delivery of
University governance principles and values Just as corporate governance
systems vary around the world, so do university governance systems.
However, through all the approaches to reform in university governance
there are some recurring themes and common principles. Typical
objectives are clear rights and responsibilities among different
participants, transparency, accountability and probity. Trust is a critical
element of good governance that has failed on too many occasions
recently in corporate and university sectors. For universities these issues
extend to cover societal trust and the vital contributions that universities
can make, at their best, to building social capital. University leaders
sometimes say that different principles apply to universities because they
have multiple objectives, including a commitment to scholarship and
knowledge creation, and because they have a wide range of stakeholders
such as their owners (governments and/or shareholders), students, clients,
staff and the communities in which they are embedded. However, as
universities establish corporate entities more like the commercial sector,
28
 and as commercial and industrial corporations move to triple-bottom-line
thinking (ie reporting in terms of financial, social responsibilities, etc).

2.10 FINANCING HIGHER EDUCATION IN NIGERIA

2.10.1 A BRIEF DESCRIPTION OF THE NIGERIAN HIGHER

EDUCATION SYSTEM

The higher education system in Nigeria is composed of universities,

polytechnics, technological, colleges of education that form part of, or are
affiliated to, universities and polytechnic colleges, and professional, specialized
institutions (IAU, 2000). They can be further categorized as state or federal
universities, and as first, second or third generation universities (Hartnett
2000:1). Federal universities are owned and funded by the federal government,
while state universities are owned and financed by the states (there are 36
states). First generation universities are the six universities established in the
1960s and early 1970’s; second generation universities are seven universities
established in the mid 1970’s; while third generation universities refer to the
eleven institutions, including the universities of technology, established in the
1980’s and 1990’s (Hartnett,2000).

According to the Association for the Development of Education in Africa

(2000) there are 43 higher education institutions in Nigeria: 11 state
universities, 3 approved private universities; and 29 federal universities
including 3 agricultural universities, 1 military university, and 4 inter-university
centers.

Three levels of university education exist in Nigeria. The university level first
stage offers a Bachelor’s degree after a minimum of three years and a maximum
of six years (e.g. in medicine). The university level second stage offers a
29
Master’s degree following one year of post-Bachelor’s study. The university
level third stage offers the doctorate degree two to three years after the
Master’s. To gain admission into the first level of university education, one has
to pass the competitive University Matriculation Examination (UME) (IAU,
2000).

Higher education in Nigeria can be further divided into the public or private,
and the university or non-university sectors. Public universities, owned by the
federal and state governments, dominate the higher education system. Private
universities and other tertiary education institutions are a recent phenomenon.
In recognition of the need to encourage private participation in the provision of
university education, the Federal Government issued a decree in 1993 allowing
private investors to establish universities following guidelines established by the
government. More than 60 applications have been received by the government
from private university sponsors since the decree’s promulgation. Of these, only
7 have been approved.

The non-university sector is composed of polytechnics, institutions of

technology, colleges of education, and professional institutions, most of them
operating under parent ministries. There is no sharp distinction between the
university and the non-university sectors; most of the institutions in the latter
sector are affiliated with universities.

The Nigerian higher education system, in spite of being Africa’s largest higher
education system with nearly 400,000 students, is unable to admit all qualified
applicants every year ADEA( 2000:3); Ajayi, T., & Alani, R.A.( 1996:23). For
example, in the academic years 1990, 1991, and 1992, only 15.31 percent, 16.71
percent, and 14.73 percent respectively of the applicants were able to gain
admission through the Joint Admission and Matriculation Board (JAMB)

30
(Ajayi, T., & Alani, R.A. ibid). In 1998, just 35,000 new students were admitted
to university study out of some 400,000 applicants (ADEA, ibid).

Numerus clausus is applied in admission to some disciplines determined by the

National Universities Commission (NUC) and conditioned by the availability of
instructional facilities at the level of institution (IAU, 2000).

Three parallel strategies are being pursued in order to expand access to higher
education in Nigeria. First, distance higher education programs are being
established; second, good quality private universities are being encouraged and
third, plans are in the works to expand all university campus enrollments to a
maximum of 30,000 students (ADEA, op cit.).

The participation rate in higher education is 395 per 100,000 persons. Women
accounted for 34 percent of total enrollments in the 1997/1998 academic year.
Female students also represented 35 percent of new entrants in the same
academic year, a significant increase from the 26 percent recorded in 1988/89
(Hartnett 2000:4).

The Federal Government controls universities and other higher education

institutions through the following organs: the Federal Ministry of Education; the
National Universities Commission, which among other things allocates funds to
federal universities and also prescribes the spending formula, and the
Committee of Vice Chancellors of Nigerian Federal Universities, which acts as
a coordinating body and offers advice to government and universities governing
councils on matters of general and specific concern to higher education. Each
university is administered by a Council and a Senate, and is headed by an
appointed Vice Chancellor as CEO. Within universities and colleges, the
institutes and centers are more autonomous. The Academic Staff Union of

31
Universities (ASUU) safeguards the interests of the academicians in the
Nigerian university system.

2.10.2 FINANCING HIGHER EDUCATION IN NIGERIA

The Federal Government maintains a policy of no tuition fees in federal

universities while at the same time allowing students enrolled in state
universities to pay tuition fees in addition to room and board. In May 2002, the
Federal Government issued an order “forbidding” the charging of tuition fees at
all 24 federal universities as these universities were contemplating charging
tuition fees as a cost recovery strategy. The Government believes that it has a
duty to provide qualified Nigerians with free university education. Before this
presidential decree, federal universities intended to charge a tuition fee ranging
from US$ 200-400 per semester. (See The Higher Education Chronicle,
Tuesday May 28, 2002).

The Government through the National Universities Commission makes it

mandatory for all federal universities to generate 10 percent of their total yearly
funds internally through various revenue diversification means Odebiyi & Aina
(1999: vii, 36).

The Education Tax Decree No. 7 of 1993 enforces the payment of 2 percent of
profits of limited liability companies registered in Nigeria as an education tax to
be disbursed according to the ratio of 50: 40: 10 to higher, primary, and
secondary education respectively. The share of higher education is further
allocated to the universities, polytechnics, and colleges of education according
to the ratio of 2: 1: 1 respectively (Ajayi & Alani op cit.). As of summer 2002,
no information was available to show the amount of funds collected and
disbursed since the promulgation of the education tax decree. It is known that
32
the Education Bank was supposed to be a depository of the funds collected
through the decree.

All federal universities receive the bulk of their financing (almost 95 percent)
from the Federal Government through the National Universities Commission
Hartnett( 2000: 1). Furthermore, the federal universities’ budgeting processes
and expenditures have to adhere to budgeting and expenditure formula
stipulated by NUC as follows: 60 percent total academic expenditure; 39
percent for administrative support; and 1 percent for pension and benefits
(Hartnett, ibid. 7).At the general level, four sources of financing university
education in Nigeria (Ogunlade, 1989: 523):

· Support from federal and state governments constituting more than 98

percent of the recurrent costs and 100 percent of capital costs,
· Student contributions towards living expenses on campuses constituting
less than 1 percent of the total operating costs of institutions. While there
is no evidence to suggest this percentage of students contribution is
capped by the government, anecdotal evidence suggest that successive
administrations in Nigeria (civilian and military) have been reluctant to
charge more than nominal fees probably to obtain and maintain public
support. Charging realistic fees has been unpopular among policy makers
Ogunlade( ibid. 525),
· Private contributions by commercial organizations in the form of
occasional grants for specific purposes, and,
· Interest earnings on short-term bank deposits and rents of university
properties.

Other sources of finance to higher education in Nigeria include endowments,

fees/levies, gifts, and international aid from international organizations. For

33
example, the World Bank has financed a US$ 120 million project titled: Federal
Universities Development Sector Operation (Odebiyi & Aina 1999: 28-29;
Babalola, J.B., Sikwibele, A.L., & Suleiman, A.A. 2000).

2.10.3 COST SHARING MEASURES IN HIGHER EDUCATION IN

NIGERIA

To respond to the problem of chronic under-funding, Nigerian public

universities adopted an array of cost sharing measures, notable among them
being the following:

Student contributions. Student contributions are made through a multitude of

fees: tuition in state and private institutions, acceptance, registration and
certification, caution (equivalent to security deposit in US), sports, identity
cards, late registration, examination, laboratory, transcript, and medical center
registration fees. These fees vary in amount paid from one university to another
(Ajayi & Alani op cit. 12). In all federal universities, undergraduates pay the
following fees: examination NGN 200 (US$ 3.7); registration NGN 150 (US$
2.77); Students Handbook for new students NGN 200 (US$ 3.7);
accommodation (excluding food) NGN 90 (US$ 1.66); hostel maintenance
NGN 200 (US$ 3.7); sports NGN 150 (US$ 2.77); and acceptance fees for new
students NGN 300 (US$ 5.55). Other amount of fees charged include: caution
NGN 100 (US$ 1.85) for science students and NGN 150 (US$ 2.77) for arts
students; students union fees NGN 60 (US1.11); medical registration NGN 100
(US$ 1.85), identity card NGN 400 (US$ 7.40); departmental registration NGN
50 (US$ 0.92) for parent department and other departments NGN 25 (US$
0.46), and library fees NGN 50 (US$ 0.92). Students also are required to pay
NGN 300 (US$ 5.55) for management information system; NGN 200 (US$
34
3.70) for examination results verification for new students; and late registration
NGN 1000 (US$ 18.51) (Prof. J.D. Amin, Personal Communication, March 10
2002). Students’ contribution to university financing for the period 1988-1994
ranged from 0.28 percent to 3.89 percent (Ajayi & Alani op cit. 12).

Private sector contributions. Contributions from the private sector to

education in Nigeria are limited to the endowment of prizes and professorial
chairs, and voluntary donations. Campaigns to raise endowment funds in
Nigerian universities dates as far back as the 1950’s when the University
College, Ibadan started an endowment drive. From 1988-1994, the University of
Ibadan generated approximately NGN 22.02 million from endowments and
grants, which was the highest during the period (Ajayi & Alan op cit. 12).
Decree # 9 of 1993 authorizing individuals and private organizations to
establish private higher education institutions has also enhanced the private
sector contribution to financing of higher education.

