Accounting As A Basis For Managing Public Expenditure


During the primitive era, the period when there is nothing like formal education, people of that age have their own peculiar way of keeping records and accounts of events or transactions. They can do these thoughts dieing of knots or moving on stroke of line on the wall of the room, and each knot or a single stroke of line signifying a particular quantity.

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In the advent of formal education when man has learnt to express or keep certain information in written word, the people of mesopetovmion Valleys made several rules as regards in accounting in the form of Hormmabi in the year 2285 – 2242 BC. They deal with such activities as selling, leasing and joint venturing.

Egypt is said to be where civilization started as far back as 500 BC. In this country, the importance of accounting was known before the general use of money commenced. The accountant of that generation kept records on Papyrius, using feathered gull as tier writing apparatus with this, various documents come down to us showing how accounts were kept, how much was received, where it came from when it came in and details of how it was used.

The Christian scripture, the Holy Bible gave us a number of references to accounting among the Israelites and their neighbors. Also, the Athenians had highly developed system of accounting. The ancient Athens kept well-elaborated accounts for public firms and private individuals like was. Moreover, essential public and private accounts or information’s were engraved on stone tables and kept for reference and accountability reasons one can still found some of them in some well know museums in Rome British and Egypt.

Another interesting medium of accounting in the Grecian times was the abax or sand tray. Adequate rewards were maintained by sketching in the sand.

It is we known that Romans with their well known have for administration, should further develop the accounting system. The Roman geniuses for rule by have is widely recognized following his own admonition that “ justice is the constant and perpetual will to give each man his might”.

The development of accounting also be viewed with reference to the following even in its origin. They are as follows:


The era of Renaissance combined the art of accounting to his own unique genueis, a mathematician by name Fraters Luca barteolmas Pacid, published his famous treaties on the 10th of November 1494, with the tittle Everything About Arithmetic, Geometry and Proportion”.

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The double entry system of accounting introduced by the some man is still intact withstanding the change of time and system. Double entry made if possible to match accounting transactions against appropriate events. Such as sales or time internals. The concept is that every accounting system or action most have cause and effect relationship. With this, it guides such essential matters like distribution of wealth, economic, welfare, matters like distribution of wealth, economic, welfare, tax burden and cost benefit analysis.

Accounting became well established during the era of Renaissance in the curriculum of Halian Universities.



Accounting were kept on tally sticks in England during this period of Pennoussance, while accounting system in Haly have gone for beyond that in the same period. In England, the tally sticks were used until the year 1826, the tally sticks were netched to indicate economic transactions. An incursion, the width of a man’s palm represents one thousand pounds, a thumb’s width stood for one hundred pounds, the width of a finger stood for twenty pounds, the thickness of a grain for one pound.

Tallies were used for receding receipt, note payable, two anticipation warrants, and even posted cheques and bills in exchange.

As English sea, farers adventures blazed the trials which led to the colonial and industrial Evans (1800 – 1930 AD) they transformed Great Britain into the worlds foremost industrial power. The momentum for accounting thus moved to the “Suepted Isk”. Climaxing into Professional status and importance. This even brings about the development of cost accounting and the Profession of public accounting was established. It is the industrial Revaluation that brought  corporate form of business organization and with all the activities that made them up.


The South Sea Company was established in the year 1728. It is today seen as a fascinated conglomerate of companies. Its functions range from developing foreign trade to assuming the national debt of Great Britain. The company aroused high interest among investors, bringing about a national upsurge on the scales of the California gold wish of 1849.

The nobles and pedestrians were equally affected by the activities of the south sea stock were such notables as Queen Anne, John Cxay and Alexander Pope.

The south sea company engaged in a series of unprofitable as well as illegal practices in addition to driving the price of its stock up through captivating new reports.

The last, the company went into criers, its stock falling in one month from 900 – 190 pounds.

The publics who have interest in the company became angry and demanded an immediate inquiry into the company’s financial dealings.

In the course of the investigations, they discovered that the company’s book of account had erroneous and non-existing entries. This inquiry rings about what is today known as the company’s Act which is still taking care of financial reporting in the United Kingdom and to the parts of he world, it also applies to the audit of public companies by Independent account public accounting therefore came into existence out of what happened in the South Sea Bubble.

With all these discussed above, from primitive ear to the south sea bubble one can be convened that accounting practice has been in existence time immemorial.



Accounting has no specific definition. It is defined in many ways by different accountants. The council of the American Institute of Certified Public Accountants (AICPA) adopted the following official statement on October 1st, 1966, defining accounting as “ a discipline which provides financial and other information that are essential to the efficient conduct  and evaluation of the activities of any organization”.

According to the Institute, the information which accounting provides is necessary far:

  1. Discharging the accountability of organization to investors, creditors, government, organic, associations, tax authorities, contributions etc.
  2. Effective planning, control and decision making by the management.

Furthermore, they said that accounting includes development and analysis of data, the testing of their validity and relevance and the interpretation and communication of the resulting information to intended users.

The AICPA was of the view that even the above definition tends to be understatement of the role of accounting in terms of its board societal mission, for in a very real way accounting policies determines who gets rich and who stages poor. This fact was recognized by Lord Ardwall, when in his address to the institute of chartered accountants and actuaries in Glassgone, he said. “There are really great public and national interest in their hands because as Auditors of public companies as advisers to great captouns of industries they have and immense power to use for good, if they want”.

