FEDERAL GOVERNMENT BUDGET IMPLEMENTATION AND APPLICATION OF FORENSIC ACCOUNTING TECHNIQUES

FEDERAL GOVERNMENT BUDGET IMPLEMENTATION AND APPLICATION OF FORENSIC ACCOUNTING TECHNIQUES

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CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Public budgeting as a field of study has grown tremendously in recent years and budgeting is one of the most important areas in policy making. Budget in the Public sector in Nigeria is a yearly affairs but with poor results as shown by various scholars. The issue of budget implementation according to Oke (2012) has long been a source of concern to the public when one considers its importance on economic growth and development in the nation. However, he stressed further that budgeting has raised challenges in the area of preparation, administration, supervision, monitoring among others, due to change in policy and governance. Ekeocha (2012) opined that through budget, government indicates what to spend, determines what to borrow, and sets policy priorities within overall spending limit so as to influence the economy.

There are various definitions to the term budget but a few of these definitions are examined in this study. Samuel and Wilfred (2009) defined budget as a ‘comprehensive document that outlines what economic and non-economic activities a government wants to undertake with special focus on policies, objectives and strategies for accomplishment that are substantiated with revenue and expenditure projections’. Hellriegel, Jackson and Slocum (1991), also described budgeting as a process of categorizing proposed expenditures and linking them to goals. According to Stoner, Freeman and Gilbert (2008) budget is described as ‘a formal quantitative statements of the resources set aside for carrying out planned activities over stipulated periods of time’. They asserted that the wide usage attached to it is the fact that it is stated in monetary terms which makes it easy to compare dissimilar activities and their profit – loss potentials.

 Ojo (2013) posits that in budgeting, government usually forecast how much can be generated and the spending pattern from all sources available to them. Omolehinwa and Naiyeju (2013) observed that budget in the public sector is a document or a collection of documents that refers to the financial conditions of the government. They further stressed that budget provides indication of revenue flow and that public sector budget is used as an instrument to allocate public resources towards achieving some basic amenities and values. Hence they observed that public decisions must therefore weigh the cost of action against the worth of the activity to society.

In spite of budgeting, Nigeria is still at a cross road in terms of infrastructural development across the states of the Federation. Ojo (2013) corroborates earlier submission made by Ahmed (2010) that basic amenities are still lacking in the country in the areas of health, road, education, transportation, electricity, water etc., thus affecting the welfare of the citizenry. It is important to note that in spite of the oil boom, many Nigerians still live in abject poverty, the value of the naira has fallen drastically and the exchange rate of the dollar to the naira is very high. Ahmed (2010) further stressed that the effect of poor planning and execution of budget cannot be ruled out as one of the reasons for the lingering poverty level in the country.

Oke (2013) posited that the issue of budget implementation has been a source of concern to the public considering the important impetus of budget implementation on economic growth. Onike (2012) observed that by half of 2011, the impact of the ₦4.8 trillion budgets was yet to be felt in the fiscal year because the budget was not up to 75% implementation. He stressed that capital budget which is a source of funding capital projects has direct impact on the lives of the citizenry but was not implemented. He stated further that practically every year the implementation of budget had been a source of friction between the executive and the legislature.

He stressed further that it is not surprising that the Federal government did not implement the capital project as expected in 2012. Oke (2013) on the other hand observed that budgeting and its process remain problematic in the area of preparation and implementation. He noted that there is the need for adequate control aimed at improving effective resource utilization at the budget implementation stage. He reiterated that budget implementation has significant impact on the performance of the economy. Ugoh and Ukpere (2009) observed that the poverty level of most Nigerians in both rural and urban areas is very high. They noted that this might be due to poor budget implementation and the interference of both Federal and State governments. Ezeagba and Adigwe (2015) in table 1.1 below observed that budgetary implementation has dwindled in the country for over a decade. They observed further that an average implementation percentage of disbursed recurrent and capital expenditure between year 2004 and 2013 according to the Central Bank of Nigeria Annual Report varies. The table 1.1 below presents the budget expenditure allocation and average implementation level between years 2004 to 2013.

Table 1.1:       Budget Expenditure Allocation and Average Implementation Percentage (2004 – 2013) in Nigeria (N Billions)

Budget

RE Exp

CA Exp

Total

AI%

2004

568

350

918

50

2005

1000

617

1618

92

2006

1337

539

1876

92

2007

1485

782

2266

60

2008

1819

673

2492

30

2009

2014

797

2871

20

2010

2755


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