National Youth Service Corp Scheme is another cost sharing measure adopted
by the Federal Government. The scheme was introduced in 1973 for graduates
of universities, polytechnics, and colleges of education. Participation is
mandatory for holders of first degrees and higher national diplomas from
polytechnics and universities from within and outside Nigeria who have not
attained the age of 30 years (Ajayi & Alani 1996:13). These graduates offer
their services to the community/nation for a period of 12 months for a monthly
stipend of N 900. This scheme becomes a cost recovery measure because these
graduates do not collect full salaries and allowances for the services rendered to
the community that presumably would have been paid for by the government or
the community.

Student Loans in Nigerian Higher Education

35
The Nigerian Student Loan Board was first established in 1972. Between 1972
and 1991, it provided loans totaling NGN 46 million (US$ 3.8 million) to help
students finance undergraduate or graduate studies within Nigeria and abroad
(Chuta, 1992: 443). By 1992, the Board had made loan awards of over N 46
million and faced the problem of recovering outstanding loans over NGN 40
(US$ 3.34 million) leading to its suspension (Chuta, 1992: 445; Ajayi & Alani
1996:4).

The Nigerian Student Loan Board was replaced by the Nigerian Education Bank
under Decree #50 of 1993. The roles of the Education Bank are to: serve as a
major intermediary in Nigeria’s education credit market; harness private sector
resources for the funding of education; and take over part of the Nigerian
government’s educational funding responsibilities. The main and specific
functions of the Nigerian Education Bank are: student lending, lending for
publishing, equipment leasing, project financing, funds mobilization and
provision of advisory services for educational purposes (Chuta, ibid. 423). The
Bank’s share capital is NGN 400 million (US$ 3.34 million) fully subscribed to
by the Federal Government of Nigeria. The long-term plan of the government is
to privatize the Bank and make it a stockholder-owned corporation (Chuta, ibid.
426).

Loans to undergraduates are designed to place a likely debt burden on students

ranging from NGN 24,000-NGN 32,000 (US$ 201-268) for four years in 1998.
Within this range, student loans are assumed to vary according to the type of
course taken, duration, level (e.g. professional, or non-professional), degree or
non-degree. Loans are structured to meet the higher costs of students in
professional fields such as medicine, law, accountancy, architecture, quantity
surveying etc.

36
Other functions of the Bank are to mobilize educational savings from parents
and teachers by advising parents to take out educational insurance policies and
initiate savings schemes for their children. The Bank also provides advisory
services and undertakes scientific research on economics and financing of
education; analyzes recurrent and capital costs of education, undertakes cost-
benefit analysis of educational investments; and advises on manpower
development issues. The First Bank of Nigeria PLC has also launched a new
product called First Education Savings Scheme (FESS) that affords parents the
privilege of providing their children with quality education to any level in their
quest for personal development and achievements.

2.11 HISTORICAL BACKGROUND OF THE UNIVERSITY OF

NIGERIA, NSUKKA.
University of Nigeria ; Nsukka is the first indigenous University in Nigeria
founded in 7th October, 1960 by Dr Nnamdi Azukiwe. The foundational
philosophy of the University is enshrined in these basic objectives: to seek truth;
to teach truth; and preserve truth. The motto is to restore the dignity of man.It
has 4 major campuses Nsukka campus,Enugu campus,Aba campus and Ituku
Ozalla campus. The Nsukka campus is the administrative seat of the University.
( University of Nigeria , 2007-2009 Calendar).
The university is managed and controlled by a governing body known as Board
of Governing Council. The University Governing Council Constitutes a
fundamental base of cooperate governance in the Nigerian University Education
System. As such in the university of Nigeria , Nsukka the case is not different.
The Governing Council has absolute responsibility for the performance of the
university and is fully accountable for the shareholders (Government,
University staff, student, suppliers and General public) for such performance.

37
The Governing Council should formulate, monitor and review corporate
strategy, major plans of action, risk policy, annual budgets and business plans of
the university and regularly identify key risk areas and key performance
indicators, based on both financial and non-financial aspects such as the socio-
political expectations of the shareholder. The financial management function in
public sector which university is a subsector is a vital function which the
Governing council is accountable for. The Governing Council of a university is
the highest regulatory and policy making organ of the institution. it is like the
Board of Director (BOD) of any public enterprise. The role of a Governing
Council includes general management Governing Council –This is a body of the
university charged with statutory responsibility for the control of policy finance,
physical and personnel resources of the university. According to Eze (2000) the
chairman of council and most of its members are layman chosen to serve on the
basis of their being in good public standing and relevant external interest. Ettah
&Mensa-Bonsu cited – describe Governing Council as an administrative of
persons from within and without the institution who are selected in such a way
as to include representative of business and industry they are the trustees of the
university.

According to Mgbeken (2004) the universities in Nigeria are run through

committee system which are either responsible to the council or the senate,
among these committee are: Finance and General purpose committee,
Development committee ,Appointment and Promotion committee, Academic
planning committee, committee of Deans, Research Grants committee
,ceremonies committee, Tender board committee among others (Ibiukun,1997)

Prof. Oloide Ola, University of Nigeria calendar Editorial Board (2005) Enugu
University of Nigeria 2004-2006 calendar.

38
The council among all other things shall ensure that proper accounts of
university are kept and that accounts of the university are audited annually by
an independent firm of auditors approved by the council and that an annual
report is published by the certified copies of the said accounts as audited.

The Council member constitutes the following;

The pro-Chancellor, Vice-chancellor, four persons representing a variety of

interests and broadly representative of the whole federation appointed by the
Federal Executive Council

Three persons appointed by the senate from among the members of that body.

One person appointed by congregation from among the members of that body.

One person appointed by convocation from among those members of that body.

The permanent secretary, federal ministry of Education or, in his absence, such
member of his ministry as he may designate to represent him.

One person to represent the armed forces of the federation and the police.

The university is committed to philosophy that provides for the broadcasting of

higher education whereby it can be fully equipped to offer courses in such
branches of learning as are related to agriculture and industry without
exchanging the classics, the arts, and the sciences. The aims are to promote
general and practical education in Nigerian communities as whole.

The university is co-educational. It aims at enabling male and female students to

engage together in academic vocational and extra –curricula activities in
developing their personalities to the higher levels of human experience in an
atmosphere where young men and women can grow individually, academically,
an professionally through the dignity of labour, sacrifice and self-determination.

39
2.12 UNIVERSITY FINANCING AND MANAGEMENT

Finance is an economic force, a means of economic empowerment (or

enablement), the where-with all, available to an organisation, to discharge its
obligations to third parties.

Therefore finances of a University refer to the totality of liquid financial

resources, available to the university such as cash, bank balances and short trem
securities. It includes credit facilities immediately accessible to the institution.

University finance is structured in the following order;

Income Heads: The typical Federal University, in Nigeria, Derives income

from five major sources. Each source constitutes an income head as follows:

-Federal Government grants (Income Head 1)

-Grants from other sources (Income Head 11)

-Student fees and Charges (Income head 111)

-Investment income (Income head 1V)

-Gift and Endowments (Income head V)

The components of Federal Government grants are largely similar for all
Federal universities. Expectedly, significant inter-university variations occur in
the constituents of the other income heads (11to V).

Expenditure Heads: The expenditure profile of the university, has two key
elements namely capital and recurrent expenditure. Capital expenses are outlays
on fixed assets, as well as outlays on the development of facilities and for fixed
assets capacity building. Recurrent expenditure has two components-personnel
costs and expenditure on goods and services. Personnel cost include salaries and

40
other non-salary emoluments such as housing, leave and other miscellaneous
allowances.

41
Sources of Finance to the University of Nigeria, Nsukka

Income Head Description Typical Elements.

1 Fed. Gov. Grants Main recurrent grant

Capital grants
Research and teaching grant
Library development fund

11 Grants from other Grants from other Fed. Agencies

sources Grants from other levels of government.
Corporate grants
Grants from NGOs
Foreign grants

111 Students Fees and Tuition

charges Registration
Examination
Special programmes
Other

1V Investment Income Income from direct investments

Hostel services charges

Rents
Portfolio investment income

V Gifts and Endowment of chairs

Endowments
Research Endowments
Other endowment and gift.
Source: P112 University Governance in Nigeria: A manual P.1.Uche, P.A Nwachukwu(ED) Epharata press,Nsukka,2004\

42
2.12.1 TASK OF FINANCIAL MANAGEMENT.

The management of university finances involves four inter-related tasks which

could be described by the acronym APAM TASK of university financial
management Prof.Okafor(2003). These are as given below;

Assessment of financial requirements - A

Procurement of needed finances - P

Allotment of available funds among - A

Competing needs and interests

Management of financial resources - M

Financial Needs Assessment

The first task is to make detailed financial needs assessment of the University
as a whole and the component units thereto .Needs assessment is normally made
for different periods, such as short-term, medium-term and long –term. The
annual recurrent and capital expenditure budget is the most typical financial
needs assessment document of a university.Prof.Okafor(2003).

Procurement of Funds

The mobilization and procurement of funds is the next major task of financial
management. The task is a top level policy issue which falls squarely on the
governing council of a university. The dominant source of university funding is
external revenue represented by grants and subventions from government and
government agencies.

43
Allotment of Funds

The task of rationing available funds among copeting units within the university
gets increasingly more problematic with every increase in the level of under-
funding. A university must devise an acceptable and equitable criteria for
allocating available funds among competing units and interest groups in the
university.

Management of funds

To effectively manage university finances, efforts must be made to:

Ø Maximize inflow of income by fully exploiting all sources available to

university.
Ø Minimize outflow of funds by (a) avoiding reckless expenditure and (b)
minimizing the cost of each necessary expenditure

P102-106 University Governance in Nigeria: A manual p.1.Uche P.A Nwachukwu(ED) Epharata press,Nsukka,2004

2.13 UNDER FUNDING PROBLEMS OF FINANCIAL MANAGEMENT

IN NIGERIAN UNIVERSITIES

There is the need to call attention to some challenges to financial management

practices in Nigerian universities.The greatest nightmare of the typical
university in Nigeria is how to cope with the ever widening gap between the
financing needs and available financial resources of the university. The
financing gap is often such that total recurrent revenue is less than the basic
salary bill. Indeed the current experience of the University of Nigeria is that
monthly recurrent subvention has to be cumulated for two months to be able to
cover one month personnel cost. Prof. Okafor(2003).

44
The capital releases on the other hand, are small and infrequent which
undermine the ability of the university to maintain existing physical facilities let
alone develop new ones.

