Pranav Satish Girkar Tybaf (Roll No 02)

PROJECT REPORT
ON
THE IMPACT OF PUBLIC SECTOR ACCOUNTING ON ECONOMY

(SEMESTER VI)
AS A PARTIAL FULFILMENT FOR THE DEGREE
BACHELOR OF ACCOUNTING AND FINANCE (BAF)
SUBMITTED BY:
PRANAV SATISH GIRKAR
ROLL NO. 02
UNDER THE GUIDANCE OF
PROF. KHUSHBOO BHATIA MAM
K. M. AGRAWAL COLLEGE
ADDRESS: GANDHARE, PADGHA RD,
KALYAN (W) 421301, DIS- THANE
(2021-2022)
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PROJECT REPORT
ON
THE IMPACT OF PUBLIC SECTOR ACCOUNTING ON ECONOMY

(SEMESTER VI)
AS A PARTIAL FULFILMENT FOR THE DEGREE
BACHELOR OF ACCOUNTING AND FINANCE (BAF)
SUBMITTED BY:
PRANAV SATISH GIRKAR
ROLL NO. 02
UNDER THE GUIDANCE OF
PROF. KHUSHBOO BHATIA MAM
K. M. AGRAWAL COLLEGE
ADDRESS: GANDHARE, PADGHA RD,
KALYAN (W) 421301, DIS- THANE
(2021-2022)
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DECLARATION
I Pranav Satish Girkar the student of T.Y.BAF Semester VI (2021-22)

hereby declare that I have completed the project on The Impact on Public
Sector Accounting on Economy. The information submitted is my true
and original to the best of my knowledge.
Pranav Satish Girkar
ROLL NO: 02
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CERTIFICATE
This is to certify that Pranav Satish Girkar studying in Third year of

Bachelor in Accounting and Finance (BAF) program of K. M. Agrawal
College of Arts, Commerce and Science, Kalyan has completed the
project “The impact on public sector accounting on economy” as a part of
curriculum requirement for Bachelor in Accounting and Finance (BAF)
under the guidance of Prof, Khushboo Bhatia mam
__________________ ______________________
Project Guide External Examiner
_______________ __ _____________
Co-ordinator / HOD Principal
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ACKNOWLEDGEMENT
To list who all have helped me is difficult because they are so numerous
and depth is enormous
I would like to acknowledge and express my gratitude to the following

respected mentors for providing idealistic channels and fresh dimensions
in the completion of this project.
I take this opportunity to thank the University of Mumbai for giving me

chance to do this project.
I would like to thank K. M. Agrawal College for providing project work

& providing necessary facilities for completion of this project.
I would like to thank my Principal DR. Anita Manna mam providing

necessary facilities for completion of this project.
I take this opportunity to than our Head of the Department Mr Mahendra

Pandey sir, for his moral support & guidance from time to time.
I would like to express my sincere gratitude towards my Project guide

Prof. Khushboo Bhatia mam whose guidance and care made for
successful.
I would like to thank my college library for having provided me various

books and magazines related to my project.
Lastly, I would like to thank each and every person who directly or
indirectly was involved in making of this project and helped me in
completion of project especially my Parents and Peers, who supported me
throughout the journey of this project.
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INDEX
(Table of content)
SR.NO CHAPTERS PAGE.NO

1 INTRODUCTION 8-22
2 REVIEW OF LITERATURE 23-32
3 RESEARCH METHODOLOGY 33-44
4 DATA COLLECTION 45-52
5 DATA ANALYSIS AND INTERPRETATION 53-60
6 FINDINGS AND SUGGESTIONS 61-62
7 CONCLUSION 63
8 BIBLIOGRAPHY & WEBLIOGRAPHY 64-65
9 ANNEXURE (QUESTIONNAIRE) 66-68
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EXECUTIVE SUMMARY
For research work simply THE IMPACT OF PUBLIC SECTOR ON

ECONOMY with analysis of public sector accounting. The basic idea
enable to reader to get glance through public sector accounting
The purposes of Public Sector Accounting include: Demonstrating the

proprietary of transactions and their conformity with the law, established
rules and regulations. Measuring current performance. Providing useful
information for the efficient control and effective management of
government operations.
Public sector accounting can be used to measure incoming revenue and

outgoing expenses of the government. It can also be used for budgeting,
planning and forecasting. Although the main aim of most public sector
entities is not to generate profit, it is still important to know how an
agency is doing financially.
Examples of internal users are owners, managers, and employees.

External users are people outside the business entity (organization) who
use accounting information. Examples of external users are suppliers,
banks, customers, investors, potential investors, and tax authorities
Public sector accounting is an accounting method applied to non-profit

pursuing entities in the public sector - including central and local
governments, and quasi-governmental special corporations - for which
the size of profits does not provide an effective measurement for
evaluating performance.
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CHAPTER 01 INTRODUCTION
1.1 MEANING
The systematic method of documenting, communicating, summarising, evaluating and

interpreting the final accounts and statistics of the government in aggregate and
details is known as public sector accounting. It is responsible for receiving, custody,
disbursement and stewardship of public funds entrusted to it. ” (Adams R. A. 2004).
The government provide critical services to residents, not to make a profit.
The government income & revenue and outstanding expenses can be measured using
public sector accounting. Budgeting, planning, and forecasting can be done with it.
Although most public sector organisations are not in the business of making money, it
is nonetheless crucial to know how they are performing financially. Government
accounting is public sector. Because they are not for profit businesses, their
accounting differs from that of profit-maximizing businesses.
1.2 OBJECTIVES
1. To verify the legitimacy of transactions and their adherence to existing

rules, regulations and statutes.
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Appropriation arts and financial regulations should be followed when
disbursing funds in the public sector. To avoid the commission of acts of
disapprobation, all payment should have proper authorization.
2. Show that you’ve been a good steward
Being able to account resources entrusted in an open and attentive manner is
what stewardship entities. In the collection and disposal of public money,
public sector operator is required to exercise due diligence and sense of
integrity.
3. Assisting planning and controlling are the all things that can be done.
The future is fraught with dangers and unknowns. Having a plan in place
protects an organisation from going in the wrong way. Plan of action serve as
focal point for the activates that are being undertaken. Unseen variables are
factored into plans to prevent or t least mitigate company collapse. The
‘mandate theory’ of governance should be followed by public sector
institutions.
4. Maintaining objectively & timeliness reporting
Uses of public sector accounting data are eager to fill in the gap in their
understanding of what their country’s government is up to. The place a high
emphasis on timely and reliable statistics when evaluating the government
performance.
5. Examining the expenses and rewards that will be gained
Cost and benefits in the public sector are difficult to quantity in many ways.
The cost benefit analysis evaluates the economic and social benefits and
drawback or inconvenient of alternatives course of action in order to ensure
that citizens comfort is well served.
1.3 USERS OF PUBLIC SECTOR ACCOUNTING INFORMATION
The users of Public Sector Accounting information will be discussed under

two categories which are listed below:
A. Internal Users - This category is made up of the following:
1. The Executive arm of Government which include the President of a country,

the Governors of various States and Chairmen of the Local Government
Councils.
2. The Federal Ministers and State Commissioners.
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3. Top Administrators of Government Departments, e.g. The Permanent
Secretaries and Directors.
4. The Chief Executives of Government Business Entities/agencies such as
Power Holding Company of Nigeria (PHCN) and the Nigeria Ports Authority
(NPA) etc.
5. Subordinates who oil the administration wheels.
6. The organised labour unions in the public service.
B. External Users - This group comprises:

1. The National Assembly.
2. The members of the public.
3. Any Government agency apart from the one that is preparing the report.
4. Foreign countries.
5. Foreign financial institutions such as International Monetary Fund (IMF),
World Bank, Department for International Development (DFID), United
Nations Children’s Fund (UNICEF) etc.
6. Creditors, both local and foreign.
7. Researchers.
8. Political parties, trade unions and Civil Liberty Organisations.
1.4 Difference between Government Accounting
And Private Sector Accounting
A commercial enterprise's goal is to make a profit, but the government's goal is to

provide enough services to the general public at a reasonable cost.
The government receives revenue from the people in the form of taxes, fines, and
Levis, among other things, whereas businesses mostly earn money by selling goods
and services.
The government keeps track of financial transactions on a 'cash basis,' whereas

businesses keep track on an accrual basis.
In public sector accounting, physical fixed assets such as land, buildings, plants, and
machinery are not represented on the balance sheet, whereas in private sector
accounting, these assets are documented, with the cost, cumulative depreciation, and
net book value of each item reflected.
On public sector accounting, current assets such as stocks and debts are not included
in the balance sheet. Until money is received or paid, debtors and creditors are
unaccounted for. The current assets and current liabilities are shown in the balance
sheet in the private sector accounting system.
Unlike commercial firms, the government does not have an Annual General Meeting
of shareholders. On various subjects, the government holds public briefings.
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Fund accounting plays a significant role in public sector accounting. In the private
sector, however, the proprietary approach is used.
Budgeting is regarded as a very effective control device in private sector accounting,

