Control Mechanisms and the Management of the Funds of Local Governments in Nigeria: a Case Study of Anambra Statestate

CONTROL MECHANISMS AND THE MANAGEMENT OF THE FUNDS OF LOCAL GOVERNMENTS IN NIGERIA: A CASE STUDY OF ANAMBRA STATESTATE....

BYBYBY

DIBUA TOCHUKWU .B PG/M.SPG/M.Sc/09/51387c/09/51387

DEPARTMENT OF PUBLIC ADMINISTRATION AND LOCAL GOVERNMENT UNIVERSITY OF NIGERIA, NSUKNSUKKAKA

JANUARY, 20122012..

TITLE PAGE

CONTROL MECHANISMS AND THE MANAGEMENT OF THE FUNDS OF LOCAL GOVERNMENTS IN NIGERIA: A CASE STUDY OF ANAMBRA STATE.

DIBUA TOCHUKWU .B PG/M.SC/09/51387

BEING A RESEARCH PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF THE DEGREE OF MASTER OF SCIENCE (M.Sc) IN PUBLIC ADMINISTRATION AND LOCAL GOVERNMENT OF THE UNIVERSITY OF NIGERIA, NSUKKA

DEPARTMENT OF PUBLIC ADMINISTRATION AND LOCAL GOVERNMENT UNIVERSITY OF NIGERIA, NSUKKA

SUPERVISOR: DR, C U AGALAMANYI

JANUARY, 2012.

CERTIFICATION

I, Dibua Tochukwu B, a postgraduate student in the Department of Public Administration and Local Government (PALG), University of Nigeria, Nsukka with registration number PG/M.Sc/09/51387, has satisfactorily completed the requirement for research work for the degree of Master of Science (M.Sc) in Public Administration and Local Government.

------DR, C U Agalamanyi Prof. Fab. Onah Supervisor Head of Dept (PALG)

------External Examiner Prof. O.E. Ezeani Dean, Faculty of the Social Sciences Date: ------

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APPROVAL PAGE

This research work has been approved for the award of the Degree of Master of Science (M.Sc) in Public Administration and Local Government, University of Nigeria, Nsukka.

------DR, C U Agalamanyi Prof. Fab. Onah Supervisor Head of Dept. (PALG) PALG, University of Nigeria University of Nigeria Nsukka Nsukka

Date:------Date:------

------External Examiner Prof. O.E. Ezeani Dean, Faculty of the Social Sciences Date:------University of Nigeria, Nsukka.

DEDICATION This project work is dedicated to our Lord Jesus Christ, the Author and finisher of our faith who died on the Cross of Calvary for us. To Him, I say, may all Honour, Glory, Adoration, Praises continue to be ascribed to His Holy Name for ever and ever, Amen.

ACKNOWLEDGEMENT The successful completion of this research work was made possible through a number of persons who have contributed immensely for its accomplishment. Hence, my first gratitude goes to my erudite supervisor, DR, C U Agalamanyi of the Department of Public Administration and local government, University of Nigeria, Nsukka. A man with a high level of integrity and honour, who in spite of his crowded schedules made out time to read and effect all the useful corrections as regards the presentation of work. I must confess that, my successful completion of this programme is a tribute to the inestimable love and care of my dear mother, Mrs. Dibua Theresa, those kindness ,and love constant and intercessory prayers which has strengthened me spiritually and made me overcome all satanic influences that comes my way. In fact, she is the source of my inspiration. To you I say, thank you mummy.Am grateful to her. I lack appropriate words to express my deep appreciation of the unalloyed support and understanding of my amiable sisters and brothers, Amaka, Big Joe, Ogo for their love and care. All of them are simply wonderful. My acknowledgement will not be complete if I failed to remember my bossom friend and classmate, Ezeudu Tochukwu, Inno, who had been very supportive at various times during my scholarly journey. Uche and Edebor has been very helpful and inspiring to me. He is a friend in brotherhood. On the same level, I record my joy at the fruitful intellectual and social relationship I have had with Mr. Sam Ugwu a lecturer in the department of Public administration, for his insightful advice and promptings that has help me pursue this work to completion. I remain profoundly appreciative of the love, concern and prayers of some dedicated and committed servants of God, whom the Lord had used to remember me in a very special way in their daily medication and intercessory prayers during the cause of this programme. Among them are Rev Fr Ezeokafor amongst others too vi numerous to mention. To them, I say ‘Bravo’ and may the good Lord continue to enrich and shower more blessings to you now and always. Finally, I feel completely humbled that the Good Lord, God Almighty, gave me the abundant life and redemption to be what I am today educationally and otherwise. I happily remain persistently committed and consecrated to serving and worshipping Him all the days of my life. To Him and to Him alone be the eternal glory in Jesus wonderful name, Amen.

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ABSTRACT

The role of the third-tier of government in societal development has become broader, deeper and even more sophisticated in the current dispensation. Thanks to the numerous reforms which have been visited on local government within the last few decades. In spite of this however, the performance of the third-tier so far in developing the society, more especially the grassroots has been quite unsatisfactory. It is in the light of this that this work dwelt on the control mechanisms and the management of the funds of Local Governments in Nigeria using Anambra State as its case study. Effective control mechanism is a pre-requisite for good financial accounting to be achieved in the local government system. Local government accounting aims at providing analysis of revenue and taxes realized and for this to be adequately taken care of, there is need for the establishment of an effective and efficient control mechanisms in the financial management of Local Government funds. In view of the situation, this research attempts to address some pertinent issues which include highlighting some of the control mechanisms provided in the Financial Memoranda and other operating guidelines as well as the faithful application of these mechanisms in the Local Government system. Attention was also paid to the factors that hinders the successful application of these mechanisms. The research went further to identify a number of findings which include the attitudes of the chairmen towards internal control measures, non-adherence to the provisions of Financial Memoranda, large scale corruption among career civil servants and the political officials, among other myriads of findings. These findings were of course not without some negative implications. We have identified some of them to include, low revenue base, administrative ineptitude and inefficiency, gross underdevelopment of the grassroots, unemployment among the teeming youths, abject poverty among the rural dwellers and many more. However, the researchers also went ahead to proffer some useful recommendations which if religiously implemented to the latter, there will be proper financial accountability in the control and management of Local Government funds and resources and the noble ideal of fostering development by way of efficient service delivery to the local people will be greatly achieved.

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TABLE OF CONTENTS

Title Page ------i Certification ------ii Approval Page ------iii Dedication ------iv Acknowledgement ------v Table of Content ------vi List of Tables ------x List of Figure ------xi Abstract ------xii

CHAPTER ONE: INTRODUCTION

1.1 Background of the Study ------1 1.2 Statement of the Problem ------5 1.3 The general Objective of the Study ------8 1.4 Significance of the Study ------8 1.5 Scope and Limitations of the Study ------9 1.6 Limitations of the Study ------9

CHAPTER TWO: LITERATURE REVIEW

2.1 Literature Review Procedure ------11 2.1.1 A Brief Historical Analysis of Local Government in Nigeria ------12 2.1.2 The present Local Government System in Nigeria ------14 2.1.3 Structure of the Local government ------15 2.1.4 Decision making in the Local Government ------17 2.1.5 General Principles of Internal Control in the Local Government ---- 18 2.1.6 The place of internal control mechanisms and accountability in the local government ------21 2.1.7 Relationship between accountability and control mechanisms in the Local Government ------26 2.1.8 Aids to proper accountability in financial management in the Local Government ------28 2.1.9 External control mechanisms ------33 2.1.10 Handbook on local government administration ------38 2.1.11 The Operational Guidelines ------39 2.1.12 The Implementation Guideline ------40 2.1.13 Problems Affecting Control Mechanisms in the Local Governments in Anambra State ------43

2.1.14 Non-adherence to the provisions of the model financial memoranda 45 2.1.15 Popular areas of fraudulent activities in the local government ----- 53 2.1.16 Gap in Literature ------55 2.2 Hypotheses ------56 2.3 Operationalization of key concepts ------56 2.4 Theoretical Framework ------61 2.4.1 The application of this Theory to the Study ------62 2.5 Methodology/research procedure ------64 2.5.1 Sources of Data ------64 2.5.2 Primary Sources ------64 2.5.3 Secondary Sources ------65 2.5.4 Area of the Study ------66 2.5.5 Population of Study ------66 2.5.6 Sample of Study ------67 2.5.7 Sampling Procedure ------69 2.5.8 Instruments for data Collection ------71 2.5.9 Administration of Instruments ------71 2.5.10 Validity and Reliability of Instruments ------71 2.5.11 Method of Data Analysis ------71

CHAPTER THREE: BACKGROUND INFORMATION ON AREA STUDY: ANAMBRA STATE 3.1 History ------73 3.1.1 Igbos Ukwu Vessel ------74 3.2 Resources ------75 3.3 Culture and Tourism ------76 3.3.1 Agulu lake1------76 3.3.2 Ofala festival ------77 3.4 Education ------79 3.5 Politics ------80 3.6 Cities and Administrative Divisions ------82 3.7 Anambra state LGA ------84 3.8 urbanization and structural planning ------85

CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND FINDINGS 4.1 Presentation of Data ------87 4.2 Analysis of data/test of hypothesis------101 4.3 Findings ------106 4.4 Discussion on findings ------110

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS 5.1 Summary ------124 5.2 Conclusion ------125 5.3 Recommendations ------126 Bibliography ------133 Appendix I ------140 Appendix II ------141

LIST OF TABLES

Table 2.1: Table showing lack of internal control mechanisms in biases local government ------27 Table 2.2: Spending limits for Local Government Council ------42 Table 2.3: For Individual LG Functionaries ------42 Table 2.4: Summary of actual contracts awarded on construction of bridges, culverts, health centres and supply of latterites undertaken by council between Jan to Dec, 2008 ------44 Table 2.5: Details of supplies made between Jan-June, 2007 ------48 Table 2.6: Population distribution of staff in some selected local government and their percentages ------65 Table 2.7: Questionnaire distribution and determination of 5% sample size ------67 Table 2.8 Determination of senatorial district and sampling procedure-- - 68 Table 4.1: Position held in council ------85 Table 4.2: Distribution on working experiences ------86 Table 4.3: Whether there is financial accountability ------87 Table 4.4: Degree of independence of the internal audit ------88 Table 4.5: Frequency external auditing in council ------88 Table 4.6: Level of adherence to operational guideline ------89 Table 4.7: Effectiveness of audit queries and sanctions ------90 Table 4.8: Internal control mechanisms in councils ------90 Table 4.9: State government interference with the local government ------91 Table 4.10: Whether budget is implemented ------92 Table 4.11: Corruption and its adverse effects on council ------92 Table 4. 12: Problem of insufficient funds ------93 Table 4.13: Why stores are badly utilized ------93 Table 4.14: Enforcement of enabling bye-laws ------94 Table 4.15: Control mechanism and development of the local government area- 95 Table 4.16: Motivation of Employees in the council ------95 Table 4.17: Financial control mechanism and insufficient funds ------96 Table 4.18: Accountability for internally generated revenue ------97 Table 4.19: Efficient financial control mechanism and efficient management is the bane of underdevelopment in your local government area?--- 97 Table 4.20: Effective control mechanisms and elimination of corruption - 98 Table 4.21: Hypothesis I ------100 Table 4.22: Hypothesis II ------101 Table 4.23: Hypothesis III ------103

CHAPTER ONE

INTRODUCTION 1.1 BACKGROUND OF THE STUDY The expediency for the creation of Local Government anywhere in the world stems from the need to facilitate development at the grassroots. The importance of local government is a function of its ability to generate sense of belongingness, safety and satisfaction among its populace. In the first place, it is the government nearest to the people, and as such, it has face-to- face relationship with the people of the rural areas; possesses first hand knowledge of the people’s problems, and feels the most impact of the people’s needs and aspirations. If the local governments are to perform their assigned functions to a reasonable standard, the local government must be viable and their overall management must be geared towards attaining efficiency in carrying out their functions. Hence, in the words of Nwankwo (2003: 177), “it is generally agreed that the viability of a local government is dependent in the level at which its services are inextricably linked with its financial state”. One of the crucial tests of effectiveness of any local government is the extent of its financial independence. Its ability to control most of its financial resources has a great deal to do with its capacity to discharge competently its functions. This is why Obasi (2002: 49), contends that “a government which has no control over its finances is a government which cannot plan ahead realistically, lack control of how much money will be at its disposal from internal and external sources, is nothing, but an irresponsible government”. Like most of the local government in Anamber state. Equally, to be able to execute functions allotted to it by the constitution, every local government, as a third-tier government would have been expected or seen to not only having adequate finances, but also execute capacity and discretionary powers to control and manage their finances. But most local government have little or no fund to management No discussion on problem and challenges facing local government in Nigeria can be considered exhaustive without addressing the problem of control mechanism, the management of fund and financial recklessness. These phenomena are one among most that are generally accepted as the canker that threaten to destroy the fabric of the Nigeria local government on its role and goals. This malaise is manifest at all level of local government in Nigeria, it takes 2 different forms including short-accounting, inflation of contracts, failing to prepare financial report, fraud and outright embezzlement of local government funds. Alarming cases of widespread lack of financial control and fund management among local government officials were highlighted by Ikejiani (1998:139-145) In other incident report by new swatch magazine in 2001,no fewer than 31 local government chairmen from different parts of the country were either under investigation ,impeached or on suspension for various forms of inadequate or total lack of control mechanism and fund management According to Oguonu (2004: 75), “there must be a machinery for ensuring that responsibilities are clearly defined, that financial duties are properly distributed, that expenditures are properly sanctioned, that outlays are wisely made, that collection of monies are carried out with diligence and honesty, that precautions for the custody of cash, the protection of financial interest are not over looked”. Every organization worth its salt has the responsibility of establishing a good control mechanism in order to achieve accuracy and reliability of records and as much as possible eradicate fraud, extravagance and waste. Considering the fact that an organization is set up with some set goals and objectives, be it private or public in nature, there is the need for adequate checks to be maintained to ensure that the goals and objectives of the organization is optimally achieved. All organizations, private or public, aim to succeed and to remain afloat. It therefore follows that, the growth of any organization especially the local government depends to a large extent on the management and its activities. This fact was buttressed by Agu (2003: 29) when she stressed that the success of any organization depends mainly on its ability to utilize its resources meaningfully. The importance of finance in the local government cannot be over-emphasized. In fact, for proper financial management and public accountability to be achieved in the local government system ,it is the recognition that finance is the life wire of the local government. Pfiffner and Presthus (2000: 267), described “finance” as a thread that runs round a cloth. According to them, if the thread is pulled wrongly at one end, it will affect the design of the cloth and destroy its beauty. That is finance. It must be handled with care. It is widely believed that the local government cannot function effectively and efficiently without finance. In the words of Amujuri, (2004: 109), ‘finance’ constitutes the ‘brain’ as well as the ‘nervous’ system of any organization. It is the lubricating elements which greases and makes 3 the administrative machinery moves. Therefore, finance is seen as the nerve centre of most organizations especially formal ones. All business transactions in an organization such as the Local Government are spelt out in accounting records. Hence such accounting system must be scrutinized properly to ascertain the correctness and genuineness of such records. This was enunciated by Onah (2001: 216), that “the establishment of effective control mechanisms in the management of funds is seen as a leeway in which the local government can conduct its activities to avoid the risk of manipulations, irregularities and fraud in the organization”. Local government accounting aims at providing analysis of revenue and taxes realized and for this to be adequately taken care of, there is need for the establishment of an effective control system of accounting records. Hence, effective control mechanisms is a pre-requisite for good financial accounting to be achieved in the local government system. The need for assessing control mechanisms and accountability in the local government system arises because achieving proper accountability demands efficient control mechanisms. These mechanisms ensure that the provisions made in the Financial Memoranda concerning accountability are adhered to. Absence of control mechanism creates room for fraudulent accounting system. Moreover, control aids in making sure that the targets of the organization are achieved. Non-adherence to the provisions in the financial memoranda can only be dictated by an effective control mechanism. A major problem area in the control mechanisms and the management of the funds of local government in Anambra State is the issue of the budget; which is an instrument of financial management and control. Once budgets are approved by the local government councils, attention is usually focused on the expenditure side to the total neglect of the income side. Whereas, Adewumi (1998: 13), “asserted that; the ingredients of good financial management are prudent budgeting, efficient revenue collection and allocation of the available resources for the expansion of new and improvement of existing services and programmers.” Poor control mechanisms and the management of the funds of local governments can also be attributed to the inability of local governments to enforce bye-laws which could enhance their revenue collection. The local government needs funds to effectively perform her constitutional functions. These can only be achieved with adequate revenue. If the bye-laws are not enforced 4 how can the local government generate the expected revenue for developmental projects, queried Agbuzu, (2005: 75). For example, there are local governments that have approved laws on tenement rates which could relieve them of their dependence on the monthly allocations from the Federation Account, but many of them have adopted nonchalant attitude towards this revenue source. Similarly, local governments have been known to exhibit their inability to keep adequate accounting records. Ozor (2000: 131) has noted with dismay that, many chairmen, and councilors have little or no knowledge of the accounting system in local governments. To them, that should be left to the ‘experts’ who are in short supply in the local governments. There is urgent need to restore financial sanity and public accountability in the local government. This is necessary to ensure the continued survival of the system and to maintain sustainable development at the grassroots. Central to any system of good financial management is the mechanism for ensuring and enforcing control and accountability in the conduct of financial activities. A conducive system of accounting is imperative for ensuring control in the administration of public funds, Onah (2007: 108) rightly observed that, “for a system of financial control to be of any effect, it has to complemented and supported by an equally cohesive system of auditing”. To this end, according to her, each local government is empowered to established an internal audit unit to provide a complete and continuous audit of the accounts and records of revenue and expenditure, plant, allocated and unallocated stores”. The internal auditor is directly responsible to the chairman as the accounting officer, and maintain neutrality and impartiality. He is professionally protected by the Auditor-General for Local Government who lays down his duties. To further strengthen his position, section 40.2 of the financial memoranda empower the auditor to submit to his accounting officer and the auditor-general for Local Government a detailed audit programme, and thereafter, he shall report monthly to the accounting officer as well as the state Auditor – General for Local Governments on the progress of the audit. An innovation introduced into the local government financial administration and control is the institution of the Audit Alarm Committee to prevent irregular and illegal payments before they are made. The audit alarm committee shall be composed of (1) the state Auditor General for local governments as chairman, (ii) the Director of Local Government Inspectorate, and (iii) one representative of the state Accountant-General. 5

To further strengthen the control mechanism and enforce the culture of accountability in the management of the funds of local government in Nigeria, chapter thirty-nine (39) of the Financial Memoranda (FM) has been devoted to audit queries and sanctions. The irregularities that may lead to audit queries are categorized with each category attracting police prosecution. Thus if local government functionaries in Nigeria and especially in Anambra State will take extra steps to familiarize themselves with the provisions of the Financial Memoranda (FM), they already have what it takes to ensure prudent financial management of the funds at her disposal. Fortunately, the revised FM has gone further to prevent such functionaries from getting away with their financial recklessness while in office as they can still be held responsible for all their actions even after leaving office. Central to the development of a virile and viable local government in Nigeria is a system of prudent financials management. The revised Financial Memoranda (FM) provides elaborate arrangements to ensure that public funds are handled by local government functionaries with a high sense of probity and accountability. As rightly noted by Adejo and Ohiani (2000), it is instructive to mention that financial management and control of the funds of local government is not the exclusive concern of anyone part of the organization of a local government or any one person or category of persons within the system. The local government council, the chairman, the Executive committee and all members of the local government staff from, the highest to the lowest are involved in financial affairs and should, in particular, be concerned with ensuring that within their field of operations and responsibility, proper value is obtained for money spent.