Ø Issue of cost control

There are enormous avenues for saving costs in most sectors of University
operations. Enormous cost of utilities could be saved if more discipline is
instilled in the use of energy, water, petroleum products etc, in all sectors of the
university community. In the past university do central purchase for all its
relevant consumables and materials, and distribute to various units but now each
unit embark on its own purchase .The result is avoidable increase in the unit
cost of purchase as well as the expansion of potential outlets for abuses.

Ø Accountability and Transparency.

The drive for accountability and transparency in the use of public resources has
become a national front burner issue. As a highly respected community, the
university should be a beacon of hope in this national drive.

Ø Financial Management Capacity

The financial management function, in the typical Nigeria University is handled

by the Bursary department. The effective operation of this department is
generally handicapped in three main respects. The role of the department is
often perceived in a very narrow context. In the first place, may be the title of
the position affects the perception of its role. The second handicap of bursary
department is lack of management capacity. The third aspect of disability is the
non-application of appropriate financial technology in the operations of the
department.

45
 Ø Financial Reporting

The financial reporting capability of the bursary department is severely

undermined by low management capacity and inadequate staffing. In most
cases, staff inadequacy arises more as a result of poor staff quality than the
numerical strength of the establishment.

2.14 ORGANGRAM OF THE UNIVERSITY OF NIGERIAN NSUKKA.

The internal management of university of Nigeria is represented by a simple

organ gram. It is divided into Executive and Non-Executive Members. The
Executive members involve in the day to day activities of the university
management. It consist of the Vice Chancellor, Deputy Vice Chancellors, the
Registrar, the Bursar, the Librarian, the provost, Deans of faculties, Directors of
Centres and heads of Departments. The Non-Executive Members are the Board
of Governing Council, Senate, Convocation, Congregation and college board
The first is the visitor who is usually the Head of State or the Head of
Government that established it(the president in case of Federal universities, and
the Governors in case of state universities). He usually come to grace the
convocation ceremonies where he uses the occasion to address the academic
communities on matters of the moment (Adegbite,2007). The second is the
chancellor who is the titular head of university who by law, in relation to the
university, takes precedence before all other members of the university ,and
when he is present, presides at all meetings of convocation held for conferring
degrees.

Besides, at the apex of the management structure within each university is the
Governing council, headed by the chairman (pro-chancellor) who is charged
with the administrative functions in the arrears of goals setting, policy

46
 Non Executive
Governing Council

College Board Sectary to the

Governing Council

Convocation Senate Congregation

Faculty/School Board Executive Admin/Centres

VC

DVCs
Bursar Registrar University
Librarian

Deans/Directors Provost

HOD/Coordinators

Source: University of Nigeria, Nsukka (2007-2009) Calendar Financial College

Controller Secretary
47
Formulation, staff development.( Ibukun.1997) states that, “the main organ
regulating the internal academic activities of the universities is the senate”. The
senate is headed by the Vice-Chancellor and the Registrar as the secretary”. The
Senate regulates the academic activities of the universities following the general
guidelines provided by the National Universities Commission (NUC).

The Board of Governing Council

The Board is the highest policy making body of the university. It is at the apex
of the organisational structure of the university. The council consists of fourteen
(14) persons including:

1.A Chancellor;

2The Pro Chancellor and a Council

3The Vice Chancellor and a Senate

4The Registrar

5Four persons representing a variety of interests and broadly representative of

the whole federation
6Three persons from the senate
7Three persons from the convocation
8. And one person appointed from Congregation

The council is charged with the general control and superintendence of the
policy, finances and property of the university, including its Public Relations

48
Vice Chancellor

The Vice Chancellor appointed is the chief Executive Officer, academic officer
of the University and ex-officio chairman of the Senate. The Vice Chancellor is
the chief Accounting officer of the University. He holds office for the period of
Five years and no more.

The Bursar

The Bursar is the chief financial officer of the university and is responsible to
the Vice –Chancellor for the day to day administration and control of the
university. The Bursar’s appointment is by the university council. The Bursar
holds office for the period of five years, renewable for another five years and no
more.

The Registrar

The registrar is the chief administrative officer of the university and is

responsible to the Vice Chancellor for the day to day administrative work of the
university. The Registrar holds office for the period of five years, renewable for
another five years and no more.

The University Librarian

The Librarian is responsible to the Vice Chancellor for the administration of the
library and the co-ordination of all library services in the university. The
University Librarian holds office for the period of five years, renewable for
another five years and no more.

College of Medicine Board.

The board of the college is subject to the overall control of the council

Provost
49
The Provost of the college of medicine is the Chief Executive Officer of the
college. The Provost is responsible to the Vice Chancellor for the day to day
running of the college.

Financial Controller

The Financial Controller of the college is the chief Accountant appointed on

behalf of the council by the board of the college. The controller is responsible to
the provost for the day to day administration of financial affairs of the college.
He or she is under the general control of the university Bursar.

Secretary to the College.

The Secretary of the College is a Senior Deputy Registrar appointed on behalf

of the council by Board of the College. The secretary is under the Registrar and
carries out administrative functions.

Deputy Vice Chancellors

Deputy Vice Chancellors assist the Vice Chancellor in the performance of the
University administrative functions. They can act in place of the Vice
Chancellor when the post is vacant.

Senate

The Senate consists of the Vice Chancellor, Faculty Deans, Directors of

Institutes, The professors and The University Librarian. The Senate’s general
function include to organise and control the teaching programmes of the
university, the admission to postgraduate courses, the discipline of students and
the promotion of research in the university.

50
Convocation

The Convocation consists of all the principal officers of the university, all
members of the teaching staff and research staff and all graduates of the
university who apply and registered as members of Convocation. The
convocation has the function of appointing a member to university council.

Congregation

The Congregation consists of the Vice Chancellor, the academic staff, the
Registrar, the Bursar and the administrative staff who holds a degree certificate
of recognized universities other than honorary degrees.

Faculty/School Board

This includes all the academic faculties including school of general studies, the
boards, the committees and the university sports council.

51
 CHAPTER THREE

3.0 RESEARCH METHODOLOGY

This chapter provides the research procedure adopted in the study. This
includes: Research design, Area of study, Population and Sampling, Sample
size, Sampling technique, Instrument for data collection, Validation of the
instrument, Reliability of the instrument, Procedure and method of data
analysis.

3.1 RESEARCH DESIGN

In this project, Survey research method is adopted to study Corporate

Governance in Nigerian Universities: a study of financial management of the
university of Nigeria, Nsukka. Survey research method is adopted in this study
because of its relevance. Survey research is useful in gathering data from
respondents thought to be representative of some population, using an
instrument composed of closed structure or open-ended items (questions).

3.2 AREA OF THE STUDY

This research is situated in the University of Nigeria , Nsukka .University of

Nigeria ; Nsukka was estabilished by the Federal Government of Nigeria. The
University is the first indigenous University in Nigeria,and her motto is to
restore the dignity of man. The Nsukka campus of the University is the
administrative headquarters and has nine academic faculties, two schools three
centres and four administrative departments ,including Bursars department.

52
Bursary department is a department that manages the financial transactions of
the university. The university ensures effective financial management through
the bursary department.

3.3 POPULATION AND SAMPLING

The population of the study comprises all the Bursary staff in all the four
campuses –Nsukka, Enugu , Ituku Ozalla and Aba , including a subsidiary of
the Bursary department in the college of Medicine and all the finance Officers
in the School of Postgraduate Studies , School of General Studies , faculties and
departments like Medical centre, works services, and Student Affairs. More so,
members of the non-executive and executive management cadres of University
are included in the population

3.6 SAMPLING TECHNIQUE

The 160 respondents from the Bursary department are selected using Expert
sampling. Expert sampling involves the assembling of sample persons with
known or demonstrable experience and expertise in some area. The choice of
this sampling technique is because it would be the best way to elicit the views
of persons who have specific expertise. Then the remaining 40 respondents
from the faculties and centres are all included.

3.5 SAMPLE POPULATION

The sample population of this study is 300 respondents.200 respondents are

from the Bursary department while the remaining 100 respondents included all
the finance officers in all faculties Schools, Centres and departments in the
study population. This sample size is considered as true representation of the
entire and it is a management size given the time and space allocated for the
study, The percentage response is 661/3%.

53
3.7 DATA COLLECTION

The Data for this study are generated through structured questionnaire and
interpersonal interviews. The questionnaire was designed within the research
objectives and from the literature. It is divided into two sections: section A
contained the respondents’ demographic details and section B contained the
study research questions. The questionnaire was designed with four point Likert
rating scale of Strongly Agree(SA),Agree(A),Disagree(D),and strongly
Disagree(SD).

Besides, interpersonal interviews were granted on some persons in both the non-
executive and Executive levels of the University management cadres. They
include: The Vice Chancellor Prof. Chinedu O Nebo, the Bursar S N Nolin(Rtd)
,Deputy Bursars ,Chief Accountant, the university Librarian, Chief internal
auditor and three Governing council members of the University (one each from
the Senate, Congregation and Convocation) and the University Chief Internal
Auditor. This is to get information that may be difficult through the
questionnaire.

Moreover, participation observation was equally implored this is as a result of

the researcher, being a staff of the university under study and as well as
accountant in the Bursar`s department is abreast with the most of the activities
of the college. This enables her to elicit reliable and accurate information
needed for the study.

Secondary source material will be got through texts, Government documents,

Journal and internet.

54
3.8 VALIDATION AND RELIABILITY OF THE INSTRUMENT

The research instrument was face validated three faculty members from
Accountancy department and marketing department of the University of
Nigeria, Enugu campus. The questionnaire was modified by the comments of
the faculty members. The reliability of the instrument was achieved through the
use of test and re-test method on a population outside the study sample. The
outcome was measured with Cronbalch Alpha giving a 0.9 value. This meant
that the questionnaire is reliable.

3.9 METHOD OF DATA ANALYSIS

The 300 copies of the questionnaire were administered personally to the

respondents and were retrieved from them within two weeks of administration.
This was done with the help of two research assistants who were duly informed
on research activities.

The data obtained through the instrument was analyzed in two levels. The oral
interview and participant-observation were used for analysis, demographic data
of the respondents were analyzed using frequency percentage and mean while
the research questions items were analyzed using Chi-square statistical method

3.10 CHI-SQUARE

What is the chi square test?

The chi square test is used to test a distribution observed in the field against
another distribution determined by a null hypothesis.

55
Being a statistical test, chi square can be expressed as a formula. When written
in mathematical notation the formula looks like this :

When using the chi square test, the researcher needs a clear idea of what is
being investigating. It is customary to define the object of the research by
writing an hypothesis. Chi square is then used to either prove or disprove the
hypothesis.