while government accounting thrives on the budgetary approach.
1.5 BACKGROUND OF THE STUDY
The public sector is a distinct sector of the economy that is founded and administered
by government and its agencies on behalf of all citizens, whereas public sector
accounting is the procedure that government agencies and municipalities use to record
financial transactions.
In theory, public sector accounting is similar to private sector accounting, but the
focus is different. The majority of government agencies and municipalities must keep
track of tax income and expenditures related to projects or allocations. Furthermore,
governments may be required to adopt a set of accounting principles that differ from
those used in the private sector. The development of an international accounting
standard aids nations in adhering to identical criteria in order to display data in a
consistent manner.
Government accounting usually follows a set of procedures to keep track of financial

data. Rather than trying to figure out how much money a government institution has
made, it must submit financial data to interested parties, primarily constituents.
Because money is separated into several funds, it is more difficult for a government
agency or municipality to use cash for unlawful reasons. To move monies between
government fund accounts, elected authorities or legislatures must make
appropriations or spending authorizations. To keep track of financial data,
government accounting normally follows a series of procedures. Rather of attempting
to determine how much money a government institution has made, it is required to
provide financial information to interested parties, primarily constituents. It is more
difficult for a government agency or municipality to utilise cash for illegal purposes
since money is segregated into different funds. Appropriations or spending
authorizations are required to move funds between government fund accounts by
elected authorities or legislatures. To keep track of financial data, government
accounting normally follows a series of procedures. Rather of attempting to determine
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how much money a government institution has made, it is required to provide
financial information to interested parties, primarily constituents.
It is more difficult for a government agency or municipality to utilise cash for illegal
purposes since money is segregated into different funds. Appropriations or spending
authorizations are required to move funds between government fund accounts by
elected authorities or legislatures. To keep track of financial data, government
accounting normally follows a series of procedures. Rather of attempting to determine
how much money a government institution has made, it is required to provide
financial information to interested parties, primarily constituents. It is more difficult
for a government agency or municipality to utilise cash for illegal purposes since
money is segregated into different funds.
Another goal of public sector accounting is to establish a common standard of ethics

and responsibility for a country's financial data. It will also be easier for a country to
endure an audit if it follows standard public accounting principles. When governments
use public sector accounting rules, it is also more difficult for them to conceal
improper financial transactions. As a result, the impact of the public sector on the
economy will be evaluated in this research project.
Smaller countries will need to study and implement worldwide accounting standards
in order to improve their internal national accounting process. Most developing
countries are unable or unwilling to build and implement a framework for their public
sector accounting standards. Adopting an international set of accounting norms will
assist them in overcoming this challenge and, in most cases, will help them begin the
process of improving their infrastructure.
Government accounting usually follows a set of procedures to keep track of financial

data. Rather than trying to figure out how much money a government institution has
made, it must submit financial data to interested parties, primarily constituents.
Because money is separated into several funds, it is more difficult for a government
agency or municipality to use cash for unlawful reasons. To move monies between
government fund accounts, elected authorities or legislatures must make
appropriations or spending authorizations. To keep track of financial data,
government accounting normally follows a series of procedures.
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1.6 Both academically and professionally, public sector accounting is
undervalued.
Recent studies and academic literature suggest that public sector accounting education
is undervalued in many countries, while private sector accounting education—such as
courses on International Financial Reporting Standards (IFRS)—is favoured.
Furthermore, preliminary study indicates that government institutions do not always
acknowledge the public sector accounting certificates issued by PAOs when
promoting employees or setting compensation.
1.7 High demand for public sector accountants in the future
According to the 2018 Status Report of the International Public Sector Financial
Accountability Index, the number of governments reporting on an accrual system of
accounting will rise from 25% in 2018 to 65% in 2023. 72 (73 percent) of the 98
governments expected to report on accrual by 2023 would use the International Public
Sector Accounting Standards (IPSAS). This will enhance the need for public sector
accountants and, as a result, higher education institutions and PAOs will provide
superior public sector accounting education, including IPSAS.
1.8 Public sector accounting is a discipline in its own right
Do public sector accounting courses belong in the curriculum?, a 2013 article,

"Despite the size and importance of the public services sector, New Zealand's
universities teach very little public services subject, as IFRS appear to have squeezed
this out," Carolyn Corduroy observed. There are insufficient resources to inform
public service teaching, and the profession appears to regard public services as
'alternative' and 'non-traditional,' resulting in the sector's neglect." This assertion is
true for a large number of countries.
1.9 Public management and governance

The term "governance" refers to how each government organization's
management is held accountable to those in charge of governance within that
organisation. It emphasises on the function of non-executive officers and the
existence of an audit and assurance committee in connection to the organization's
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management board, as well as internal auditor reporting lines. It also focuses on
separating management's responsibilities from the responsibilities of external
auditors in written form. The word 'governance' was once a synonym for
'government,' but it had fallen out of favour. It has re-emerged in recent decades
under the phrase 'corporate governance,' notably in reference to the senior
management of public firms. It was eventually applied to a wide range of
organisations. It is a manner of thinking about each governmental organisation,
such as a government department of a national government, in government. It is
not a way of thinking about government in its broadest legal and political
dimensions.
In two respects, the rise in importance of explicit governance obligations
coincided with an increase in the importance of internal control systems. The
systems have grown increasingly complex and explicit. They've also been
expanded to incorporate all parts of management, not simply the long-standing
financial aspects of internal control systems, at least in theory. Furthermore, once
internal control systems are in place, the focus shifts to management and those in
charge of governance monitoring the risks of the internal control system failing.
Financial scandals, notably financial reporting scandals, provided a major
incentive for enhanced governance and internal control mechanisms. The
formation in 1985 in the United States of what is now the Committee of
Sponsoring Organizations (COSO), a private sector body made up of five
professional accounting associations, including the American Institute of Certified
Public Accountants and the Institute of Internal Auditors, as well as the American
Accounting Association, an academic accounting body, was a significant marker
in this. The results of its internal control work can be seen in government auditing
standards.
1.10 Public money

An accountant's first idea of the word 'public money' is that he or she is in charge
of other people's money, which carries with it a lot of power but also a lot of
responsibility. Most accountants in both for-profit and non-profit organisations,
however, deal with other people's money: ownership has long been separated from
control, as the saying goes.
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However, public money is more than just other people's money: it is money that is
stolen from taxpayers without their consent. In order for a system to function, all
taxpayers must agree to pay taxes; yet, regardless of this general consent, each
individual taxpayer has a legal obligation to pay the tax bill issued, which is
enforceable in the courts. Furthermore, because public services are often offered
free at the point of delivery, spending public funds does not generate additional
profits (as spending in a profitable firm would): it just generates more tax bills. It
is similar to a non-profit organisation in this regard, as its spending increases
demand for voluntary donations — but donations, not taxes.
People's needs for additional services and products appear to be infinite,
regardless of who provides them: the government, for-profit companies, or non-
profit organisations. The demands in the for-profit case must be paid for by each
individual, although the demands in the other two situations are purposely
separated from the payment of them in each individual's case. There is no explicit
right of each individual to have their needs met in the non-profit sector, but there
typically is in the government sector, as specified by law.
The accountant's responsibility for public funds boils down to forcing individuals
and for-profit businesses to pay taxes that are used to satisfy requests, which
frequently develop into rights, for services that are provided free at the point of
delivery. It's a unique type of stewardship in which the accountants (who are
mostly concerned with money) and the rest of the managers are the stewards
(primarily concerned with the services provided). In the end, these stewards are
accountable to the public, but within each government, they are accountable to the
public's representatives — that is, politicians with finite, and short, time horizons
to the next election in a democracy.
These public officials' long-term viability is dependent on the next round of votes,
which are, by definition, a crude assessment of each voter's desire for services and
taxes. When a politician is campaigning for votes, he or she promises each voter
free services at the time of delivery (a good) and a tax bill (bad). There are natural
incentives for votes to be forthcoming if the politician can separate these by
borrowing to pay for the services in the near term or by reducing the short-term
tax. This division fosters specific, repeating forms of political corruption: a
prestige project or a very local project, with a politician's name attached, that
garners enough local votes but is out of sync with other projects.
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Being primarily concerned with money, its roles in the more technologically
complex world of money and the things that money is used to measure (revenues,
expenses, assets, liabilities and cash flows). No services are free at the point of
delivery, according to the accountant: they all have to be paid for by taxation,
sooner or later. Because of the accountant's longer time horizon, there are natural
incentives to try to capture the long-term implications of short-term borrowing on
taxation and communicate them to all taxpayers. In other words, accountants as
stewards have strong incentives to overrule the people's representatives - possibly
even the people themselves. These are in addition to the motivations that exist in
all organisations for accountants to desire to take precedence over their non-
financial counterparts. All of the groups
The desire for accountants to have central management of public funds, whether
the 'centre' is the centre of a local, state, or national government, protected from
overt political influence, has been a common outcome. In any case, it is a fact of
government – however unsettling – that the more technical a topic is the less
political understanding and effect it will have. As is to be expected, the amount to
which the wish has been fulfilled in various situations and at various eras has
varied greatly. Some governments will place a larger focus on political
responsibility; as the government's relative wealth changes, the influence of career
officials will wax and wane. Never doubting the ultimate strength of professional
accounting bodies
The distinction between providing services and paying for them has a common
effect on government management of public funds: it encourages governments to
buy inexpensively – even the cheapest – in the markets, regardless of the country's
riches. The most persistent form of this is in laws that require contractors' lowest
tenders to be accepted. More concrete examples include austere public offices
occupied by low-paid government employees, as well as opulent private offices
and executives with salaries to match. Regardless of the effects on the services
delivered, public money has often signalled austerity.
Written statements of ethics for government accountants are similar to those for
private sector accountants in terms of generalities. However, because it is in the
nature of public money to be more frequently and sensitively concerned with the
public interest, equity or fairness would be considered differently.
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1.11 Evaluations of Performance
While previous studies focused on relationships with elected or appointed authorities,

