THE ROLE OF FINANCIAL ACCOUNTABILITY IN A PUBLIC LIMITED COMPANY

Abstract

The mismanagement of every organization emanates from the ability of the financial accountability to administer the financial undertaken in order to achieve its profit maximization.

Business collapsed, is characterized by negligence to adhere to effective control system, which primarily comes from internal control.

An organization encounters problems, which often times result to financial impropriety, which has made many firm to collapse. Some of these problems lie largely outside the control of the organization. These are the problem to be solved by the financial accountability in the interest of effective control system of the organization while other problems arise from the organization’s limitation in his financial undertakings.

An analysis of factors that contributed to this fact would be highlighted and useful recommendation towards resolving these problems would be made.

This researcher is optimistic in view of the fact that if these recommendations are adhered to, they will go a long way in achieving the objectives of this research work.

Chapter one

1.0   introduction

Accountability as seen by Iwumenne (1982: 56) is the sole of any business continuity. A mismanaged economy cannot sustain her subjects. In the micro sense, a mismanaged firm is for failure. The main aim of business is profit maximization. This cannot be achieved if the financial mismanagement is endowed in any form. In any business setting, the priority of management is to enable the firm to continue to finance its undertakings. This cannot be achieved without due regard to the prudent financial administration.

According to Muoha Otanka (1975:4)2. The spirit of continuity of a business is the careful administration that well administers the financial undertakings. Really, the issue of financial importriety has made many a business, collapse. There are many ways to check the menace in both public and private life. Any method used in subsumed in effective control system which primarily cue’s from internal control.

According to Jonah Jenny (1982.12)3, internal control can be perceived in the following ways.

1. Good record keeping of all transactions in the factory.
2. Good stock control system.
3. Well co-ordinate channel of raw material procurement.
4. Efficient redundantly control.
5. Good personal administration
6. Avoidance of waste.
7. Control of acquisitions
8. Effective trade union administration.

There, he said are not exhaustive, it is whom management recognizes the necessity of effective internal control system, management of materials and resources is very much possible

Akinloye Oyibanji (1999 : 86)4 observed that many factors contributed to the reason why banks failed. The banks collapsed due to lack of financial prudence which is a clear out example of management incapacitation.

To have effective control of materials, men, and machine, management needs grassroots control affected through monitoring of any financial disbursement. The issue at stake is that good internal control is a necessary condition for efficiency of any organization.

To state it differently, any organization that opts for a continued business entity must be prepared to timely check the personal, procure the right type of personnel, train them on the technical aspect of the work and teach equity and justice in financial appropriation. The financial manager must be a model of sound background of prudent handling of money.

The subject of financial accountability has been a controversial issue even among the early philosophers.

Plato condemned using, (i.e. the use of money in trade) according to him, for the attendant “social ills” and “unethical” reasons.

In addition to the above, the peculiar nature of the Nigeria economy has made any topic in accountability, financial or otherwise, worth discussing. Nigeria has had her fair share of financial impropriety both in the public and private sector, not quite unconnected with her political set ups, the history of the evolution of her financial institutions and level of the country’s development.

The research has therefore been reduced to the firm (micro) level and Nigeria breweries Plc, Enugu has been carefully selected to be used in drawing a line of parallel between the level of accountability in the public and private sectors.

Control is an adjunct of accountability. The extent of financial accountability therefore should be reflected to the extent of the working control mechanisms within the particular organization.

The fact that both public and private sectors need and make use of control measures is undisputable. The extent to which they employ this and how it has improved their finances is called to question. The effective means, by which they employ internal control to safeguard assets, collect debts or pay creditor, etc is the issue at stake.

In the words of a management experts, “internal control comprises the plan of organization to co-ordinate method and measures adopted within a business to safeguard its assets, check accuracy and reliability of its accounting data, promote operational efficiency and encourage adherence to prescribed managerial policies.

Apparently, the general conception of internal control here is that it should be effective enough to cause probity in all the organizations activities with a resultant disciplined financial atmosphere in the organization.

1.1   STATEMENT OF PROBLEM

Every policy formulated in boardrooms would have been a success, if they were being carried out there too. Unfortunately, adherence to planned policies by employees is the problem of many management of some companies.

Peter F. Drucker, noted that management is the act of getting thing done through others. The owner of every business expects a reasonable return on their investment of who executes the policies. The problem of policy execution is further compounded by the evolution of large organization.

Personal supervision of the employees by individual seems an attempt at impossibility with large spoons of control. There are therefore the needs for an internal control system. Internal control is such an indispensable tool in the hand of management if it wish to obtain adequate and useful information, protect company assets, but despite the established necessity for installing an internal control system, many managers do not have it, and they of course wallow in the flimsy excuse of its expensive nature. This is the first problem.

The other thing to think about is the effectiveness of control procedures of the internal control is at all established. The effectiveness of control procedures is a function of the fact that segregate duties are not being circumvented by the collusion of the employees, negligence and even personal factors. These factors are problem to the firm and eventually would undermine the effectiveness and efficiency of the internal control system, if not taken care of. The afore – mentioned problem give rise to the following basic questions:

1. How adequately are employees adhering to internal control measures?
2. What standard should management adopt as test to observe control measures?
3. Should internal auditing be an adequate means of checking internal control?
4. Should the effectiveness of control be relied on for adequate financial accountability?

1.2   PURPOSE OF THE STUDY

The purpose of this study is to have a close look at the sort of internal control existing in breweries plc. If there is any, then to know how efficient this has assisted in attaining financial accountability.

Specifically, the purpose of the study include:

1. To ascertain if there is segregation of duties at various levels of management.
2. To know if there have been irregularities that have passed unnoticed in the establishment.
3. To find out what step have been taken to rectify inefficiency when detected.
4. To determine whether adequate punishment is meted out to those found to over – step control measures to prevent further occurrence of such defects in the future.
5. To know action that can be taken to forestall the situation and see that probity is maintained.
6. To undertake a critical appraisal of the system generally, and to suggest solutions where the system is seen effective, and
7. Finally, to build an analytical model to explain the network of an internal control, system.

1.3   SIGNIFICANCE OF THE STUDY

The rational for the research in this paper is

1. An attempt to investigate the general belief of a more financial management and more effective control in the private sector of the economy.
2. The dis-satisfaction (apparent or perceived) with the level of financial accounting in the private sector and the resulting under development in the country’s economic sphere.
3. The paucity or, more accurately, lack of research on the question of probity in the private sector.
4. An intrinsic in the question of whether internal control influences or can determine the level of financial accountability.

There ius also the importance of this study, which comes as a result of the public glamour for accountability. The promotion of the benefits associated with effective internal control and the attendant financial accountability is the aim of this study.

1.4   STATEMENT OF HYPOTHESIS

Based on the problem and objectives of the research, the following hypothesis are formulated,

1. Null hypothesis (Ho): Financial accountability is as a result of effective internal control.

Alternative Hypothesis (Ho): Prudent allocatives and fraud elimination are not as a result of effective internal control system.

1. Ho: Prudent allocation and fraud elimination are not as a result of effective internal control system.

Hi: Prudent allocation and fraud elimination are as a result of effective internal control system.

1. Ho: There is no financial accountability in the private sector of the Nigeria economy.

Ho: There is financial accountability in the Private sector of the Nigeria economy.