56
 CHAPTER FOUR

4.0 DATA PRESENTATION AND ANALYSIS, TESTING OF

RESEARCH QUESTION AND DISCUSION OF FINDINGS.

4.1 DATA PRESENTATION AND ANALYSIS

In this chapter, the analysis of data through the research instrument was
presented in table form and analysed at different levels. The demographic
details of the respondents were analysed using frequency distribution and
percentages. The main research questions were analysed using mean scores,
while the study hypotheses were tested with Chi-square statistical tool. This is
to make easy understanding and achievement of the objective of the study.

DATA PRESENTATION AND ANALYSIS.

A total of 300 questionnaire representing 100% of respondents were

administration to Accountants, on-Accountants and Finance Officers at the rate
of 105(35%), 150(50%) and 45(15%).

Table 4.1 Return of Questionnaire.

Respondent Number of Number not Number not Number Number

Questionnaire returned properly returned Used
Administered completed
Accountants 105 (35%) 30 (10%) 5 (1.67%) 75 (25%) 70 (23.33%)

Non Accountants 150 (50%) 36 (12%) 14 (4.67%) 114 (38%) 100(33.33%)

Finance Officers 45 (15%) 10 (3.33%) 35(11.67%) 35(11.67%) 30 (10%)

Total 300 (100%) 76 (25.33%) 24 (8%) 224(74.67%) 200(66.67%)

Source: Data obtained from survey questionnaire administration and collection.

57
The above table 4.1 was drawn to show data on the administration and retrieval
of questionnaire. As indicated by the table, 300 questionnaire representing100%
of the respondent were distributed to the Accountants, Non Accountants and
Finance officers at the rate of 105 (35%), 150 (50%), and 45 (15%)
respectively.

Out of the 105 questionnaire that were distributed to Accountants (Ac) 30

(10%) were not returned; while for Non Accountants (NAcc), 36 (12%)
questionnaire out of 150 distributed were not returned; for Finance Officers
(FO), out of 45 questionnaire distributed, 10 (3.33%) were not equally returned.
In sum, 76 questionnaire represented by (25.33%) of the total (300) numbers
were not returned.

From the therefore, Only 75 questionnaire representing (25%) of the quantity

(105) allotted to Accountants were returned. In the same vein, 114
questionnaires representing (38%) of the questionnaire (150) that went to the
Non Accountants were returned, while 35 questionnaires representing (11.67%)
allotted to Finance Officers were returned. In essence, a total of 224 (74.67%)
questionnaire were returned.

However, out of the above returned number 224 of questionnaire, no t all was
used to various errors. For the Accountants, out of 75 returned, 5 (1.67%) were
not used, from Non Accountants, 14 (4.67%) out of 114 were not used while
from Finance Officer 5 (1.67%) out of 35 were not used.

The conclusion from this is that only 70 (23.33%) questionnaire from

Accountants were useful, also 100 (33.33%) questionnaire from Non
Accountants were useful and in the case of Finance Officers 30 (10%) were
useful too. In summary therefore, out of 224 (74.67%) questionnaire returned,
only 200 (66.67%) questionnaire were valid.

58
It follows therefore, that 200 respondent’s form the basis of our analysis.

Note: ACC stands for Accountants.

NACC stands for Non Accountants.

FO stands for Finance Officers

Table 4.2 Gender Specification of Officers.

SEX ACC% NACC% FO% TOTAL%

Male 40 (20%) 60 (30%) 10 (5%) 110 (55%)

Female 30 (15%) 40 (20%) 20 (10%) 90 (45%)

Total 70 (35%) 100 (50%) 30 (15%) 200 (100%)

Source: Data obtained from survey questionnaire Question 1

In order to know the gender of the respondents in this study, table 4.2 was
drawn. From the table, out of 70 (35%) respondent in Accountant (ACC) 40
(20%) respondents were males, while 30 (15%) are female. Also out of 100
(50%) respondents of Non Accountants (NACC) 60 (30%) are males while 40
(20%) were female. In like manner, out of 30 (15%) respondents of Finance
Officers (FO) 10 (5%) are male while 20 (10%) are female.

In summary, 110 (55%) respondent are male while 90 (45%) are female.

Table 4.3 Age specification of Officer Distribution

AGE ACC% NACC % FO % TOTAL %

20-30 7 (3.5) 17 (8.5) 4 (2) 28 (14)

31-40 32 (16) 48 (24) 11 (5.5) 91 (45.5)

41-50 24 (12) 29 (14.5) 15 (7.5) 68 (34)

59
51-60 7 (3.5) 6 (3) - 13 (6.5)

Total 70 (35) 100 (50) 30 (15) 200 (100)

Source: Data obtained from survey questionnaire Question 2

Given the information on the total column, 28 (14%) respondents are within the
age bracket of 20-30 years, Another 91 (45.5%) are within the limit of 31-40
years, while 68 (34%) are within 41-50 years. Those 51-60years and above are
13 representing 6.5% of the total number.

Table 4.4 Educational Qualification of Respondents

ALTERNATIVES ACC % NACC % FO % TOTAL %

PHD 26 (13) 6 (3) 32 (16)

ACA 13 (65) 10 (5) 23 (11.5)

Master`s Degree 23 (11.5) 51 (25.5) 10 (7) 84 (42)

HND/Bachelor`sDegree 34 (17) 10(5) 14 (7) 58 (29)

OND/NCE 3(1.5) - 3 (1.5)

Total 70 (35) 100 (50) 30 (15) 200 (100)

Source: Data obtained from survey questionnaire Question 3

In the above table, the researcher sought to establish the Educational

qualification of the respondents. The essence is to ascertain if the respondents
are literate enough to give objective response to the question raised in the
questionnaire.From the total column of the table, 32 (16%) respondents are
Ph.D holders, 23 (11.5%) respondent have ACA, 84(42%) respondents posses
Master`s Degree,58(29%) respondent posses either HND or Masters Degree and
3(1.5%) respondent have either OND or NCE .

60
 4.2.1 RESEARCH QUESTION ONE

What are the sources of funds to the University of Nigeria Nsukka?

Questions 1to 5 of the questionnaire were used to find answer to the research
question number one. The rating scales for the items in the questionnaire are as
follows: Strongly Agreed (SA) has 4 points, Agreed (A) has 3 points, Strongly
Disagreed (SD) has 2 points and Disagreed (D) has 1 point.

Table 4.5 Responses to the sources of fund to the university.

S/N ITEMS: 4 3 2 1 Sum X % Remark

SA A SD D Total Mean Score

1 The university sources fund majorly 100 85 - 15 670 3.35 92.5 Accepted
from the federal government
source

2 The university gets huge money 70 80 10 40 580 2.9 75 Accepted

from investment income
source

3 Students fees are veritable means 60 100 20 10 600 3.00 80 Accepted

through which the university is
funded source

4 . Capital projects of the university 50 50 60 40 510 2.55 50 Accepted

are funded by donations from
corporate bodies source

5 Income from subsidiaries 50 70 40 40 530 2.65 60 Accepted

Source: Respondents responses to the research questionnaire item(s) administration

From the Items, the following were deduced:

The observed/Achieved table 357.5

Expected Frequency 500
Expected less Observed 142.5

61
Table 4.5 Responses to research question one questionnaire shall be
employed in testing this hypothesis.
Calculation of Chi –Square
Items 1 2 3 4 5

Agreed 92.5 80 75 50 60
(71.5) (71.5) (71.5) (71.5) (71.5)

Disagreed 7.5 20 25 50 40
(28.5) (28.5) (28.5) (28.5)
(28.5)

Total 100 100 100 100 100

To find n

= 100 X 375.5

500 = 71.5

= 100 X 142.5

500 = 28.5

Then X2 Calculated ==∑ ( 0-e)2

92.5-71.5 2 + 80-71.5 2+ 75-71.5 2 + 50-71.5 2 + 60-71.5 2+ 7.5-28.5 2

+ 20-28.5 2

71.5 71.5 71.5 71.5 71.5 28.5 28.5

+ 25-28.5 2 + 50-28.5 2+ 40-28.5 2

28.5 28.5 28.5

= 6.17+ 1.01 + 0.17 + 6.47+ 1.85+15.47 +2.54+ 0.43 + 16.22 +4.64

62
= 54.97

Significant Level = 0.05

df = ( C-1) ( R-1)

(5-1) (2-1)

X2 Tabulated = 9.49

Decision Rule:

Reject Ho if X2 Cal > X2 tab otherwise accept.

Decision:

Since our calculated value of X2 (84.08) is greater than 15.51, we reject the null
hypothesis and accept the alternative hypothesis. This means that effective
Corporate Governance has significant influence on the sources of finance in the
university

Testing Hypothesis I:

Null Hypothesis:

Ho: Effective Corporate Governance has significant influence on the sources of

finance in the university

Alternative Hypothesis:

H1: Effective Corporate Governance has no significant influence on the sources

of finance in the university

63
4.2.2 RESEARCH QUESTION TWO

What are the objectives of financial management in the University?

To answer this question, questions 6 to 10 in the questionnaire were used.

Table 4.6 Responses to the objectives of financial management in the

university.

S/n ITEMS 4 3 2 1 Sum X % Remark

SA A SD D Total Mean Score

6 To avoid fraud in the system 120 70 10 - 700 3.5 95 Accepted

considerably
source

7 To enhance strict management 80 60 35 25 590 2.95 70 Accepted

of limited resources
source

8 To ensure high level of 90 80 20 10 650 3.25 85 Accepted

transparency and
source
accountability in the university
institutional processes

9 To avoid the issue of virement 70 90 - 40 590 2.95 80 Accepted

in the university financial
source
management

10 To promote effective financial 60 70 40 30 660 3.3 65 Accepted

regulations
source

Source: Respondents responses to the research questionnaire item(s) administration

From table 4.6

The Observed/Achieved value = 300

64
Expected frequency = 500

Expected less Observed Frequency = 200

Table 4.6 Responses to research question two will be used to test this hypothesis

Calculation of Chi-Square

Item 1 2 3 4 5

Agreed 95 70 85 80 65

(60) (60) (60) (60) (60)

Disagreed 5 30 15 20 35

(40) (40) (40) (40) (40)

Total 100 100 100 100 100

To find n =

100 x300

500 = 60

100 x 200

500 = 40

Then X2 Calculated = ∑ O-e 2

2 2 2 2 2
= 95-60 + 70 -60 + 85-60 + 80-60 + 65-60

60 60 60 60 60

65
 2 2 2 2 2
= 5-40 + 30-40 + 15-40 + 20-40 + 35-40

40 40 40 40 40

= 20.41+1.66 + 10.41 + 6.66+ 0.41 + 30.62 + 2.5+ 15.62 + 10 + .62

= 98.91

X2 Calculated = 98.91

Significant Level = 0.05

df = (C-1) (R-1)

= (5-1) (2-1)

X2 Tabulated = 9.49

Decision Rule:

Reject Ho if X2 Cal > X2 tab otherwise accept

Decision:

The calculated value of X 2 (98.91) is greater than 11.07 and for that we reject
the null hypothesis and accept the alternative hypothesis. This means that
effective management of finance has significant influence on accountability and
transparency in the university system.