1.2 STATEMENT OF THE PROBLEM In virtually all organizations, and in the local governments in particular, it is expected that, in order to assist all levels of management to discharge their responsibilities properly, a definite system of control mechanisms should be established and sustained. The system to be adopted should help in preparing properly the objective analysis, appraisals and reports relating to specific activities. Again, some of the basic functions of management in an organization like the local government system are planning, execution and control. Control, as an aspect of managerial function is therefore very necessary if the organization is not to be rudderless. It is therefore one 6 of managerial tools available to management to effectively achieve the aims and objectives of an organization. Throughout the country, comprehensive arrangements have been designed for the exercise of internal and external controls mechanisms over the management of the funds of local governments but unfortunately, very little have been achieved over the years. Thus, it is vital to ask some pertinent questions like this; why should the management of funds be controlled? How effective and adequate are these control measures to the general well-being of the local government. The nerve centre of most organization, especially formal ones, is finance. This is so because human wants are many, but the resources to satisfy these wants are limited. Therefore, in all human undertakings, attempts are usually made to make the best use of the limited resources. The aim is to obtain the greatest output from a given input, and these inputs and outputs are usually expressed in monetary terms. Thus, recording of monetary values helps in ensuring organizational efficiency. It is also an acknowledged fact that, the life wire or bedrock of any organization, be it public or private is finance, and no administrator can achieve the set goals or objectives of an organization, if such organization(s) is faced with the problems of good or sound financial management. In most local governments today in Nigeria, and Anambra local governments in particular, you fail to find structures on the ground indicating any administrative presence. And if you inquire, you will receive an answer like “shortage of funds”. Now; the question is that, is it that this money is still insufficient despite the huge chunk of monthly federal allocations sent to these councils or does it goes the wrong way? If it is insufficient, what are the councils doing to improve means and ways of generating more revenue. Or if it goes the wrong way what are the control mechanism being put in place to check these excesses. Accountability control measures in Nigeria Local Governments have always existed. What seems to be an issue is the failure of such control measures to achieve the objectives for which they were designed. There have always been in existence both internal and external control measures which are suppose to block, for instance, internal revenue leakages in the local governments. There are, for instance, both internal and external audit control institutions. The office of the state Auditor-General for local governments is supposed to be an effective external control mechanism. The relevant question concerns whether the professional officials of this 7 office are actually doing their work well. The same question applies to internal audit control measures. Are they enjoying the necessary job security and protection meant for professionals in such offices. Secondly, there exist operational guidelines for local governments in Nigeria. These provisions should promote healthy financial transactions in the local governments. But why are these guidelines subverted by key political officials of the local governments? Why is it possible for top career officials of the local governments to collude with such transient political officials in this mismanagement enterprise? Thirdly, and more importantly, there is the Model Financial Memoranda for local government councils in Nigeria. The detailed provisions of these memoranda seems to exist only on paper. Why, in spite of the existence of many strict provisions of this memoranda, internal revenue leakages continue to increase as the days go by? The existence of fake receipt is no longer a secret today. Why? Why are stores so badly utilized for personal purposes than for public interest by those, who are supposed to manage them? Fourthly, why is it that the annual budget has failed as an instrument of ensuring financial accountability in the local government system? How effective is the Finance and General Purpose Committee (FGPC) in its budget control functions? Fifthly, one also wonders, why there are always cases of fraud, mismanagement, misappropriation of funds and mal-administration in the local governments in Nigeria, and in Anambra State local governments in particular, in spite of various control mechanisms being put in place to check and curtail there excesses. These and many more questions currently agitating our minds are what this research work considers expedient to unravel. The questions then arises! (a) Are the internal control mechanisms properly installed in the L.G.A of Anambra state? (b) To what extent are the operators (employers) of the system adhering to the provisions of internal control mechanisms? (c) What can be done to enhance accountability through effective control mechanism in the Anambra state local governments? (d) Why is the local governments in Anambra state facing the problem of insufficient funds despite the huge monthly federal allocations made to them. 8

Finding answers to these questions are crucial in ensuring effective control mechanisms and constitutes the focus of this thesis.

1.3 THE GENERAL OBJECTIVE OF THE STUDY The general objective of the study is to find out how financial control mechanisms can be applied to promote effective management of the funds of Local Governments in Anambra State.

Specific objectives of the Study The specific objectives of the study are as follows: 1. To ascertain the level and the extent of application of the various control mechanisms in the local government in Anambra state. 2. To determine the degree and extent of which the officials and operators of the local government adhere to the provisions of enabling guidelines on internal control mechanism 3 To identify the various control mechanisms in the management of the funds of local governments in Anambra State. 4 To find out why the local governments in Anambra State are facing the problem insufficient funds despite huge federal allocations. 5 To suggest appropriate and a more functional approach of financial control and management of the funds of local governments in Nigeria with particular reference to Anambra State.

1.4 SIGNIFICANCE OF THE STUDY This study has both theoretical and empirical significance. Theoretically, this study is pertinent because it adds to the science of public administration. It also serves as a stepping stone whereby future researchers on similar studies to either revalidate or invalidate the findings here. Finally, this study will add to the institutional theory of public administration. Empirically, this study will assist in identifying more potent and pragmatic ways of instilling sound and efficient control mechanisms in the management of the funds of local governments in Nigeria and in Anambra State in particular. This study will also add to the body of knowledge, not only by enriching the existing literatures on the subject of financial control mechanisms and the management of local 9 governments funds, but on how best to curb the excessive abuses and ineffectiveness at present associated with poor accounting processes and procedures in the system. Apart from this, the study will impart more knowledge to scholars and local government administrators, chairmen, councilors, political appointees, stakeholders in the local government business, accounting staff in the finance department, revenue officers and council revenue staff and their agents, that good and efficient financial control mechanisms will help to increase efficiency, decrease waste, unintentional errors and minimize fraud considerably. When these vices are curtailed, the local government will have sufficient funds to carry out developmental projects and programmes.

1.5 SCOPE AND LIMITATIONS OF THE STUDY

SCOPE OF THE STUDY The researcher being aware and familiar with the disillusion of most citizens in the third tier of governments in the country as regards the poor performance of this tier of government will nevertheless focus the scope on a concrete case – Anambra State Local Government which is composed of eighteen councils. Apart from the fact that the researcher hails from this state, all the local governments that exist in the state and its methods of applications of financial control mechanisms are similar and typical of all the rest local governments in the country, hence the findings therein could be generalized to other third-tiers of governments in Nigeria. This is so because most local governments in Nigeria complain of similar problems ranging from non-payment of salaries and allowances to workers for several months, lack of good water supply, inadequate health facilities, lack of electricity supply, lack of good feeder roads through which to convey their local food products to the urban markets, lack of skilled workers, inadequate finance, corruption, embezzlement and fraud. These problems have remained the perennial woes of local governments in the country.

1.6 LIMITATIONS OF THE STUDY Naturally, carrying out a comprehensive study of this magnitude usually accompanied some level of constraints and limitations. A number of factors which posed as limitations to the researcher are as follows; 10

Time The researcher had time constraints to contend with. This is particularly so because of the duration of the programme which runs for twelve calendar months after which failure to submit your research project may attract negative sanctions. Faced with this, the researcher has to tackle academic course work alongside with the research work within the limited time available. Finance A research work of this nature usually require enough funds in which to aid you undertake some trips to administer and collect questionnaires from respondents. Some of such journeys cannot be accomplished in just one day. Hence, the need to pay for hotel accommodation and feeding especially faced with the harsh economic realities in the country. In most cases, the researcher has to borrow money from friends and well-wishers in order to finance these problems.

Attitude of some public servants to information The attitude of some public servants was another problem of worry to the researcher. Some of them exhibited non-challant attitude toward the researcher. In fact, some bluntly refuse to talk or oblige the researcher any useful information. While some talk, but refuse to answer some pertinent questions put forward to them for fear that it might jeopardize either their employment or closed their source of raking in a little extra income. In most cases, all pleas that every information would be treated in strict confidence fell on deaf ears.

Mental insecurity With the deplorable state of our major highway roads, couple with the attendant recklessness on the part of drivers and users alike, the researcher did feel very insecure during most of the trips embarked upon in the cause of this research work. This is evidence in the spate of road accidents recorded on our roads on daily basis, some of which many lives were lost and others maimed. However, in spite of these limitations, the style, quality and output of this work would not be jeopardized in any manner whatsoever.

CHAPTER TWO

LITERATURE REVIEW 2.1 LITERATURE REVIEW PROCEDURE This chapter will review literature on concepts, comments and expositions on the subject matter. It is hereby intended that the framework will be analytical and illuminating to the real issues at stake. In addition, there shall be direct and indirect intellectual excursion into the existing body of knowledge relating to the variables at play in this study. This shall be employed to make substantial contribution to knowledge by identifying gaps that have to be filled in the existing literature. Attempts shall also be made to feature published and unpublished works of current scholars on the literature as a way of conceptualizing a framework that represents current thinking of the literature that will guide the study. Thus, this study will review literature on the following areas. • A brief historical analysis of local government in Nigeria. • Structure of local government administration in Nigeria. • Decision making in local government • General principles of internal control mechanism in the local government. • The place of control mechanism and accountability in the local government. • The application of internal control mechanism in the local government. • Aids to proper accountability in financial management in local government. • Internal control system • Administrative control • Internal checks • Internal auditors • Budgetary control 12

• External control • The office of Auditor – General of Local Government • The Inspectorate division of the Ministry of Local Government Affairs • The Finance and General Purpose Committee • The Handbook of Local Government Administration • Operational guidelines • Implementation guidelines • Financial memoranda for Local Government • Popular areas of fraudulent activities in the local government

2.1.1 A Brief Historical Analysis Of Local Government In Nigeria Before the arrival of the colonial masters, the traditional grass root Nigerian society had no substance on ground to portray devolution of powers. John de Saint (1981) acknowledges that in the traditional Nigerian society, that is talking about real grass root, power was bestowed upon paramount chiefs and each village or clan had its codes of conduct which were predicated on the need to ensure strict morality in all forms of actions and reactions of these paramount chiefs were taken as tin-gods in most of these societies whose people the chiefs as men ordained by God. However, Orewa (1984), refuses to agree with this. Even though these chiefs were held in high esteem, they were not necessarily overtly or covertly dictatorial. Colonialism introduced dictatorship in Nigeria. These societies always had a council of elders who took decisions on pressing issues and these decisions were usually taken after exhaustive debates. That the chiefs were very influential is not in question but they respected the people’s voice. One can only say that the form of authority in pre- colonial Nigeria was rudimentary, but to a large extent, these were exhibits of flashes of democracy. Ajayi (1994), posits that, if the Nigerian society had been allowed to evolve on its own, without any colonial interference, by now we would have been able to boast of an administration to suit the different people who are today called 13

Nigerians and that would not have been any difference from what is today referred to as democracy. As a result of the fact that grass root administration in pre-colonial Nigeria was not very well structured and documented and varied from village to village and region to region. Guidelines for the propagation of indirect rule of the Nigerian economy were laid down by Sir George Goldie in the year 1886. By 1890, colonial native authorities were established but however in very rudimentary forms. Orewa (1985) contends that “this represented a system of indirect rule which established local administration through traditional institutions”. In some parts of the country, these institutions had problems especially where it concerned their identity. A further re-organization in the 1900s saw to the emergence of chiefs-in-council and chiefs-and-council to replace the sole Native Authority. This was actually based on recommendations made earlier in 1901 by sir Frederick Lugard before he became governor general of the amalgamated Northern and Southern protectorates of what is today the Nigerian state. The core of this was a mutual and workable agreement between the chiefs (Obi, Emir, Oba) and the colonial administration in the sharing of functions. (Orewa op. cit) remarked that in due course, selected non-traditional of native authorities in the south and this provided a training ground for future leaders both at the regional and national levels”. Another development within this period was the federation of small native authorities into larger viable units with joint treasures. Furthermore, the need to improve management skills led to the grading of councils according to their performances. Conditions of service improve gradually to bring them as far as possible in line with public service staff. “But this native authorities were be-deviled by numerous problems in spite of all the support they were able to garner from the colonial master” remarked Okojie (1988). 14

Dasuki (1988) also contents that these problems were “lack of qualified staff due to the closed door policy of these native authorities and small sizes of treasures with very limited resources for the employment of well paid staff” Orewa (op. cit) goes even further to enumerate additional problems” lack of any definite long range policy on the democratization of the native authorities resulted in different types of authorities in existence side by side, sole native authority; chiefs-in-council and federated authorities; nationalist were not encourage to work in Local Governments because of their Pan Africanist stand which was hated by the colonialists”. In this regard, local governments were denied the leadership of many able persons. In addition Darisu, (1988), remarked that lack of personnel restricted the spheres of operation of the councils in each areas as water supply, health and education”. In his argument Ade-Ajayi (1990), contends that, despite the plethora of problems of these native authorities, they very provided a form of stable local administration which strengthened the base of colonial government in the maintenance of law and order” Local Government provided a training ground for councilors and staff in general in financial administration. There were also good roads, dispensaries, agricultural extension services and in the Northern part of Nigeria, a prelude to the provision of water supply. This arrangement was funded chiefly by the more financial viable southern protectorate which subsidized colonial operations in the Northern protectorate.

2.1.2 The Present Local Government System In Nigeria The 1976 model has been very drastically restructured. The present day local government is an admixture of deconcentration, concepts of central convenience and an acknowledgement that not all authority ought to be exercised at the centre. Decree No. 15 of 1989 (Local Government Basic constitutional and Transitional provisions) states in section I. 15

“The system of local government shall under this decree be by a democratically elected local government, while decree No. 10 of 1991 (Basic constitutional and transitional provisions) divided tasks and functions among key officials of local government and decree No. 23 of 1991 (Basic constitutional and Transitional amendment No. 3), specifies the constitution of the legislative arm of the council, creates the position of leader, deputy leader of the legislature who would be appointed among elective councilors. Heads of personnel arrangement (HPM) who are career civil servants were created to give up their former post of Secretary to the Local Government (SLG) in 1991, so that Secretary to Local Governments would be appointed by the incumbent chairman. That status has remained so till date. The head of personnel management is the administrative head of the local government while the chairman as the political head and chief executive of the council. The Local Government Service Commission was retained to take care of staff training, discipline, posting, welfare, etc. However, it is no longer under the Ministry of Local Government, but under the state government directly.

2.1.3 Structure Of The Local Government Most federations all over the world are arrived at through compromised. The various components, despite apparent diversities are aware of a need to come together. This need might arise as some have suggested from the realization of one or more of the following factors: (a) A sense of insecurity and acknowledgement of the need for a common defense (b) A hope of economic advantage (c) Some profitable historical association which is simply continued in this form (d) Some feelings of mutual compatibility of components parts (e) A past history of peaceful co-existence and settlement of quarrels through a process of give and take. 16

Today, the organizational structure of Local Governments as spelt out by implementation guidelines No. 11 of Decree 23 of 1991, (Basic Constitutional and Transition amendment No. 3) as follows: 1 One department of personnel management 2 One department of finance, supplies, planning, research and statistics. 3 Not more than four operational departments reflecting the basic functions and areas of concern of local governments as follows: (a) education (b) agriculture and national resources © Works and housing, lands and survey (c) medical and health Implementation guideline 11.2 stipulates that; no local government is allowed to have more than six departments in all. Therefore, any expansion shall only be accommodated through the sub-divisions below the level of departments, provided that in each case, span of control will not exceed six”. Implementation guideline 11.3 stipulates that “each department shall be sub- divided into branches to reflect sub-professional areas. Each branch shall be sub- divided into sections to reflect specialized activities within a sub-professional area. In all cases, span of control shall not exceed six”. Implementation guideline 11.4 spells out that “the departments, divisions, branches and sections of a local government department shall be headed as in the approved scheme of service for local government employees. Such heads of departments shall retain their present nomenclatures. Implementation guideline 11.5 finally stipulates that “each officer shall bear a functional title reflecting his position or area of specialization. This diagram below represents organizational structure of local governments in present day Nigeria.

Fig. 2.1: Organogram of Administrative Structure in Local Government in Nigeria

Chairman

Secretary

Management Operations Departments Departments

Finance, supplies, Plg Personnel Dept Research & statistic Educ. Agric Works Health Department Dept. Dept. Dept Dept.