voters, or creditors, the study of nonprofits entities focuses on services to the
constituency in a strict sense. These services could be viewed as resources supplied to
interest groups in exchange for political office in a genuine sense. However,
accounting research has generally focused on the microeconomic perspective of the
single service unit in these sectors. In this section, we will examine new research that
aims to assess the quality of services provided by bureaucrats or elected officials to
their constituents using non-financial indicators.
Nonfinancial metrics of government performance have piqued the interest of both

government accounting standard setters and researchers. Service Efforts and
Accomplishments: Its Time Has Come was issued by the Governmental Accounting
Standards Board (GASB) in 1990. This study compiled the findings of various
research studies, each of which attempted to learn more about the state of the art in
service efforts and accomplishments reporting for a certain type of government
service. For each service area, research reports were created (e.g., elementary and
secondary education, fire and department programs, sanitation collection and disposal,
and water and wastewater treatment)
Agency theory was utilised by Hayes and Millar to examine the production efficiency
of county correctional establishments. The findings disproved theories based on
traditional budgeting assumptions and found empirical evidence that public-sector
managers do not behave in a cost-cutting manner. Cullen and Falk investigated the
relationship between public sector efficiency and board composition. Data from 72
health-care charities was used to conduct empirical experiments. They did not
uncover empirical support for this hypothesised association using data envelopment
analysis.
By comparing efficiency measurements produced by transom cost functions and data

envelopment analysis, Hayes and Millar's work was expanded. Different perspectives
on management efficiency emerged as a result of the methodologies. They came to
the conclusion that when employing transom cost functions to quantify efficiency,
caution should be exercised.
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Lawrence and Roberts investigated the efficiency disparities between government and
non-government hospitals in a similar vein. Lawrence and Roberts discovered that
government hospitals were more efficient than non-government hospitals using a
deterministic cost frontier model. The results appeared to be influenced by
inefficiencies found in private, non-profit hospitals.
Roberts and Dies conducted a preliminary examination of GASB service efforts and
successes reporting recommendations for elementary and secondary education. The
link between inputs (e.g., student-teacher ratios, salaries, etc.) and explanatory factors
(e.g., intrinsic abilities, community educational level, and per capita income) in school
districts was investigated (e.g., ACT scores). Several of the GASB's proposed input
and result measures were highly connected, according to Roberts and Dies. However,
due to the challenges of evaluating educational outcomes, the nature of the links
between inputs and outcomes is difficult to convey via vicariate analysis, according to
their findings.
Focus on budget line items to analyse budgetary slack, budget relevance and
reliability, job complexity for major tasks, and the Police Department's
responsiveness to service demands. The findings show that task complexity is a
driving force behind allocation decisions; this finding is significant in and of itself
because it confirms previous managerial research. Increased allocations to higher
priority, more complex jobs (i.e. crimes as opposed to misdemeanours) are also
conducted during a period of low resources, according to the study.
1.11 Accounting Research

Several accounting academics studied the importance of accounting information
in the public sector at the municipal and state levels using Zimmerman's findings
as a starting point. Although portions of agency theory not explicitly discussed by
Zimmerman were integrated into later investigations, the general theoretical
foundation for these findings is consistent with Zimmerman. The studies
addressed below are concerned with the factors that influence the demand for and
supply of public accounting data.
Copeland and Ingram investigated the capacity of accounting data to predict
mayoral elections in municipalities with mayoral-committee (non-reform)
governments. Their research, which was based on the notion of voter rationality,
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tended to confirm the hypothesis that voters are rational and vote in their own best
interests. Cities with high population densities and low income and economic
activity, for example, tended to back mayors who used less short-term debt and
service cuts than their peers. Cities with high income levels and strong business
activity ratios were more likely to elect mayors who boosted public safety services
like police and fire departments.
Re-elected leaders in cities with high levels of poverty and low family income
tended to retain lower levels of deficit financing while increasing welfare
spending. While Copeland and Ingram's analysis is quite accurate at predicting the
outcome of mayoral elections, with results ranging from 75% to 95% based on
data from the previous two years, the findings do not show that voters use
accessible accounting information when making their decision. Voters, on the
other hand, are aware of the service environment and are more likely to elect
leaders who give the required service. This study shows that using accounting-
derived ratios to proxy for the elected official's service orientation can improve
election prediction accuracy.
Municipal Finance Officers Association (MFOA) Certificate of Conformance
Program (CCP) participation as an economic incentive for municipal officials was
investigated by Evans and Patton. Evans and Patton's study, which looked at
signalling and monitoring in the public sector, was based on this research. Cities
with more debt, cities that participated in the CCP programme prior to 1976, cities
with more professionally active city officials, cities located in states that require
GAAP reporting, and cities with the council-manager form of government were
found to be more likely to participate in the CCP programme in a previous study.
The debt relationships among the participating cities were discovered to be
arranged in a hierarchy. The winners of the CCP had greater debt than those who
did not receive the CCP, and those who did not receive the CCP had more debt
than nonparticipants. Prior CCP participants were found to maintain involvement,
potentially because to a reduction in conformity costs, as GAAP is perceived as
costly to establish but can be continued, in large part, without additional fixed
information production expenses once implemented. It's worth noting that this
association held true for cities with populations of up to 500,000 people. Above
this stage, it was believed that municipalities operate more like state governments
and did not adhere to Evan Patton's theoretical framework. Larger cities provide
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unique study opportunities because their management has been largely ignored
from accounting theory development and research studies.
City officials who are professionally active are perceived as benefiting directly
from their participation in two ways: improved professional performance and
higher national reputation. The certificate is essentially included in the following
year's annual report as an indication of the city management's excellence that
might not otherwise be apparent. However, because elected officials' salaries are
essentially set, financial perks may not be available.
This theory is made more persuasive by the fact that council-manager forms of
government are more likely than other forms of government to be successful in
obtaining the certificate. As a result, the certificate serves as a signal of the city
manager's professional qualities or objectives, making it easier for the manager to
get monetary and non-monetary recompense.
It's also intuitively attractive that municipalities in states that previously required
GAAP will apply for the certificate because compliance is easier to achieve.
Municipalities that have never been obliged to meet governmental GAAP
standards will almost certainly incur a higher setup cost than non-participants.
This condition necessitates a benefit/cost analysis when deciding whether or not to
participate. If the municipality is unable to cover the cost through increased
employee funds, the expense must be met by the individual administrator and his
staff. The perceived advantages must be sufficient to compensate for any costs
that are not compensated (e.g., unfunded overtime)
Bond rating agencies, on the other hand, have mentioned GAAP compliance as
one of the criteria for lower interest rates... This implies that the CCP is a
signalling system, which is in line with Spence's idea. Or Ross, in that the CCP is
a signal that minimises economic market information asymmetry. When this
condition is taken into account, the municipality's decision becomes a benefit/cost
analysis. Cities with higher debt levels are more likely to pursue a higher bond
rating in order to lower interest rates. If the expense of achieving GAAP, or the
CCP, is sufficient to balance the cost of achieving GAAP, or the CCP, city
officials may get additional advantages in the form of enhanced compensation or
no monetary rewards. .. (For example: a larger budget, nicer office, or city
automobile).
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Finally, Evans and Patton emphasise the need for a voluntary information
disclosure theory. This is in line with other authors' observations that the public
sector suffers from a severe lack of theory development (for example, Chan,
Wallace, Chan and Rubin.) According to Evans and Patton, a greater
understanding of the motivations for managers/city authorities to provide
information is required.
Political competition index, urbanisation index, per capita income, and the
population's median school years. The governor's appointive powers, as well as
the procedure of selection for the auditor and accounting system administrator,
acted as proxies for the administration selection process. In addition to the
population, management incentives for the sort of accounting system utilised
include debt, federal money, per capita state-generated (own) revenues, governor,
legislature, and accounting administrator compensation (as a level of state
complexity variable).
Finally, by combining the power of the press with newspaper circulation per
capita, an alternate source of information was created. Ingram's discoveries add to
our understanding of principal-agent relationships. The fact that "...on the margin,
more press strength leads in less accounting information" suggests that other
methods for minimising information asymmetry in a range of situations should be
examined further.
Ingram also discovered that governor-installed accounting administrators gave
more accounting information than legislatively appointed accounting
administrators (or other forms of selection). This can be construed in a variety of
ways. Is this, for example, due to a deep personal relationship between the
governor and the appointee, which leads to the appointee's desire to over-supply
information (as in the standard monitoring hypothesis of the principal-agent
setting)? Is it out of a sense of duty to the CEO and a desire to provide superior
data for decision-making? Is it possible that these appointees are just more
educated and capable of employing more advanced accounting techniques? These
are unanswered questions that would be interesting to investigate further. Finally,
various agency interactions were discovered to have an impact on the amount of
state accounting disclosure. Coalition groupings, for example, served to lower the
expenses of external monitoring and the incentives of appointed administrators to
monitor political behaviour.
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Evans and Patton create a signalling model and a monitoring model to explain
municipal managers' participation in the CCP programme, addressing the topic of
theory development in governmental accounting research. The signalling model is
based on a single-period environment where the chief financial officer (city
manager) is specified as risk-averse and has a separable utility function: U(k) =
U(s) - V(a + e). In the model, s represents compensation, a represents a minimal
level of work, and e represents an increase in effort required if the officer wants
the town to join in the CCP programme.
To explain municipal managers' participation in the CCP programme, Evans and
Patton build a signalling model and a monitoring model, addressing the problem
of theory development in governmental accounting research. The signalling model
is based on a single-period setting with a risk-averse chief financial officer (city
manager) and a separable utility function: U (k) = U(s) - V (a + e). In the model, s
stands for remuneration, a for a minimum level of work, and e for an increase in
effort required if the officer wants the town to participate in the CCP programme.
Managers are said to come from a two-tiered pool of managers, with a portion of
high-quality managers and the rest of lower-quality managers.
Citizens are considered as desiring the largest net resources available after debt
allocations from any borrowing. In this case, debt must be taken on to cover the
predicted shortfall. The manager's decision to participate in the CCP programme
signals the quality of the financial reporting system to the public (citizens and
creditors).
The signalling model produces a proposition with three debt levels and a
simultaneous separating/pooling equilibrium. To begin, (0, do*) represents
communities with no or little debt and a high-quality city manager. The
implication is that signalling is unnecessary. Second, the interval between high
quality managers with low debt and low quality managers with large debt is
represented by Municipalities with high-quality management are expected to
participate, while municipalities with low-quality managers are unlikely to do so.
Finally, managers with significant debt will be found in the interval (do*, infinite).
In order to lower interest expenses, all municipalities are expected to indicate
credit worthiness by participating in the CCP in the final interval.
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CHAPTER 02 REVIEW OF LITERATURE
2.1 Definition
The sector, which is engaged in the activities of providing government goods and
services to the general public, is Public Sector. The enterprises, agencies, and bodies
are fully owned, controlled and run by the Government whether it is central
government, statement government or a local government.
There are two types of public sector organizations, i.e. either the Government fully
finances them through the revenues they raise by collecting taxes, duties, fees, etc. or
the government holds more than 51% of the total share capital of the company which
comes under various ministries. The enterprises are established with service motive. It
is the largest sector, which works for the upliftment of the people by providing the
following services to the people:
 Generation of employment opportunities