66
Testing Hypothesis II

Null Hypothesis:

H0: Effective management of finance has no significant influence on

accountability and transparency in the university system.

Alternative Hypothesis:

H1: Effective management of finance has significant influence on accountability

and transparency in the university system

4.2.3 RESEARCH QUESTIONS THREE

What is the value of corporate governance in the financial management of

the university?

Question 11 to 15 from the questionnaire were used to answer question three

Table 4.7 Responses to value of corporate governance in the financial

management of the university.

S/n Items 4 3 2 1 Sum X % Remark

SA A SD D Total Mean Score

11 It gives room for 90 85 - 23 680 3.4 87.5 Accepted

independency of the
source
auditors
12 It promotes risk 100 80 10 10 650 3.25 90 Accepted

management of the source

university system

67
13 .Effective internal 180 20 - - 780 3.9 100 Accepted

control is made easy source

14 It aids due 160 40 - - 760 3.8 100 Accepted

implementation of
source
government financial
regulation in the
university
15 Due process in the 110 50 20 20 650 3.25 80 Accepted
university financial source
management is
emphasized
Source: Respondents responses to the research questionnaire item(s) administration

From table 4.7

The Observed/Achieved table = 457.5

Expected Frequency = 500

Expected less Observed = 42.5

Table 4.7 Responses to research question three will be used to test this hypothesis

Calculation of Chi-Square

Items 1 2 3 4 5

Agreed 87.5 90 100 100 80

(90.9) (90.9) (90.9) (90.9) (90.9)

Disagreed 12.5 10 0 0 20

(9.1) (9.1) (9.1) (9.1) (9.1)

Total 100 100 100 100 100

68
To find n=

100 x 457.5

500 = 91.5

100 x 42.5

500 = 8.5

Then X2 Calculated = ∑ O-e 2

2
= 87.5-91.5 + 90-91.5 2 + 100-91.5 2 + 100-91.5 2 + 80-91.5 2 +

91.5 91.5 91.5 91.5 91.5

12.5-8.5 2 + 10-8.5 2 + 0-8.5 2

+ 0-8.5 2
+ 20-8.5 2

8.5 8.5 8.5 8.5 8.5

= 0.22+ 0.03 + 0.79 + 0.79 + 1.45 + 1.88 +0.26 +8.5 +8.5 + 15.56

= 38

X2 Calculated = 38

Significant Level = 0.05

df = (C-1) (R-1)

= (5-1) (2-1)

= 4

X2 Tabulated = 9.49

69
Decision Rule:

Reject Ho if X2 Cal > X2 tab otherwise accept.

Decision:

The calculated value of X 2 (38) is greater than 9.49 we reject the null hypothesis

and accept the alternative hypothesis. This means that there is significant

influence effective Corporate Governance on management of finance in the

university system.

Testing Hypothesis III:

Null Hypothesis

H0: There is no significant influence of Corporate Governance on management

of finance in the university system.

Alternative Hypothesis:

H1: There is significant influence of Corporate Governance on management of

finance in the university system.

70
4.2.4 RESEARCH QUESTION FOUR

What is the impact of corporate governance mechanisms on the university management

performance?

To answer this question, questions16 to 22 of the questionnaire were used.

Table 4.8 Responses to the impact of corporate governance mechanism on the university
management performance.

S/n Items 4 3 2 1 Sum X % Remark

SA A SD D Total Mean Score

16 For the purposes of 130 60 10 - 720 3.5 95 Accepted

administrative convenience
source

17 It aids effective financial 190 10 - - 790 3.95 100 Accepted

accountability in the system
source

18 Regulation of the entire 148 52 - - 748 3.74 100 Accepted

university activities is
source
emphasized

19 Professionalism is 95 65 40 - 655 3.27 80 Accepted

recognized and appropriated
source

20 Personal growth is 140 60 - - 740 3.7 100 Accepted

encouraged
source

21 Independent of the Auditor 100 50 20 30 620 3.1 75 Accepted

is strengthen

22 Internal control procedure 110 70 - 20 670 3.35 90 Accepted

improved

Source: Respondents responses to the research questionnaire item(s) administration

71
From table 4.8

The observed/Achieved Frequency = 640

Expected Frequency = 700

Expected less Observed = 60

Table 4.8 Responses to research question four will be used to test this hypothesis

Calculation of Chi-Square

Items 1 2 3 4 5 6 7

Agreed 95 100 100 80 100 75 90

(91) (91) (91) (91) (91) (91) (91)

Disagreed 5 0 0 20 0 25 10

(9) (9) (9) (9) (9) (9.) (9)

Total 100 100 100 100 100 100 100

To find n=

100 x 640

700 = 91

100 x 60

700 = 9

Then X2 calculated = ∑ O-e 2

72
 2 2 2
= 95-91 + 100-91 + 100-91 80-91 2 + 100-91 2
+ 75-91 2
+ 90-91 2
+

91 91 91 91 91 91 91

2 2 2 + 20-9 2 + 0- 9 2 + 25 - 9 2 + 10 – 9 2
5-9 + 0-9 + 0-9

9 9 9 9 9 9 9

= 0.18 + 0.89+ 0.89+ 1.33 + 0.89+ 2.81 + 0.01+ 1.78+ 9+ 9+13+28.44+0.11

= 68.33

X2 Calculated = 68.33

Level of Significant = 0.05

df = (C-1) (R-1)

= (7-1) (2-1)

= 6

X2 Tabulated = 12.59

Decision Rule:

Reject Ho if X2 Cal > X2 tab otherwise accept.

Decision:

Since our calculated value of X2 (68.33) is greater than 12.59, we reject the null

hypothesis and accept the alternative hypothesis. This means that corporate

governance mechanisms have significant influence on the university

management performance.

73
Testing Hypothesis IV:

Null Hypothesis:

H0: Corporate Governance mechanisms have no significant influence on the

university management performance.

Alternative Hypothesis:

H1: Corporate Governance mechanisms have significant influence on the

university management performance.

4.2.5 RESEARCH QUESTION FIVE

What are the challenges to the implementation of corporate governance in the

university financial management?

To answer this question, questions23 to 27 of the questionnaire were used.

Table 4.9 Responses to the challenges to the implementation of corporate

governance in the university financial management.

S/n Items 4 3 2 1 Sum X % Remark

SA A SD D Total Mean Score

23 Bureaucracy and 130 60 10 - 700 3.5 95 Accepted

administrative bottleneck
source

24 Pervasive official corruption 190 10 - - 790 3.95 100 Accepted

in the university system
source

25 Played up lack of 148 52 - - 748 3.74 100 Accepted

professionalism that
characterize the university source
system

26 Division of labour is not 95 65 40 - 655 3.27 80 Accepted

appropriated in the
74
 university system source

27 The case of improper 140 60 - - 740 3.7 100 Accepted

separation of administrative
authorities and power source

Source: Respondents responses to the research questionnaire item(s) administration

From table 4.9

The observed/Achieved Frequency = 475

Expected Frequency = 500

Expected less Observed = 25

Table 4.9 Responses to research question 5 will be employed in testing hypothesis no 5

Calculation of Chi-Square

Items 1 2 3 4 5

Agreed 95 100 100 80 100

(95) (95) (95) (95) (95)

Disagreed 5 0 0 20 0

(25) (25) (25) (25) (25)

Total 100 100 100 100 100

To find n=

100 x 475

500 = 95

75
 100 x 25

500 = 25

Then X2 calculated = ∑ O-e 2

= 95-95 2 + 100-95 2
+ 100-95 2
+ 80-95 2 + 100-95 2
+ 5-5 2
+ 0-5 2
+

95 95 95 95 95 5 5

2 2 2
0-5 + 20-5 + 0-5

5 5 5

= 0 + 0.26 + 0.26 + 2.37 + 0.26 + 0 + 5 + 5 + 45 + 5

= 63.15

X2 Calculated = 63.15

Level of Significant = 0.05

df = (C-1) (R-1)

= (5-1) (2-1)

= 4

X2 Tabulated = 9.49

76
Decision Rule:

Reject Ho if X2 Cal > X2 tab otherwise accept.

Decision:

Since our calculated value of X 2 (63.15) is greater than 9.49, we reject the null

hypothesis and accept the alternative hypothesis. This means that there is

significant influence challenges to the implementation of Corporate governance

has on the university financial management

Testing Hypothesis IV:

Null Hypothesis:

H0: There is no significant influence challenges to the implementation of

corporate Governance has on the university financial management

Alternative Hypothesis:

H1: There is no significant influence challenges to the implementation of

corporate Governance has on the university financial management

77
4.3 INSTRUMENTS OF ANALYSES

In carrying out this study, the researcher used the following instruments to
obtain relevant data for analyses. The instruments are:

(a)Questionnaire instrument: the researcher constructed questionnaire to

ascertain the financial probity and accountability of authority of the University
and also to find out the impact of Corporate Governance in the management of
finance. In all (300) three hundred questionnaire were distributed to both
Accountant and non accountant in the Bursar`s department .But only 200 were
returned completed. These were analyzed using chi –square.

(b) Oral interview: In order to be more precise, the researcher further granted
oral interview to some selected key officers of the university, Viz: the financial
Adviser to the current Vice Chancellor who was a principal Accountant in the
Bursary department during the administration of Prof. Nebo, since the
researcher could not reach the former Vice Chancellor of the University. The
former Bursar, the librarian of the university, Deputy Bursars, Chief
Accountant, Chief Internal Auditor and some council members. This was to get
fact from them since they the people managing the finance of the university.

(c) Participant –Observation: the researcher being an insider was able to elicit
reliable and accurate information for the study.

4.4 DATA ANALYSES

Inferring from the data presented on the table 4.5, the research question was,
what the sources of finance to the university are. The respondents reply shows
that, the main source of finance to the university is Government. This manifests
itself as 92.5% of respondents attested to that view.