Source: Organogram of Anambra State L.G.A. Administrative Structure 2007

2.1.4 Decision Making In The Local Government In present day Local Government administration, the spirit of democracy is reflected. This means decision are taken collectively and ratified on the basis of majority wins the vote. Dumbi (1991), posits that, “the fact that an influential man sits as chairman does not mean all his bills must be passed. If he has a bill and it is not all supported by the majority of the elected councilors present at the council meeting, that bill will not be passed. Abdulahi (1993) comes in here to say that, it is not going to be unlikely for us to find a situation which will be taken just because a particular party has the majority. But this is likely to spell doom for such an administration, especially if the incumbent tries to seek re-election for it will be difficult for that party to win the next election. Kachiri, (1995) contends that “where the party which produces the chairman is different from the one with the majority of elected councilors, it will not be uncommon for petty bickering and unnecessary squabbles to easily come up in order to frustrate the chairman so that the electorates would feel he and his party have failed to deliver”. 18

However, in the final analysis, decisions are taken by the House which is made up of the chairman, his deputy and all the elected councilors. The secretary of the local government who is appointed by the chairman will be present to take minutes but has no voting rights. At best, he could advice. Other career civil servants such as the head of personnel management, treasurers, chief personnel officer, Engineer and Heads of all departments who are present will only be called upon to proffer advice, recommendations and solutions but will not be involved in the taking of decisions as they have no voting rights. In essence, decision making is done by the elected members of the House through the process of deliberations which usually ends in taking of votes. 2.1.5 General Principles Of Internal Control In The Local Government According to Howard, (1982: 22), Internal control is the whole system or set of controls which includes those that relate to financial transactions or otherwise established by the management, in order to carry on the affairs of the organization in an orderly and efficient manner, so as to adhere to management policies, safeguard its assets and resources and secure as much as possible the completeness and reliability of its records and ensure compliance with statutory requirements. This means that every organization worth its salt has the responsibility of establishing an internal control mechanism to achieve accuracy and reliability of records and eradicate fraud, extravagance and waste. The magnitude of the system adopted largely depends on the size of the organization, the nature of the organization, (private or public), the complexity of its operations etc. In any case, the choice of control, however, is a reflection of the cost-benefit analysis. But it has been noted that the internal control system adopted, no matter how elaborate, cannot be perfect. Cases abound of systems penetration from outside the organization. The efficiency of control, is therefore, a function of so many factors both internal and external to the organization. This assertion was buttressed by Agu, 19

(2004: 108), when he noted”, in view of their primary importance, the safety and authencity of the accounting records have to be ensured from their point of collection i.e. (origin) to the point of their final stages. Therefore, effective internal control system in the local government is seen as the leeway in which the management can conduct its activities to avoid the risk of manipulations, irregularities and fraud in the local government. Internal control mechanisms emphasizes that tasks or activities in the organization should not be concentrated in the hand of one person, rather they should be segregation of duties and responsibilities. In other words, the activities of one person should be checked by another in order to conform with the laid down procedures. This statement corroborate the views of Nwabueze (2000: 79); that, arrangement of duties among staff in a department should be such that no one person in a position should carry out the work of a particular operation alone by which fraud is impossible or greatly minimized. In the Local Government system, the chairman as the accounting officer, the Treasures and the Internal Auditor are responsible for the establishment, and monitoring of the internal control system. According to Millichamp, (1994), succinctly stated that; in developing such internal control procedures, certain precautionary measurers or principles must be followed. These are: a. Only designated employees, who are suppose to the bonded, should be allowed to receive cash, whether in form of cheques, or money orders. By bonding Obi, (1996) posits, that, the employees should be carefully investigated, if possibly be an insurance company, and if their characters and back grounds are satisfactory, the local government is insured against future losses which only occur or mishandling of cash or other resources of the council 20

b. In order to ensure the security and safety of local government funds, cash receipts are expected to be keep in a cash register, a locked cash drawer or a safe, and only the designated officers should have access to them. c. The Local government should have a record of all cash receipts as funds come into the council. d. Before a bank deposit is made, the funds should be checked against the record made when the cash was received. It is necessary too, that the employee who does the checking is not one who receives or records the cash. e. All cash receipts are deposited promptly. This means that they should be deposited in fact, no cash receipts should be used for payments. Again, the person who makes the payment (paying cashier) is not the one who receives or records the funds (Receiving cashier). f. The monthly bank statement should be received and recorded by a worker other than the employees who handled, recorded and received the funds or deposited them in the bank. In all these, the role of the chairman as the accounting officer, the Director of personnel management and the Treasurer are general supervision and regular inspection. In other words, the role of the treasurer is to prepare regularly, financial statements based on generally accepted accounting principles or standards. This, he does for the routine attention of the chairman as the Accounting Officer. Such useful information will aid him and the members of the executive in the process of monitoring and controlling the operations of the Finance and Supply Department. The Local Government Administration also have a responsibility to use actively the financial information they receive to advance the course of the council area. The system is such that when properly, studied and interpreted, financial information can help the local governments, to do a more effective job of controlling present operations, making decisions and planning for the future. It is generally 21 known that a sound use of a well prepared financial information is a sine qua non to the good management of local government affairs. Our deduction from the above points is that in the Nigeria local government system, the treasurer, as the Head of Department of Finance and Supplier, provides the needed full and accurate financial information which the chairman as the Accounting Officer requires in order to make the right decision. In order to perform the job of managing the funds of the Local Government effectively, the relevant pieces of information should not only be easily available but also up-to-date. 2.16 The Place Of Internal Control Mechanisms And Accountability In The Local Government Some systems of control are provided and designed in the local government system to ensure effectiveness, efficiency, orderliness and safe-guarding of the assets of the local government and the reliability of its records. The following systems of controls according to the Revised Financial Memoranda for local government (1991) are provided in the local government system. Section 1.4 of the Revised Financial Memoranda authorizes the executive committee to be responsible for the management and control of the finances of the local government. For instance, they are empowered to make such recommendations as it considers necessary to the local government conserving the policy to be followed by the committee and the departments in the framing of estimates proposal for the next financial year. Secondly, to achieve and consider the annual estimates proposals of all departments, as collated by the treasurer and to direct the treasurer in the preparation of the draft of the annual estimates of revenue and expenditure of the local government. To accept or amend the draft estimates submitted by the treasurer and to submit the agreed draft annual estimates for the consideration of the local government council 22 etc. These provisions above are provided to aid in efficient operations of the enterprise. Again section 1-8 of the Revised Financial Memoranda stipulates that the Finance Department will be responsible for the care and custody of the local government funds, whether in cash or held in the local government bank account. The following provisions also apply; (a) They should see that all revenue due to the local government is collected promptly and properly paid into the local government funds; (b) Make all payments out of the local governments, ensure that such payments are properly authorized and relate to duties entrusted to the local government; (c) Participate in the preparation of local government estimates and development plans in the form and manner prescribed. (d) Exercise control over the accounts and financial records kept by other departments or officials, and see that such accounts and records are submitted to the finance department for checking and reconciliation at the prescribed times. (e) Keep and store all account and records in an orderly manner and ensure that they are readily available to the auditor-general, internal auditor and any other persons authorized to inspect such accounts and records (f) Deal promptly with queries arising from inspections or audits, and keeping records of such queries showing how they were cleared etc. Section 1.10 of the Revised Financial Memoranda states that the chairman of local government shall be the chief Executive and Accounting Officer of the Local Government provided his roles as the Accounting officer shall exclude signing vouchers and cheques. He shall also ensure strict compliance with the provisions of the Financial Memoranda throughout the Local Government organization. He shall observe and comply fully with checks and balances spelt out in the existing guidelines and financial regulations governing receipts and disbursements of public funds and 23 other assets entrusted to his care and shall be liable to any breach thereof. The chairman as Chief Executive and Accounting Officer shall face periodic checks in order to ensure full adherence to the finance act of 1958 as amended. It is worthy to note, that the section also provides that the chairman shall set the target which each employee in the local government shall aim at and shall also ensure that audit queries addressed to him are answered within the time limit stipulated in the financial memoranda 39.3 Where the query concerns him, he shall answer it promptly in person. As the Accounting Officer, the chairman shall have sole responsibility to establish and maintain an internal audit unit to provide a complete and continuous audit of the accounts and records of revenue, expenditure, plant allocated and reallocated etc. Furthermore, section 31.1 of the memoranda requires the treasurer to be responsible for ensuring continuous checks is maintained in respect of all revenue collector’s accounts. Section 31.2 stipulates that the treasurer shall require each revenue collector to attend at the treasury once a month on a prescribed date and submit his cash books, receipt books used, partly used and unused and revenue register for examination, irrespective of whether or not any collections have been made during the month. Section 31.10, provides that, the treasure shall also be responsible for the monthly checks of accounting transaction. These include: i) Treasury cash book and receipt and payment vouchers (Fm 19: 35) ii) Departmental vote expenditures books (financial memorandum 13: 17) iii) Journal test; which checks the journal voucher details, check the entry of the voucher in the journal, check casts in the journal and verify that debit and credit totals agree. iv) Daily abstracts; checks the receipts vouchers to the various sub-heads and accounts. Checks the monthly totals of the abstracts. 24

v) Monthly abstracts: Checks the postings of the revenue and expenditure sub- head from the daily abstract. Check the balances of revenue not collected and the unexpended balances on expenditure sub-head etc. Moreover, section 40.1 of the financial memoranda stipulates that there shall be established in each local government an Internal Audit unit headed by an Internal Auditor to provide a complete and continuous audit of the accounts and records of revenue, expenditure, plants, allocated and unallocated stores where applicable. Notwithstanding the existence of an audit unit in a local government, the individual officer’s responsibilities shall subsit and departmental checks shall continue. Section 40.2 states that the internal auditor shall be: 1) Directly responsible to the chief accounting officer 2) Submit to the Accounting Officer and the Auditor-General for Local Governments, a detailed audit programme and thereafter he shall report monthly to the Accounting Officer as well as the Auditor-General on the true progress of the audit. 3) Issue special reports if necessary where in his opinion, the attention of the Auditor-General should be drawn to any irregularity or apparent departure from earlier internal audit reports. 4) Where a system of stores stocks verification does not exist, the Internal Auditor shall assume the control of stock verification staff and direct their programme of inspection. 5) Facilitate the work of the audit alarm committee. In addition, section 40.3 requires the Internal Auditor to be responsible for carrying out an independent appraisal of the accounting, financial and other processes of the local government with the following objectives. I. To assist in protecting the assets and interests of the local government by carrying out a continuous examination of activities in order to detect fraud, 25

misappropriation, irregular expenditure and losses due to waste, extravagance and maladministration. II. To secure the continued maintenance of soundly based system of control within each area of departmental responsibility. III. To review where necessary, make recommendations for the improvement of systems, controls and procedures to ensure that they are both efficient and effective and that they remained adequate in the light of changing circumstances. IV. To monitor the use of resources in the pursuit of the defined objectives of the local government. Furthermore, in section 3.2 of the Revised Financial Memoranda, the Local Government Executive Committee shall issue a circular calling for the preparation by local government of the estimates for the ensuing financial year. The call circular shall: Contain such general guidelines to be followed by departments in the preparation of their annual estimates as reflected in the local government policy and priorities in regard to the discharge of functions and provisions of services at the local level. Stress such procedural and timing matters and matters related to the objectives and contents of estimates as are considered appropriate by the executive committee. The above explanation helps in the control of revenue and estimates hence the guidelines and timing to be adopted by the department in preparing the annual estimates are reflected in the section. Sections 3.2 to 3.12 of the Revised Financial memoranda discuss local government annual revenue and estimates and their approach at length. It is expedient for management to control results with estimates and this can only be achieved through budgetary control found in these sections of the financial memoranda.

2.1.7 Relationship Between Accountability And Internal Control Mechanism In The Local Government Accountability is as old as man himself and dates back to the biblical times. For instance, the story of Anannias and Saphira sold a piece of property and with his wife’s full knowledge, he kept back part of the money for himself but brought the rest and put it at the apostle’s feet (Acts: 1-3). There were able several other accounts in the bible where stories of similar role expectations involved financial or material accountability. For instance, in St Mathew’s Gospel (chapter 25), when the rich man went on a journey he delivered his goods to his servants to look after. On his return, he asked each of servants to account for the goods which have been entrusted. He was not pleased with the servant who had not profitably used the goods to which he was entrusted during his master’s absence. . The Oxford Advanced Learners Dictionary sees the word accountability as being responsible for something that is expected to give an explanation on something under one’s care. Akpan (1990) viewed public accountability as: “The firm’s recognition and acceptance of the fact that all public servants hold their positions as trusts for the people who are masters. Those who are expected to render services must account to the people for their success and failures and those who are entrusted with the custody and disbursement of public funds must appropriate account to the people for their use”. For one to be accountable for something, one must have responsibility with its associated authority, which will make him answerable to his supervisors. In the light of the above, proper accountability demands control mechanism. If accountability is to exist and must be carried out properly, there must be internal control mechanism. For instance, in the table below proper accountability were neglected as a result of effective internal control mechanism. 27

Table 2.1 Table showing Lack of Internal Control Mechanisms in Biase Local Government Date Pv. No. Amount Remark Sept. 2005 184 85.00 HPM/LGT Sept 2005 180 750.00 LGT Sept. 2005 186 960.00 LGT Sept. 2005 187 100.00 LGT Sept. 2005 188 340.00 LGT July 2005 190 160.00 HPM/ LGT July 2005 112 400.00 HPM/ LGT 9-5-2007 25 1,250.00 HPM/ LGT 5-5-2007 34 35,000.00 HPM/ LGT 3-5-2007 119 120,000.00 HPM/LGT 15-05-2007 40 8,000.00 LGT 20-05-2007 112 9,500.00 LGT 30-05-2007 123 45,000.00 HPM 4-5-2007 109 28,00,00 LGT 8-5-2007 245 35,450,00 HPM 6-05-2007 255 150,000,00 HPM 12-05-2007 261 250,000 LGT 1-05-2007 94 18,250,00 LGT 7-05-2007 76 14,440,00 HPM Source: Biase Local Government: Audit Report 2005-2007

In the above table, payment vouchers were not signed by two officers authorized to approve vouchers. That is, the HPM and the Treasurer. Some of them were signed by one of the above-mentioned officer and not both as required. The 28 practice of paying a voucher without complete authorization signifies a weakness in the accounting system and could be viewed as an intention to defraud the local government. This also shows absence of effective control mechanism. Accountability is a system whereby results of expenditure and by extension of policy making decision should be stated, evaluated and justified where need be. It should be noted that the primary aim of accountability is to harness the available resources. For this aim to be achieved, internal control mechanism must be present to prevent fraud and errors and thus enhance accountability.

2.1.8 Aids To Proper Accountability In Financial Management In The Local Government There are a number of in-built checks and balances factors which serves as effective ingredients for efficient control mechanisms in the management of funds of local governments. These include: Internal Control System There are some systems of control designed in the local government financial management whose central objective is to ensure orderliness, effectiveness, efficiency and accountability in the operations of the local government system in Nigeria. They are also aimed at safeguarding the assets of the local government from mismanagement and pilfering. The following systems of internal control are given detailed attention in view of their relevance to this topic: They are: Administrative Control The strengths and weaknesses of any organization are determined by the effectiveness of administrative controls in the system. Administrative control comprises the layout of an organization and all methods and procedures that help the management to effectively control its operations. These include the formal or bureaucratic operations of official functions, including its division of labour leading to specialization, in such a manner as to ensure efficiency in the discharge of assigned 29 responsibilities. The Statement of Auditing Standards (SAS) of the American Institute of Certified Public Accountants, posits that, “Administrative control include, but not limited to the plan of organization and procedures and records that are concerned with the decision process leading to management authorization of transactions. Such authorization is a management function directly associated with the responsibility for the objective of the organization and is the starting point for establishing accounting control of transactions”. From all indications, therefore, administration control is targeted towards achieving the organization’s objective such as accountability for actions. Administrative control should strive to maintain and encourage adherence to corporate policies rules and regulations in order to ensure public accountability in the management of the organization’s (local government’s) financial and material resources. The chief executive of the local government in Nigeria controls all the staff of the local government including the secretary and the Heads of Departments. Therefore, administrative control is directly under his portfolio, and a resourceful local government chairman should utilize and capitalize on administrative control to achieve maximum public accountability. Accounting Control Accounting control is made up of all methods and procedures that are mainly concerned with authorization of transactions, the safeguarding of funds and assets and accuracy of accounting records. As contended by Williams 2000, Harana, 2002 and Orewa (1997) on local governments in Nigeria in which the summary state thus: comprehensive arrangements have been designed in all states for the exercise of internal controls over the finances of local government authorities, but very little and in some cases practically no regards has been paid to the need for effective, progressive management of finances, for agents of funds of local government authorities. While Nwosu, N.N. in his article “the need for the effective most control system in Nigeria local councils in the journal of public administration and local 30 government suggest that, all public agencies in Nigeria should adopt effective internal control mechanism which will facilitates attainment of targeted objectives. Accounting control is designed to provide assurance that transactions are executed according to the authorization of the Chief Executive and that the accuracy and reliability of records are maintained in comparison with physical assets. The two technical device used in this recording process are the journals and the leaders. The objective of the system is to have permanent records of responsible officers, bases of accounting adopted, internal accounting instructions and internal control questionnaire. As Horngen (1990) put it; “A good accounting control will help to increase efficiency, decrease waste, unintentional errors and fraud”. This assertion, therefore, emphasizes the significance of accounting control for all financial transactions in the local government. All local government staff including the treasurer, report to the Chief Executive of the local government. The Chief Executive must, therefore, appropriately utilize the services of the accounts units and the officers of accounts, as already defined to ensure proper internal control in all financial transactions in the local government. Internal Checks This is an exclusive aspect of internal control established for the prevention and quick detection of errors, waste, irregularities and fraud in the local government system in Nigeria. It involves the systematic ordering of the clerical duties and routine activities in order to ensure: 1) that no single task is executed from the beginning to its conclusion by only one person; and 2) that the work of each engaged upon a task is subjected to an independent check in the course of another’s duties.

Internal Audit As a means of establishing the quality of a local government’s internal control, the work of internal audit unit is directly attached to the office of the Chief Executive and Accounting officer of the local government. The auditor still has the independence of his office as far as professionalism is concerned, yet he is directly answerable to the Chief Executive of the local government. In his approach to work, the internal auditor’s duties are aimed at ensuring that the accounting system is efficient so that the accounting information presented by management (i.e local government’s executive branch) throughout the period covered by the report, is accurate and discloses the true and fair view of the financial statement. That means that the internal auditor’s work can involved continuous setting of management goals and standards and monitoring the performance of the local government officials so as to ensure probity and public accountability. Therefore, since the internal auditor’s work is directly attached to the office of the Chief Executive and accounting officer of the Local Government, he has a lot to do in order to present checks-and-balances report to the chairman. From these reports, the Chief Executive and accounting officer will be able to render his stewardship account to the public not only at the end of his financial year, but also at the end of his term of office and even after. The Local Government Service Commission in each state is responsible for appointing the internal auditors and posting them to their various local governments. This is due to the fact that auditors fall within the rank of senior staff cadre which is under the supervision of the commission as stipulated by rules. Of course, one the functions of the Local Government Service Commission are the appointment, posting, promotion and discipline of local government employees on grade level 07 and above. The most recent criteria for appointment of internal auditors is as contained in a letter number; MSLG/LG/352/1/115 of 9 th July 1998, issued by the States and Local 32

Government Affairs Office in the presidency, Abuja, and addressed to States Local Government Service Commissions. The excepts are hereby produced below: in consideration for the appointment of internal auditors, the following conditions must be met by the appointees who must possess a degree in accountancy, business administration, economics with accounting bias, from recognized University, Advanced Diploma in public Administration, Advanced Diploma in local government etc with accounting bias”.