 Postal services
 Providing education and health facilities at low cost
 Providing security
 Railway service
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2.2 THE PUBLIC SECTOR CONCEPT
The phrase "public sector" refers to the component of a country's economy that is
dedicated to delivering fundamental services to citizens under the framework of a
government.
Accounting is often referred to as the business language. It is a term used in the

business sector to define the transactions that all types of government parastatals
engage in. In any office where money is used as a medium of exchange, it is
necessary to keep track of all monetary transactions that occur in the office, so that a
reference can be made at any time to fund the effect of all transactions.
Accounting is defined by the users of the data as the act of finding, measuring, and
presenting economic data in order to allow for firm judgement and decision. This data
is largely financial in nature and is expressed in monetary terms. Accounting is a key
measurement and communicative procedure that is used to report on the activity of
profit-seeking businesses, not non-profit organisations.
An accounting system is a set of rules, regulations, and procedures that are built into a
system using suitable theoretical force. This accounting system definition is quite
instructive. He claimed that the accounting system converts data into information,
which is then used as input in the organization's decision-making process.
According to Ani Uchena, in his book "Government and Public Sector Accounting,"
the public sector is the sector of the economy established and operated by the
government and its agencies. This distinguishes the public sector from the private
sector, and it is organised on behalf of all citizens, with the expectation of making a
minimum profit from their operations.
Orewa claims that (1978). He underlined that one of the key objectives for the
existence of local government councils is to collect various forms of money from its
inhabitants or the federal government, and then use that cash to offer social services
as efficiently as feasible. A plan of estimated costs for various services to be offered
in the following year must be established on a regular basis.
Adedeji claims that (1972). He cited inadequate functions and powers, insufficient
finances, low-quality and low-paid workers, corruption, and poor performance of
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employed staff and members of the local government council as examples of the
multiple circles of poverty in local governments.
Greetings, Ogunle (2004:86). According to the report, the breadth of services defined
as public sector may vary significantly from country to country, but most will include
any services that are freely available to all residents, even those who do not contribute
to their upkeep and maintenance. This means that services deemed inside the public
sector benefit almost everyone, including those who do not use the service directly.
One of the most common examples of services provided as part of the public sector is
law enforcement. Police departments are operated by municipalities, counties and
parishes, and in some cases by states, provinces and even national governments.
Protection of this type is provided for everyone living within or visiting the
jurisdiction, regardless of whether they participate in taxation or other means used by
the government entity to finance the function of the police force.
This means that even if a person is not a direct victim of a crime, he or she is
protected indirectly by law enforcement, allowing them to travel freely around the
region with little fear of being a victim of crime.
Another example of a service given by the government is education. Typically,

countries that support a public school system do so without requiring pupils to pay
tuition or fees in order to benefit from the learning opportunities provided by a
primary education system. Individuals who are not directly connected with the system
also benefit from the schools' presence, because graduates are better suited to function
in the community in terms of getting jobs and participating in activities that assist to
improve the community's quality of life.
The armed forces, the establishment and maintenance of a public road system, public
transit systems that serve bigger areas, and, in some situations, healthcare that is
provided for residents who cannot afford the luxury of paying for private coverage are
all included in the public sector. Even something as simple as a street light within a
municipality would be deemed a service provided within the purview of the public
sector, according to Olo (2004:57). The goal of public sector services, in any form, is
to enable citizens to enjoy a greater standard of living than would otherwise be
attainable.
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2.2 OVERVIEW OF PUBLIC SECTOR ACCOUNTING
Odike claims that (2006:54). The size of earnings does not give a useful measurement
for measuring performance for non-profit pursuing institutions in the public sector,
such as central and municipal governments, and quasi-governmental special
corporations.
Ifezue claims that (2006:86). Public Sector Accounting is an information system that
records, analyses, classifies, summarises, and communicates financial and economic
events and their consequences for public sector enterprises in terms of both:
(1) The providing of information to management and top executives for the purposes
of planning, organising, and controlling their operations; and
(2) The creation and distribution of financial statements and fiscal reports to external
users in accordance with certain accounting and reporting standards.
According to Onyeke (2004:65), frequent services include tax, auditing, general

accounting, and consulting. Accounting firms may provide additional services to their
clients depending on their need. The majority of accountants who work in the public
sector hold a professional licence, such as the Certified Public Accountant (Cpa)
designation. This is a global, universal licence that certifies that an accountant has
passed a rigorous test in order to meet this requirement.
The preparation of annual personal or business returns is one of the most common tax
services provided by the public accounting profession. CPAs in this industry devote a
significant amount of work to learning and maintaining current on tax law.
2.3 PECULIARITIES OF PUBLIC SECTOR ACCOUNTING
According to Onyeke, the idiosyncrasies of public sector accounting include the

following: (2003:397).
(1) EXCELLENCE IN SOURCING RESOURCES: The government's dominance in

