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CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

In Nigeria, there are three tiers in public administration: the central (federal) government, state governments and local governments. This project is devoted to the examination of local governments accounts, and the development of financial management with their departments. It is therefore pertinent at this point to mention that the local government is the third tier of government in Nigeria   Local governments in Nigeria derive their existence form the constitution of the federal Republic of Nigeria (promulgation). Decree No 45 of 1989 has brought about a new awakening public sector virile, dynamic, result and development oriented. At present, with aeration of more 177 local government expenditure, the total number of local government in Nigeria has therefore increased to 1776.

One would then guess what effects will it have even before that, like since 1979, there has been a significant rise in local government expenditure in line with greater emphasis on grass root participation. For instance, 1992 when compete political, administrative and   financial independence were granted to the local government form state control, its responsibility was enlarged. With effect form 1992, local government has been directly responsible for primary heath care; this is in addition to its statutory functions.   Johnson (1992) said that, though virtually all developed countries have a system of local government, some system involve considerable local autonomy while others involve lee on a spectrum, the Nigeria system problem involves less rather than more autonomy. Then the question and answer are important as they reflect the type of financial and   accounting framework required.  
Sharpe (11980) noted that the participatory value, if not the liberty, value, still remains as a valid one for modern local government .Not perhaps in the full glory of its early pedometers but as an important element in a modern democracy nonetheless. But as a co-ordinate of service in the field; as a reconciler of community options; as a consumer peruse group as an agent to responding to rising demand; and finally as a country weight to incipient syndicalism, local government seems to have come into its own The following point were listed in local government favor by the lay field committer (1976)
(a)     It providers democracy.
(b)     It acts as a counter weight to the uniformity inherent in government decision. It spreads political power.
(c)     It embraces accountability because it brings those responsible for decision close to their electrons.
(d)     It is efficient because services can be adjusted in local needs and preferences, and because response can be more democratized.
(e)     Central government would be over loaded by more functions.
(f)      It provides a velricle for formulating new policies and pioneering ideas.  
As a result of increase in the responsibilities and the fantastic expenditure associated with them, it is vital that the local government expend their sources of revenues beyond the present level. They would endeavour to tap all the potential resources so as to see their revenue based fureti fied any improvement to this effect will be welcome as it would give the local government an added impetus in discharging its statutory function and socio-economic advancement to the local inhabitants   From the in caption of local governments, they have been relying substantially on grants from state and central government and also statutory allocation form the internal generated funds of the state.  
As a matter of facts, the internal generated revenue by the local government was very abysmal. Now that it has been granted antimony, it is statutorily required to rely more on internally generated funds for the performance of its functions. This being the case, government grants and statutory allocation are only supplement any sources of revenue to local government, Babangida (1992) for local government to be self sustaining financially without reducing the level and quality of its services to the people, it is essential that it exploits all potential internal ones. This as well suggests which would supplement existing ones. That the existing ones adequately exploited and property managed.  
STATEMENT OF PROBLEM
Finance and Accounting in local government is probably more complex than in any other part of the public sector in Nigeria, the inability of local governments to raise adequate  funds and keep accurate accounts to sponsor its expenditure and achieve grass root developments has been discovered as one of the local governments. The purpose of this study therefore, is to assess the problems of finance and accounting in local governments as to determine their prospect.     
OBJECTIVE OF STUDY 
Local government like any other organization encounter financial and of course accounting problems. These problem have in no small mean contributed to their poor performance. It is therefore imperative to mention that one of the major reason for under taking this work is the belief that for any meaning full improvement to take place in government accounting and financial control, the strands forming part of these systems must first be put together in during so, the adequacies in the areas of each   system would be pointed out   and criticized or mention as problem areas for future development.   In carry out the study efforts for future development should be geared to: 
1.   Identify the major causes of these maladies in the financial system of the local government. 
2.   Examine the accounting department to find out if it is being manned by the desired competent and of course qualified personnel.       
3.   Examine whether the sources of income to the local government is enough as to enable it discharge its constitutional, statutory and or otherwise obligations with ease. 
4.   Examine the various instruments of management and control of thee local government finances. 
5.   Examine the various problems of local government finances and accounts and ascertain the financial autonomy of the local government. 
6.   Examine the prospects of improving available sources off the local government finances.
STATEMENT OF HYPOTHESES
Since this research work is in ‘’the problem and prospects if contemporary local government finance and accounting in Nigeria,’’ the writer obtained facts chiefly through interviews and questionnaires. Some hypotheses have been formulated to produce better results.  
Hypothesis 1
Ho; That can increase in federal government statutory allocation of federation form 20%-25%would not help local government in achieving at least 75%of their statutory responsibility.  
Hypothesis 2
Ho; that the employment of low caliber staff has no significant negative relationship with the low efficiency and productivity of local government. Hi; that the employment of low caliber staff has significant negative relationship with low effective  
Hypothesis 3  
Ho; that the accounting system of local government effective in operation  
Hypothesis 4
Ho; That another source of tax revenue essential for Nigeria local government.
Hi; That another source of tax revenue is not essential for Nigeria local governments.   