It is believed that going by the above provisions, the local government internal auditors must have undergone training in auditing field under accountancy or financial management profession. From these, therefore, such persons must have been instructed on the ‘dos’ and don’ts of auditing ethics. Budgetary Control The principles of budgetary control involve the process of comparing results on the ground with the planned results of the budget and reporting on the variations. Oshisami, (1992) stated that; a budget itself is a quantitative or plan of action and it aids coordination and implementation. From the perspective of internal control, within which budgetary control is hereby discussed, budgetary control serves the function of evaluating performance, coordinating activities, implementing the plans, communicating, monitoring and authorizing action. Therefore, with the control system of budget as discussed above, the budgetary system of local government will help the Chief Executive and Accounting officer of the Local Government in controlling the derived revenues and estimated expenditure of the council. 2.1.9 External Control Mechanisms A number of external control measures have been evolved into the local government system in Nigeria in order to make it efficient and effective. Such measures include the supervisory and advisory roles of such institutions as the State Local Government Service Commission, the state Auditor-General of Local 33

Government, the Inspectorate Unit of the Bureau of Local Government Affairs in the Deputy Governor’s office etc. Others include, statutory provisions in the constitutions, various states local government laws, rules, regulations, policy statements, etc contained in various official circulars and government gazettes. All these are designed to make the local government, and therefore, the Chief Executive and Accounting officer comply statutorily with the public accountability demands of his office. We shall examine few of these external control mechanisms briefly. 2.1.9 The External Auditors Another aspect of control on the funds of Anambra State local government councils is exercised by the State Auditor General for Local Government through periodic checks and full audit of the account of the council at the end of every financial year. In the words Oyelekin (1979), the Handbook on Local Government Administration in Nigeria, the State Auditor – General for local government should: “Be the chairman of the Local Government Audit Alarm committee; having access to the state governor through the Governor’s representative of the Audit Alarm committee; and notify the public accounts committee of Audits of significant importance and serious prepayment audit queries for which the Accounting officer of the Local Government is liable or responsible. In addition, any other sensitive issues which, because of its urgency, cannot wait until the committee convenes, shall be dealt with by the State Auditor-General for Local Government.

The State Auditor-General for Local Government shall be appointed by the state Governor. He shall be a qualified Auditor with the necessary qualifications and experience. Section 55.4 of the Financial Memoranda (Fm) states that; audit queries shall be addressed to the chairman and answered within the time limit stipulated in the rules governing offences and sanctions. 34

An Audit Alarm Committee must be established in each local government and shall comprise the following: 1. The State Auditor General for Local Government. 2. Directorate of Local Government Inspectorate 3. Representative of the State Accountant General’s Office And their work shall be facilitated by the following local government officials; a. All heads of department, including the Director of Personnel Management b. The Treasurer to the local government and c. The Internal Auditor It should be responsibility of the above named officials to alert the Local Government Audit Alarm Committee of any irregular payment made. If they fail to do so, they will be liable to appropriate share of punishment under the guidelines on audit queries and sanctions. The Ministry Of Local Government The Ministry of Local Government exercises a considerable level of control over the finances of the local government councils. One of these is by virtue of its statutory duty to approved the annual and supplementary estimates of the council; for the estimate are the financial reflection of the council’s policy and in approving the estimates the ministry’s takes a managerial decision of approving policy. Another Ministry’s role in the management of council’s funds is the issuance of Financial Memoranda for the better control and management of the council and its financial business and for the regulation of procedures of the Finance and General Purposes Committee (F.G.P.C). Again, the duplicate keys of strong rooms, safe and cash tanks of the councils are kept by the permanent secretary, Ministry of Local Government. He sends the officers of the internal audit section of the Ministry, who through regular surprise and periodic checks helps to detect irregular expenditure and losses due to waste and who also, ensures that the finances of the council are in order. Consequently, these auditors 35 with the power vested on them; “may surcharge the responsible official, the responsible committee, or the whole council with a proportion or with the full amount of any payment which he considers to be an improper use of the tax payers money (Haris 1959: 43). Other aspects of the Ministry’s control relates to acquisition of land, making of regulatory rules, award of contracts procedures, limitation as to the sources of supply of certain officials materials, such as receipts, books of accounts and forms. Other functions includes; keeping of the local government share of the federation account and the local government share of proportion from the state government source through the State Joint Local Government Account. The Finance And General Purposes Committee (Fgpc) The local government law of each state of the Federation provides for the establishment of the Finance and General Purposes Committee for the control, management and administration of its finances. By its roles and functions, the Finance and General Purposes Committee remains a statutory committee of any local government because it is a mandatory requirement by the state local government law. Again, section 42(1) (a, b, & c) of the Anambra State Local Government Edict (1999) stipulates that; “Every local Government shall established a finance and General Purposes Committee which shall consist of the chairman, the supervisory councilors and not more than two other members. These two other members consist of the Head of Personnel Management and the council treasurer. The committee shall sit every month. The functions of the committee have been restricted to the executive arm of the local government as outline in financial memoranda (Fm) 1.4 and include the following among others; (a) Consider the annual estimate proposals of all departments, examined such proposals and send recommendations to the local government council for consideration. 36

(b) Consider applications for supplementary estimates for approval by the Department of Local Government Affairs. (c) Consider and amend contracts according to standing orders and the Fm provisions (d) Check to ascertain the level and progress of revenue generation in the local government and the disbursement of such funds. (e) Exercise general supervision over the financial management of the local government, including the collection of revenue and the expenditure of funds within budgetary guidelines. In this regard, the finances of the local government are properly and efficiently managed and accounted for. The Financial Memoranda The next major framework for ensuring control mechanism in the local governments is the use of the financial memoranda, called Fm for short. Anybody associated with the present system of local government in Nigeria knows that one cannot discuss public accountability in financial management in the local government without reference to the financial memoranda. In fact, the Fm is regarded as the bible for financial management in the Local Government system in this country, and as Aguonye (1994) succinctly put it. “It is the written instructions issued by the government and not inconsistent with any of the provisions of the local government law for the better control and management of the financial transactions of local government in the state and for the regulation of the procedure of other financial committee; and such instructions shall be observed by the local government to which they are applicable”.

Chapter one of the Fm deals with the financial duties and responsibilities of local government bodies and officials and is also in line with the maintenance of checks and balances to ensure accountability. Section 1.10 of the Fm states that the 37 chairman is both the Chief Executive and Accounting officer but he shall not signed cheques and vouchers. According to Ejisun (1998) the council acts as a check on the chairman in that the chairman presents monthly returns of income and expenditures to the council which under, the Fm is the final approving authority for any expenditures within the limit of the local government council. The council also checks the chairman especially over the execution of local government budget. Under the Fm, it is the business of chairman as the accounting officer of the local government to ensure that the provisions of the Fm are complied with and that the checks and balances spelt out in the existing guidelines and financial regulations governing receipts and disbursements of public funds and other assets entrusted to his care are observed. One of such regulations to be adhered to by the chairman is the Finance (control and management) Act 1958 and all its amendments. This law provides that; (a) All instructions relating to expenditure of public funds by the accounting officer shall be in writing. (b) The chairman as Chief Executive and accounting officer shall render annual reports of his local government in order to ensure accountability and enforce performance ethics. 2.1.10 The Handbook On Local Government Administration Looking at the above provisions of the financial memoranda, one would have thought that the issue of accountability has been assured in the local government. But this is not so. Because of lack of financial controls lead the Federal Government to issue the Handbook on local government in 1992 which provided another framework for proper control mechanism in the local government system. The handbook in its S. 3 (10) (3) provided that all expenditures approved by an individual officer shall be reported within a week to the higher officer for information. S. 3 (10) (11) further 38 stated that, each officer authorizing expenditure shall be held personally accountable after leaving office for the expenditure approved by him. As a further measure to check reckless spending the provisions of the implementation guidelines on the application of civil service reforms in the local government service as regards spending limits were adopted by the handbook on local government administration with increases in spending limits. The handbook in adopting the provisions of the guidelines warned that all expenditures beyond the individuals spending limit shall be referred to the next higher officer or to the executive committee of the local government as the case may be. The handbook in ensuring that inefficiency as a result of the use of unqualified officers does not lead to misuse of public funds and improper accounting system, provides that, until all local governments can boast of qualified personnel in budget preparation, the inspectorate staff of local government in the deputy governor’s office shall continue to assist needy local government in ensuring that budgets are prepared in accordance with stipulated guidelines. Furthermore, the handbook provided that: “All contractual agreements, local purchase orders, job order forms or such other documents relating to contract, suppliers etc, shall be signed by the head of personnel management only after appropriate approving authority has given the necessary approval. If the Head of Personnel Management observed any irregularity, he shall invite the attention of the appropriate authority to it. Where such authority is recalcitrant, the Head of Personnel shall raise an audit alarm”.

2.1.11 The Operational Guidelines Before the present democratization experiment, the local government administrators and care taker committee of management were guided in financial management by the operational guidelines for sole Administrators and care taker committee issued by the General staff headquarters in 1988. The guidelines contain 39 extensive provisions to ensure financial control in the then dispensation in the local government system in Nigeria. For example S.3 (2) of the guideline provides that members of the local government caretaker committee must declare their assets and liabilities on assumption of duty, while S. 9 (a) adopted the provisions in the Fm which is that there shall be an Auditor-General for local government who shall be appointed by the administrator or governor of the state subject to the ratification of the state House of Assembly when elected. S. 9(b) then provides that the public account of a local government council, local education authority shall be audited by the State Auditor-General who shall submit his report to the administrator. S. 9(c) states also that the public account of an area council of the Federal Territory Abuja and of all offices of the area council shall be audited by the Auditor- General of the Federation who shall submit his report to the Provisional Ruling Council. The above provision clearly shows the determination of the Federal Government to ensure that officials of the Local Government councils are accountable no matter their length of stay in the system. In addition, section 10 also states what should be applicable in the management of public funds in the local government system. Section 10(a): All contracts exceeding N50,000 shall be considered by the finance and general purpose committee. Section 10(b) provides that the chairman, caretaker committee can approve expenditure of up to N50,000.00 at a time subject to a maximum of N125,000.00 per quarter and such expenditure shall be reported to the finance and general purposes committee within one week. The only exceptions to this are salaries and allowances. 40

By section 10(c) expenditure exceeding N500,000.00 are to be referred to the military administrator for approval. S. 10(d) states that the chairman, caretaker committee is entitled to draw a maximum of N50,000.00 as security vote monthly. The caretaker committee is also enjoined under S. 10(e) to adhere strictly to tender procedures and finally S. 10 (f) provides that: Audit of accounts of the Local Government are to be carried out on the directive of the military administrator from time to time, or as when due, depending on the exigencies.

Under S. 20 of the operational Guidelines titled: Management of Local Government Funds, sub section (a) states: Without prejudice to the provisions of these guidelines, the control and management of Local Government funds shall be governed by the approved revised Financial Memoranda for Local Government in each state.

The same sub-section states further that the chairman, caretaker committees shall observe stringent financial discipline and must operate within budgetary provisions as extra-budgetary expenditure shall not be allowed.

2.1.12 The Implementation Guidelines One of the most comprehensive legal frameworks for the maintenance of financial accountability in the Local Government is the Implementation Guidelines on the Application of civil service reforms in the Local Government service in Nigeria of 1988. The statutory provisions of the implementation guidelines seemed to have taken care of the problem of accountability. S. 13 which is titled “Creation of the Director of Local Government Audit in the state, states inter alia; “In the recent past, Local Governments have assumed increasing financial responsibility with enormous amount of money flowing to them from the Federation Account as well as 10% internally generated revenue from the state 41

government. In view of the above reasons, there shall be established in each state the office of Director of Local Government Audit whose responsibilities will be as those prescribed for the Auditor-General in section 11 (39) of the implementation guidelines”.

The section went further to provide that the Director of Local Government Audit shall have power, to carry out on regular basis, the auditing of Local Government accounts. This is because as observed by Russel, (1993) auditing is important in ensuring sound financial management and accountability. Furthermore, sub-section (II) of S. 13 gave the Auditor-General for Local Government power to sanction and surcharge any officer as stipulated in the guidelines governing offences and sanctions. Section 25 of the implementation guidelines is headed “guidelines on audit queries and sanctions”. Codification of offences and sanctions. This section clearly outlines offences and the time limit for an officer who has committed an offence should reply to an audit query. It also stated the punishments to be meted to such an earring officer. Section 9(2) of the 1988 Implementation guidelines provided another type of measure to ensure control mechanism and accountability. This section stated the spending limits of local councils and officials. This means that no local government council or official can exceed such limits without the approval of the state governor. The section further provided that such spending limits shall be scrupulously adheres to. For local government councils, their spending limit is as follows: 42

Table 2.2: Spending limits for Local Government Council Council annual Limit per council Limit for FGPC internally generated subject to L.G. council revenue approval (a) Above N2 million N250,000.00 N100,000.00 (b) N1-N2 million N100,000.00 N50,000.00 (c) Below N1m 50,000.00 N25,000.00 Source: Implementation guidelines 1988.

Table 2. 3: For Individual LG Functionaries Annual internally Chairman Secretary Head of dept generated revenue Above N2 million N50,000.00 10,000.00 N5,000.00 N1-N2 million N20,000.00 N5,000.00 N3,00.00 Below N1 million N10,000.00 N3,000.00 N2,000.00 Source: S.9 (2) Implementation guidelines 1988.

Despite all these internal and external control measures, its provisions as seen above, leave no one in doubt as to the importance the Federal Government attaches to the issue proper financial management in the Local Government system. One then wonders why, with all these statutory provisions discussed so far, it has been impossible to achieve probity in the management of public funds by the officials of the local governments. This is the subject of the next section. 2.1.13 Problems Affecting Controls Mechanism in the Local Governments in Anambra State Effective control, important and desirable as it may be, is not quite easy to attain in the local government system. This is due purely to the large array of problems that are involved in trying to attain a reasonable high level of administrative/financial controls. 43

It is therefore not surprising to observe that in Anambra State Local Government like other councils in Nigeria are involved in a series of problems towards attempt to enforce an effective control mechanism in the system. To this end, some inherent problems that tend to constrain its overall performance are being highlighted. Some of which are; attitudes of the chairman towards internal control measures, lack of security of the internal audit unit, inconsistency in government policies, inadequate training and motivation of auditors and finance personnel’s, legal/statutory provisions for the performance of audit work, state government over- interference in the affairs of the Local Government, collusion of some auditors with top local government functionaries. Others are poor supervision, socio-economic factors which includes; the biting inflation and sapping condition, high bride price in the society amongst others. (a) Attitude of the chairman toward internal controls measures Chairman of councils give authoritative orders to officers that are vested with the functions of carrying out internal control measures in the local government such as the treasurer, internal auditors the Head of Personnel Management (HPM) of local governments. In an interview I held with the internal auditor of Biase Local Government Council (one of the councils under investigation) he asserted that the chairman of council have little or no regard for laid down rules and regulations guiding operations in the local government. He said for instance, in 2008, he and the Head of Personnel Management had serious clash with the chairman over indiscriminate award of contracts. That was at 2007, the council according to its internally generated revenue was only empowered to award a contract up to N50,000.00. However, the chairmen regard this limit in spending particularly in the award of contract as a necessary rigmarole and redtapsm aimed at frustrating him and his administration.

Table 2.4: Summary of actual contracts awarded on construction of bridges, culverts, health centres and supply of laterites undertaken by council between Jan to Dec, 2008. S/No Site No. of Bridge No of No of Actual culverts/supply Health amount of latterites centres awarded 1 Ugbem 40ft concrete - - 140,000 2 Akparawuni - - 1/24 Rms 192,000 building with VIP Toilet 3 Ukwop 3ft concrete Supply of - 50,000 latterites 4 Ibogo 90ft concrete - - 200,000 5 Ikun 30ft concrete - - 420,000 6 Erei 95ft concrete - 425,000 7 Urugbam 29ft concrete 520,000 8 Umai 58ft concrete 181,000 9 Abani 24ft concrete 3 culverts at 280,000 50,000 10 Adim 2 culverts at 150,000 50,000 11 Edundun 300,000 12 Ifene 100,000 13 Akpet central 2,000,000 14 Umon 2,500,000 15 Ikot okpora 3,000,000 540,000,000 45

Source: Biase Local Government Expenditure Abstract 2009 As contained above, table 1.4 shows a summary of contracts awarded by the council chairman between January to December 2008. All the contracts excepting the supply of latterites are above the spending limit of the council as against the provision of the 1988 implementation guidelines; which stipulates that, any contract sum above N50,000.00 should cleared from the Ministry of Local Government. But in most cases, such clearance were never sought and obtained before the contracts were awarded. That was one of the major areas of conflict between the internal auditor and the chairman and also between the Head of Personnel Management (HPM), Treasurer and the chairman. This conflict of disagreement according to the internal auditor led to the sealing off of his office on the directives of chairman reason being that he (auditor) refused to check and pass his contractual vouchers which he had awarded contracts above spending limit without seeking for prior permission from the relevant quarters. This and many more are cases where the chairman undermined measures aimed at ensuring effective internal control mechanism in the local government. 2.1. 14 Non-Adherence To The Provisions Of The Model Financial Memoranda

There is no doubt that the implementation of the accounting framework in the model financial memoranda will ensure accountability in the local government system. Consequently, after articulating the provisions of the memoranda, Admiral Augustus Aikhomu, the then vice-president of the Federal Republic of Nigeria stated. “It is my hope that the provisions of the model financial memoranda would be faithfully implemented in such a way as to foster national culture of public probity and accountability beginning from the grassroots. This statement shows the expectations and encouragement of the government in respect of effective implementation of the provisions of model financial memoranda to ensure, more particularly, adherence to the accounting framework”.

