Definitions
Accounting to
Learn H. Hay, Government Accounting is “accounting for governmental and
non-profit entities” as the composite activities of analyzing recording,
summarizing, reporting and interpreting the financial transactions of
government units and agencies.
Learn H. Hay, Government Accounting is “accounting for governmental and
non-profit entities” as the composite activities of analyzing recording,
summarizing, reporting and interpreting the financial transactions of
government units and agencies.
Oshisami and Dean
also defined government accounting as the process of recording, analyzing,
classifying, summarizing, communicating and interpreting financial information
about government in aggregates and in detail reflecting all transactions
involving the receipts, transfer and disposition of government funds and
property.
also defined government accounting as the process of recording, analyzing,
classifying, summarizing, communicating and interpreting financial information
about government in aggregates and in detail reflecting all transactions
involving the receipts, transfer and disposition of government funds and
property.
From the above
definition, government accounting can be summarized as primarily being
responsible for the effective and efficient utilization of governmental
resources for the production of reliable financial information in respect of
government activities.
definition, government accounting can be summarized as primarily being
responsible for the effective and efficient utilization of governmental
resources for the production of reliable financial information in respect of
government activities.
Objectives
The objectives
are the aims and purpose at the which government accounting and financial
reporting are directed which are closely related to the user’s needs. Thus, the
operation of government activities.
are the aims and purpose at the which government accounting and financial
reporting are directed which are closely related to the user’s needs. Thus, the
operation of government activities.
1. Providing useful information necessary
for the efficient, effective and economic management of the financial resources
of government.
for the efficient, effective and economic management of the financial resources
of government.
2. Providing information necessary by the
executives to report on the discharge of their responsibilities in relation to
the collection, custody and disbursement of public funds entrusted into their
care. This is concerned with stewardship and accountability on which emphasis
are being placed.
executives to report on the discharge of their responsibilities in relation to
the collection, custody and disbursement of public funds entrusted into their
care. This is concerned with stewardship and accountability on which emphasis
are being placed.
3. Providing proofs of reasonableness of
the financial transactions and;
the financial transactions and;
4. Ensuring compliance and strict
adherence to the laid down rules and regulations.
adherence to the laid down rules and regulations.
Basic principles of government accounting
The following are the major
principles of government accounting.
principles of government accounting.
1. Organization
principle: In a governmental organization, there should be ordering of
functions. There should be centralized control of accounting function under a
single officer – supervising and keeping all the accounts. The accountants
General is in –charge of preparing, supervising and keeping accounts.
principle: In a governmental organization, there should be ordering of
functions. There should be centralized control of accounting function under a
single officer – supervising and keeping all the accounts. The accountants
General is in –charge of preparing, supervising and keeping accounts.
2. The
general ledger principle: The central book in government accounting is the
general ledger using the double entry system. Ledger is the trust of the
governmental accounting system. It contains a summary of all the records. There
should be subsidiary books.
general ledger principle: The central book in government accounting is the
general ledger using the double entry system. Ledger is the trust of the
governmental accounting system. It contains a summary of all the records. There
should be subsidiary books.
3. The
terminology principle: There should be common terminology and
classification consistently used throughout the accounting entries. Example,
head, sub-head, general warrant, special warrant number, estimates actual
revenue, excess, shortfall etcetera.
terminology principle: There should be common terminology and
classification consistently used throughout the accounting entries. Example,
head, sub-head, general warrant, special warrant number, estimates actual
revenue, excess, shortfall etcetera.
4. The
fund principle: This is the
most important principle in government accounting. Funds refer to assets set
aside for specific purpose.
fund principle: This is the
most important principle in government accounting. Funds refer to assets set
aside for specific purpose.
5. The
segregation of fixed items principle: Fixed assets are to be kept separate. There
should be segregation between current assets and fixed assets. Fixed assets
should not be carried in the same fund with the current assets.
segregation of fixed items principle: Fixed assets are to be kept separate. There
should be segregation between current assets and fixed assets. Fixed assets
should not be carried in the same fund with the current assets.
6. Budgetary
control principle: Government money can only be spent through appropriation
bill. The contingency fund can only be used in time of dire need and must be
quickly sent to the house for approval for replacement in contingency fund.
control principle: Government money can only be spent through appropriation
bill. The contingency fund can only be used in time of dire need and must be
quickly sent to the house for approval for replacement in contingency fund.
7. The
accruals principle: The accruals concept states that revenue and costs are
recognized as they are earned or incurred not as money is received or paid,
matched with one another so far as their relationship can be established or
justifiably assumed, and dealt with in the profit and loss account of the
period to which they relate.
accruals principle: The accruals concept states that revenue and costs are
recognized as they are earned or incurred not as money is received or paid,
matched with one another so far as their relationship can be established or
justifiably assumed, and dealt with in the profit and loss account of the
period to which they relate.