procuring resources is one aspect of the public sector accounting system. In
neoclassical economics, all economic entities are expected to act rationally and on an
equal footing on the market in order to maximise profits and their effects. In reality, a
hierarchical structure exists in the distribution of resources between a government and
other entities. A government has the power to levy and collect taxes, as well as to
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issue banknotes and coins through the central bank. This allows a government to
procure resources forcibly and for other entities to submit resources involuntarily.
Among the public sector entities, a central government, holding both the taxation and
money issuance authority, faces almost no external restrictions in procuring economic
resources
Greetings, Olakunori (2008:65). According to him, even if the government's debts
grow to vast proportions, it will be able to meet its obligations without difficulty. For
example, financial authorities can increase actual taxes. Alternatively, the government
can have the central bank guarantee government bonds in order to raise the amount of
money in circulation, so causing inflation and effectively decreasing the burden of
servicing nominally fixed debts. (This is the same as repaying government debts with
inflation tax revenue.) Local governments and quasi-governmental special
corporations, for example, are unique in that they are rarely subject to external
constraints, with the exception of soft budget constraints imposed by the central
government in the form of subsidies.
(2) PROVISION OF GOODS AND SERVICES THROUGH BUDGET
FORMATION: Economic entities in the public sector, like those in the private sector,
consume economic resources (input) to generate commodities and services (output).
However, in the world of public sector accounting, public-sector economic entities
have unique characteristics, not only in terms of supremacy in resource procurement
on the input side, but also on the output side.
Edoga, Edoga, Edoga, Edoga, Ed (2007:85). Specifically, goods and services
produced and supplied by public sector economic enterprises are exempt from the
market system, which determines pricing based on supply and demand. In other
words, by intervening in the market mechanism through subsidies and taxation or by
directly providing such goods and services to the society, the market is counted on to
provide public and semi-public goods and services - which are excludable and non-
competitive in nature - in optimal quantity to its governed society. In this setting,
budgetary planning, which is strongly tied to numerous political processes, is critical
for the distribution of economic resources and the transfer of goods and services.
2.4 FINANCIAL FORMATION OF A PUBLIC ACCOUNT
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According to the preceding rationale, public account financial statements should
include:
(1) A balance sheet for a public account,
(2) A statement of administrative costs (statement of net current expenditures)
(3) A statement of supporting revenue and changes in taxpayers' equity and
(4) A statement of cash revenue and expenditures.
Of the four inter-related statements
(1) A balance sheet in public accounting is equivalent to a balance sheet in corporate
accounting.
(2) An income statement's statement of administrative costs, and (4) a cash flow
statement's statement of cash receipts and expenditures. Aside from those three,
(3) A statement of supporting revenue and changes in taxpayers' equity is required,
which is a capital statement with a broader scope to include changes in stock (assets
and liabilities). This statement lays the groundwork for determining the viability of
capital expenditures and social security systems that could have a substantial impact
in the future.
To answer for its fiscal management, the government has merely produced a
statement of cash revenue and expenditure. However, methodical preparation of the
above-mentioned comprehensive set of financial statements allows for the resolution
of cash-basis accounting issues while utilising accrual-basis accounting benefits.
2.5 OBJECTIVES OF PUBLIC SECTOR ACCOUNTING

In many aspects, the purpose and aims of public sector organisations differ
significantly from those of private sector businesses. One of the most significant of
these distinctions is the provision of necessary public services that the private sector
would either be unable to supply or would only be able to provide at a cost that the
recipients of the services could not bear. As a result, the focus of public sector
financial statements should differ from that of private sector financial statements,
even though the accounting procedures used to construct them could, and should, be
almost identical.
According to the definition of Public sector accounting by “Ifezue” It is important to
differentiate between the process of accounting and the presentation of information
(reporting) from the accounting system. Both are important, but they are different
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issues. Adoption of accrual accounting methodologies, and IPSAS financial
statements, can help determine the need for improvements in the quantity and the
quality of services that are provided to the citizens of the adopting country, and also
allow better understanding of the financial and fiscal condition of the governments in
that country. However, IPSAS should be adopted in the context of the overall
priorities of the reform process and not just on the basis of the perceived superiority
of one basis of accounting over another. Accrual accounting is not an end in itself – it
is a tool to improve good governance. Most often, transition to accrual accounting
addresses first the operational needs of the government, and then the financial and
fiscal reporting needs. Accrual accounting is use in measuring the costs, effectiveness,
and efficiency of service programs is the first area where the reforms will help realise
both cost savings and improved governmental accountability. Once the framework is
in place and used consistently by public sector management, then the quality of the
accrual-based information will allow better fiscal and financial reporting. However, in
many countries the opposite case is true, where external reporting requirements
dictate immediate improvement in financial and fiscal reporting, and the managerial
use of accrual accounting is left to be sort out at some indistinct future date.
The use of accrual accounting for management and financial statement purposes are
not mutually exclusive activities; they can be carried out in simultaneously and should
employ the same accounting transactions to enter data into the accounting system.
However, the resources required to achieve both changes at the same time are
considerable. The time and effort required for coordination and management.
Regardless of which method of accounting is adopted first, a smooth transition will
make the acceptance of accrual accounting or the other method easier. It's critical to
identify domestic resources that can be incorporated into the transition process with
the understanding that they will continue to provide vital expertise, experience, and
assistance for many years to come.
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2.6 STATEMENT OF THE PROBLEM
The following are the issues raised by the researcher in this research study:
1. INADEQUATE REVENUE: that is, the source of revenue accessible to
government authorities is frequently insufficient, which has a negative impact on a
variety of operations carried out in the local government region.
2. Poor administration of local government funds.
3. Another issue is that the local government's approach to controlling public funds is
ineffective. As a result, the local government continues to experience setbacks in
terms of infrastructure development.
4. The adoption of inappropriate and ineffective public sector accounting principles

and guidelines.
5. Another issue is that the local government's accounts are marked by shortcomings,
such as incorrect account management and bookkeeping, misappropriation of public
monies, particularly by high officials.
2.7 LIMITATIONS OF THE STUDY
This research would have been generalized to all local government areas in economy
but due to some numerous factors, I have decided to limit my study to government
area, Edo state. The following are the constraints encountered in this research:
1. FINANCIAL CONSTRAINT: Finance is the key to the success of every

research work and the said finance was readily unavailable on my part as at
the time I was carrying out this research and as such, proper research will not
be carried out if I go about all local governments
2. TIME CONSTRAINT: The time stipulated for the submission of this work
was obviously too short and as such was unable to go about all local
government.
3. LACK OF KNOWLEDGEABLE AND SINCERE PERSONNEL: some of the
officials employed or appointed in most local governments in no knowledge of
what public sector accounting is and they are also not approachable because
they placed themselves on a very high esteem and even when one is opportune
to interview them, there is sure to be shortcomings arising from the basis such
Page 30 of 69
as, misinformation, and deliberate distortion of facts and these is as a result of
not letting one know where revenue comes from and how it is been utilized.
4. LACK OF RESERCH FACILITIES: Research facilities such as transportation
makes research work easier and interesting but it is noted that Nigeria has a
poor transportation system especially in the area were most local government
secretariat are situated and this restricted me from going about all local
government areas and as such, I was forced to focus my study on area though,
the research was still very difficult to carry out.
2.8 TAXES AND TAXPAYERS WITHIN STATE
GOVERNANCE STRUCTURE
The objective of public sector accounting also determines the conceptual
framework of public sector accounting.
Taxation, which is the government's primary source of revenue, should be
recognised and assessed as a rise in taxpayer equity. Because of the following
reasons:
(1) Taxes provide a fiscal foundation for the government to manage state
affairs entrusted by the people (almost equal to taxpayers and voters) who are
the state's constituent members (internal members), and it is inappropriate to
recognise tax receipts as "income" that is supposed to be derived from
transactions with third parties (external members), and
(2) The relationship between benefits and burden from the taxpayers' point of
view is unclear, making it difficult to recognize (as required under the cost
matching income principle).
Oluwadipo's (2006:86) description of public sector accounting goes a long
way toward describing its functions:
Because the point of view is uncertain, it is difficult to link income to a
government injection of resources (as required under the cost matching
income principle). Oluwadipo's (2006:86) description of public sector
accounting goes a long way toward describing its functions.
Page 31 of 69
Basis for Public Accounting Private Accounting
Comparison
Training Trained in the analysis Expert in the recording of accounting

of accounting systems and transactions which eventually forms
validation of financial financial statements
disclosures
Training May be exposed to a plethora Limited knowledge about industries other
of industries given the nature than the one they work in
of work.
Educational Must be a certified CPA Not compulsory to be a certified CPA; but
Qualification is an added advantage.
Travel May be required to travel to Usually fixed work location with no
Requirement the site of the client location. travel.
Client A significant number of Individual company for which they work
Profile companies
Work May be required to work for Relatively stable and regular work hours
Environmen long hours to meet tight
t deadlines.
Character Must be comfortable to Must be comfortable to query other
Traits interview clients departments of the same company
2.8 Public vs. Private Accounting Comparative Table
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CHAPTER 03 RESEARCH METHODOLOGY
3.1 OBJECTIVES OF THE STUDY
The main objective of this study is to appraise the impact of public sector accounting
on economy financial control system and also to aid government improve on their
revenue generation and collection to that point where all collectable revenue are
actually collected and safely paid into the council treasury
Other objectives include the following:
1. To investigate whether the sources of revenue available to Government authority is

enough for Public sector.
2. To find out whether the revenue generated within the government is put into good
use.
3. To ascertain whether the control of public fund adopted by the local government is
appropriate.
4. To determine if the accounts of the local government are characterized by

inadequacies such as, improper maintenance and book keeping of accounts and other
necessary records, embezzlement of public funds especially by the top officials.
5. To examine if the public sector accounting principles applied by the local