78
Also 80% of the respondents agreed that student school fees are also a veritable
means of sourcing fund by the university. 75% of the respondents agreed that
Interest from investment is also a means of finance to the university, while, 60%
of respondents go for income from subsidiary companies of the university and
50% went for donations from friends of the university.

In relation to table 4.6, the research question was what are the objectives of
financial management in the university? The respondents responses shows that,
to avoid fraud in the system is the major objectives of managing finance in the
university, and to achieve transparency and accountability in the system was
equally accepted as 85% of respondents agreed to it. Also 80% of the
respondents agreed that financial management helps to reduce or avoid virement
in the university system. While 65% of the respondents agreed that financial
management promote effective financial regulation.

Table 4.7 presented and analyzed the responses to research question three which
says, what is the value of corporate governance in the financial management of
the university? The respondent’s responses show that the value of the corporate
governance in the financial management as enumerated by the researcher cannot
be over emphasized.

Table 4.8 contain research question four, which is the impact of corporate
governance mechanisms on the university management performance. From the
respondent responds, it is evidence that the impact of corporate governance as
stated by the researcher is of great important to the university management
performance. This was clear as all the mechanisms suggested were accepted and
supported by the respondents.

Table 4.9 contain research question five, what are the challenges to the
implementation of corporate governance in the university financial

79
management? The responses of the respondents show that corruptions, improper
separation of power, lack of professionalism, administrative bottleneck and lack
of division of labour are the major challenges facing the implementation of
corporate governance in financial management.

In other to obtain more professional responses since the research borders more
on management of the university, the researcher granted oral interview but face
to face and telephone conversations with the special adviser to the Vice
Chancellor on finance, the university former Bursar, the Librarian, Deputy
Bursars, Chief Internal Auditor and some selected council members. The
following oral questions were asked to get facts about the governance and
financial management of the university.

1. What do you understand by corporate governance as it pertains to the

management of funds in Nigerian Universities?

2. Is corporate Governance needed in the management of university system?

3. How is it needed in university system?

4. What will it serve to the university?

5 How is university funds managed?

6. How can corporate Governance improve the university financial

management?

7. Can we use Corporate Governance to achieve accountability and

transparency in the university systems?

8. If Corporate Governance is adopted in the system what are the envisaged

problems?
80
9. What are the Sources of fund to the university?

10. What do you consider as obstacles to the implementation of Corporate

Governance in University of Nigeria Nsukka?

11. Suggest ways of minimizing the bottlenecks.

Responses

1 Corporate Governance being the manner, in which an organization is

controlled and directed, cannot be over emphasized in the management of
finance, especially in public Sector which university is a subset. The essence of
Governance in finance is accountability and transparency.

2 Corporate Governance is highly needed in management of University, for

university system to function well there must be order of doing things and there
must be people at the hem of affairs running the system. This is what Corporate
Governance emphasized on.

3. There are different levels of management and control in the management of

the university finance. A system that is well managed is one that enshrines
corporate governance in its institution. University system needs effective
management, for this to happen there must be a structure and this structure is
enhanced by Corporate Governance.

4. Effective management and control is achievable in an institution that

embraces corporate governance. This helps different levels of authority to stick
to their boundaries of control especially in the management of finances in the
university without abusing it. It will also serve as a policy guide to the
University Authority

5 The university Bursar is the Chief financial officer of the university, but
answerable to the Vice Chancellor who is the Chief account officer. For
81
instance, for any payment to be made, the Vice Chancellor must approve it
while the Bursar ensures that appropriate procedure for payment is followed.

6 Corporate Governance would prevent theft and fraud through mechanisms

designed by the board and management. It equally creates room for the
providers of fund (stakeholders) to monitor how the fund is disbursed and
managed. Also it helps to reduce abuse and misappropriation of fund by the
university management. As such, funds will be used for the purpose it was
meant for and with this management of finance is improved.

7. Yes. Corporate Governance if well practiced will ensure accountability and

transparency in the management of the university system.

8. There will be problem of principal officers that use the property of the
university to their personal gain, because this act will be checkmated by the
university policy strengthened by Corporate Governance.

The problem of under staff and Over staff in different arms of the university
will be exposed and this will bring about structuring which might not favour
some staff if not most of the staff.

9. The university relied heavily on the monthly grants from Government

especially for its personnel cost and capital expenditure. There is also Internal
Generated Revenue from student school fees, investment from shares, income
from subsidiary companies, gifts and donations from the friends of the
university and corporate bodies. etc.

10. Bureaucracy and administrative bottleneck

Pervasive official corruption in the university system

Played up lack of professionalism that characterizes the university system

82
Division of labour is not appropriated in the university system

Lack of succession plan in the university system

The manner of employment in the university system which is characterized with

“God father”, this has lead to the employment of unqualified staff.

Professionalism is not encouraged in the university system.

Wages and Salary in the university system is nothing to compare with other
sectors like CBN, SEC, NNPC, PHCN etc, and this increases staff turnover in
the system.

The case of improper separation of administrative authorities and power

11. The possible ways of minimizing the bottleneck to the implementation of

the corporate Governance include the following

Employment of key positions in the university should follow due process that is
there should be advert for employment on at least 2 national daily newspapers.
This will create room for competitions that will result in hiring the best among
the equal.

There should be a strong policy on succession plan for every department of the
university to avoid work suffering when someone retired, resign or died.

Wages and salary of the university staff should be increased, to avoid the
number of staff turnover in the system and also to retain professionals.

There should be policy on how to reward outstanding performance of staff in

the system.

Division of labour must be emphasized and implemented

83
There must be proper separation of administrative authorities and power for
effective governance in the system.

4.5 FINDINGS

In the study, five research questions and five hypothesis were used for the
study, results of which shown in this chapter. Five important findings emanated
from this research work, these include the following;

The major sources of finance in the University on Nigeria, Nsukka was identify
to include grant from Government, interest income from investment, student
school fees and donations from well wishers. The research work was able to
find out the objectives of financial management in the university to include the
following, to enhance strict management of limited resources, to promote
effective financial regulations, to avoid fraud in the system considerably, etc.

.The research work also find out the values of corporate governance in the
management of finance in the university, to include independent of the
Auditors, reduce risk in the university management system and it ensures
effective internal control system

The impact of corporate governance mechanism in the university management

performance was also identified in the research work to include (1) it aids
effective financial accountability in the system (2) it encourages
professionalism in the system,(3)it strengthens Independents of the Auditors,
etc.

The research work also find out some problems facing the implementations of
corporate governance in the university to include corruptions in the university
system, lack of division of labour, Bureaucracy and administrative bottleneck,

84
etc. And the possible solutions to the problem includes the following (1)
division of labour be emphasized and implemented,(20 proper separation of
administrative authorities and power for effective governance in the system,(3)
there should be effective policy on staff welfare in the system(40 the
employment of principal officers must follow due process of employment in
the civil service rule, etc.

85
 CHAPTER FIVE

5.0 SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 SUMMARY

This study is an explorative research designed to investigate how corporate

governance affects the management of finance in Nigeria Tertiary institutions,
with particular reference to University of Nigeria, Nsukka. The research is
divided into five chapters, chapter one discussed among others the background
to the study, statement of problem, objectives of the study, significance of the
study and, scope and limitations of the study. Chapter two discussed literature
review on financial management ,corporate governance, university governance,
sources of fund to the university, University system in Nigeria and finally
history and organ gram of the university of Nigeria, Nsukka. Chapter three
dwelled on the methodology while chapter four presented, analyzed and
interpreted the data that were collected based on the respondents `responses to
the questionnaire item(s). Lastly, chapter five summarized and concluded the
research work, and made relevant recommendations based on the findings.

The study used both primary and secondary data for data collections. The
primary data are questionnaire instruments, scheduled face-to-face oral
interview and observational techniques while the secondary data are journals,
texts, government documents and internet.

The research identified the major sources of finance to the university to include
Government grant, student school fees, Income from investment, donations
from friends of the university and income from subsidiary companies.

86
The objectives of financial management in the university were also identified to
include reduction of fraud in the system, increase accountability and
transparency in the system and to promote effective financial regulation.

Furthermore, the value of corporate governance was also discussed and it

includes the following; independent of the Auditor is emphasized, effective
internal control is maintained and due process of financial management is
ensured. And problems to the implementation of corporate governance were
identified and solution to it was equally provided.

Finally, the research made relevant recommendations on how to improve on

university corporate Governance and financial management in the university
system to include among others.

Bursar, who is the head of finance, should be a graduate of Accounting,

Business Administration, and Economics etc and must be a member of related
accounting professional bodies like ICAN, ANN, ACCA etc.

The process of employment of key staff of the bursary department must follow
due process to ensure that the best for the positions are employed.

There must be proper separation of administrative authorities and power for

effective governance in the system.

There must be both formal and informal training of the university staff.

All payment and receipt should be done only through the cash office of the
Bursary department.

Document for financial transactions must pass proper channel before payment
is made there must be an approval from the Vice Chancellor or DVC, then
document send to Bursar’s office for processing and then Audit unit for
verifications.
87
There should be in-house training for all the principal officers, Deans and heads
of departments on government financial regulations.

5.2 CONCLUSION

The researcher has viewed that the finding represents the true position of
Corporate Governance in financial management in the University of Nigeria,
Nsukka and other tertiary institutions with similar characteristics in Nigeria.
The findings, among others, include the Identification of major sources of
finance in the University of Nigeria, Nsukka. The objectives of financial
management in the university, the values of corporate governance in the
management of finance in the university, and the impact of corporate
governance mechanism in the university management performance

The problems facing the implementations of corporate governance in the

university and the possible solutions to the problems were equally spell out in
the research.

It is in the opinion of the researcher that other researcher and academicians

should undergo a thorough research work in the area of corporate governance.
This is because corporate governance is not just about financial management in
an institution, but also the manner organizations are directed and controlled. In
effect, it is concerned with systems, processes, controls, accountabilities and
decision-making at the heart of and at the highest level of an organization.

Finally, the researcher is equally recommending for that authorities in various

institutions and University of Nigeria, Nsukka in particular, should follow the
recommendations in this research work and implement them to the latter in
order to ensure efficient financial management in the university.

88
5.3 RECOMMENDATIONS

The following measures, if properly adopted can help to improve corporate

governance in the financial management in the University of Nigeria, Nsukka.

