IMPROVEMENT OF ACCOUNTING SYSTEM IN GOVERNMENT OWN COMPANY.
BACKGROUND OF THE ACCOUNTING SYSTEM IN GOVERNMENT OWNED COMPANIES.
All accounting system serve three broad purpose accounting to C.T. Horngren they are:-
- Internal reporting to managers for use in planning and controlling routine operations.
- Internal reporting to managers for use in strategic planning, that is the making of special decisions and the formulating of overall policies and long-plans &
- external reporting to stock holders, government and other out side parties.
- A simon and his research team found out that three types of information, each serving a different purpose, often at various management levels, raise and help to answer three basis questions.
- score card questions: an I doing well or badly?
- attention solging questions: of the several ways of doing the job which is the best.
2.2 MEANING OF ACCOUNTING GOVERNMENT OWNED COMPANIES
The score card question while eliciting answers that provide feedback to management will also provide information for external reporting to outside interested parties for example the report of actual performance is the task of financial accounting. Problem solving data are those that help management in long range and strategic planning and in making non-routine decision.
C.T. Horngen Summarized the accountants tasks of providing information as having the factors.
- Score keeping: the accumulation of data this aspect of accounting enables both internal and position.
- Attentions directing: the reporting and interpreting of information that helps managers to focus on operating problem. Imperfections, in efficiencies and opportunities. This aspect of accounting helps managers to concern themselves with important aspects of operations promptly enough for effective action either through perceptive planning or through estate day-to-day supervisions. Attention Directing is commonly associated with current planning and control and with analysis and investigations of recurring, routine internal accounting reports.
- problem solving: this aspect of accounting involves the concise qualifications of the relative merits of possible courses of actions often with recommendations as to the best procedure. Problem solving is commonly associated with non-recurring decisions. Situations that require special accounting analysis or reports. The above distinctions sometimes overlap or merge consequently, it is often difficult to pin point a particular accounting task as being score keeping attention directing, or problem solving.
Big and perims explained that the account is responsible for directing and co-ordinating the work of the book-keeping staff and for deserting and maintaining accounting system adequate to the need of the particular business. It is part of his duty to prepare periodical accounts of profit and loss and financial statements 12 a from which will be of assistance to the management, not only in appraising past results, but in formulating future transformations occur within the entity itself as a regular part of its business, example in the manufacture and or processing of render intangible services, these internal movements of resources which do not involve transactions across the boundary between the entity and the rest of the economic system, says lee, cale for resources attached to the activities in which they are deemed to be embodied so as to enable profit or loss to be intelligently computed with special reference to the valuation of unused raw material, components of fuel, work in progress, and unsold stocks of finished goods as at the beginning and end of the accounting period.
“Thus” it is that even for the purpose or rotational period accounting in financial terms some form of cost accounting (or costing) is essential for all but the simplest operations of buying and selling goods without change of form or of rendering personal services without employing hired labour. In other words, there is usually a need to partition the accounting system into a minimum of two sub-financial accounting and cost accounts. The first are normally in double entry, the second may be incorporated in the main system, or set up as a semi-autonomous double entry sub-system linked to or periodically reconcile with, the financial sub-system, or exist merely as a set of separate calculation using. Figures extracted from the financial books of account.
- SUBSIDIARY BOOKS
Some of the following records will be found in most companies.
The cheque register: contains the pertinent detail with respect of all cheques received on account or cashed by the companies. A receive many thousands of such cheque annually, often from narrative strangers, and when a cheque “bounces” the receipts may be very valuable.
The Equipment register: records the details as to cost, dates of acquisition, and depreciation of furniture fixtures, and equipment.
The insurance register: is the usual record of all insurance policies, containing columns for the pro-ration of the monthly expenses write off.
Inventories: of stocks and replies are taken at least once a month and recorded in a book, which is usually in colummar form, with one set of colums of each month this arrangement reduces the labour of inventory taking and facilitates comparisons from month to month.
Payroll records: automation has entire the companies, machines have been used for sometimes to prepare payrolls, handle account receivable and payable, and to perform other detailed, tasks, such as maintaining inventories. In general, elerical functions that are handled with automatic and analysis of the operation of the units as an aid to management decision making is made. For example when some units record losses, there is no analysis in the light of costing information available to show whether the losses are due to low sales or due to high overhead or indirect costs. It is as a result of inefficient management or some other factors. Unit managers have to access to timely managerial accounting information which help them in improving operating efficiency. Uniform prices are charged in all the units. How the prices are arrived at is not known but it may be through that they should depend on amongst other things the price charged by competitions. Some of the units are not facing any reasonable competitions in the state. Since the board is now a limited company, it should be operating along commercial line hence it should exploit all avenues and opportunities of making more profits. Management accounting information produced is in the form of quarterly and/or half yearly accounts which are passed on the managers. There is no evidence that on the general managers have access to this information (which is useful feed back) timely enough for appropriate collective action on the arithmetical accuracy of the bookkeeping by the ledger clerk, he is expected to balance his master card with the sum of the balance on the payment cash book and the purchases day book as the appear at the end of the month. Where the purchases are for fixed assets, the asset account are debited while cash account is credited with payment for them.
When sales is made the cashier has to receives the money from the customers and write an invoice to clarity that it is made on so – so date and so – so amount is paid. Sales are important to any company. That is dealing in goods, because it helps the sales department to know if they are making profit or loss in the department, in other to bulky up if there is any loss. It is very important to issued receipt or invoices in any sales that as made because from the details in the receipt/invoices the clerk attached to the unit. As has been explained earlier, the tabular ledger is a daily record of all the revenue yielding transactions in the units. At the end of the month. These ledgers are taken to the sales or revenue account.