government is appropriate and effective and also to recommend strategies by which
the government can use in detailing out funds
3.2 SCOPE OF THE STUDY
This research work on the impact of public sector accounting in financial control
system is focused on government.
3.3 LIMITATIONS OF THE STUDY
This research would have been generalized to all local government areas in Nigeria
but due to some numerous factors, I have decided to limit my study to l government.
The following are the constraints encountered in this research:
Page 33 of 69
1. FINANCIAL CONSTRAINT: Finance is the key to the success of every research
work and the said finance was readily unavailable on my part as at the time I was
carrying out this research and as such, proper research will not be carried out if I go
about all government.
2. TIME CONSTRAINT: The time stipulated for the submission of this work was
obviously too short and as such was unable to go about all government.
3. LACK OF KNOWLEDGEABLE AND SINCERE PERSONNEL: some of the

officials employed or appointed in most local governments including that of
government has no knowledge of what public sector accounting is and they are also
not approachable because they placed themselves on a very high esteem and even
when one is opportune to interview them, there is sure to be shortcomings arising
from the basis such as, misinformation, and deliberate distortion of facts and these is
as a result of not letting one know where revenue comes from and how it is been
utilized.
4. LACK OF RESERCH FACILITIES: Research facilities such as transportation

makes research work easier and interesting but it is noted that poor transportation
system especially in the area were most local government secretariat are situated and
this restricted me from going about all local government areas and as such, I was
forced to focus my study on government area though, the research was still very
difficult to carry out.
3.4RESEARCH DESIGN
Research design provides the glue that holds the research project together. A research
design is used to structure the research to show how all major parts of the research
project work together and also tries to address the central research questions that were
used.
Udeagha, (2003:153); defined research design as the framework that indicates the
type of information that is needed for the research, the source of such information and
method of its collection. Definitely, this is a survey research. Survey research is the
method of gathering data from respondents thought to be the representatives of some
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population using an instrument composed of closed structure or open ended items
(questionnaires).
NOTE: In this research, survey design was used to so as to ensure originality and
reliability. That is, to ensure that all information gotten were from primary source and
not seconded data hence reliability.
3.5 SOURCES OF DATA

Both primary and secondary sources of data were used in this research work for
gathering information.
3.5.1 PRIMARY SOURCE OF DATA

The primary sources of data used in this research work include the following:
a) Questionnaire administration,
b) Oral interview and,
c) Personal observation
3.5.2 SECONDARY SOURCE OF DATA

The secondary sources of data used in this research work include the following:
a) Periodicals and journals,

b) Textbooks and
c) Internet.
3.6 POPULATION OF THE STUDY

The population of this research work consists of the management and staff of
local government. The total population of the staff of the local government.
“60”
3.6.1 SAMPLE SIZE DETERMINATION
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Based on the population figure of the staff and management of local
government, the researcher used the “Tharo Yamani‟s formula (1964:2000)
in determination of the sample size.
The formula is stated thus:
n = N 1+ N (e) 2
Where:
n = the desired sample size
N = Total population = 52
e = Tolerable error = 0.05
1 = constant
The researcher assumed 5% level of tolerable error would be used for this
research work. Hence, the sample size is computed thus;
n = 52 1 + 52 (0.05)2
n = 52 1 + 52 (0.0025)
n = 52 1.13
n = 46
3.7 SAMPLING TECHNIQUE
In other to minimize sampling error, this study applied sample random

technique in selecting and interacting with staff of the local government.
This proved effectiveness and efficiency as the respondents interviewed
responded positively.
3.8 RESEARCH INSTRUMENT USED

The researcher used questionnaires for the purpose of obtaining the desired
result. Multiple choice and open ended questions were used in the
questionnaire. They were used to assist the respondents in expressing their
views which in turn helped this study to obtain the needed information.
3.9 RELIABILITY OF THE RESERCH INSTRUMENT
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This research instrument used is reliable because the information obtained has
been tested over and over again and yet same result was gotten hence,
reliability.
3.10 VALIDITY OF THE RESEARCH INSTRUMENT

This research work has been accorded with a close supervision as the
supervisor has read, made all necessary corrections in the areas where lapses
occurred and after which the corrections has been made, he approves
validation of the work.
3.11 METHODS OF DATA TREATMENT AND ANALYSIS

In treating and analyzing of data collected, extensive use of tables and
percentages will be of paramount importance. The data collected will be
presented in tables and analyzed in percentages. The hypothesis will be
analyzed by the use of Chi – Square formula.
Chi-square
X2 = chi – square
Formula = X2 = ∑ (0 – E) 2 E
Where X2 = chi – square
0 = observed frequency
E = expected frequency
3.12 AREA OF THE STUDY

This research work covers only local government area. Most of the data analyzed in
this research were gotten from the said local government. Hence, the researcher
decided to narrow the study government area for easy assessment.
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HYPOTHESIS
The researcher at this point tests the hypothesis formed earlier in other to accept or
reject them and as well as determining the extent of their reliability. In other to
achieve this, the researcher used chi – square method that is chi – square (X 2) test.
HYPOTHESIS ONE:
HO: the public sector accounting principles applied by government authority is
inappropriate and ineffective
HI: the public sector accounting principles applied by government authority is

appropriate and effective
TEST STATISTICS X2 = Chi-square
Formula = X2 = ∑ (0 – E) 2 E Where X2 = chi – square
ASSUMPTION:
The level of significance used is 5%. That is 0.05.
DEGREE OF FREEDOM
The degree of freedom is given as thus:
DF = (R-1) (C-1) Where
R = rows
C = columns
DF= (2-1) (2-1)
DF = 1. That is, 1x1
NOTE: the value of 1 at 0.05 significant level is = 3.45. Using the chi-square table.
Thus: the critical value is given as X2 = 3.45.
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COMPUTATION THE TEST STATISTICS USING TABLE 4.4
TABLE 4:
OPTIONS Oi Ei
Yes 92 55.5
No 08 55.5
Total 111 111
Where: oi = Observed frequency
ei = Expected frequency
To get the expected frequency, the researcher divided the total frequency by the
number of options. Thus we have:
ei = 111/ 2 = 55.5
X 2 = ∑ (oi – ei )2 / ei
=(92 – 55.5) 2 + (08 – 55.5) 2
= (- 4) 2 + (4) 2 / 18
16 + 16 / 18
32/ 55.5 = 1.78
Comparing the test statistic with critical value 1.78 < 3.45
DECISION RULE
Since the calculated value of X2 is less than the critical value, we accept the null
hypothesis and reject the alternative hypothesis. We therefore conclude that the
public sector accounting principles applied by Government authority is inappropriate
and ineffective.
HYPOTHESIS TWO:
HO: the source of revenue available to government authority is not enough for them.
HI: the source of revenue available to government authority is enough for them.
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TEST STATISTICS
X2 = Chi-square Formula
= X2 = ∑ (0 – E) 2 E Where X2 = chi – square
ASSUMPTION:
The level of significance used is 5%. That is 0.05
DEGREE OF FREEDOM
DF = (R-1) (C-1)
Where R = rows
C = columns
DF= (2-1) (2-1) DF = 1.
That is, 1x1 NOTE: the value of 1 at 0.05 significant level is = 3.45.
Using the chi square table.
TABLE 5
OPTIONS Oi Ei
Yes 70 55.5
No 30 55.5
Total 111 111
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Where:
oi = Observed frequency
number of options. Thus we have:
ei = 111/ 2
X 2 = ∑ (oi – ei )2 / ei
= (70 – 55.5) 2 + (30 – 55.5) 2 /55.5
= (- 7) 2 + (7) 2 / 18
49 + 49 / 55.5
98/ 55.5 = 5.44
Comparing the test statistic with critical value, That is, 5.44 > 3.45
DECISION RULE
Since the calculated value of X2 is greater than the critical value, we reject the
null hypothesis and accept the alternative hypothesis. We therefore conclude that
the source of revenue available to Government authority is enough for public
sector.
HYPOTHESIS THREE
HO: the control of public fund adopted by government authority is inappropriate.
HI: the control of public fund adopted by government is appropriate.
TEST STATISTICS
X2 = Chi-square Formula
= X2 = ∑ (0 – E) 2 E
Where X2 = chi – square
ASSUMPTION:
The level of significance used is 5%. That is 0.05.
Page 41 of 69
DEGREE OF FREEDOM
DF = (R-1) (C-1)
Where R = rows
C = columns
DF= (2-1) (2-1) DF
= 1. That is, 1x1
NOTE: the value of 1 at 0.05 significant level is = 3.45. Using the chisquare table
TABLE 6
OPTIONS Oi Ei
Yes 76.68 55.5
No 24.32 55.5
Total 111 111
Where:
number of options.
Thus we have:
ei = 111/ 2 = 55.5 X 2
= ∑ (oi – ei )2 / ei
= (76.68– 55.5) 2 + (22 - 18) 2 55.5
= (- 4) 2 + (4) 2 / 55.5
16 + 16 / 55.5
32/ 55.5 = 1.78
Comparing the test statistic with critical value, That is, 1.78 < 3.45
DECISION RULE
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control of public fund applied by government is inappropriate.
TABLE 7
OPTIONS Oi Ei
Yes 83.78 55.5
No 16.22 55.5
Total 111 111
Where:
number of options.
Thus we have:
ei = 111. / 2 = 55.5 X 2
= ∑ (oi – ei )2 / ei
= (14 – 55.5) 2 + (22 – 55.5) 2 55.5
= (- 4) 2 + (4) 2 / 18
16 + 16 / 18
32/ 18 = 1.78
DECISION RULE
control of public fund applied by government is inappropriate.
Page 43 of 69
TABLE 8
OPTIONS Oi Ei
Yes 77.48 55.5
No 22.52 55.5
Total 111 111
Where:
number of options.
Thus we have:
ei = 111 / 2 = 55.5 X 2
= ∑ (oi – ei )2 / ei
= (77.48 – 55.5) 2 + (22.52 – 55.5) 2 /55.5
= (- 4) 2 + (4) 2 / 55.5
16 + 16 / 55.5
32/ 55.5 = 1.78
DECISION RULE
control of public fund applied by government is appropriate.
Page 44 of 69
CHAPTER 04 DATA COLLECTION
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Q...11) what is your opinion on impact of public sector accounting in economy?
The purposes of Public Sector Accounting include: Demonstrating the proprietary