1. Ensure compliance to Government financial regulations.

2. Put only qualified officers with appropriate experience and qualification at

the head of the bursary units

3. Embark on regular internal auditing of the University Accounts.

4. Dismiss all culprits; possibly prosecute perpetrators of financial

mismanagement in the law court.

5. Maximize investment in commercial ventures with quick returns potential.

6. Expand portfolio investment through investment in blue chip company

shares, high grade bounds, treasury instruments and commercial papers.

7. The university should give serious considerations to setting up a stock

Brokerage Outfit to handle portfolio investment.

8. The university management should devise ways of expanding and deepening

the Revenue base while adopting effective strategies to control cost and
enthrone accountability and transparency in the use of scarce resources.

9. The responsibilities of the University Bursar should be broadened to include

such things as long-term financial planning.

10. The higher institution of learning, University of Nigeria in particular should

establish audit committee that will be made up of Executives and Non-
Executives’ members of the university to be liaising with the external auditors
to ensure transparency and accountability in financial reporting system.

89
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http://www.gse.buffalo.edu/org/inthigheredfinance/region_africa_Nigeria.htm

http://www.gse.buffalo.edu/org/inthigheredfinance/region_africa_Nigeria.html.

93
 Ingrid Moses (2006) Global trends in university governance’ Thai-Australian
Workshop on University Governance University of Canberra ,Bangkok,
22-23 June 2006
November 2008 <www.oecd.org/daf/corporate/principles/>.

Obinna,O.E.(1986) “Public Finance Management in Nigeria 1962-1980:The case of

External public Debt”. Nigerian Journal of public Administration and
Local Government. Vol.iv, No. 2 P.11.

OECD 2004, The OECD Principles of Corporate Governance, viewed 26

U. S. Embassy in Nigeria (2001) ibid.

Wachira Kigotho (2002). “Nigeria Forbids Public Universities to charge Tuition.”

Available at http://chronicle.com/daily/2002/05/2002052806n.htm.

OFFICIAL PUBLICATIONS

Federal Republic of Nigeria (1998): New National Policy on Education ,3rd Edition.

National Universities Commission (2002) “A manual of Uniform Accounting System

for Nigerian Universities”. Abuja: NUC.

University Governance in Nigeria: A Manual. Edited by :P.I. Uche,P.A. Nwachukwu.

University of Nigeria, Nsukka Calendar (2007-2009).

SEMINAR

Anyambele, S. C. (2004). Institutional management in higher education; a study of

leadership approaches to quality improvement in University management.
Nigerian and finish cases. An unpublished ph.D. Thesis submitted to the
Department of Education, University of Helsinki.

94
 Babalola, J.B.; Jaiyeoba, A. O.; and Okediran, A.92007): “University autonomy and
financial reforms in Nigeria; Historical Background, Issues and
Recommendations from Experience”.

Essien-Udom, E.U. (1984) “Funding situation in the University System”. A paper

presented at a Management Workshop for Senior Nigerian University
Administrators held at the University of Benin on August27th 1984.

Kayode, M.O.(1986) “Universities and Fund Generation” ,A paper presented at a

Workshop Organized by The Association of Nigerian University Professional
Administrators at the UNN on May 29, 1986.

Prof. David Fourier: School of Public Management and Administration ,University

of Pretoria “Good Corporate Governance in ensuring sound Financial
Management”.

NEWSPAPER/MAGAZINE

Babalola (2005): “Socio/Political Issues”, The Guardian Newspaper

Babalola (2005); “world ranking of universities published by Institute of

Higher Education of Shanghai Jiao Tong University”,The Guardian

Babalola (2006); “President Obasanjo addressing the pioneer students of

December, 2005.

Newspaper December, 2005.

Gombe State University”, Daily Independent online March 14, 2006 p.1.

95
 ORAL INTERVIEW

Chief Accountant Nwabueze Chinyere(Mrs)92010): What are the Sources of fund to

the university?

Chief Internal Auditor(2010): “Can we use Corporate Governance to achieve

accountability and transparency in the university systems?

Congregation Representative at Council (2010): Suggest ways of minimizing the

bottlenecks.

Convocation Representative at Council (2010): What do you consider as obstacles to

the implementation of Corporate Governance in University of Nigeria
Nsukka?

Deputy Bursar, Mr Oboh (2010): If Corporate Governance is adopted in the system

what are the envisaged problems?”

How can corporate Governance improve the university financial management?

How is it needed in university system?

Is corporate Governance needed in the management of university system?

Mr Nnolin Bursar (rtd) (2010). “How is university funds managed?

Senate Representative at Council (2010): What do you consider as obstacles to the

implementation of Corporate Governance in University of Nigeria Nsukka?

Special Adviser to Vice Chancellor on Finance “What do you understand by

governance as it pertains to the management of funds in Nigerian
Universities?

What will it serve to the university?

96
 BIBLIOGRAPH

BOOKS

Ajayi, T.,&Alani, R.A. (1996). A Study on cost recovery in Nigerian university

education: Issues of quality, access and equality. Final
Report.Accra:Association of African universities (AAU).

Anyafo, A. M. O (1997): Government and public Sector Accounting.Vol.1 Legal

and Institutional Framework: Enugu; Snap Press Nig. Ltd.

Anyanwu, J.C.(1997): Nigerian Public Finance, Onitsha: Joanmi Educational

Publishers Ltd.

Babalola, J. B. (1998). Cost and financing of university education in Nigeria, Higer

Education 36, 43-66.

Babalola, J.B. Sikwibele, A.L.,& Suleman, A.A. (20000.Education as aided by the

World Bank: A critical analysis of post-independence project in Nigeria.
Journal of Third studies 17(1), 155-163.

Banya, K.,& Elu, J.(20010. The World Bank and financing of higher education in
Sub- Saharan Africa. Higher Education 42(1), 1-3.

Chuta, E.J. (19920. Student loans in Nigeria. Higher Education 23 (4) 443-449.

CIA-----The World fact Book---Nigeria 2002.

Dabalen, A., Bankole,O.,& Adekola, O,A.(2000).Labour market prospects of

university graduates in Nigeria. Background study conducted to inform
design of the Nigerian University System Innovation Project. November
2000.

97
Hartnett, T. (2000). Financing and trends and expenditure patterns in Nigerian
Federal universities: An Update. Background study concluded to inform
the design of the Nigerian University System Innovation Project.
November 2000.

Holy Bible, (1980): The Holy Bible, Toronto. Nairobi: international Bible Society

Ingrid Moses (2006) Global trends in university governance’ Thai-Australian

Workshop on University Governance University of Canberra, Bangkok,
22-23 June 2006.

Insitute of Chartered Accountant of Nigeria (ICAN)(2009) : Study Pack ,Financial

Reporting and Ethics.

Litterer, J. A. (1988): An introduction to financial Management New York;

John Willey and sons.

Ojo F. Et al (eds) 91986): Manpower Development and Utilization in Nigeria.

Lagos:University Press.

Oshisami,K and Dean, P.N.(1984): Financial Management in the Nigeria Public

Sector.Britain:Pitman Press.

Oshishami, K. (1993): Government Accounting and Financial control, Ibadan

Sepectrum Books Ltd.

Pandey, M. (1997) Financial Management (2 nd Edition) New Delhi: Vikas

publishing House PVT.

Schimank, U. A. (2005,p.2) Comparative Perspective on Changes in University

Governance Europe`, Public lecture at the ANU,17 October,2005.

International Association of Universities (IAU) (2000).Nigeria-education system.

Data for academic year: 2000-2001.
98
 Odebiyi, A.I. & Aina, O.I.(1999). Alternative modes of financing higher education
in Nigeria and implications for university governance. Final Report.
Accra: Association of African Universities9AAU).

Ogunlade, A.L. (1989). Locating supplemental sources of revenue to finance

universities in Nigeria. Journal of Education Finance 14(4), 522-533.

Oni, B. (2000). Capacity building effort and brain drain in Nigerian Universities.
Ibadan, Nigerian Institute of Social and Economic Research (NISER).

United Republic of Tanzania (URT)(1998), Financial sustainability of higher

Education in Tanzania. A report of the Task Force on Financial
Sustainability of Higher Education in Tanzania.Dar es Salaam: Ministry
of Science, Technoloy, and Higher Education.

JOURNALS

Babalola, J.B. Sikwibele, A.L.,& Suleman, A.A. (20000.Education as aided by the

World Bank: A critical analysis of post-independence project in Nigeria.
Journal of Third studies 17(1), 155-163. Babalola, J.B.

Obinna,O.E.(1986) “Public Finance Management in Nigeria 1962-1980:The case of

External public Debt”. Nigerian Journal of public Administration and Local
Government. Vol.iv, No. 2 P.11.

Ajayi, L.A.(2008). Towards effective use of information and communication

technology for teaching in Nigerian colleges of education.A sian j.

Inf. Technology.7(5):210-214.

99
 Sikwibele, A.L.,& Suleman, A.A. (20000.Education as aided by the World Bank: A
critical analysis of post-independence project in Nigeria. Journal of Third
studies 17(1), 155-163.

NABFS (1998): The Financier: A publication of National Association of Banking

and Finance Students (NABAFS) University of Nigeria, Enugu Campus,11th
edition.

Ogunlade, A.L. (1989). Locating supplemental sources of revenue to finance

universities in Nigeria. Journal of Education Finance 14(4), 522-533.

Research Journal of Internatıonal Studıes - Issue 12 (October, 2009) Australian

National Audit Office,( 2003) Better Practice Guide: Public Sector
Governance, Australian National Audit Office, Canberra, p.6

INTERNET

Data on tuition fees in private universities are currently not available.

Federal Ministry of Education (2000)

Higher Education Policy September 2003, Volume 16, Number 3.

http://chronicle.com/daily/2001/08/20010809070n.htm.

http://www.gse.buffalo.edu/org/inthigheredfinance/region_africa_Nigeria.htm

http://www.gse.buffalo.edu/org/inthigheredfinance/region_africa_Nigeria.html.

100
 Ingrid Moses (2006) Global trends in university governance’ Thai-Australian
Workshop on University Governance University of Canberra ,Bangkok,
22-23 June 2006
November 2008 <www.oecd.org/daf/corporate/principles/>.

Obinna,O.E.(1986) “Public Finance Management in Nigeria 1962-1980:The case of

External public Debt”. Nigerian Journal of public Administration and
Local Government. Vol.iv, No. 2 P.11.

OECD 2004, The OECD Principles of Corporate Governance, viewed 26

U. S. Embassy in Nigeria (2001) ibid.

Wachira Kigotho (2002). “Nigeria Forbids Public Universities to charge Tuition.”