However, in spite of these expectations, it appears there is apparent failure on the part of the existing rules in the model financial memoranda to achieve true public accountability in the local government to eliminate the possibility of corrupt practices, as well as to encourage adherence to accounting framework for achieving the best value for money spent. This is revealed in some of the reasons for the suspension of some local government staff in Anambra, Abia, Benue, Akwa – Ibom, Cross River, Enugu and Rivers states in 1994. The reasons include among other things, reckless spending, fraud and flouting of official codes of conduct. This mismanagement of local government resources is also revealed in Aborishade’s (1994) account of the caption on page 24 of the newswatch magazine of December 20, 1993 “Fortress of corruption”. According to him, the following issues were the major issues raised in a 74 page audit report. a) That all the chairman of twenty one local governments in a particular state (Anambra state) were pronounced guilty of financial irresponsibility. b) That the local government councils had become fortresses of financial malpractice. c) That these malpractices include inability to produce payment vouchers for monies paid out, non-availability of revenue receipts, loss of public funds, irregularity in stores accounts, irregular payments and inflated contracts, non-retirement of imprest and advances as well as non-refund of advances collected by some local governments on behalf of other agencies. The above account proves lack of control mechanism and non-adherence to the stipulation of the financial memoranda, especially as they pertain to management of the funds of local governments in Nigeria. Also, Oguonu, (2005) in a study consisting of a sample of 648 local government staff from the Eastern states confirmed that the staff of local government system did not keep to the stipulations of the Model Financial Memoranda. Hence, out of twenty categories of Revised Memoranda stipulations, each with a cluster of five, 47 only twenty per cent, that is, one item out of five was implemented by those concerned. The study further articulated that, lack of motivation, poor numeration, poor attitude to work and non-enforcement of sanctions against non-compliance to the provisions of the financial memoranda, etc contributed to non-implementation of the memoranda. Lack of Security of the Internal Audit Unit As noted by Howard (1989) Internal Audit is described as review of operations and records, sometimes continuous, undertaken within an organization by assigned officials. Where there is an internal audit or department, this may form a valuable part of the whole system of internal control, and according to its effectiveness or otherwise, may influence considerably the conduct of the audit. However, according to the internal auditor of some of the investigated Local Governments of Aguata, Awka south ,Aaocha, Ihiala, Ideemili north, Nnewi south,and Njikoka etc, because of lack of adequate security of the internal audit, such as laws to back the audit unit or the internal auditor so as to enable him operate without fear of harassment or victimization, internal control measures is greatly hampered. Thus, if properly protected by law, the auditor will no longer owe allegiance or be answerable to the chairman of council as stipulated in the guideline that “the internal audit of each local government shall be directly responsible to the accounting officer”. Indeed, in most cases, these auditors appointment by the Local Government Service Commission as it is the case in Anambra State are being lobbied or influenced by the chairmen of councils and therefore, they cannot but only abide or do what will pleased or favour the chairman thereby reducing the effectiveness of the internal control by auditors to mere checking of payment vouchers. Hence, in these councils, there is nothing like audit queries and sanctions. Also, in these local government councils, the dependence upon on the internal auditor on the management has resulted in insurance of local purchase order (LPO) 48 for goods which are not usually supplied. These frauds in most cases involved the principal officers of councils with the connivance of the stores department; in which goods are entered into the store accounts as being supplied, certified and receipted without the goods being supplied. For example, the table below depicts a case in point where goods/items were ordered in 2008 in Ogbaru local government council, but were not actually supplied and yet were entered into the stores accounts as being supplied; certified and payment made. Unfortunately the ‘deal’ leaked and the store officer was suspended and subsequently dismissed while the treasurer was equally suspended and sent on retirement.

Table 2.5: Details of Supplies made between Jan-June, 2007 S/No Items Amount 1 Supply of six steel cabinet @ 15,000 each 90,000 2 Purchase of two computer type writers @ 150,000 300,000 3 Purchase of three adding machines @ 15,000 45,000 4 Supply of forty calculators @ 1450 for staff 58,000 5 Supply of thirty shovels to labourers at 1500 45,000 6 Supply of thirty cutlasses to labourers @ 2500 75,000 Total 3,313,000 Source: PHG/LGA/254/VOL. III/2008 pp 57-58 Anambra east Local Government stores file Inconsistencies in Government Policies The frequency of changes in government policies, rules and regulations at very short intervals has cause a lot of setbacks in maintaining an effective internal control measures in the local government in Nigeria. For example, as noted by the Director of Personnel Management of Aguata local government council, from 1988 to July1989, August 1989 to December 1990 and up to June 1991, there have been different systems of government. That is, elected council in 1988 (not based on party platform) 49 sole Administrator system in 1990 and the presidential system in 1991 in which local government council in Nigeria are now having executive and legislative arms of government, all led to different approaches in administering the day to day operations of local governments. For instance, the sole administrators in 1989 in Anambra State felt that as Sole Administrators, they had every right to award contracts at any amount convenient to them and not to be guided by any rules. And as a consequence, they disregard all measures that would conflict on their interest. Again, with the present policy, chairmen are awarding contracts up to ten to twenty million and above. For example the chairman of Idemili local government council between January and March 2008 awarded a contract for the construction of a feeder road from the local government headquarters to his village at the cost of N53 million naira. Also, the council chairman had awarded contracts for the completion of Ayamelum Bridge at a whooping sum of N110, million without clearance or approval from the Department of Local Government Affairs. On their part, the chairmen are contending that there is nothing like limit of approval as far as the local government full autonomy is guaranteed. It should be noted that, even the auditors at this point became handicapped, since the chairman are contending that they made promises to the electorates and therefore, they must award contracts to redeem their promises. Thus, they have no regard to spending limit. With this, the internal auditor, Head of Personnel Management, and the Treasurer’s roles are seriously undermined, in the process, internal control mechanism is being eroded in the system. Inadequate Training, Orientation And Motivation One of the major aspect of efficiency in civil service is “on the job training” as directed in the guidelines for local government reforms. The aim is to promote local government staff training schemes at various levels for administrative, financial, 50 professional and technical areas and in cooperation with training institutions and other government ministries. In the Anambra state local government, staff are usually sent on short termed courses on accounting, stores duties and revenue duties with special emphasis on property ratings etc. These short courses are usually sponsored by the Local Government Service Commission. Legal/Statutory Provisions For The Performance Of Auditing Work It has been observed that, all the rules and regulations guiding the operations of local government in Nigeria such as the 1976 local government reforms, the Anambra State Financial Memoranda of 1976, the 1979 and 1989 constitution of the Federal Republic of Nigeria, the 1985 Technical Committee on the review of Local Government Administration in Nigeria, the Implementation Guidelines on the application of the Civil Service reforms in the local government of 1988, the presidential system of government at the local government level etc have failed to empower specifically the Internal Auditors of local government to operate independently. The implementation guidelines worsen it more by emphasizing that the Internal Auditors of councils are answerable to the Accounting Officers who are the chairmen of councils. Therefore, without any legal or statutory backing or coverage the internal auditors cannot operate effectively. Collusion Of Some Auditors With Top Local Government Functionaries This is one of the problems be-devilling the effective operation of the internal auditing in virtually all the local governments in Nigeria. it is sad to note that, despite the presence of the internal audit in our local government, corruption has continued to persist. Most of these internal auditors have been found to be very corrupt. They collude with top council officials and exploit loopholes of defrauding the council of huge sums of money. 51

State Governments Undue Interference In The Affairs Of Local Government The excessive control of the local government by the state government reduced some degree of seriousness of councils in ensuring an effective internal control measures. These controls by the state government are through budgetary controls, inspectors of Local Government from the Department of Local Government, external audit inspection management audit inspection panel, contract awards, and State Local Government Joint Account Allocation Committee etc. As a consequence, autonomy and excessive control of the local government councils by the state government result in delays and red-tapism of local government plan of action. Also, they in turn give rise to frustration and apathy among the council’s personnel and particularly the internal auditor who has become weakened as a result of various control measures imposed on the councils by the state government machinery. Poor Supervision: When the work of employees are not regularly and appropriately supervised by well-trained and experienced officers, fraudulent staff may use this chance for their advantage. For instance, some clerks of the payroll section inject ghost names into the payroll sheets vouchers and will sign and collect monthly salary or any other payments or allowances without being detected because of poor supervision. Moreover, poor supervision also enables staff to print fake receipts and issue such to market women. Again, abstracts of both revenue and expenditure are wrongly posted, different figures in the abstracts. At times, revenue paid to local government are not receipted. All these occur as a result of poor supervision. Socio-economic Factors: These include inappropriate and inadequate promotion, motivation and recognition. The aggrieved staff who had been in one position for ten years or more are forced to resort to not adhering to the control mechanism. Other socio-economic factors include: 52

I. high bridge price in the society. II. high funeral and burial expenses III. the biting inflation and sapping condition IV. the increasing rate of financial burden and also high cost of living resulting from growing number of dependent relations and extended family system. High Bridge Price In The Society The high societal demand for social events such as marriages and funerals are source of financial pressures on workers. Consequently, workers in order to meet up with these societal expectations engage in various fraudulent activities aimed at enhancing their financial base. The Biting Inflation and Sapping Condition This has contributed immensely to non-application of control measurers installed in organizations. Biting inflation has caused a lot of harm in the society. Inflation is the rise in price of goods and services. With this increase in the prices of goods and services, revenue collectors in the local government system who earns very meager salary will be moved to print his own receipt for personnal enrichment. Likewise, the employee in the payroll section inject ghost names into the payroll and collects such monies. Increasing Rate of Financial Burden Increasing rate of financial burden and also high cost of living resulting from extended family system contribute to the non-application of the internal control measures installed in the system. This is so because breadwinners faced with these problems defy laid down principles and procedures of financial accountability in order to meet up with their financial responsibilities. Others factors includes; lack of qualified, honest, and sincere personnel, ignorance and a host of other factors.

2.1.15 Popular Areas Of Fraudulent Activities In The Local Government There are some areas where fraudulent activities have been observed, on a regular basis, in the financial transactions of the local governments. These fraudulent activities can be broadly classified into two; (a) Manipulation of accounts by the agents of the local government involving the misappropriation of money or goods. This is a situation where accounting records or stores are deliberately amended, adjusted or falsified to cover up money or goods stolen by official(s) concerned. There are various forms such manipulations takes place. They are: (i) non-recording of monies collected and the use of receipts to cover this up. This is a regular means of defrauding the council especially by the revenue officers. I. Understatement of collections by either distortion of carbon copy or receipts, revenue books or under posting of the cash book. II. Overstatement of expenditure is usually by the use of false receipts and invoices and the consequent over posting of the cash book. A regular means of siphoning the funds of the local governments by almost all the officials, both politicians and staff, is the use of false receipts and invoices to retire monies or activities that were never carried out. Huge sums of monies are lost through this method. III. Loading of invoices and inflation of contracts is sure way through which local governments funds are drained away. This is more so with particular reference to the members of the executive. Sometimes, some projects are never brought before the finance and general purpose committee for proper briefing before being given out on contracts. IV. Wrong totals of invoices, cash books and payrolls. V. Inclusion of dummies or ghost workers on the payroll VI. Carrying forward wrong balances on the cash book and stores ledger. 54

VII. Forgery and fraudulent alterations of document such as cheques, local purchase order (LPO), vouchers and payment vouchers, etc. (b) Teeming and lading is the other category. This is also referred to as carry- over fraud and is a regular method of carrying out fraud popular among the staff of Finance and Supply Department of the local government. Teeming and lading refers to a situation where a cashier or revenue collector makes unauthorized borrowing from the money collected (for the revenue collector) or money deposited in the treasury (for the cashier). Normally, such monies “borrowed” are taken with the intention of replacing them but with time, the amount involved would accumulate to a point that repayment or replacement will be difficult. The result will be delay in banking activities and the consequent manipulation of the figure on the tellers so that they will agree with the daily total collections. 2.1.16 Gap in Literature Although significant contributions has been made by various individuals, stakeholders, authors and scholars alike on the control mechanisms and the management of the funds at the third-tier of governments in Nigeria, there is still a lot of public criticisms on the disappointing and dismal performance of the third-tier of government across the country in areas of infrastructure and provision of essential services to the people as statutorily required of them as a result of shortage of funds occasioned by these apparent lack of efficient financial control mechanisms in the system. More so, most of the contributors and scholars in the preceding literature only identified the ills plaguing these control mechanisms at the third-tier without proffering reliable and acceptable remedies in solving the protracted problem especially as it affect the all the local governments areas in Anambra State. This present study seeks to fill in this gap with a view to providing a basis for credible and 55 sustainable formula which will change the present status-quo and turn around to promote inclusive growth and development that would enhance the people’s welfare. In doing this, the study would among other things examine the existing control machinery with a view to recommending appropriate and a more efficient and effective approach in the control and management of the funds of local governments in Nigeria and Anambra State in particular. This will provide the basis for enshrining result-oriented and sustainable third-tier governance in line with the ideals of the national development agenda. 2.2 HYPOTHESES A hypothesis is simply a tentative statement which is open to confirmation or rejection when exposed (subjected) to empirical verification. It is defined by Ezeah, (2004), as a conjectural, tentative and speculative statement of the relationship between two or more variables. In line with the study, the hypotheses put forward are: 1. There is significant relationship between efficient financial control mechanisms and effective management in the local government system. 2. Lack of adequate financial control mechanisms is the cause of insuffient fund in the local government system in Anambra State 3. Lack of efficient financial control mechanisms and effective management is the

Bane of underdevelopment in the local government system in Anambra State 2.3 OPERATIONALIZATION OF KEY CONCEPTS Third-Tier This is government at the grassroots level of governance. It is the third level of government after the first and second tiers, which is the Federal and States government respectively. For the purpose of this study, the third-tier of government represents the Local Government area administration. The 1976 Local Government reforms and the 1979 constitution of the Federal Republic of Nigeria conferred a 56 third-tier status and a measure of local autonomy to grassroots administration in Nigeria. Local Government Local government can be viewed from many perspectives. According to Oyediran (1988), it is a government in which popular participation, both in the choice of decision makers and in the decision making process are conducted by local bodies which, while recognizing the supremacy of the central government, is able and willing to accept responsibility for its decision. Local government is very important in the political and economic life of a nation. As Aborishade (1994) puts it, the institution of local government as an embodiment of progress is as old as anything one can quickly consider essential in the political and economic field. The word local entails the involvement and participation of the grassroots in the activities affecting the daily lives of community.

ACCOUNTABILITY The Oxford Advanced Learner’s dictionary sees the word ‘accountable’ as being responsible for something; that is expected to give an explanation on something under one’s care. Akpan (1982) view the concept accountability as: The firm recognition and acceptance of the fact that all public servants hold their positions as trusts for the people who are masters. Those who are expected to render services must account to the people for their successes and failures and those who are entrusted with the custody and disbursement of public funds must appropriately account to the people for their use”. For one to be accountable for something, one must have authority with its associated responsibility which will make him answerable to this supervisors. Explaining this concepts further, Dean (1969), stated that ‘Accountability is a system 57 whereby results of expenditure and, by extension, of policy – making decision should be stated, evaluated and justified when need be. It should be noted that the primary aim of public accountability is to harness the available resources. For this aim to be achieved, adequate checks and balances must be taken to prevent fraud and errors that may result in poor public accountability. Financial Management The emphasis of financial management is on being progressive. Management is a group of officials who are collectively and individually responsible for attaining the different goals of the organization. The financial manager is responsible for the finance function. The emphasis is on being progressive, that is performing the finance function of the organization effectively and efficiently. Finance: Finance is concerned with the study of the nature, the uses and the management of all means of settlement available to different types of organizations. Finance could be seen to be concerned with the discharge of the task and functions associated with finance in an organization. These tasks are: a) Task associated with procurement of funds. b) Task of effective management of funds and discharge of functions of the organization c) Assessment of the financial needs of the organization d) Finally, appropriation of income The financial manager has to coordinate all these tasks for the organization to function effectively and efficiently. Auditing Auditing has been defined as the examination of books, records and vouchers of a business and other relying records of the organization which enable the auditor to report in his own opinion, whether the balance sheet is properly up so as to give a true and fair view of the financial position of the business. If the auditor is not satisfied, he should report in what respect he is not satisfied. In the words of Millichamp (1993); 58

Historically, annual reports and accounts of companies are produced by the directors (as managers) and other people were not expected to be interested in them. However, today a much wider range of people are interested in the annual report and accounts of companies and organization. In view of the above assertion, it therefore became necessary to audit the accounts of companies and local governments to solve the problem of credibility in reports and accounts. Internal Auditing Stettler (1977) defines internal auditing as an independent appraisal activity within an organization for the review operations as a service to management. Ogonu (1996) sees internal auditing as a managerial controls which measurer and evaluates the effectiveness of other controls within the system. The main aim of the internal auditor is to help in the effective discharge of duties by furnishing with analysis, appraisals, recommendations and pertinent comments concerning the activities of the local government. Internal Control Internal control has been defined variously by many financial experts. According to Howard (1999: 22) defined internal control as the whole system of controls, financially or otherwise, established by management in order to carry on the business of the organization in an orderly and efficient manner, ensure adherence to management policies, safeguard the assets and secure as far as possible the completeness and accuracy of the records”. Internal control refers to steps taken within an organization in regulating and directing the activities of the organization. In making this point clear, Agu (2004: 8) succinctly stated that; internal control system usually comprises a continuous check and re-checking of the days financial activities of the organization. This according to 59 her is to ensure the correctness and fairness of the accounting records and to detect and simultaneously expose any deviation”. Internal Audit As a means of establishing the quality of a local government’s internal control mechanisms, the work of the internal audit is directly attached to the office of the Chief Executive and Accounting officer of the local government. The main object of an audit is to report upon the accounts, statements and balance sheet prepared by a client or his staff in accordance with the auditor’s appointment. Control Mechanism Control mechanisms is referred to as the whole systems of controls established by the management of an organization such as the local government for the purpose of carrying out an independent appraisal, and for the review of the internal control system as a service to the organization. It objectively examines, evaluates and reports on the adequacy of internal control as a contribution to the proper, economic, efficient and effective use of resources. The Auditor-General for Local Government The office of the auditor-general for local government is one of the external control mechanisms in the management of funds of local governments. The auditor general shall have powers to carry out on regular basis the auditing of local government accounts, have powers to surcharge any officer as in financial memoranda 39.3. This provisions also empowers the internal auditor to report to the State Auditor- General for Local Government on records, audit, of the local government and other matters he finds relevant. 2.4 THEORETICAL FRAMEWORK This study acknowledges and makes use of one theory as its theoretical framework. The theory is the institutional theory.