of transactions and their conformity with the law, established rules and
regulations. Measuring current performance. Providing useful information for the
efficient control and effective management of government operations. The
purposes of Public Sector Accounting include: Demonstrating the proprietary of
transactions and their conformity with the law, established rules and regulations.
Measuring current performance. Providing useful information for the efficient
control and effective management of government operations. Demonstrating the
proprietary of transactions and their conformity with the law, established rules and
efficient control and effective management of government operations...Impact of
public sector accounting in economy with growth its short summary.
Page 52 of 69
CHAPTER 05 DATA ANALYSIS AND INTERPRETATION
The presentation of data collected means the way of presenting and arranging the
different forms of data obtained through various data collecting techniques to enable
the researcher perform analysis and exact new meanings from it. The data collected
will be presented in simple table. The data analysis was based on the answers to the
key questions received from the various people. The key questions in the Google
forms will be analyzed by the use of simple percentage. A total of 150 Google forms
were distributed and a total number of 111 were returned. So the analysis of data will
be based on the returned Google forms
TABLE 5.0
DISTRIBUTED GOOGLE FORMS
NO. OF DISTRTIBUTED NO. OF RETURNED

S/NO percentage
GOOGLE FORMS GOOGLE FORMS
COMPLETED AND
1 111 74
RETURNED
2 NOT RETURNED 39 26
Total 150 100
Hence, the analysis of data will base on the returned questionnaires
QUESTION 1: this question requires the respondents to disclose their Age Groups the
data obtained is shown in table 5.1
TABLE 5.1
NO OF
SR NO AGE GROUPS RESPONDENT PERCENTAGE
S
1 15-20 22 19.47
2 20-30 63 57.52
3 30-40 12 10.62
4 40 or above 14 12.39
TOTAL 111 100
Page 53 of 69
Source: - Google form survey 2022
The table above shows that, respondents were 15-20 age group 20-30 age group, 30-
40 age group, 40 or above where representing 19.47%, 57.52%, 10.62% and 12.39%
respectively
QUESTION 2: this question requires the respondents to disclose their Gender the data
obtained is shown in table 5.2
TABLE 5.2
NO OF
SR NO GENDER RESPONDENT PERCENTAGE
S
1 MALE 84 75.22
2 FEMALE 27 24.78
TOTAL 111 100
Source: - Google Form Survey 2022
The table above shows that, 84 respondents were male while 27 where female
representing 75.22% and 24.78% respectively
QUESTION 3: this question requires the respondents to disclose their occupations

the data obtained is shown in table 5.3
TABLE 5.3
NO OF
SR NO OCCUPATION RESPONDENT PERCENTAGE
S
1 Students 66 59.29
2 Business 08 07.08
3 Job 32 29.20
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4 Retired 05 04.42
TOTAL 111 100
Source:-Google form survey 2022
The table above shows that, respondents were 66 students, 8 Business person, 32 job
person and 5 retired person where representing 59.29%, 7, 08%, 29.20% and 4.42%
respectively
QUESTION 4: Are public sector accounting principles applied through the

government authority appropriate and effective?
TABLE 5.4
NO OF
SR NO OPTIONS RESPONDENT PERCENTAGE
S
1 YES 101 91.15
2 NO 10 8.85
TOTAL 111 100
The table above shows that 91.15% of total respondents are of the opinion that public
sector accounting principles applied through government authority is appropriate and
effective while 8.85% of the total respondents said public sector accounting principles
applied through government authority is inappropriate and ineffective.
QUESTION 5: Is the source of revenue available government authority enough for

public sector?
TABLE 5.5
NO OF
S
1 YES 79 70.80
2 NO 32 29.20
Page 55 of 69
TOTAL 111 100
Source:-Google Form Survey 2022
To above table shows 70.80% of the respondents are of the opinion that the source of
revenue available government authority is enough for public sector while 29.20 of
total respondent said the source of revenue available to government authority not
enough for public sector.
QUESTION 6: Is the revenue generated government put into good use by public
sector?
TABLE 5.6
NO OF
S
1 YES 84 75.22
2 NO 27 24.78
TOTAL 111 100
The above table shows 75.22% of the respondents of the opinion that the revenue
generated government put into good use by public sector while 24.78% of total
respondent said the revenue of government not put into good use by public sector.
QUESTION 7: Are the accounts of government characterized by inadequacies such as

embezzlement?
TABLE 5.7
NO OF
S
1 YES 93 84.07
2 NO 18 15.93
TOTAL 111 100
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The available table shows that 84.7% of the respondent is of the opinion that the
account of government characterized by inadequacies while 15.93% of them said the
account of government is not characterized by such inadequacies.
QUESTION 7: To what extend do irregularity add regards to public fund affects the
diverse activity that are carried out government?
TABLE 5.7
NO OF
S
1 TO VERY GREAT EXTENT 48 42.48
2 TO A GREAT EXTENT 34 30.97
3 TO AN EXTENT 22 20.35
4 NOT AT ALL 7 6.19
TOTAL 111 100
The above table shows that 42.48% of the respondents are of opinion the irregularity
as regards to public funds in the government affects the diverse activities of
government to a very extent 30.97% said a great extent 20.35% of them said to an
extent while 6.19% said not at all.
QUESTION 8: What are the sources of revenue available to local government areas?
TABLE 5.8
NO OF
S
1 GOVERMENT GRANT ONLY 24 22.12
2 LOCAL GOVERMENT 16 15.04
REVENUE GENERATED
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WITHIN SUCH AS
TAX,LISCENSE
FEES,MARKET FEES ETC.
LOCAL CREDIT FROM THE
3 23 20.35
STATE GOVERNMENT
4 ALL OF THE ABOVE 48 42.48
TOTAL 111 100
From the table above, 22.21% of the respondents said the source of revenue available
to the government are those gotten form government grants only while 15.04% from
local government revenue within such as tax, license fees, market fees etc while
20.35% of total respondents said local credit from state government while 42.58%
form all of the above.
QUESTION 9: What are the sources of revenue available to state government areas?
TABLE 5.9
NO OF
S
1 GOVERMENT GRANT ONLY 20 17.70
LOAN CREDIT FROM
2 21 18.58
CENTRAL GOVERNMENT
3 STATE TAXES 14 12.39
TOTAL 111 100
to the government are those gotten form government grants only while 18.58% for
loan credit from central government while 12.39% of total respondents said state
taxes while 42.58% form all of the above.
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QUESTION 10: What are the sources of revenue available to central government
areas?
TABLE 5.10
NO OF
S
1 GRANTS 18 15.93
2 LOAN CREDIT FROM RBI 14 13.27
3 CENTRAL TAXES 16 15.04
TOTAL 111 100
to the government are those gotten form grants while 13.27% for loan credit from RBI
while 15.04% of total respondents said central taxes while 55.75% form all of the
above.
QUESTION 11: do you think impact of Liberalization, Privatization and globalization

impact of public sector accounting?
TABLE 5.11
SR NO OPTIONS NO OF PERCENTAGE
RESPONDENT
Page 59 of 69
S
1 POSITIVELY 60 54.87
2 NEGETIVELY 19 16.81
3 NUTRAL 32 28.32
TOTAL 111 100
From the table above 54.87% of total respondents is said of Liberalization,