2.5 FINAL ACCOUNT
Monthly, quarterly or half yearly accounts are prepared as occasion demands. Accounts are prepared for the units showing on profit/loss made by each. The group profit and loss account is prepared by coming all the net profit(loss) of the unit and charging head office over heads. These over heads are debited to the group profit and loss account operating expenses are charged to the units that incurred them. Charges such as insurance are included in head office over head. There is no apportinate treated separately. External Auditor come once a year to audit the group accounts and they prepare the audited account and they audit the group accounts and they prepare the audited account which is presented to the management together with the audit report.
PERSONAL ACCOUNT – SALES LEDGER
This contains the personal account of the boards debtors. These are mainly the ministries. The Army and other government agencies.
PURCHASES LEDGER – This contains the personal accounts of the board supplies. There is a purchases ledger control account which is called the maker card. This account is used to ensure that the arithmetical accuracy of entitles in the purchases ledger. It must be balance with the purchases ledger at the end of every month. however, it is kept by the same clerk who keeps the creditors (purchases) ledgers. The trial balance – the trial balances is extracted at the end of each month by the acting group of accountant assist by the management accountant.
2.6 RESEARCH DESIGN
In this research, the research design adopted is the survey research design, this is because the study is a case study and it is base on research questions which are summation of the respondent / participants on the question as the participant perceived such questions. The survey research design is heart to provide proper through descriptive finding and descriptive answers to the questions. This is essence from the basis of objective research work as intended by a work of this nature.
More, survey design is used in this study because other methods of collecting data considered in other research designs would not meaningfully achieve the objectives of this study. Therefore, the researcher will employ two methods of collecting data v.z. personal interview and questionnaire, and the instrument is use involved a two part instrument called: improving accounting system in government owned company”. The first part questionnaire which was developed by the researcher was meant to collect information from the participants in administrative internal control departments, regarding the participant sex, academic qualifications, objectives of effective internal control in the private sections as well as the formal organizational structure, and the problems which militate against towards improved accounting system as regards the achievement of good financial accountability in the public section. The second part was to elicit information from accounting internal control departments regarding how ration of financial returns to capital employed and the need for developing functional internal accounting clerk for the achievement of financial accountability. Moreover, the instrument we use yes, no, open, ended for comment and neutral type of scales. Based on this, simple statistics all techniques of frequencies and percentages will be employed to the study. Therefore, given the technicalities of the theme of the research, in this case, one should confidently inter that the best research design is that based on a well formulated research question. It is only this type of design and methodology that ensured meaningful analysis and interpretation of conformity of the investigation with the research frame.
- SOURCES OF DATA
To accomplish the purpose of this research, the main source of data was grouped into primary and secondary sources.
- Primary sources of data
This is mainly personal interviews and responses to their distributed questionnaires with sample names.
- PERSONAL INTERVIEW: This is design to argument the needed could not be gathered through the questionnaire experience etc of the various accounting offices. Accounts cleak are attached to the units ie each unit has an accounts clerk.
External auditors are appointed by the board to audit the account once a year. They (the external auditors) visit all the unit under the board for the purpose the audit.
Purchases: purchases are of two main kinds, namely purchases of inventory and purchases of fixed assets.
The inventory consists of various items for the company and office stationary.
The fixed assets include furniture and fittings, office equipment and accessories.
Purchases of machinery, heavy plant and equipment building etc are made by the government. The company board does not control the purchases, they only recommend to the government the necessity for the purchase.
Purchases of inventory: the purchases stall inventory are made by the head office of all units for this purpose the company embarks on bulk purchase and thus benefits from the advantages of bulk purchase such as savings in transportation costs and the enjoyment of credit facilities provided by the larger supplier. Purchases are made by the purchasing officer following advice from the stores officer. The stores officer advices the purchasing officer to purchase when stocks have fallen below the minimum inventory level the purchasing officer can also purchase when favourable, but this is subject to the availability of storage space purchase by the purchasing officer, are made through local purchaser order (LPOS) L.P.O.S are issued to suppliers to the central stores accompanied by their invoices. The L.P.O.S and invoices are endorsed by the stores officer who received the supplies, they are then passed on checking, forwards these to the general manager who endorse them and approves payment. The document are then returned to the accounts department for payment there in the accounts department the invoice number, amount and the particulars of the supply as well as the supporting L.P.O number are entered into the purchases daybook. The account of the supplier in the creditor’s ledger is credited with the amount on the invoice. If the supplier has no existing account with the company, and account is open for him, the invoices received is entered into a master card. Suppliers give at least one mouth credit to the board. Payment is made on the 25th of every month by cheque. At the end of the mouth, a summary is prepared of all the outstanding invoices ie those that were received between the 25th and the last day of the month. When payment is made it is entered in the payment cash book which contains columns for the cheque number, invoice number, amount and name of the payee. As a check and semi-automatic equipment in other companies. Studies have been made concerning the applications of automation to reservation handling quest registrations, food and beverage control and other typical companies activities at present automation system are economically attractive mainly to the larger companies and claims. I have reported the observation of G.R. Hunder mark from his study of the accounting system of firms in the American. Most modern companies provide similar services and are managed along broadly similar lines. Therefore, the information their management or owners will require from their accounting system will be broadly similar.
The figure below shows the organization on chart of accounts department.