UNIVERSITY OF LAGOS

SCHOOL OF POST-GRADUATE STUDIES

DEPARTMENT OF ACCOUNTING

Programme: M.Sc. Accounting (Part- Time)

Academic Session: 2009/2010

Course Title: Public Sector Accounting

Course Code: ACC805

Assignment: Assurance Engagement

Paper Title:

Name: Uwuigbe, Olubukunola ‘Ranti

Matric. No: 099021041

SEPTEMBER, 2010

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1) Discuss the following:
a) The appointment
b) Loss of office/ Dismissal (Removal from office)
c) Remunerations
d) Functions of each of the following;

i) Auditor General for the Federation

ii) Accountant General of the Federation

2) Compare and contrast the public sector accounting and the private sector accounting

SOLUTION TO QUESTION 1:

The Auditor General for the Federation: The Financial Regulation 102 described the auditor

general of the federation as the officer recognised by the constitution of the Federal republic of

Nigeria, 1979 as amended 1989 and 1999, and the audit ordinance of 1956 to audit the accounts

of all accounting officers and all persons entrusted with the collection, custody, receipts, issue or

payment of public money. He is given the free hand to examine the accounts in such a manner as

he may think fit. However, at the end of the audit, he is expected to write a report stating whether

in his own opinion;

i) The accounts show true and fair view of the state of affairs of the nation at any

particular point in time

ii) Proper books of account are being kept

iii) Money is collected as at when due

iv) All money collected are properly accounted for

v) Money is expended for the purpose for which they are meant

vi) All rules and regulations are been complied with

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A) The Appointment of the Auditor-General for the Federation

In line with section 86 (1) of the constitution of the Federal republic of Nigeria, 1979 as amended

1989 and 1999, the Auditor-General for the Federation shall be appointed by the President on the

recommendation of the Federal Civil Service Commission subject to confirmation by the Senate.

The power to appoint persons to act in the office of the Auditor-General shall vest in the

President.

Except with the sanction of a resolution of the Senate, no person shall act in the office of the

Auditor-General for a period exceeding six months.

B) Loss of office / Dismissal of the Auditor-General for the Federation

In line with section 87 (1) of the constitution of the Federal republic of Nigeria, 1979 as amended

1989 and 1999, a person holding the office of the Auditor-General for the Federation shall be

removed from office by the President acting on an address supported by two-thirds majority of

the Senate praying that he be so removed for inability to discharge the functions of his-office

(whether arising from infirmity of mind or body or any other cause) or for misconduct.

This may include;

i. Ill- health;
ii. Insanity;
iii. Death;
iv. Gross misconduct but for the president to proof this he need the support of two-
third majority of the Senate
v. Where the terms of his office had expired.
The terms of office can expire if:
a. He had served for a maximum period of 35 years

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 b. He attained the age of 60 years, whichever is earlier.
c. Where his tenure is not renewed.
d. Gross misconduct.

If he has no misconduct or if no inability to discharge his function occurs, Auditor –

General cannot be removed from office until the retirement age.

C) The Remuneration of the Auditor-General for the Federation

In line with section 84 (1); (2) and (3), there shall be paid to the Auditor General such

remuneration, salaries and allowances as may be prescribed by the National Assembly, but not

exceeding the amount as shall have been determined by the Revenue Mobilisation Allocation

and Fiscal Commission.

The remuneration, salaries and allowances payable to the Auditor General shall be a charge upon

the Consolidated Revenue Fund of the Federation.

The remuneration and salaries payable and their conditions of service, other than allowances,

shall not be altered to their disadvantage after their appointment.

D) Functions of the Auditor- General

In line with section 85 (1) – (6) of the constitution of the Federal republic of Nigeria, 1979 as

amended 1989 and 1999 spelt out the statutory functions of the Auditor General for the

federation thus;

The public accounts of the Federation and of all offices and courts of the Federation shall be

audited and reported on to the Auditor-General who shall submit his reports to the National

Assembly; and for that purpose, the Auditor-General or any person authorised by him in that

behalf shall have access to all the books, records, returns and other documents relating to those

accounts.

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Furthermore, nothing in subsection (2) as stated above shall be construed as authorising the

Auditor-General to audit the accounts of or appoint auditors for government statutory

corporations, commissions, authorities, agencies, including all persons and bodies established by

an Act of the National Assembly, but the Auditor-General shall -

(a) provide such bodies with -

(i) a list of auditors qualified to be appointed by them as external auditors and from which the

bodies shall appoint their external auditors, and

(ii) guidelines on the level of fees to be paid to external auditors; and

(b) comment on their annual accounts and auditor's reports thereon.