Privatization and globalization impact positively while 16.81% of total respondents
said of Liberalization, Privatization and globalization impact negatively while others
28.32% of total respondents is neutral.
QUESTION 12: Do you think public sector accounting is managed properly?
TABLE 5.12
NO OF
S
1 YES 85 76.99
2 NO 26 23.01
TOTAL 111 100
From the table above 76.99% of the total respondents said public sector accounting
managed properly while 23.01 of the total respondents said public sector accounting
not managed properly.
QUESTION.13) what is your opinion on impact of public sector accounting in

economy?
The purposes of Public Sector Accounting include: Demonstrating the proprietary
of transactions and their conformity with the law, established rules and
efficient control and effective management of government operations. The
purposes of Public Sector Accounting include: Demonstrating the proprietary of
Page 60 of 69
transactions and their conformity with the law, established rules and regulations.
Measuring current performance. Providing useful information for the efficient
control and effective management of government operations. Demonstrating the
proprietary of transactions and their conformity with the law, established rules and
efficient control and effective management of government operations...Impact of
public sector accounting in economy with growth but impact of Liberalization,
Privatization and globalization impact positively
CHAPTER 06 FINDINGS AND SUGGESTIONS
6.1 SUMMARY OF FINDINGS
This study was channeled towards the discovery of the various lapses and problems
associated with the financial control system and accountability of government and
also to appraise the impact of public sector accounting in financial control system.
This objective was achieved through the research questions formulated from the
statement of the problem as this enabled the researcher to design and collect responses
from the distributed questionnaires and the analysis of the returned Google forms get
out the following findings which are enumerated below:
 There is enough evidence to show that the public sector accounting on

economy
 There is enough evidence to show that the public sector accounting principles
applied government authority is appropriate and effective.
 There is enough to show that the source of revenue available government
authority enough for public sector.
 There is enough to shows that the revenue generated government put into good
use by public sector.
Page 61 of 69
 The accounts of government area are characterized by inadequacies, such as,
embezzlement of fund by transferring public fund into private use and
improper keeping of accounting records.
 The irregularity as regards to public fund in the government affects the diverse
activities of the public sector.
 There is enough to shows that public sector accounting is managed properly
 There is enough to shows that impact of Liberalization, Privatization and
globalization impact positively
6.2 SUGGESTIONS
 Based on the summarized above, the following recommendations were made

as these will go a long way in helping the local government in terms of
improvement and development if properly adopted. The recommendations are:
 An account committee should be set up to control and regulate the accounting
system of the government to ensure there is a proper record of the generated
revenue by the account officers since most chairmen in conjunction with their
supervisors collaborates and enrich themselves with the local government fund
thereby leaving the council treasury bankrupt especially toward the expiration
of their tenure in the office.
 The government should take an efficient and effective planning control
measures and prudent management of their resources and also to increase the
salaries of all staff and members of the local government so as to motivate
their efforts towards the discharge of the duties assigned to them in other to
achieve the stated objective(s) of the government.
 The government authority should endeavour to look into its administrative
activities regularly and then prosecute any officer(s) found embezzling public
funds and also make the head of the account office answerable for any such
misappropriation.
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 There should be a close interference or inspection from the head of state or his
representatives to the activities that are carried out in the local government
area without informing the chairman or other top personnel on when they are
to visit the local government secretariat
 The government authority should set up a disciplinary committee to punish
defaulters especially the chairman and the head of account department after
which they should be handed over to “economic and financial crime
commission” EFCC for proper examination and prosecution as this will put
fear into the minds of the in-coming chairman or the head of account
department of the government
CHAPTER 07 CONCLUSION
Based on the findings summarized above, the researcher was able to reach a
conclusion, thus:
 The public sector accounting principles applied by government authority is

appropriate and effective.
 The generated revenue of government authority is put into good use for public
sector,
 The source of revenue available government authority enough for public
sector.
 The accounts of government area are characterized by inadequacies, such as,
embezzlement of fund by transferring public fund into private use and
improper keeping of accounting records.
 The irregularity as regards to public fund in the government affects the diverse
activities of the public sector.
 There is enough to shows that public sector accounting is managed properly.
 There is enough to shows that impact of Liberalization, Privatization and
globalization impact positively.
 The overall conclusion is public sector accounting is need to improve their
standard and this sector are growing in future and impact of liberalization,
privatization and globalization on public sector is positively and public sector
are growing in future but need of proper administration
Page 63 of 69
Page 64 of 69
CHAPTER 09 BIBLIOGRAPHY & WEBLIOGRAPHY
www.google.com
www.wikipidia.com
Afolabi, O. (2004) Public Sector Accounting: Planning and Control, Enugu: JTC
Publishers
.Ani, W.U. (1994). Government and Public Sector Accounting, Enugu: Meridian
publishers.
Barber, M.P. (1988). Local Government: The M & E Handbook Series, London:
McDonalds& Evans Ltd.
Egbo, A. (2007). Fundamentals of Public Sector Accounting, 4th edition, Enugu:

Immaculate publications Ltd
Ifezue, K. (2006). Management and Practice of Public Sector Accounting, Enugu: Je-
Rohi publishers.
Muyiwa, J. (2002). An Overview of Public Sector Accounting: Basic concepts

&processes, Ibadan: Agbanga books.
Nweke, S. (2005). Principles and Processes of Public Sector Accounting, Enugu:

Lano publishers.
Ogunle, E. (2004). Contemporary Issues on Public Sector Accounting in a Developing

Economy, Ibadan: Murphy publications.
Olakunori, O.K. (2008). Evaluation of Public Sector Accounting: Theory, Analysis &
Strategies, Ibadan: Muonaga publications.
Olo, A. (2004). Public Sector Accounting Principles and Strategies, Lagos: Random
house publications.
Omelehinwa , J.O. (1990). Principles & Practice of Accounting, Lagos: PYT

publications.
Onyeke, O (2004) Dynamics of Public Sector Accounting, Enugu: Abic books &
equipment. Onyeke, & Nebo, P. (2005). An Integrated Approach to Public Sector
Accounting Development, Enugu: Lano publishers.
Roger, H. (1990). Financial Control in the Developing Countries, London: Longman

group Ltd
Chow, D., Humphrey, C. and Moll, J. (2007) ‘Developing whole of government

accounting in the UK’, Financial Accountability and Management, 23(1): 27–54.
Page 65 of 69
Granof, M. (2010) Government and Not-for-profit Accounting (5th edn), Wiley.
Grossi, G., Newberry, S., Bergmann, A., Bietenhader, D., Tagesson, T., Christiaens,
J., Van Cauwenberge, P. and Rommel, J. (2009) ‘whole of government accounting:
international trends’, Public Money and Management, 29(4): 209–18.
Heald, D. (2003) ‘Value for money tests and accounting treatment in PFI schemes’,
Accounting, Auditing and Accountability Journal, 16(3): 342–71.
Heald, D. and Georgiou, G. (2000) ‘Consolidation principles and practices for UK

government sector’, Accounting and Business Research, 30(2): 153–67. Heald, D. and
Georgiou, G. (2009) ‘whole of government accounts developments in the UK:
conceptual, technical and timetable issues’, Public Money and Management, 29(4):
219–27.
Jones, R. and Pendlebury, M. (2004) ‘A theory of the published accounts of local

authorities’, Financial Accountability and Management, 20(3), August: 305–25.
Plummer, E., Hutchison, P. and Patton, T. (2007) ‘GASB No. 34’s Governmental
Financial Reporting Model: evidence on its information relevance’, Accounting
Review, 82(1): 205–40.
Walker, R., Dean, G. and Edwards, P. (2004) ‘Infrastructure reporting: attitudes of

preparers and potential users’, Financial Accountability and Management, 20(4): 351–
75.
Page 66 of 69
CHAPTER 09 ANNEXURE (QUESAIONNAIRE)
1) Name:- --------------------------
2) Age:-
15-20
20-30
30-40
40 or above
3) Gender:-
Male
Female
4) Occupation
Student
Business
Job
Retired
Questionnaire
1) Are public sector accounting principles applied through government authority

appropriate and effective?
Yes
No
2) Is the source of revenue available government authority enough for public

sector?
Yes
No
Page 67 of 69
3) Is the revenue generated government put into good use by public sector?
Yes
No
4) Are the accounts of government characterized by inadequacies such as

embezzlement?
Yes
No
5) To what extent do the irregularity and regards to public fund affects the diverse
activities that are carried out by the government?
To a very great extent
To a great extent
To an extent
Not at all
6) what are the sources of revenue available to local government areas?

Government grant only
Local credit from the state governmemt
Local government revenue generated within such as Tax, license fees, Market
fees, wheelbarrow fees etc
All of the above
7) What are the sources of revenue available to state government areas?

Government grant only
Loan credit from central government
State Taxes
All of the above
Page 68 of 69
8) What are the sources of revenue available to Central Government areas?
Grants
Loan credit from RBI
Central Taxes
All of the above
9) Do you think public sector accounting is managed properly?

Yes
No
10) Do you think Liberalization Privatization and Globalisation impact on public

sector accounting?
Positively
Negatively
Neutral
11) What is your opinion on the impact of public sector accounting on economy?
Thank you
Page 69 of 69

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PROJECT REPORT

THE IMPACT OF PUBLIC SECTOR ACCOUNTING ON ECONOMY

AS A PARTIAL FULFILMENT FOR THE DEGREE

BACHELOR OF ACCOUNTING AND FINANCE (BAF)