However,
accruals accounting in Nigeria is at present only Mandatory for public
corporations, whose accounting policies are expected to adhere to best
commercial practice. In line with this matching principle, a variety of state
controlled bodies make provision for depreciation in their account.
accruals accounting in Nigeria is at present only Mandatory for public
corporations, whose accounting policies are expected to adhere to best
commercial practice. In line with this matching principle, a variety of state
controlled bodies make provision for depreciation in their account.
In practice,
most government activities ids done on cash basis.
most government activities ids done on cash basis.
The government
adopts the cash basis as her accounting system because;
adopts the cash basis as her accounting system because;
(a) It is simple to undertake and operate;
(b) No special knowledge in accounting is
necessary before one can operate the treasury cash book; and
necessary before one can operate the treasury cash book; and
(c) It permits easy identification of those
who authorized payments and those who receive them.
who authorized payments and those who receive them.
8. The
valuation principle: Stocks of both consumable and properties should be
recorded in subsidiary books. All fixed assets should be stated at original
cost or estimated cost or appraised value. Provision for depreciation is very
unnecessary.
valuation principle: Stocks of both consumable and properties should be
recorded in subsidiary books. All fixed assets should be stated at original
cost or estimated cost or appraised value. Provision for depreciation is very
unnecessary.
9. The
standard classification principle: The two main aspects of this principle
are:
standard classification principle: The two main aspects of this principle
are:
(a) Where
government has business operations like a manufacturing firm, the establishment
should use classification common to private organizations.
government has business operations like a manufacturing firm, the establishment
should use classification common to private organizations.
(b) Institutions
like colleges, hospital, library and other public institutions should employ
the standard used by similar private institutions.
like colleges, hospital, library and other public institutions should employ
the standard used by similar private institutions.
10. The
audit principle: Government accounting specifies period audit by
independent account. Also the accounts prepared by the Accountant General of
the Federation or state are submitted for audit. The accounts are audited to
ensure among others;
audit principle: Government accounting specifies period audit by
independent account. Also the accounts prepared by the Accountant General of
the Federation or state are submitted for audit. The accounts are audited to
ensure among others;
– Compliance with rules
and regulation
and regulation
– Maintenance of proper
books of account
books of account
– Adequate security of
public funds and properties.
public funds and properties.
– The audit act of 1985 (as amended)
covers the area of audit and accountability within government establishments.
covers the area of audit and accountability within government establishments.
11. The
report principle: A financial report should be prepared monthly or often as
needed to show the current conditions of the budgetary accounts. At least once
a year, there must be general report. There should be uniformity in the
financial report of government agencies of similar types etcetera.
report principle: A financial report should be prepared monthly or often as
needed to show the current conditions of the budgetary accounts. At least once
a year, there must be general report. There should be uniformity in the
financial report of government agencies of similar types etcetera.
12. Legal
compliance and accounting principle: This principle states that legal procedures
must take precedence. However, if the government accounting report at any time
rejects aspect of the generally accepted accounting principle, this should be
disclosed in the report. The report should also state that general legal
requirements have been met.
compliance and accounting principle: This principle states that legal procedures
must take precedence. However, if the government accounting report at any time
rejects aspect of the generally accepted accounting principle, this should be
disclosed in the report. The report should also state that general legal
requirements have been met.
Conclusion
Government
accounting is the processes and procedures adopted in presenting accounting
information for governmental and non-profits entities.
accounting is the processes and procedures adopted in presenting accounting
information for governmental and non-profits entities.
It involves
recording transactions, analyzing, summarizing. Reporting and interpreting
financial transactions of government units, agencies and non-profits entities.
recording transactions, analyzing, summarizing. Reporting and interpreting
financial transactions of government units, agencies and non-profits entities.
Like any other
accounting record, its objective lies in provision of financial information for
effective and efficient running of governmental and non-profit making
organizations.
accounting record, its objective lies in provision of financial information for
effective and efficient running of governmental and non-profit making
organizations.
The basic
principles of government accounting include organization, the general ledger,
terminology, fund, which is the most significant, segregation of fixed item,
budgetary control, accruals, valuation, standard classification, audit,
reporting and legal and accounting compliance principles.
principles of government accounting include organization, the general ledger,
terminology, fund, which is the most significant, segregation of fixed item,
budgetary control, accruals, valuation, standard classification, audit,
reporting and legal and accounting compliance principles.