Available at http://chronicle.com/daily/2002/05/2002052806n.htm.

OFFICIAL PUBLICATIONS

Federal Republic of Nigeria (1998): New National Policy on Education ,3rd Edition.

National Universities Commission (2002) “A manual of Uniform Accounting System

for Nigerian Universities”. Abuja: NUC.

University Governance in Nigeria: A Manual. Edited by :P.I. Uche,P.A. Nwachukwu.

University of Nigeria, Nsukka Calendar (2007-2009).

SEMINAR

Anyambele, S. C. (2004). Institutional management in higher education; a study of

leadership approaches to quality improvement in University management.
Nigerian and finish cases. An unpublished ph.D. Thesis submitted to the
Department of Education, University of Helsinki.

101
 Babalola, J.B.; Jaiyeoba, A. O.; and Okediran, A.92007): “University autonomy and
financial reforms in Nigeria; Historical Background, Issues and
Recommendations from Experience”.

Essien-Udom, E.U. (1984) “Funding situation in the University System”. A paper

presented at a Management Workshop for Senior Nigerian University
Administrators held at the University of Benin on August27th 1984.

Kayode, M.O.(1986) “Universities and Fund Generation” ,A paper presented at a

Workshop Organized by The Association of Nigerian University Professional
Administrators at the UNN on May 29, 1986.

Prof. David Fourier: School of Public Management and Administration ,University

of Pretoria “Good Corporate Governance in ensuring sound Financial
Management”.

NEWSPAPER/MAGAZINE

Babalola (2005): “Socio/Political Issues”, The Guardian Newspaper

Babalola (2005); “world ranking of universities published by Institute of

Higher Education of Shanghai Jiao Tong University”,The Guardian

Babalola (2006); “President Obasanjo addressing the pioneer students of

December, 2005.

Newspaper December, 2005.

Gombe State University”, Daily Independent online March 14, 2006 p.1.

102
 ORAL INTERVIEW

Chief Accountant Nwabueze Chinyere(Mrs)92010): What are the Sources of fund to

the university?

Chief Internal Auditor(2010): “Can we use Corporate Governance to achieve

accountability and transparency in the university systems?

Congregation Representative at Council (2010): Suggest ways of minimizing the

bottlenecks.

Convocation Representative at Council (2010): What do you consider as obstacles to

the implementation of Corporate Governance in University of Nigeria
Nsukka?

Deputy Bursar, Mr Oboh (2010): If Corporate Governance is adopted in the system

what are the envisaged problems?”

How can corporate Governance improve the university financial management?

How is it needed in university system?

Is corporate Governance needed in the management of university system?

Mr Nnolin Bursar (rtd) (2010). “How is university funds managed?

Senate Representative at Council (2010): What do you consider as obstacles to the

implementation of Corporate Governance in University of Nigeria Nsukka?

Special Adviser to Vice Chancellor on Finance “What do you understand by

governance as it pertains to the management of funds in Nigerian
Universities?

What will it serve to the university?

103
 APPENDICES

QUESTIONAIRE

APPENDIX 1

Department of Accounting

Faculty of Business Administration

University of Nigeria,

Enugu Campus, Enugu.

30/06/2010

Dear Respondents,

I am Uzoamaka Deborah Chinwe, a master degree student of the above named

department currently carrying out a research on Corporate Governance in
Nigerian Universities. A study of financial management in the University of
Nigeria, Nsukka. This research is part of the requirements for the award of
master’s degree in Accountancy. Data and information provided in this
questionnaire will be used strictly for the purpose of the research.

Therefore, the researcher request that you sincerely respond to the questionnaire
as your response will be treated with utmost confidence. You will be
acknowledged in this research.

Thanks in anticipation for your cooperation.

Yours truly,

Deborah Uzoamaka Chinwe

PG/MBA/08/47372

08038353990

104
This questionnaire is subdivided into two sections, A and B. section A centers
on the demographic details of the respondents while section B deals with the
item questions on the research objectives.

SECTION A: DEMOGRAPHIC DETAILS OF THE RESPONDENTS.

Please tick the option of your choice.

1. Gender (a) male ( ) (B) female ( )

2. Age. (a) 20-30 ( ) (b) 31-40 ( ) (c) 41-50( )

(d) 51-60 ( ) (e) >61> ( )

3. Highest Educational Qualification (a) OND ( ) (b)

HND/Bsc ( )

(c) Masters degree ( ) (d) PHD ( ) (e) ACA ( )

4. Length of service . (a) 1-10( )(b) 11-20( ) (c) 21-30 ( )

5. Position. (a) Finance Officer ( ) (b) Accountant ( ) (c) Non

Accountant ( )

SECTTION B. ITEM QUESTIONS BASED ON THE RESEARCH

OBJECTIVES

The item questions are built in likert rating scale of Strongly Agree (SA), Agree
(A), Disagree (D), and Strongly Disagree (SD). Please tick one of the options.

105
S/N ITEM 1: What are the sources of SA A D SD
funds to the university

1 The university source fund from the

federal government

2 The university gets huge money

from investment income

3 Students fees are veritable means

through which the university is
funded

4 Capital projects of the university are

funded by donations from corporate
bodies

5 Income from subsidiaries

S/N ITEM 2: What are the objectives SA A D SD

of financial management in the
university

1 To avoid fraud in the system

considerably

2 To enhance the strict management

of limited resources

3 To ensure high level of

transparency and accountability in

106
 the university institutional
processes

4 To avoid the issue of virement in

the university financial
management

5 To promote effective financial

regulation.

S/N ITEM 4: What is the impact of corporate SA A D SD

governance mechanisms on the university
management performance

1 For the purposes of administrative

convenience

2 It aids effective financial accountability in

the system

107
3 Regulation of the entire university activities
is emphasized

4 Professionalism is recognized and

appropriated

5 Personal growth is encouraged

6 Independent of the Auditor is strengthen

7 Internal control procedure improved

S/N ITEM 3: What is the value of SA A D SD

corporate governance in the
financial management in the
university

1 It gives room for independency of

the auditors

2 It promotes risk management of the

university system

3 Effective internal control is made

easy

4 It aids due implementation of

government financial regulation in
the university

108
5 Due process in the university
financial management is
emphasized

S/N ITEM 5: What are the challenges SA A D SD

to the implementation of
corporate governance in the
university financial management?

1 Bureaucracy and administrative

bottleneck

2 Pervasive official corruption in the

university system

3 Played up lack of professionalism

that characterize the university
system

4 Division of labour is not

appropriated in the university
system

5 The case of improper separation of

administrative authorities and
power.

109
APPENDIX 11

ORAL INTERVIEW QUESTIONS

1. What do you understand by corporate governance as it pertains to the

management of funds in Nigerian Universities?

2. Is corporate Governance needed in the management of university system?

3. How is it needed in university system?

4. What will it serve to the university?

5 How is university funds managed?

6. How can corporate Governance improve the university financial

management?

7. Can we use Corporate Governance to achieve accountability and

transparency in the university systems?

8. If Corporate Governance is adopted in the system what are the envisaged

problems?

9. What are the Sources of fund to the university?

10. What do you consider as obstacles to the implementation of Corporate

Governance in University of Nigeria Nsukka.

11. Suggest ways of minimizing the bottlenecks.

THANK YOU

110
Responses

1 Corporate Governance has been the manner in which an organization is

controlled and directed, cannot be over emphasized in the management of

finance, especially in public Sector which university is a subset. The essence of

Governance in finance is accountability and transparency.

2 Corporate Governance is highly needed in management of University, for

university system to function well there must be order of doing things and there

must be people at the hem of affairs running the system. This is what Corporate

Governance emphasized on.

3. There are different levels of management and control in the management of

the university finance. A system that is well managed is one that enshrines

corporate governance in its institution. University system needs effective

management, for this to happen there must be a structure and this structure is

enhanced by Corporate Governance.

4. Effective management and control is achievable in an institution that

embraces corporate governance. This helps different levels of authority to stick

to their boundaries of control especially in the management of finances in the

university without abusing it. It will also serve as a policy guide to the

University Authority.

111
5 The university Bursar is the Chief financial officer of the university, but

answerable to the Vice Chancellor who is the Chief account officer. For

instance, for any payment to be made ,the Vice Chancellor must approved it

while the Bursar ensure that appropriate procedure for payment is followed.

6 Corporate Governance would prevent theft and fraud through mechanisms

designed by the board and management. It equally create room for the providers

of fund (stakeholders) to monitor how the fund is disbursed and managed. Also

it helps to reduce abuse and misappropriation of fund by the university

management. As such, funds will be used for the purpose it was meant for and

with this management of finance is improved.

7. Yes. Corporate Governance if well practiced will ensure accountability and

transparency in the management of the university system.

8. There will be problem of principal officers that use the property of the

university to their personal gain, because this act will be checkmated by the

university policy strengthened by Corporate Governance.

The problem of under staff and Over staff in different arms of the university

will be exposed and this will bring about structuring which might not favour

some staff if not most of the staff

112
9. The university relied heavily on the monthly grants from Government

especially for its personnel cost and capital expenditure. There is also Internal

Generated Revenue from student school fees, investment from shares, income

from subsidiary companies, gifts and donations from the friends of the

university and corporate bodies. etc.

10. Bureaucracy and administrative bottleneck

Pervasive official corruption in the university system

Played up lack of professionalism that characterizes the university system

Division of labour is not appropriated in the university system

Lack of succession plan in the university system

The manner of employment in the university system which is characterized with

“God father”, this has lead to the employment of unqualified staff.

Professionalism is not encouraged in the university system.

Wages and Salary in the university system is nothing to compare other sectors

like CBN, SEC, NNPC, PHCN etc, and this increases staff turnover in the

system.

The case of improper separation of administrative authorities and power

113
11 The possible ways of minimizing the bottleneck to the implementation of the

corporate Governance include the following

Employment of key positions in the university should follow due process that is

there should be advert for employment on at least 2 national daily newspapers.

This will create room for competitions that will result in hiring the best among

the equal.

There should be a strong policy on succession plan for every department of the

university to avoid work suffering when someone retired, resign or died.

Wages and salary of the university staff should be increased, to avoid the

number of staff turnover in the system and also to retain professionals.

There should be policy on how to reward outstanding performance of staff in

the system.

Division of labour must be emphasized and implemented.

There must be proper separation of administrative authorities and power for

effective governance in the system.

114