AN OVER-VIEW OF LOCAL GOVERNMENT FINANCE IN THE NEW MILLENNIUM (A CASE STUDY OF IGBO – ETITI LOCAL GOVERNMENT COUNCIL)

CHAPTER ONE
INTRODUCTION 
1.1  BACKGROUND OF THE STUDY
Local government form the third tier of government. The aim of creating local government is to decentralized government activities so that local governments which are nearest to the people will enable the people to participate in development process of their area. In other to ensure their constant existence local governments need to ensure that adequate controls exist over the transactions that funds are promptly and properly accounted for and all documents and records relating to the financial transactions are accurate and complete. There are increasing demands on and expectations of the local government councils in Nigeria, while their revenue continues to be mismanaged. To prevent this trend and for significant objectives to be achieved in the new millennium there is need for proper harnessing, management, control and accountability of funds available to the councils. In addition constitutional mechanisms to autonomy, abolition joint accounts and development countries. In this analysis Igbo-Etit local government is our case study. Obviously we have been compelled by limited resource to confine this review to one out of the 774 local government in Nigeria and this forms the fulcrum of this review. Moreover the fact that this work is an academic project with its peculiar characteristics and scope make this choice quite germane. Furthermore, the finance available to the local government is very low and if specified objectives are to be achieved there must be proper harnessing of this resources, therefore must be proper control of revenue generated and proper accountability of funds available to them. I equally looked at local government sources of revenue, the manner and eective collection and disbursement of funds.
1.2  STATEMENT OF PROBLEMS
The main targets of this study is to determine the followings:
i) Whether the financial management procedures carried out in local government are adequate and effective in meeting the objective of the local government.
ii) Whether laid down control procedures are complied with.
iii) To identify the major problems methodology in the implementation of financial administration procedures.
iv) Sources of council revenues and expenditure and most importantly the control and accountability of council revenues among others.
v) To identify measures which could assist Igbo-Etiti local government to achieve its results.
1.3  OBJECTIVES OF THE STUDY
The objectives of the study are as follows:
i) To examine the procedure for local government finances
ii) To determine the adequacy of these procedures in relation to the objectives of the local government administration.
iii) To determine whether these procedures have been effectively and efficiently applied in practice.
iv) To review the performance of local government with respect to revenue generation and expenditure.
v) To find out the effect the audit and inspection of financial management has in the local government level.
vi) To find out factors that may constrain the local council from performing its responsibilities.
vii) To establish that there is a relationship between effective use of financial accounting information and the quality of the decisions made by management of an organisation.
viii) To identify specific problems militating against implementation and to make recommendation on how they could be overcome.
1.4  SIGNIFICANCE OF THE STUDY
This study is important because of the very important role the local government plays in national development. The study will be useful in eliminating some of the major problems encountered in local financial management. The study will be useful:
i) To the policy makers who need policy analysis to enable them decide the effectiveness and efficiency of policies. An improvement in the efficiency of financial function will be of great assistance to local governments. ii) To the government and local government functionaries who need to understand that flexibility in management is of great importance in achieving the objectives of the policy.
iii) To the researcher as a partial fulfillment of the requirement for the award of Higher National Diploma (HND) iv) To other researchers who may carryout further research on the subject matter or other related topics as a source of literature review.
v) To the students who may seek an understanding of local government as part of their academic studies.
vi) To the general public in the inform of increase in the standard of living arising from improvement in local council administration.
1.5  SCOPE AND LIMITATIONS OF THE STUDY
An over-view of local government finance in the third millennium is an elaborate task. There are 774 local government councils in Nigeria an adequate study of which is rather un-imaginable. This research is therefore confined to Igbo-Etiti local government councils. The choice of this case study is made with a view to rendering the work less expensive, less tedious and less firms-consuming while at the same time giving went to indepth study. With respect to the case study the major limitations and constraints are:
i) FINANCE: A Study of scope contemplated in this work and the length of distance between my school and Igbo-Etiti local government council headquaters (Ogbede requires commitment of resources for the research (transportation cost to and from Ogbede in order to meet or set appointment with the council functionaries/sta). This will cuntail the scope and quality of work necessary for the study while this may be so, it is hoped that the work will still prove to be of immense value within in the restricted scope.