Samuel Ayangbola News Accounting through the following points of view: –

  1. Collecting measuring and interpreting economic data regarding the performance of an organization in order to facilitate effective and efficient economic functions.
  2. The function of recording classifying and summarizing in significant manner, and in monetary terms, transactions which are part at last, of financial character, and interpreting the result thereafter.
  • The science and art of recording, measuring and interpreting values and their movements in terms of money.

Moreover, Accounting is defined by Douglas Garbut “ as discipline concerned with the recording, analysis and forecasting of income and wealth of business and other organizations” he also said that, accounting keeps record of economic flows values between or within economics entries in monetary term. And this is applied in two major fields, they are –

  1. Micro Accounting – This involves business accounting (financial managerial and cost accounting), government accounting and house hold accounting.
  2. Macro Accounting – This involves the fields of national income, input-output, balance of payment and money flow accounting.

Finally, which financial can generally define accounting as set of rules and methods and economic data are collected, processed. And summarized into report that can be used in making immediate or future decisions.



Accounting is classified into different types according to the purpose which each of them services. They are as follows:

  1. Government Accounting: The main objective of any government is service oriented and not making of profit. The whole aims of government is to provides services for the welfare of its citizens government accounting has much in common with conventional accounting methods, this is so because they use journals and ledger. Due to the fact that: profit motive is absent in government sectors, it is not available as a means of measuring efficiency therefore other controls are used. Meanwhile government is the type of accounting system that is solely used in keeping transaction records of the government.
  2. National Income Accounting: This is a special type of accounting which provides on estimate of the nations annual purchasing power. If includes the total market value of power. If includes the total market value of all production within the nation for a given period of time mainly on yearly bases. It uses an economic and social concept in establishing the accounting unit rather the usually business entity concept.
  3. Private Accounting: This is the type of accounting system which is restricted to one particular firm. It can also be called industrial accounting. In this case, the private accountant works only on the transactions of the firms that employed him alone.
  4. Fiduciary Accounting: fiduciary accounting induces keeping of records and records and preparation of reports by the trustees, administrators, executors or people in position of trust. This may be done by authorization of a court of law it is the duty of the fiduciary accountant to seek out and control all the properties of the estate or trust. In fiduciary accounting, the concept of proprietorship that is common in the usually types of account is absent or well modified.
  5. Public Accounting: This is the type of account which is offered to the public. When there is a practitioner – client relationship between the accountant and the firm and not an employee – employer types of relationship an accountant involved is said to be a public accountant done by certified public accountant is aid to be of the highest professional caliber than that excused by a private accountant.


  1. FINANCIAL ACCOUNTING: – According to Akuanyiawu 1988, This involves accounting or keeping records of assets, liabilities, and ownership interest as well as revenues and expenses, it also leads to the preparation of financial statement, the balance sheet, income statement and funds flow statement. They are prepared in comprehensive formats suitable for presentation to the shareholders, investors, creditors and the general public. The financial account is very essential to the management of the organization not withstanding the fact that the management requires more elaborated and constant information that can only be obtained for special reports.
  2. MANAGEMENT ACCOUNTING: According to Ajayi Bayo’s 1991 Management accounting is that field of accounting that measures and reports. Financial information as well as other types of information that assist managers in fulfilling the goals of the organizations. It is concerned with formulating overall strategies and long-range plans. It also deals with resources allocation decision such as product and customer emphasis and pricing.

Management accounting is a wilder concept than cost accounting . it does not only report costs but also use them as well as data from various economic and statistical sources to assist management in planning possible alternate cause of action and meeting external regulatory and legal reporting requirements as well as performances measurement and evaluation of workers.

  1. COST ACCOUNTING: According to Ibezue C.I 1986, This involves summarizing classifying, analyzing, recording, allocating and reporting of costs incurred while running the affairs of an establishment. It is an extension of financial accounting, so it must be coordinated closely with the financial accounting system. It will be more detailed and elaborate in its presentation of costs.

The end product of every accounting is the presentation of financial statement showing its operations within an accounting period. This financial report form the firm helps to show the progress of the firm. Much attention is always focused on the cost of activities in producing the goods and services.

Therefore, cost accounting aims at planning  and monitoring of operational efficiency management needs a variety of information to plan, to control and to take decisions. Cost accounting is that system in accounting that provides data for such information what records of the costs of produces operations or functions and compares the actual costs and expenses with pre-determined budgets and expenses.

  1. TAXATION: Taxation is all about the preparation of tax returns and the consideration of the tax consequences of proposed business transaction or alternative causes of action. Accountants specializing in this field, particularly in the area of tool planning must be failure with the tool status affecting their employer or client and also must keep up to data record on administrative regulations and court decisions on tax matter.
  2. AUDITING: According to Westberry James . P. 1976, Auditing is the impendent examination of the financial statement of an organization with a view of expressing an opinion as to whether there statements give a time and fair view and comply with the relevant status. This opinion is expressed in the form of a report. The person who carries such an examination is known as auditor.

Audits may be classified on the basis of the auditor, that is the modality for his appointment. On this basis, we have the  internal audit and external audit.

Internal audit is the review of the transactions of a business which may be in many respect, similar to the statutory audit, but which is carried out by employees of business who are responsible to the management. Therefore the internal auditor is appointed by the management and hence may only report to the management.

External audit on the other hand is the independent examination of the financial statements of an organization by an auditor who is appointed by the shareholders. Through the external auditor may perform the same producers with the internal auditor, but he is responsible to the shareholders who appointed him.

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