The Auditor-General shall have power to conduct checks of all government statutory

corporations, commissions, authorities, agencies, including all persons and bodies established by

an Act of the National Assembly.

The Auditor-General shall, within ninety days of receipt of the Accountant-General's financial

statement, submit his reports under this section to each House of the National Assembly and each

House shall cause the reports to be considered by a committee of the House of the National

Assembly responsible for public accounts.

In the exercise of his functions under this Constitution, the Auditor-General shall not be subject

to the direction or control of any other authority or person.

The Auditor general of the federation performs the following accounting functions;

1) Seeing that proper system of accounts as prescribed by the minister of finance are

maintained

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 2) Exercise supervision over the receipts of public revenue and ensures its punctual

collection.

3) Ensures that there are adequate securities over the custody of public money

4) Ensures that there are adequate safeguards against the occurrence of frauds, embezzlement

and carelessness

5) Exercise supervision over all officers under his authority entrusted with the receipt,

custody and disbursement of public funds

6) Ensure that money are expended for the purpose for which they are meant for

7) Ensure that all books are correctly posted up to date

8) Ensure that authorised maximum cash balance to be held are not exceeded

9) Report any defect in the procedure for collecting revenue which come to his notice

during the course of his audit

POWERS OF THE AUDITOR-GENERAL FOR THE FEDERATION

In accordance with Financial Regulations 103, the Auditor-General for the

Federation has the following powers:

(a) Power of access to books and records of all Ministries and Extra- Ministerial
Departments at reasonable times.

(b) Power to request for information and explanation necessary for his duties.

(c) Power to carry out special investigation in any Ministry and Extra- Ministerial

Departments.

(d) Power to carry out Ad-hoc investigation in any Ministry or Extra-Ministerial Department.

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The Accountant General of the Federation

The Financial Regulation 101 described the Accountant General for the Federation as the Chief

Accounting Officer of the receipt and payment of the Federal Government, saddled with the

responsibility of general supervision of accounts of all ministries and departments within the

federation and prepares the annual financial statements of accounts of the nation as may be

required by the minister of finance. He or his representative shall have access at any reasonable

time to all documents and other records that are related to the accounts of every ministry or

department and he is entitled to obtain information necessary for the proper performance of his

duties.

A) Appointment of the Accountant-General of the Federation:

He is appointed by the president on the recommendation of the minister of finance /
Federal Civil Service Commission, must be versed in government accounting, and must
have served not less than in 10 years in the government account departments.

B) Loss of office / Dismissal of the Accountant-General of the Federation:

The dismissal of the Accountant-General of the federation, being a carrier civil servant is
as guided by the Federal Civil Service Commission rules and regulations.

C) Remuneration of the Accountant-General of the Federation:

The remuneration of the Accountant-General of the federation, being a carrier civil
servant is fixed /determined by the Salaries and wages Commission.
The remuneration and other conditions of service are as applicable to the post of the
Accountant-General for the Federation and as may be determined from time to time by
the Federal Government of Nigeria. In accordance with the provisions of the Civil
Service Rules and Regulations, the successful candidate shall hold office Up to the
compulsory retirement age of 60 years.

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Fringe benefits include a pension scheme in consonance with the contributory pension
scheme and allowances as may be approved from time to time by the Federal
Government.

Powers of the Accountant-General of the Federation, Financial Regulation 103:

(a) Power of access to books and records of every Ministry at any reasonable time.
(b) Power to request for information and explanation necessary for his duties.
(c) Power to carry out special investigation in any Ministry.
(d) Power to carry out Ad-hoc investigation in any Ministry.

Functions of the Accountant-General of the Federation, Financial Regulation 101:

The functions of the Accountant General of the Federation are divided into two namely;
“routine” and “management” accounting functions. The Routine functions include:

i. Establishment and maintenance of proper system of Internal Control in all the

Ministries.
ii. Establishment and maintenance of proper books of accounting records.
iii. Establishment of Internal Audit Department in all the Ministries.
iv. Ensure that money are collected as at when due.
v. Ensure that all money collected is properly accounted for.
vi. Supervise all officers under his authority entrusted with the receipt, custody and
disbursement of public funds.
vii. Maintain efficient checks against the occurrence of frauds, embezzlement and
carelessness.
viii. Ensure that there are adequate securities over the custody of government funds.
ix. Ensure that money are expended for the purpose for which they were meant for.
x. Ensure that the authorized maximum cash balance to be held at any time is not
exceeded.
xi. Establishment of authority limit.
xii. Establishment of cash limit.