SIGNIFICANCE OF STUDY
Our local governments have in this recent times been riddled with financial and accounting problems, these undoubtedly have stultified the unflinching efforts of most local government to instill and of course restore sanity in the system hence the need for a steady on the problems and prospects of contemporary local government finance and accounting in Nigeria.    The study leaves no stone unturned in examining the problems confronting the existing revenue sources of the local government and appraises latent revenue resources that could be used to fortify the revenue base of the local governments.   This study, therefore, points out significantly that improved local government finance and accounting system is the corner- stoned to the much desired economic growth and development. It potentially serves as a guide to policy making in Nigeria. The study also forms a source of reference in other related topics and to researches in similar topics.     
LIMITATIONS OF STUDY
As has been earlier mentioned, finance and accounting in local governments is fraught with complexities. It is then not possible to provide a fully comprehensive coverage of all facts of the subject in this kind of study. Local government finance and accounting has developed in a distinctive fashion and as such has evolved to terminology that may be unfamiliar even to those with experiences of finance and accounting in either the public or private sector.   This study restricts itself to the evaluation of the various revenue resources and expenditure patterns of local governments, examination of the problems associated with then and the prospects for enhancing them. Since it is not possible for a research project of this kind to develop into the entire local governments in Nigeria individual, this research work is confirms to information gathered from Nsukka local government.  
This student researcher of this work is of desired intuition to carryout an elaborate and comprehensive study of the problems and prospects of the contemporary local government in Nigeria, but has to obey impenetrable limitations encountered during the research. At local government under study necessary statistical data could not be obtained in a particular location and bureaucratic tendencies seemed to be a rule rather than an exemption.    
More so, majority of local government staff are illiterate people and could not give written information needed from enlightened follows. Yet same respondents are relevant to comply with piece of information needed from them.   In the final analysis, this research was also limited to the data gathered from the finance and accounting department of the local government. As such, it should be intensified to not that treasury department was the major source of information used in analysis of the study.      
DEFINITION OF TERMS
LOCAL GOVERNMENT: Local government is the third tier of government. According to shihu (1976)’’it is that level of government which is as close as possible to the people at the grass roots and vested with statutory porkers to perform certain function and both inherent and ascribed, confining its activities and authority within a particular district or neighborhood and subject to the control of the central government.    
FINANCE: Finance refers to the raising of funds, contorting and  using them in the  running of an organization, be it private, corporation or government (ume 1980)    
ACCOUNTING: Accounting is defined by Douglas (11976) as a discipline that  is concerned with the recording, analysis and fore  casting of in ame and wealth of business and other entities.  
FUNDS: The National committee on Government Accounting (USA) defined a fund as an independent fiscal and accounting entity with self balancing set of accounts recording cash and or other resource together with all related abilities, obligations, reserves and equities which are segregated for the purpose of carrying on specific activities or altering certain objectives in accordions with special relations, restrictions or limitations.
REVENUE: Revenue refers to all those moirés, each and other wise received by way of statutory allocation, grants, subvention form lighter levels of government, taxes, rates, licenses fees relations, loans and charge which enable the government to meet its day today expenses and its capital expenditure programmers.  
EXPENDITURE: Expenditure refers to all those activities/ services performed /rendered by the government with available resource (Egonwa( 1985)   
CAPITAL EXPENDITURE: This consists of expenditure whose benefit of which is not consumed in one accounting period, but spread over several periods. it includes assets  acquired for the purpose of earning income or increasing the earning capital of the business, for example, land and buildings, plant and machinery, maintaining of roads and other projects of capital nature.    
BUDGET: A budget is a plan terms, covering in qualitative and usually in monetary terms, covering a specified period of time usually one year. To be more precise it is a financial plan of government drawn out yearly for strict compliance in the execution of government business.  
REVENUE ESTIMATE:  As the name implies, it is the part of the estimate in which is expected revenue from over all source of the government of the following fiscal year.    
ESTIMATE: An estimate is a proposed budget which is yet to  be  approved. It is a statement of planned revenue and expenditure of the government for coming year. This, like budget normally expressed in monetary terms.
CAPITAL EXPENDITURE ESTIMATE: This specifies the expected capital expenditure project of the government for the coming fiscal year.
RECURRENT EXPENDITURE ESTIMATE: This is an aspect of the estimate that stipulates in detail shape, expected recurrent expenditure of the government if the following fiscal year.   REVENUE ABSTRACT  This is a record, which shows at a glance, in a concise manner all revenue receipts head by all, and sub head that accrues to the local government in a given financial year.  
EXPENDITURE ABSTRACT: This is a summary of all expenditure in aired by local government all categorized according to vote heads during a particular fiscal year. STATUTORY FUNCTIONS These are function that the local government is legally binding to carry out. An edge outside it may amount to an ultra vile and will therefore be rendered null and void and of no effect.
INTERNAL REVENUE:   This is the aspect of reverie that local government can generate with its area of jurisdiction.                    

REFERENCES 
BABNGIDA, I,B (1992):’’ Watershed on our National Evolution’’, Budget speech to the Nation on January I  
Civil Service (Re-organization) Decree No 48 of 1988 official Gazette No 9 vol. 75 of 30th November, (fed. Govt press logos)
DOUGLAS, GARBUTT (1978): cater’s Advanced Accounts (London: pitman publishing Ltd, 39 parker street.)  
EGOMNWA, AGHARESE J. (1985): principles and practices pf local Government in Nigeria,(Benin city: S.M.O  Aka and Bros)   
Nigeria Federal Republic of (1989): The constitution of the federal Government of Nigeria section. (Logos federal Government press)

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