The Institutional Theory The institutional theory has become a prominent lens through which organizational processes of continuity and change are interpreted and understood. It is concerned with the development of open systems of organization (Silverman, 1970, Preffe and Delbridge; 2005). Such system emphasize the significance of social and cultural aspects of organizational environments rather than the task and technical elements given prominence under contingency theory and resource dependency theory (see Donaldson 1995; Oliver 1991). However, much of the early theorizing from an institutional perspective was concerned with an alternative to functional and rational explanation of organizational forms (Meyer and Rowan 1977; Rachel et al 2005) and sought to understand similarity and stability within organizational field (Di Maggio and Powell 1983). Organizational environment can be characterized by the sources of norms and values which permeate organizations and influence actions in particular by informing the ‘taken for granted’ assumptions regarding behaviours, organizational forms and processes that are seen as legitimate. DiMaggio and Powell (1983) identified ways that an organization within a field fence pressure to conform, to forms and processes deemed legitimate. These pressures as identified by them are; mimetic, coercive and normative. For the purpose of our theoretical framework, the normative and coercive factors are the most crucial. These normative and coercive factors are product of societal norms and constitutional legal framework predominant over a period of time. The normative factors constitute the standard to adopt to achieve performance while on the other hand, the role played by coercive forces highlights political impact. DiMaggio and Powel identifies rules played by the Federal Governments to ensure accountability and improved performance. The term compliance suggest that over time organizations are moving in the direction of movement that is required by 61 prevailing institutional norms and the target organizational characteristics that are expected to change. The expectation of the institutional theory is that there should be institutional logics/mechanisms that underpin the organizing principle of the field. In Nigeria local government systems, we have the institutional mechanisms for public financial management and accountability. Hence, knowledge and effective application of these mechanisms would to a great extent enhance performance. 2.4.1 The Application of This Theory to the Study It is pertinent to note that government’s action on the elimination of corruption and increased accountability, transparency, and performance are in the best interest of Nigerian citizens, especially those at the local level who appear to have been forgotten. Local governments as we know, are closer to the people and are better positioned to deliver social services. But unfortunately local governments in Anambra state have failed to deliver and the blame points to lack of funds. It is however, not very current to say that lack of funds is a sufficient explanation for the poor record development of local governments. However, the government of Obasanjo as part of its strategy to face the challenges of governance declared its intention to carryout a total reform of institutions of governance. Transparency, accountability, efficiency and good governance, therefore, became key issues in this strategy (Olu, 2005). This was anchored on the need to enthroned a regime of genuine partnership with citizens, while improving the processes and efficiency. The reform programme was the government’s response to the increasing demands on her for improved services delivery and poverty reduction (Rafia: 2005). Successive governments have tried to meet these challenges with varying degree of success. 62

However, a cusory look at the resources allocation from 1999 to date do not show that the local governments are poorly funded as purported (Federal Ministry of Finance 2005), rather attention has not been paid to the various institutional mechanisms for public accountability and performance to check if these mechanisms are properly functioning and the effects on performance. The point here is that proper functioning of these mechanisms is as important as and perhaps even more important, than the level of funding in explaining the performance of local governments. However, adequate knowledge of these mechanisms of financial control and its proper application will to a very great extent, influence public accountability and performance. These mechanisms include. Auditing framework, accountability, internal and external control mechanisms, financial control, administrative control, budgetary control, due process, and parliamentary oversight functions of both local government and state legislative assemblies etc. All these mechanisms are installed in the third-tier of government to ensure public accountability and performance. Accordingly, it is the central argument of this thesis that the knowledge of institutional mechanisms of public financial management among local government functionaries would enhance performance if properly applied. 2.5 METHODOLOGY/RESEARCH PROCEDURE This study will proceed to discuss the methodology which was adopted for the purpose of this research. Thus, it will cover the type of study, area of the study, population of study, sampling technique and sample size, data collection method, instruments for data collection, and the method of data analysis. Type of Study A research of this nature requires the researcher to state clearly the type of research design to adopt in order to serve as a guide and to give the researcher a proper direction of assessing his work and to judge whether the study was conducted in line with the characteristics of the design as generally known in the research world. Hence, for the purpose of this study, the case study research design will be adopted. 63

This is informed by the fact that, the researcher is carrying out an appraisal and evaluative report on the control mechanisms and the management of the funds of local governments in Nigeria which lays emphasis on information sieved from carefully selected individuals, documented evidence, report(s) and archival records. 2.5.1 Sources of Data Data for this study will be collected from primary and secondary sources. 2.5.2 Primary Sources The primary sources of information involved personal interviews with individuals who have had a hand in the administration of local governments at one time or the other, or who have witness the numerous reforms produced of the third- tier of government in Nigeria. Secondly, questionnaires were designed for local government staff. Finally personal observations during the course of this study were also effectively employed – the researcher being a staff of the finance and supplies department of Biase local government council of Anambra state. Personal Interviews Personal interviews were carried out with notable individuals such as the internal auditors, finance and supplies staff, and treasurers of some of the local governments under investigation. These interview were quite rewarding but due to the fact that the spread of information was not as wide as the topic of this nature deserves, the need arose to design questionnaires that would reach a lot more people. However, the interview help in guiding the nature of questions that were eventually fielded. Questionnaire Design The questionnaire was designed for individuals in the employment of local government councils in Anambra State being the study area. It was done in such a way that employees with different educational qualifications, work experience and positions had an opportunity to expressed how well they knew their job in the cause of implementing all the goals that are set to be achieved. The questions were objectively 64 fielded, simple to grasp and in some cases options were offered to facilitate administration. 2.5.3 Secondary Sources The secondary sources of information include: books, newspapers, magazines lecture notes and papers delivered by technocrats throughout the country concerning financial control in the third-tier of government in Nigeria. In any case, everything went ahead to complement the other, that is, the secondary sources complemented the personal observations which went ahead to further complement the answers from the retrieved questionnaires. 2.5.4Area of the Study The area of study in this research is Anambra state. The state consist of twenty one (21) local governments areas and divided into three (3) senatorial districts namely Anambra south, Anambra central and Anambra Northern senatorial districts. The choice of Anambra state is due to proximity in the sense that the researcher is a resident in the state. This facilitated his movement in the data collection exercise as a result of his knowledge of the state. Again, the idea of selecting some local governments councils from the three senatorial districts as representative sample is because, it is going to be difficult for the researcher to sample the entire state due to time and financial constraints. Primarily, the study seeks to examine the control mechanisms and the management of the funds of local governments in Nigeria with particular attention to Anambra State. 2.5.5 Population of Study Although the third-tier of government is all-encompassing and embracing, but for the purpose of this study, the scope will be restricted to only the local government councils in Anambra state representing the third-tier of government in the Nigerian system of Federalism. 65

Consequently, the state will be divided into the three (3) existing senatorial districts of North, central and southern senatorial districts each having seven local governments. The Southern districts local government comprising of Aguata, Ekwusigo, Ihiala, Nnewi north, Nnewi south, Orumba north, and Orumba south Local governments. The central, which includes, Awka north, Awka south,Aaocha, Dunkofia, Ideemili north, Idemili south,and Njikoka, local government areas. The Northern senatorial district are made up of Anambra east, Anambra west, Ayamelum, Ogbaru , Onitsha north, Onitsha south, and oyi local government making a total of twenty one (21) local governments in the state.

Table 2.6: Population distribution of staff in some selected local government and their percentages S/No Name of LGA No. of staff Percentage 1 Aguata 140 7.8 2 Awka south 170 9.4 3 Anambra east 135 7.5 4 Anaocha 150 8.3 5 Ayamelum 120 6.7 6 Idemili North 145 8.1 7 Ihiala 130 7.2 8 Njikoka 165 9.2 9 Nnewi south 180 10 10 Ogbaru 160 8.9 11 Onitsha 190 10.6 12 Orumba north 115 6.4 Total 1800 100 Source: Research Survey 2011.

2.5.6 Sample of Study A sample is a small group of elements or subjects drawn through a definite procedure from specified population. Samples are meant to represent population when the entire population cannot be studied. Due to the problem associated in determining the sample size, some experts have suggested percentage of the population that should be chosen to form the sample size. For instance, Ball and Gall (1971) suggest that for population up to 1,000; use 20%, for 5000, use up to 10%, for up to 10,000; use 5%. Accordingly, the sample size of this study will be determine using “YAMANE” formula for a finite population. The formular is given as: N n = 1 + N e)( 2 Where: n = the sample size N = the finite population e = level of significance or limit of tolerable error i = unity (a constant) Applying the above formular, our sample size will be calculated thus

1800 n = )05.0( 2 1 + 1800 1800 = .0( 0025 ) 1 + 1800 1800 = 1 + 5.4 1800 = 5.5 = 327 With this as a guide, the population of this study will be drawn from the twelve local government councils, four local government in each of the senatorial district. 67

One hundred and nine (109) questionnaires were distributed in each senatorial district. Which comprises four (4) local governments in each .On the whole, a total of three hundred and twenty seven (327) questionnaires will be distributed according to the sample size as illustrated in the table below: Table: 2.7 Questionnaire distribution and determination of 5% sample size

S/No Name of Senatorial No. of staff Sample size Percentage LGAs districts 1 Aguata South 140 28 7.8 2 Awka south Central 170 30 9.4 3 Anambra east North 135 23 7.5 4 Anaocha Central 150 27 8.3 5 Ayamelum North 120 20 6.7 6 Idemili North Central 145 25 8.1 7 Ihiala South 130 25 7.2 8 Njikoka Central 165 27 9.2 9 Nnewi south South 180 34 10 10 Ogbaru North 160 30 8.9 11 Onitsha North 190 36 10.5 12 Orumba north South 115 22 6.4

Total 1800 327 100 Source: Research Survey 2011 2.5.7 Sampling Procedure Due to the constraint of time and cost, it was not possible for the researcher to access every single local government in the country, more especially when many of the council officials displayed degree of apathy that were awfully discouraging. The point, however, is that, a total of three hundred and twenty seven (327) questionnaires were administered. 68

The local government councils were chosen quasi randomly in such a way that those with receptive officials were the ones to whom questionnaire were distributed. Accordingly, one hundred and nine (109) questionnaires were distributed to each senatorial district, while in each senatorial district, four local government were selected for research; making a grand total of three hundred and twenty seven (327) questionnaires. The following cadres of staff were administered: head of service, secretary’s, treasurers, revenue officers, revenue collectors, revenue cashiers, main cashiers, internal auditors, store officers and the accounting staff in the finance and supplies department of the affected local governments. This formed a good basis as every cadre of staff/officials as regards control mechanisms and the management of the funds of local governments was represented as shown in the table below. Table 2.8 Determination of senatorial district and sampling procedure S/No L.G.A. Senatorial district Sample size Percentage 1 Anambra East North 23 7.5 2 Ayamelim North 20 6.7 3 Ogbaru North 30 8.9 Onitsha North 36 10.5 Total 109 4 Akwa south Central 30 9.4 5 Anoacha Central 27 8.3 6 Idemili North Central 25 8.1 Njikoka Central 27 9.2 Total 109 7 Aguata South 28 7.8 8 Ihiala South 25 7.2 9 Nnewi south South 34 10 10 Orumba South 22 6.4 North Total 109 Grand total 316 100 Source: Research Survey 2011

2.5.8 Instruments for Data Collection The instruments used in this study are the constructed questionnaire and personal interview that were distributed and administered to the sample area under investigation. The questionnaire was formulated based on practical experience, observation and therefore has both inherent validity and reliability to the extent that any researcher wishing to embark on similar research exercise using the same instruments will certainly arrived at the same findings and results. 2.5.9 Administration Of Instruments The questionnaire was self administered and contains close and open-ended questions. One research assistant and two field workers were recruited and trained for the administration of the questionnaire to the respondents. They were undergraduates from the social sciences. They were given one day training on questionnaire administration. The researcher supervised the entire process of the questionnaire administration and collection. 2.5.10 Validity and Reliability of Instruments The research generated data which were subsequently analyzed and the results were used to answer the research questions and test the hypothesis as well. The assumption in the use of data is that the sources are reliable and the data themselves are of the highest possible quality. One very important way of ensuring that data are of high quality is by improving the quality of the measuring instruments (Asika, 1991), the quality of measuring instruments is determined by the validity and reliability. Validity is defined as the degree of which a measuring instrument measures what it is designed to measure while reliability is defined as the consistency between independent measurements of the same phenomenon. It is then the stability, dependability and practicability of a measuring instrument. (Ujo 2004: 78). 70

The questionnaires were carefully structured and were deemed valid and were vetted by some Ph.D research students in Odili hostel who are carrying out different research activities in statistics and public financial management. Again the use of the χ 2 statistical formula as analyzing tool in testing the hypothesis, the method used in determining the sample size and sampling technique, etc granted sufficient validity and reliability of the instruments to the extent that any further research carried out on the same subject matter and using the corresponding instruments will certainly arrived at the same findings and results. 2.5.11 Method of Data Analysis The descriptive analysis of the data will be by breaking down the data into tables and percentages for clarity as well as relating them to the main variables of interest in the study. The data from the in-depth interview will be analyzed using qualitative techniques by relating the outstanding points of the responses to the objective of study, upon which inferences will be drawn for generalization. The hypotheses of the study were tested using chi-square (χ 2 ) statistical formula and thereafter, conclusions were drawn base on the results of the tests.

CHAPTER THREE

BACKGROUND INFORMATION ON AREA STUDY: ANAMBRA STATE 3.1 History Anambra is a State in south-eastern Nigeria. Its name is an anglicized version of the original 'Oma Mbala', the name of the river now known as Anambra which the state is named after. The Capital and the Seat of Government is Awka. Onitsha and Nnewi are the biggest commercial and industrial cities, respectively. The state's theme is "Light Of The Nation". Boundaries are formed by Delta State to the west, Imo State and Rivers State to the south, Enugu State to the east and Kogi State to the north. The origin of the name is derived from the Anambra River (Omambala) which is a tributary of the famous River Niger .The indigenous ethnic group in Anambra state are the Igbo (98% of population) and a small population of Igala (2% of the population) who live in the North western part of the state. Anambra is the eight most populated states in the Federal Republic of Nigeria and the second most densely populated state in Nigeria after Lagos State. The stretch of more than 45 km between Oba and Amorka contains a cluster of numerous thickly populated villages and small towns giving the area an estimated density of 1,500– 2,000 persons living within every square kilometer of the area.

3.1.1 Igbo Ukwu Vessel

Anambra possesses a history that stretches back to the 9th century AD, as revealed by archaeological excavations at Oraukw u and Ezira; Great works of art in iron, bronze, copper, and pottery works belonging to the ancient Kingdom of Nri, revealed a sophisticated divine Kingship administrative system which held sway in the area of Anambra from c. 948 AD to 1911.

During the Nigerian/Biafran war, a relief airstrip, was constructed by Biafran Engineers in the town of Uli/Amorka (code named "Annabelle"). Extremely dangerous relief flights took off from Sao Tome and other sites loaded with tons of food and medicine for the distressed Biafran population. Uli/Amorka airstrip was the site were brave American pilots like Alex Nicoll, and scores of others, made the supreme sacrifice in the service of humanity, delivering tons of relief supplies to the Biafran population. Disgusted by the suffering and mounting death toll in Biafra from starvation as well as the continuous harassment of the relief planes by the Nigerian Airforce, Carl Gustaf von Rosen resigned as a Red Cross relief pilot and helped Biafra to form an Airforce of five Minicoin planes 73 malmo MFI-9 stationed at the Uga airstrip. He named his tiny but effective airforce "Babies of Biafra" in honour of the babies who died via starvation inside Biafra.

Old Anambra State was created in 1976 from part of East Central State, and its capital was Enugu. A further re-organization in 1991 divided Anambra into two states, Anambra and Enugu. The capital of Anambra is Awka.

3.2 Resources

Anambra is rich in natural gas, crude oil, bauxite, ceramic and has an almost 100 percent arable soil. In the year 2006, foundation laying ceremony for the first Nigerian private refinery Orient Petroleum Refinery (OPR) was made at Nsugbe- Umuleri area. The Orient Petroleum Resource Ltd, (OPRL) owners of OPR, was licensed in June 2002, by the Federal Government to construct a private refinery with a 55,000 b/d capacity.

Furthermore, Anambra state is a state that has many other resources in terms of agro-based activities like fishery and farming, as well as land cultivated for pasturing and animal husbandry. Currently Anambra State has the lowest poverty rate in Nigeria 74

3.3 Culture and Tourism

3.3.1 Agulu Lake

Agulu Crocodile Lake is located along Awka road in Agulu, Aniocha Local Government Area of the state. A potential tourist site, it is home to an estimated three hundred crocodiles and water turtles. Fishing is not allowed on the lake and the crocodiles, being sacred animals to the people, cannot be killed. Legend says that these crocodiles were instrumental in delivering the town from enemy soldiers during the Nigerian civil war. It is believed that these sacred crocodiles and turtles transformed themselves into beautiful ladies and lured the soldiers unawares into the lake where they disappeared without trace. At noon the crocodiles and the turtles appear at the banks of the lake to take in sunlight.

Ogbunike Caves , listed by UNESCO as a world Heritage Site is one of the most visited tourist sites in Anambra State. It is classified as a Sandstone cave (Lateritic sandstones of Campanian-Miocene age. It has very scenic vegetation with attractive waterfall. It is situated in the Ogba hills Ogbunike, across the 75

Ugwu-Aga Escarpment Umunya by the Enugu/Onitsha Expressway and lies in the coordinates of N06 11 11 and E06 54 21.

Igbo Ukwu Museum: lgbo Ukwu is an ancient town known for astonishing metalcrafts and has remained an attraction to tourists because of its bronze artifacts. The bronzes which were first noticed in 1938 and later excavated by Thurstan Shaw (an English archaeologist) date back to about the 9th century, are of high value and historic relevance.

Uzu-Oka: Awka is historically known for the great metal foundry, Uzu Craftmanship. Imo-Awka is an annual festival celebrated by the natives.

3.3.2 Ofala Festival

Other Anambra tourism potentials and cultural festivals include:

• Ijele Masquerade listed in UNESCO Archives as Intangible cultural element Ijele dance festival is home to the 'Olus' of the Omambala area: Omor, Aguleri, Umuleri, Awkuzu, Umunya, etc. 76

• Omaba Yearly New-Yam Festival.

• Ajana-Ukwu and Igu aro festivals at Omor.

• Obu Gad at Enugwu Aguleri.

• Ini Iguedo (Iguedo Grave) at Nando.

• Odinani Museum at Nri.

• Ini Eri (Eri Grave) at Ivite, Aguleri

• Afia olu Festival in Nnewi. Attracts thousands of visitors annually.

• The River Niger at Onitsha and Asaba with the famous Niger bridge is the eastern gateway linking the South East with Niger Delta and Western Nigeria.

• Uzoiyi Festival Umuoji attracts thousands of visitors annually.

• Ofala (Ovala) Festival is the commemorative of Kingship celebrated by various towns. It was popularised by Onitsha town.

• Igu-Aro is the major ki•ngship festival among the Nri.

• Nkpokiti Dance, Umunze is known for fantastic acrobatic performances.