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xiii. Ensure that officers made good any minor deficiency not cause by theft or fraud in
the cash held by them.

The Management functions include:

i. Prepare such financial statement required by Law or by the Minister of Finance.

ii. Preparation of Management accounts for decision making.
iii. Preparation of annual and supplementary estimate (i.e. budget).
iv. Issuance of financial regulation.
v. Issuance of financial circulars.
vi. Reporting defect in the procedure for collecting revenue.

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SOLUTION TO QUESTION 2

COMPARISON BETWEEN PUBLIC AND PRIVATE SECTOR ACCOUNTING

Public Sector accounting is an umbrella term which refers to the various accounting systems

used by various public sector entities while Private sector accounting also refer to the various

accounting systems used in the private sector.

SIMILARITIES

1. Budgeting: The two sectors prepares budget for the purpose of resource
management and allocation.
2. Financial Statement: Government produces various financial statements of assets
and liabilities which is in line with the Balance Sheet in private sector.
3. Principle of Book-keeping: Both public sector accounting and private sector
accounting apply the principles of double entry.
4. Controlling / Auditing: both controls their expenditure and have their accounts
audited.
5. Profit as a measurement of efficiency: In some public sector organizations,
managers operate on broadly commercial lines. In other words, the success of the
organizations is measured to a large extent by the amount of profit the
organizations generate.
Obviously, the parastarals have objectives other than profit maximization.
6. Accounting cycle: Both public sector accounting and private sector accounting
recognize accounting cycle or organization time period concepts. The account
starts from recording transactions to preparing post balance sheet.
7. End Users: Both sectors prepare accounts for end users

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COMPARISON BETWEEN PUBLIC AND PRIVATE SECTOR ACCOUNTING

DIFFERENCES PRIVATE SECTOR PUBLIC SECTOR

ACCOUNTING ACCOUNTING
1 Formation Comes in form of Public and Comes in various forms;
Private limited liability controlled ministries, parastatals etc. have
by CAMA1991 as dimed by the enabling Acts
Corporate Affairs Commission
2 Entry Legal entry Non Legal entry
3 Treatment of Dividend Dividends are often declared to Dividends are not paid
shareholders
4 Efficiency Measured by profit, capital Measured by services rendered.
appreciation, etc.
5 Auditing Private Accounts are audited by The Public Accounts are audited
firms of Chartered Accountants by the Auditor-General for the
Federation.
6 Objectives Maximization of profit Provision of adequate welfare
services at reasonable cost
7 Income / Revenue Income from the sales of goods Revenue is from members of
and services the public in form of taxation,
custom duties etc.
8 Spending The boards of directors gives Government obtains
approval for what it wishes to Parliamentary authority for
spend what it wishes to spend (no
taxation without representation)
9 Choice to spend In the private sector you have a In the public sector through
choice about whether to spend and taxation, you have no choice –
on what to spend you are forced to spend, usually
depending upon your level of
income
10 Linkages Difficulty in linking inputs to There is no problem linking the
outputs inputs to outputs in this sector
11 Treatment of cost of The cost are spread over the written off immediately after
Fixed Assets estimated useful lives of the asset purchase and payment

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 BIBLIOGRAPHY

Adams R.A. (2006), Public Sector Accounting and Finance. Revised .Edition 2.
Corporate Publishers Venture, Lagos

Gretschmann K. (1991): “Analysing the Public Sector: The Received View in Economics and
Shortcomings” chap. 3 in Kaufmann F. (ed.)(1991): “The Public sector – challenges for
coordination and learning”, de Gruyter, Germany.
Institute of Chartered Accountants of Nigeria (ICAN). (2006), Public sector Accounting,
Paper 14.

Jimoh Biodun. (2006), Principles of Public Sector Accounting and Finance.

2nd Edition. Magic Plus Ltd., Lagos.

Lane, J.E (1995): “The Public sector”. Sage publications. (Focuses on changes within the field of
public administration - contains an overview of concepts, models and approaches of
public choice, new institutionalism and public administration – scale 5)

1999 Constitution of the Federal Republic of Nigeria

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