ii) INADEQUATE LITERATURE : An over-view of local finance in the new of local government finance in the new millennium” is a new terrain in research studies especially as it affects Igbo-Etiti local government councils. There is therefore a famine of relievant literature on the subject matter. This poses a serious constraint. However, the research is relatively re scored by the existence of fundamental materials such as the GRAND NORM (the constitutions) financial statements budget dras, etc.
iii) The reluctance of local government officials to disclose enough or correct information about their operations or to make data available because of fears or ignorance. Etc and their tendency not to disclose the information at all posed another constraint to this work.
iv) The insufficiency of time also limits the scope of the work. all this notwithstanding, the researcher will optimize the finance and time a in order to put up a work of invaluable significance.
1.6  STATEMENT OF HYPOTHESIS
Hypothesis is defined by the Encyclopedia Americana as a proposition assumed to be true merely for the purpose of argument; or a proposition or theory put forward to account for and order a body of facts. A more relevant definition was given by Konler (1963: 225). According to him, Hypothesis is a proposition involving relation between sets of events which is to be rejected or tentatively accepted on the basis of sample evidence in accordance with stipulated rule of statistical inference. In accordance with the above definition the following assumptions will be subjected to testing.
i) Mismanagement is the bane of local government finance.
ii) Laid down control procedures are not complied with in council administration.
iii) The improvement of the development of the local government in the new millennium lies on the adherence to laid down control procedures and management.
1.7  DEFINITION OF TERMS
Below is the operational Definition of terms of the basic concepts used in this study. The aim is to ensure that ambiguity is removed giving room to clearer understanding of the basic issues and concepts. i) Overview: This is an indepth analysis (of the fate of Igbo-Etiti local government) and an assortment of its future. ii) Finance: This represents funds, revenues and expenditures. iii) Financial memoranda; This is a book of guidelines on local government financial managements. iv) Accounting: this is the preparation and communication of financial and economic information (partier 1984 p 3) v) Local government: Government is generally the administrative agency of the state. While local government is its third or lowest tier basically responsible for grass root development. vi) Mismanagement: This is the out landish aspect of the concept of management which is the act of effective and efficient enforcement and control of operation of economic unit an organisation. (Kohler 1963 p 33) such as a local government. vii) Nigeria constitution (1999): The constitution of any state such as Nigeria’s any state such as Nigeria is the highest body of rules through which it is administered. It defines, among other things, the powers and functions of three tiers of government namely federal, states and local government. Our current constitution is the constitution of Nigeria (1999). viii) New millennium: A millennium is one thousand years period. The third millennium range from 2000 – 3000 A.D. It is new as the period has just started five years ago. The research is concerned with this era but with knowledge of hindsight.
1.8  RESEARCH DESIGN AND METHODOLOGY
Whatever undertaking one wants to carry-out there must be steps or procedures that should be followed in order to arrive successfully at the targeted objective(s). an over-view of local government finance is an exploratory research work which demands that certain systematic steps be followed in order to ‘walk without stumbling”. For the sake of this study, the data are based mainly on secondary sources. These are existing literatures and related books on the subject matter. They are not original but have been assembled by other people in the past. They are either published or unpublished and are classified into two: i) Internal secondary sources of data: These data are records generated within the local government such as the chats, budget dras/speeches, etc and ii) External/secondary sources of data: Which are sources available for obtaining secondary data other than records of the local council. They include published materials from the libraries, the constitution of the federal republic of Nigeria (1999) unpublished research works, etc. As a matter of fact, the choice of confirming our data collection to secondary sources is to enable us validate our claims and discoveries. Be that as it may, there are situations which dovetailed into primary sources as it were. Primary sources are those original sources of information through which original or primary information or facts are obtained e.g information, through specialists/administrators/sta of local government, etc of course these pieces of information may be unreliable and subjective thus vitiating its scientific basis. This, no doubt, partially defines our preferment for the secondary sources – without excluding the primary sources. For the latter we distributed questionnaires to a sample of local government sta.