• Rogeny Tourist Village at Oba (a stadium that is equipped with recreational activities including a swimming pool, zoo, shrine, soccer stadium, et

3.4 Education

Nnamdi Azikiwe University

Awka, the state capital, is also the center of Nigeria's metalwork and carving industries. Educationally, Anambra is a centre of excellence. There are the Nnamdi Azikiwe University (UNIZIK), Awka a federal university with College of Medicine situated at Nnewi. The UNIZIK Nnewi runs a modern Teaching Hospital with facilities also at Umunya and Ukpo. The Anambra State University, formerly known as Anambra State University of Science and Technology (ASUTECH), with two campuses, one in Uli, and another at Igbariam; the Federal Polytechnic, Oko; Nwafor Orizu University of Education (formerly known as the Nwafor Orizu College of Education), Nsugbe. Private Universities include The Tansian University, Umunya and Madonna University, Okija.

Literacy rate in the state is comparatively high. Some of the more notable secondary schools include Dennis Memorial Grammar School (D.M.G.S) Onitsha; St Christopher's Junior Seminary 3-3 Onitsha; Girls' Secondary School Onitsha; St Charles' Special Science School (SCSSS), Onitsha; Christ the King college (C.K.C) Onitsha; Our Lady's High School Onitsha; Comprehensive Secondary School Nawfia; Queen Of the Rosary College (Q.R.C.) Onitsha, St. Monica's College Ogbunike; Nnamdi Azikiwe Secondary School, Abagana; St Mary's High School Ifite-Dunu; Igwebuike Grammar School Awka; Lorretto Special Science School Adazi; Father Joseph Memorial High School Aguleri; Girls High School Umunya; Ajalli Government School; Community Secondary School Igbariam and many more. Primary and secondary school enrollment in the state is one of the highest in the country. Consequently, Anambra state has the highest number of JAMB candidates going after the limited number of spaces in Nigeria's tertiary colleges.

3.5 Politics

Anambra State Government House 79

Anambra’s political history can be described as awesome, weird and unique depending on the aspect one turns to. It is a state with a long list of “firsts” in Nigeria history that dubbed the sobriquet “The Light of The Nation”. On May 29, 1999, Dr. Chinwoke Mbadinuju was sworn in as civilian governor of Anambra state, after many years of military rule. His administration was marred by heavy problems. The most notable is the teachers' salary which was withheld for a long time. This led to a ten-months strike in all the government secondary schools in the state. Also, before his rule, secondary education had been free of charge. But his administration prescribed a tuition fee of 3000 Naira per term for all secondary schools, which led to an unprecedented massive demonstration by the secondary school students from all over the state. Many people attribute Mbadinuju's failure to political godfathers a debacle that also trailed his predecessor. On May 26, 2003, Dr. Chris Ngige was sworn in as the new governor of the state, but he was removed in March 2006 when Mr. Peter Obi of APGA dragged him to court on charges of electoral malpractice. The Court of Appeal in Enugu asserted that his election victory in 2003 was fraudulent and ordered him to leave the seat. Peter Obi was in turn ousted by a faction of the Anambra State House of Assembly on November 2, 2006 and replaced by Virginia Etiaba, his deputy. [On February 9, 2007 Mrs. Etiaba handed power back to Obi after the Court of Appeal had nullified Obi's removal.

On April 14, 2007, Mr. Andy Uba of PDP was "elected" the new governor of the state and, on May 29, was sworn in as the new governor. The election was reported to be massively rigged and was disapproved all over the country. On June 14, 2007 the Supreme Court of Nigeria removed Mr. Andy Uba from office and replaced him with his predecessor Peter Obi, on the ground that Peter Obi's tenure had not ended, therefore there was no vacancy in the governorship. On Saturday, 6 80

February 2010, Peter Obi was re-elected governor for a second term of four years, after a hot contest with Dr. Chris Ngige, a former governor of the state; Prof. Charles Soludo, a former governor of the Central Bank of Nigeria and Mr. Andy Uba who was a strong voice in the state's politics. Other contenders included Mrs Uche Ekwunife, Prince Nicholas Ukachukwu and many others. Altogether, there were twenty-five contestants for the office. Mr. Peter Obi was named the winner of the election, with more than 30% votes above the immediate runner-up.

3.6 Cities and Administrative Divisions

Niger Bridge - Gateway into Anambra

With an annual population growth rate of 2.21 percent per annum, Anambra State has over 60% of its people living in urban areas making it one of the most urbanized places in Nigeria.

The major urban centres of Anambra state are Onitsha including Okpoko, Nnewi, and Awka. Awka and Onitsha developed as pre-colonial urban centres with Awka as the craft industrial centre of the Nri hegemony; and Onitsha the city state on the Niger and a river port and commercial centre. 81

Onitsha is a fast-growing commercial city, and has developed to become a huge conurbation extending to Idemili, Oyi and Anambra East LGAs with one of the largest markets in West Africa. Nnewi (the Taiwan of Nigeria) is a rapidly developing industrial and commercial centre; and Awka, by becoming the state capital is, as it were, regaining its precolonial administrative eminence.

Other main towns of Anambra state are: Awgbu, Igbariam, Omor, Nkwelle- Ezunaka, Abatete, Awka-Etiti, Achina, Agulu, Amorka, Aguluezechukwu, Ogidi, Obosi, Ihiala, Amichi, Uga, Uli,Ubuluisiuzor, Abagana, Alor, Nsugbe, Atani, Nkpor, Eziowelle, Oba, Ichi, Ojoto, Oraifite, Ozubulu, Umuawulu,Umunze, Umuoji, Umunachi, Umudioka, Unubi, Umunya, Umuleri, Utuh, Ogbunike, Aguleri, Ekwulobia, Igbo-ukwu, Ichida, Ora-Eri, Ihembosi, Akwaukwu, Uke, Ukpo, Ifite - Dunu, Okija, Ajalli, Oko, Oraukwu, Osumenyi, Otu-ocha, Nnobi, Nnokwa, Ideani, Adazi-Nnukwu, Adazi-Enu, Umuanaga, Adazi Ani, Nanka, Nimo, Nneni, Nmiata-Anam, Awkuzu, Ebenebe, Enugwu-Ukwu, Enugwu-Agidi, Umueze-Anam, Nawfia, Amawbia, Agukwu, Nando, Nanka, Nnokwa, Amansea, Amanuke, Achalla, Mgbakwu, Ugbenu, Ugbenne, Umuchu, Umuomaku, Isuaniocha, Azia, Utuh, Akwaeze, Omogho, Akpo, Amesi, Ebenator, Nibo, Mbaukwu, Nise, Achala, Ukpor. Akpo town in Aguata L.G.A;comprises six villages: Agbaelu, Uhualla, Umueze, Ogbo, Amaife and Udo.

3.7 Anambra State LGA Map

There are 21 local government areas in the state:

• Aguata

• Awka North

• Awka South

• Anambra East

• Anambra West

• Anaocha

• Ayamelum

• Dunukofia

• Ekwusigo

• Idemili North

• Idemili South

• Ihiala

• Njikoka 83

• Nnewi North

• Nnewi South

• Ogbaru

• Onitsha North

• Onitsha South

• Orumba North

• Orumba South

• Oyi

3.8 Urbanization and Structural Planning

Over the last two decades the rural/urban exodus has caused a shift making Anambra a highly urbanized state with 62% of its population living in urban areas.

Faced with decades of neglect and bad governance, the shift in human migration has posed problems to available infrastructural provision, environmental sanitation, erosion control and other social services. As a result, major cities have become characterized by inadequate and deteriorated road networks, walkways, unregulated building patterns, sanitation, uncontrolled street uncontrolled street trading, mountains of garbage, and chaotic transport systems, creating congestion, noise pollution and overcrowding.

To address this situation, the government of Peter Obi with the assistance of the UN-HABITAT produced 20-year structural plans (2009–2028) for three major cities in the State, Onitsha, Nnewi and Awka Capital Territory to restore urban planning and guide their growth into the future.

The plans contain policies and proposals for land use, city beautification, road infrastructure, industrial development, housing, waste disposal, water supply and health and educational facilities to turn the cities into Anambra into successful urban areas to generate employment, wealth and provide high living standards for its residents Anambra became the first state in Nigeria to adopt Structural Plans for its cities and with effective implementation should systematically grow as a major economic center in Nigeria and West Africa.

The process of urbanization is fairly contributed by population growth, immigration, migration, and infrastructure initiatives like good road, water, power, and gardens, resulting in the growth of villages into towns, town into cities centres, thereby resulting in food scarcity and over population in urban environment.and cities into metros. However, in such a phenomenon for ecological feasible development, planning requires an understanding of the growth dynamics, if not people will continue moving from our villages in search of greener pasture living only the aged men and women to farm, this is noticeable in Amesi, Akpo, and Achina towns in Aguata local government area. They major in the production of yam,Cocoyam and cassava through consistent agriculture. These agricultural activities have in recent time suffered a setback due to massive out-migration of their youths to the urban

CHAPTER FOUR

DATA PRESENTATION, ANALYSIS AND FINDINGS This section deals specifically with the information garnered from the retrieved questionnaires. As was said earlier in chapter two under method of data analysis, our data were presented and analyzed using the simple frequency and percentage tables for proper comprehension.

4.1 PRESENTATION OF DATA Three hundred and twenty seven questionnaires (327) was administered at the ratio of 109 for the three senatorial district namely, Northern, Central and Southern senatorial district. Of this number, only two hundred and sixty two (262) were retrieved, giving a response rate of 80.1%. Note that by virtue of the administrative hierarchy of the local government, one (1) person each occupies the office of Chairman, Secretary, Treasurer, Stores Officer, Cashier, Internal Auditor, and Revenue Officer in each local government. So, for twelve local governments under investigation, we have a total of twelve (12) in each category of the above stated officials. Other respondents constitute the remaining sample size as shown in the questionnaire design below.

Question 1: What position do you occupy in this council?

Table 4.1: Position held in council Responses Frequency Percentage Chairman 12 4.6 Secretary 12 4.6 Treasurer 12 4.6 Internal auditor 12 4.6 86

Store officer 12 4.6 Revenue officer 12 4.6 Accounting staff 74 28.2 Revenue collectors 116 44.2 Total 262 100 Research Survey, 2011

Table 4.1 shows that 12 respondent or 4.6% held the post of chairmen, also 12 respondents held the post of secretary representing 4.6%. The same also applies for the treasurer, internal Auditor, store officer, and Revenue officer. This is so because these officers are only one (1) in each local government and we are studying twelve local governments, automatically, we are bound to have one respondent per each council making a total of 12. The table also shows that 74 or 28.2% respondents held the post of accounting personnel while 116 or 44.2 held the position of revenue collectors

Question 2: for how long have you been a local government staff? The following options were offered.

Table 4.2 distribution on working experience S/NO Option Frequency Percentage A Less than 1 year 12 4.6 B 1-4 years 12 4.6 C 5-9 years 12 4.6 D 10-14 years 20 7.6 E 15- 19 years 53 20.2 F 20-25 years 96 36.6 G 25-30 years 42 16.0 I 30 years and above 262 100 Source: Research Survey, 2011. 87

NOTE: Frequency denote respondent all through the tables. Table 4.2 shows that 12 respondents or 4.6% has spent less than one year in the local government 1-4 years also had 12 respondents or 4.6%. So also is 5-9 years. 20 respondents or 7.6 10-14 years in the local government while 53 respondents or 20.2 has spent up to 15-19 years in the local government. 96 respondents or 36.6 has spent 20 – 25 years in the local government while, 42 respondents or 16.6% has spent up to 25 – 30 years in the local government and 15 respondent or 5.7 has spent 30 years and above in the local government.

Question 3 . Do you think there is financial accountability in your local government? Table 4.3: Whether there is financial accountability Option Responses Frequency Percentage A Agreed 17 6.5 B Strongly agreed 25 9.5 C Disagreed 103 39.3 D Strongly disagreed 117 44.7 Total 262 100 Source: Research Survey 2011.

The 4.9 depicts various response options on whether there is financial accountability in the council. 17 respondents or 6.5% agree to the fact while 25 respondent or 9.5% strongly agreed whereas 103 respondent or 39.3% disagreed that there is no financial accountability in the council and 117 respondent or 44.7% strongly disagreed to this statement

Question 4: Is the internal Audit units in your council independent?

Table 4.4: Degree of Independence of the internal Audit Option Responses Frequency Percentage A Agreed 30 11.5 B Strongly agreed 23 8.8 C Disagreed 89 34 D Strongly disagreed 101 38.5 E No idea 19 7.2 Total 262 100 Source: Research Survey 2011.

The table above shows that 30 respondent or 11.5% agreed to the independence of the internal Audit unit, 23respondents or 8.8% strongly agreed. 89 or 34% disagreed to this statement while a total of 101 respondents or 38.5% strongly disagree with the above statement, while the remaining 19 respondents comprising 7.2% says they have no idea.

Question 5: How often does External Auditing takes place in your local Government Council. Table 4.5: Frequency External Auditing in Council Options Response Frequency Percentage a Regularly 62 23.7 b Not regularly 189 72.1 C Undecided 11 4.2 Total 262 100 Sources: Research Survey 2011. Table 4.5 illustrates the degree of external audit inspection in various councils 62.or 23.7% of the respondents said internal audit inspection is carried out regularly in 89 the council, 189 or 72.1% of the respondents said internal inspection is not regularly in the council while the remaining 11 or 4.2% are undecoded about it.

Question 6: Does your council adhere strictly to the provisions of the financial memoranda and other operational guidelines for Local Government Administration Table 4.6: Level of Adherence to Operational Guideline Options Response Frequency % a At frequent intervals 17 6.5 b Very often 8 3.1 c Seldom abide by this provisions 21 8.0 d These guidelines are completely ignored 211 80.5 e No idea 5 1.9 Total 262 100 Source: Research Survey 2011. Table 4.6 shows that 17 respondents representing 6.5% avowed that the council adhere strictly to the operational guidelines. 8 respondents which is 3.1% said this is done as very often. 21 respondents or 8.0% admitted that the council seldom abide by these provisions. A whopping number of respondents totaling 211 or 80.5% confess that these guidelines are completely ignored while only 5 or 1.9% said they have no idea; meaning they don’t know whether the council is adhering to the guidelines or not.

Question 7: Are Audit queries and sanctions effective in your council?

Table 4.7: Effectiveness of Audit queries and sanctions Response Frequency % Not usually issued 43 16.4% Even if issued, sanctions not enforced 188 71.8% Issued periodically 22 8.4% No idea 9 3.4% Total 262 100 Source: Research Survey 2011. Table 4.7 rightly examined the issue of audit queries and sanctions. Hence the respondents have expressed their feelings and observations as regards all this importance aspect. Accordingly, 43 respondents or 16.4% admitted that audit queries and sanctions are not usually issued. 188 or 71.8% of the total respondents agreed that even if audit queries are issued, sanctions are not enforced. 22 respondents or 8.4% said audit queries are issued periodically, while the remaining 9 respondents or 3.4% said they have no idea. Question 8: Are the internal control mechanisms properly installed in your local government?

Table 4.8: Internal control mechanisms in councils Option Responses Frequency Percentage A Agreed 16 6.1% B Strongly agreed 21 8.0% C Disagreed 126 48.1%34 D Strongly disagreed 99 37.8% Total 262 100 Source: Research Survey 2011.

Table 4.8 illustrates that 16 respondents or 6.1% agreed that internal control mechanisms are properly installed in the council, 21 respondent or 8% strongly agreed whereas 126 or 48.1% disagreed to the above statement while 99 respondent or 37.8% strongly disagreed with the above statement too.

Question 9 Does the state government interfere with the local government activities, finance and programs in your council? 4.9 State government interference with the local government Option Responses Frequency Percentage A Agreed 98 37.4 B Strongly agreed 131 50 C Disagreed 20 7.6 D Strongly disagreed 13 5 Total 262 100 Source: Research Survey 2011. Table 4.3 illustrates that 98 respondents or 37. 4% agreed to the fact that the state government undue interfere with the local government activities, finance and programs in your council. Whereas 131 respondents, constituting 50% strongly agree to this submission. 20 or 7.6% disagree with the above statement while 13 or 5% respondents strongly disagree respectively. 92

Question 10: Is the budget of your council properly implemented? Table 4.10: Whether budget is implemented Option Responses Frequency Percentage A Agreed 38 14.5% B Strongly agreed 48 18.3% C Disagreed 109 41.6% D Strongly disagreed 67 25.6% Total 262 100 Source: Research Survey 2011

Table 4.10 shows that 38 respondents or 14.5% agreed on the opinion that the council annual budget estimate is being implemented while 48 respondent or 18.3% strongly agreed to the statement whereas 109 respondents or 41.6 disagree and 67 respondents or 25.6% strongly that the council annual budget estimate is not implemented.

Question 11: Corruption has adversely affected your local government council

Table 4.11: Corruption and its adverse effects on council Options Response Frequency % a Agreed 102 38.9 b Strongly agreed 121 46.2 c Disagreed 21 8.0 d Strongly disagreed 18 6.9 Total 262 100 Source: Research Survey 2011.

Table 4.11 shows respondents options to the extent of corruption in the council. 102 respondents or 38.9% agreed that, corruption has adversely affected the council. 121 or 46.2% strongly agreed to this same fact. While 18 or 8.0% said they disagree 93 with this statement. The remaining 18 respondents or 6.9% prefer to strongly disagree with this claim. Question 12: Your local government faces the problem of insufficient funds to execute projects/programmes

Table 4.12: Problem of insufficient funds Options Response Frequency % a Agreed 111 42.4 b Strongly agreed 103 39.3 c Disagreed 26 9.9 d Strongly disagreed 22 8.4 Total 262 100 Source: Research Survey 2011.

Table 4.12 shows that, while 111 respondents or 42.4% agreed to the fact that the local government faces the problem of insufficient funds, 103 respondents or 39.3% strongly agreed to this statement. Rather, only 26 respondents or 9.9% disagreed while 22 or 8.4% strongly disagreed to this fact.

Question 13: Why is the local government stores so badly utilized for personal purpose rather than public interest?

Table 4.13: Why stores are badly utilized Option Responses Frequency Percentage A Agreed 117 44.7 B Strongly agreed 124 47.3 C Disagreed 9 3.4 D Strongly disagreed 12 4.6 Total 262 100 Source: Research Survey 2011 94

Table 4.13 shows the various responses on why stores are badly utilized. 117 respondents or 44.7% agreed that stores are badly utilized for personal purpose rather than public interest. While 124 or 47.3% also strongly agreed to the fact where as 9 or 3.4 disagreed and 12 respondent or 4.6% strongly disagreed with the above statement.

Question 14: Are the enabling byelaws enforced on the application of the control mechanisms in your local government? Table 4.14: Enforcement of enabling bye-laws Option Responses Frequency Percentage A Agreed 56 21.4 B Strongly agreed 40 15.3 C Disagreed 97 37 D Strongly disagreed 69 26.3 Total 262 100 Sources: Research Survey 2011 The above table shows that 56 respondent or 21.4% agreed to the fact that there are enabling bye enforced on the application of control mechanisms, 40 respondents or 15.3% strongly agreed where as 97 respondent or 37% disagreed and 67 respondent or 26.3% strongly disagreed with the above statement. 95

Question 15: Does the non-application of efficient and effective financial control mechanisms has adversely affected the development of your local government council. Table 4.15: Control mechanism and development of the local government area Response Frequency % Agreed 104 39.7 Strongly agreed 109 41.6 Disagreed 20 7.6 Strong disagreed 29 11.1 Total 262 100 Source: Researche Survey 2011

Table 4.15 depicts various response options, on how the non application of control mechanisms has adversely affected the development of the local government area. Hence, 104 respondents or 39.7% agreed to this statement. 109 respondents or 41.6 % strongly agreed to this fact. Whereas, 20 respondents or 7.6% disagreed, while the remaining 29 or 11.19% strongly disagreed to this assertion.

Question 16: Are the employees of your local government properly motivated and trained Table 4.16: Motivation of Employees in the Council Option Responses Frequency Percentage A Agreed 48 18.3 B Strongly agreed 33 12.6 C Disagreed 91 34.7 D Strongly disagreed 90 34.4 Total 262 100 Source: Research Survey 2011

The above table shows the response rate on staff motivation and training. 48 respondents or 18.3% claimed that staff are being motivated and trained in the council. While 33 respondents or 12.6% strongly agreed with the above statement whereas 91 respondents or 34.4% strongly disagreed that staff are not motivated and trained.

Question 17: lack of adequate financial control mechanism is the cause of insufficient funds in the local government system? Table4.17: financial control mechanism and insufficient funds Option Responses Frequency Percentage A Agreed 85 32.4 B Strongly agreed 146 55.7 C Disagreed 19 9.3 D Strongly disagreed 12 4.6 Total 262 100 Source: Research Survey 2011

Table 4.17 depicts various responses options on how lack of adequate financial control mechanism is the cause of insufficient funds in the local government system. Hence 85 respondents or 32.4% agreed to this statement, 146 respondent or 55.7% strongly agreed to this to this fact whereas 22 or 8.3% said they disagreed while the remaining 12 respondents or 4.6% strongly disagreed to the assertion.

Question 18: Are the internally generated revenue of your local government properly recorded and accounted for?

Table 4.18: Accountability for internally generated revenue Option Responses Frequency Percentage A Agreed 49 18.7 B Strongly agreed 54 20.6 C Disagreed 89 34 D Strongly disagreed 70 26.7 Total 262 100 Source: Research Survey 2011 Table 4.18 shows that 49 respondents or 18.7% agreed to the proper recording and accounting of internal revenue funds accruing to the council. 54 respondents or 20.6% strongly agreed to the fact whereas 89 respondents or 34% refused or disagreed to the fact. While 70 respondents or 26.7% also strongly disagreed.

Question 19: Lack of efficient financial control mechanism and efficient management is the bane of underdevelopment in your local government area? Table 4.19: Response Frequency % Agreed 76 29 Strongly agreed 153 58.4 Disagreed 18 6.9 Strongly disagreed 15 5.7 Total 262 100 Source: Research Survey 2011

Table 4.19 shows that 76 respondents or 29% agreed that lack of efficient financial control mechanism and efficient management is the bane of underdevelopment in your local government. A total of 153 respondents or 58.4% also strongly agreed to this fact. However, 18 respondents, or 6.9% said they disagreed while the remaining 15 respondents or 5.7% strongly disagreed to this allegation.

Question 20: Adequate and effective financial control mechanisms will reduce or eliminate corruption in the local government Table 4.20: Effective control mechanisms and elimination of corruption Options Response Frequency % A Agreed 107 40.9 B Strongly agreed 129 49.2 C Disagreed 16 6.1 D Strongly disagreed 10 3.8 Total 262 100 Source: Research Survey 2011

Table 4.20 shows varied responses indicating their level of acceptance on the principles and application of control mechanisms in the local government. 107 respondents or 40.9% agreed that effective control mechanisms can reduced or completely eliminate corruption in the local government council. 129 respondents constituting 49.2% of the sample size also strongly agreed to the claim. However, there were some dissenting opinions, as 16 respondents consisting of 6.1% of the respondents disagreed to the statement above. While the remaining 10 respondents constituting only 3.8% of the sample size said they strongly disagreed to the statement.

4.2 ANALYSIS OF DATA/TEST OF HYPOTHESIS The data presented in the preceding sub-sections will be analyzed in this section. This will be carried out by testing the three (3) hypothesis that were formulated in chapter two. In addition, to these tests, some other relevant facts obtained from respondents while administering the questionnaires will also be analyzed in the findings. The research hypothesis will be subjected to Chi square test. At 5% level of significance, Chi square (X 2) will be used in ascertaining the validity or other wise and a test whether or not there is an association between set of variable and another. Chi-square X 2 formula Where Oij = observed frequency Where Σij = expected frequency Restatement of Hypothesis All the hypothesis previously formulated are as stated below: 1. There is significant relationship between efficient financial control mechanisms and effective management in the local government system 2. Lack of adequate financial control mechanisms is the cause of insufficient fund in the local government system in Anambra State. 3. Lack of efficient financial control mechanisms and effective management is the bane of underdevelopment in the local government system in Anambra State. Decision Rule If the collected value is greater than the tabulated value REJECT the null hypothesis. But accept null if X 2 calculated is less than X 2 tabulated. Statistical Hypothesis I Ho: There is no significant relationship between efficient financial control mechanisms and effective management in the local government system. 100

H1: There is significant relationship between efficient financial control mechanisms and effective management in the local government system. Table 4.21 Hypothesis I Options Responses Frequency Percentage % a Agreed 61 23.3 b Strongly agreed 165 63 c Disagreed 18 6.9 d Strongly disagreed 15 5.7 e No idea 3 1.1 Total 262 100

O Expected frequency = = ∑( /N) Σij = 61 +165+18+15+3 = 262 + 52.4 5 Oij Σij Oij - Σij Oij - Σij 2 Oij - Σij 61 52.4 8.6 74 1.4 165 52.4 112.6 12,678.8 242 18 52.4 -34.4 1,183.4 22.6 15 52.4 -37.4 1,398.8 26.7 3 52.4 -49.4 2,440.4 46.6 339.3 Computed Value = X 2 = 339.3 Degree of freedom = R – 1, where R = R011 = 5 -1 = 4 At 5% level of significant, degree of freedom a +4 = 9.488. therefore X 2 tab = 9.488 Decision Rule Recalled Reject null hypothesis if X2 cal is more than X 2 tab. But accept null if X2 cal is less than X2 tab. 101

Therefore since the X 2 cal (339.3) is greater than the X 2 tab (9.488) we reject the null hypothesis and accept the alternative hypothesis which state that “there is significant relationship between efficient financial control mechanism and effective management in the local government system”. Research Hypothesis 2 Lack of adequate financial control mechanisms is the cause of insufficient fund in the local government system in Anambra State Statistical Hypothesis Ho: Lack of adequate financial control mechanisms is not the cause of insufficient fund in the local government system in Anambra State

H1: Lack of adequate financial control mechanisms is the cause of insufficient fund in the local government system in Anambra State Table 4.22: Hypothesis II Options Responses Frequency Percentage % a Agreed 76 29 b Strongly agreed 153 58.4 c Disagreed 18 6.9 d Strongly disagreed 15 5.7

Total 262 100 Using the formular X 2 (Oij - Σij)2 Σij

O Expected frequency ∑( /N) ∑ = 262 4 ∑ = 65.5

102

Oij ΣΣΣij Oij - ΣΣΣij Oij - ΣΣΣij 2 Oij - ΣΣΣij 76 65.5 10.5 110.25 1.7 153 65.5 87.5 7656.3 116.9 18 65.5 -47.5 2256.1 34.4 15 65.5 -50.5 2550.1 39 262 192

Computed value = X2 = 192 Degree of freedom – 1 = 4 – 1 = 3 At 5% level of significance X2 tab = 7.815 Decision Rule Recalled Reject null hypothesis if X2 cal is more than X2 tab but accept null if X2 cal is less than X2 tab. Decision Since X2 cal (192) > X2 tab (7.815), we reject null hypothesis and accept alternative hypothesis which state that “ Lack of adequate financial control mechanisms and effective management is the cause of insufficient fund in the local government system in Anambra State. Research Hypothesis 3 Lack of efficient financial control mechanisms and effective management is the bane of underdevelopment in the local government system in Anambra State. Statistical Hypothesis Ho: Lack of efficient financial control mechanisms and effective management is not the bane of underdevelopment in the local government system in Anambra State. 103

H1: Lack of efficient financial control mechanisms and effective management is the bane of underdevelopment in the local government system in Anambra State. Options Responses Frequency Percentage % a Agreed 85 32.4 b Strongly agreed 146 55.7 c Disagreed 19 7.3 d Strongly disagreed 12 4.6 Total 262 100

Using the formular = X 2 (Oij - Σij)2 Σij

O Expected frequency ∑( /N) ∑ = 262 4 ∑ = 65.5

Oij Σij Oij - Σij Oij - Σij 2 Oij - Σij 85 65.5 19.5 380.3 5.8 146 65.5 80.5 6480.3 99 19 65.5 -46.5 21623 33 12 65.5 53.5 28621 44 262 181.8

X2 = 181.8 Degree of freedom – R-1 = 4 – 1 = 3 At 5% level of significance X2 tab = 7.815 Decision Rule Recalled Reject null hypothesis if X2 cal is more than X2 tab but accept null if X2 cal is less than X2 tab.

104

Decision Since X2 cal (181.8) > X2 tab (7.815), we reject null hypothesis and accept alternative hypothesis which state that “ Lack of efficient financial control mechanisms and effective management is the bane of underdevelopment in the local government system in Anambra State”. 4.3 FINDINGS Public officers in Nigeria have been associated with various financial crimes and those in Local government councils are no exceptions. Regrettably, probably because the Local Governments are closest to the people, financial crimes in Local Government councils are given wide publicity .Specifically abuse of financial control mechanisms associated with Local Government councils comes in the following form. Inflation of contract Unauthorized variation of contracts Payment for jobs not executed (mobilization fees) Payment through forged certificate of execution Irregular or wrong payment Losses of stocks by storekeeper Short accounting by cashiers Assets paid for but not collected Payment of ghost workers Failure to Account for government revenue collected Non recovery of cash advances Failure to raise Audit Alarm by Internal Auditors, treasurer, secretary or any other staff in a position to do so. Non rendering of statement in support of authority to incur supplementary expenditure (Sowande 2001: 398). The list is endless as unscrupulous public servants of the council usually come up from time to time with surprises. The points raised above are further buttressed by a study carried out on corruption and lack of control mechanism in the Nigeria Local 105 government. This study shows that between 1993 and 1995, the Federal Government received petitions against 76 local governments, across the country, on financial crimes and other abuses. According to the study, the chairman of Mobba in former Borno State was accused of sharing N2.2 million Naria with his treasurer. The chairman of Modobi Local Government in Kano state made illegal payments to the tune of N1,30,745.50 while the chairman of Ile-Oliyi/Okeigho Local Government in Ondo State was said to have put the sum of N1.3 million (part of economic relief to workers) into his private pocket. (Ikejiani-Clark 1995: 139-140). More recently, in Anambra State, the chairman of Onitsha south Local Government embezzled the sum of N20 million meant for capital project within two weeks of assumption in office. Also in Cross River the chairman of Obanliku Local Government, Dr. Godwin Amanke was impeached for financial impropriety leveled against him by his councilors. In the same vein, ten out of the eighteen Local Government chairmen in the state were pronounced guilty of financial malpractices by the state House of Assembly Appropriation Committee. The offences include loss of public funds, irregularity in stores account, irregular payments and inflation of contracts, non retirement of imprest advances as well as non refund of personal advances. Specifically, the amount that could not be accounted for were N7 million for payment vouchers, N1 million was paid out to contractors and no work done, N9 million was outstanding as personal advances against Local Government officials and N5 million was deducted under various headings such as PAYE, NULGE dues but never paid to the respective agencies. It is pertinent to point out that these incidents recorded in the state are prevalent in recent times in the Local Government councils across the country. For instance, According to an investigation carried out by the Newswatch magazine in 2001, Frank Bala Baba, chairman, Sanga Local Government area of Kaduna State was alleged to 106 have stolen N100 million belong to the Local Government. Baba claimed that the fund was used to transform his Local Government. A breakdown of the expenses showed that he used N3 million to purchase two-six-wheeled vehicles, fenced his own official residence with N1.5 million and furnished his official residence with a whooping N2.3 million, among other fragrant uses of public funds. The chairman of Birnm–Gwari Local Government was indicted for spending N2.9million in extra-budgetary Allocation to buy a Peugeot 406 saloon car for himself. The Birnin-Gwari chairman also claimed that he spent the sum of N110,000.00 on efforts for the release of stabilization fund. Rex Kola Olawole, the chairman of Ifeoldun Local Government of Kwara State was removed for spending over N350 million he received from the Federal allocation without paying workers salaries running into four months. Also, in Benue State, Otse Ofukpa, chairman of Ado Local government council, sand that he spend N38,200,000.00 on maintenance of peace in the area; however, people from the area who spoke to Newswatch on the issue said there was no crisis in the area since the chairman assumed office. The chairman, Itse Otokpa has also claim he has spent N18 million on hospitality. An account of inflated of a contract sum of N15 million to 26 million by the chairman of Owerri West Local Government in Imo State in 2001 is also a case in point (FRN: 2003: 109-110). Interaction with senior career local government officials during my research reveals other forms of financial crimes in the Local Government can hardly be documented. For instance, local government Chief Executives in breach of laid down regulations, prevail upon Local Government Heads of Departments (especially heads of finance) to make available huge sums of money for undisclosed purposes. Such monies are never accounted for. The Model Financial Memoranda (FM) is the most important document with regards to the control mechanisms and the management of local government funds. The FM is a compendium of information about the management of Local government 107 finances chapter 40 (pp 322–324) of the document is devoted to internal audits and checks. It provides for the establishment of each Local government, an Internal Audit unit headed by an Internal Auditor. This unit is charged with the responsibility of assisting in the protection of the assets and interests of Local Governments by carrying out a continuous examination of activities in order to defect fraud, misappropriation, irregular expenditure and losses due to waste, extravagance and mal-administration (FM, 1991: 332). Furthermore, in chapter 39, the FM provides for External Audit queries and sanctions. In this regard, it stipulates that the office of Auditor General be established in each state. The Auditor General is to be appointed by the governor of the state. He is empowered to carry out, on regular basis, the auditing of Local government accounts. He also empowered to sanction and surcharge any officer in line with the provisions of the FM 39.3 (FM 1991: 317). Lack of will on the part of the people at the helm constitutes a major constraint to effective implementation of efficient financial control mechanisms in the management of the funds of Local Government. The common parlance of the dog that eats the bone hung over its neck”, is our experience in the Nigerian Local governments. Hence, those who are supposed to facilitate effective management of financial crimes and abuses becomes impediments to the exercise. This situation is succinctly captured by Howard (1982: 23) in his statement that: No control mechanism, however elaborate, can by itself guarantee efficient administration and the completeness and accuracy of the records, nor can it be proof against fraudulent collusion, especially on the part of those holding positions of authority or trust. Authorization controls can be abused by the person in whom the authority is vested. Management is frequently in a position to override controls which it has itself established.

The picture painted by Howard is akin to the situation in Nigerian Local Governments. Local Government career officials tell their woes of the overbearing 108 influence of council Chief Executives in prevailing on them to float the laid down procedures in the management of Local Government funds. For instance, heads of finance departments (treasures) are made to issue cheques and Local purchase orders (LPOs) not backed by cash anywhere. Store-keepers are pressurized into making issues that are unofficial and not properly accounted for by the Chief Executive and other senior officials of the Local government (Onah, 1997: 223). Worry of note as regards the effective implementation of the control mechanisms in the management of the council funds is the inaccessibility of financial regulations. This, from my research findings is particularly the case with the model Financial Memoranda for Local Government. In different forums, career local government officials have pointed out that they have no access to this compendium of information about the management of Local government finances. A corollary of this is the lack of knowledge of the previsions of the document. When the FM was formally installed in 1994, copies were made available to every local government in the federation. Consequently, the inaccessibility of the document is a deliberate ploy by Chief Executives and senior career officials to have their lee-way to float the provisions. However, there is no gainsaying that even those who have knowledge of the provisions still go contrary to them. There has been lack of firm political commitment by Nigerian governments to subvert financial control mechanisms. Previous cases of proven financial malpractices at this level of government have gone unpunished. As pointed out by the committee on Human Development and Civil society (HD Cs ), most anti-corruption crackdowns by African governments have been public relation exercises. African governments have been seen to be reluctant to take action in cases of corruption and mismanagement where there is no political benefit to the government. Political bosses have also been seen interfering with investigative process seeking leniency for friends and political loyalists involved in acts of corruption and unethical practices (UNECA 109

2003). These are experiences in Nigerian Local Governments with regards to financial control mechanisms in the management of council’s funds. This also explains the reason for the ineffectiveness of the Audit Alarm committees of Local government. Findings from our interviews of local government officials shows total dismay on the control mechanisms because of lack of response to Audit Alarms. Sometimes, the one who raised the alarm may become the accused. States and Local Government Funds and Financial Control Mechanisms Many state governors, facing investigation or trial for graft, are suspected to have engaged in financial impropriety associated with Federal Allocations to local governments in their domain. Even now sitting governors are busy scheming what to do with the next round of Federation Account allocations to some of the 774 local governments. As a result of this behemoth of corruption the local government system has recorded paltry achievements far below expectations despite the trillion of naira sunk into its since the 1976 reforms of the third-tier of the nation’s political administration. Our investigation revealed that virtually all states governments or governors, violate, and with predictable impunity, their mandate to remit the 10 per cent of their internally generated revenue to local governments. The end-result is that the local government administration became a cesspool of corruption and thus attracts all manner of devious characters that go in and out of office as dictated by state governors. There is also this unholy alliance between state government and local councils in the state, where the state government constitutes Joint Action Committee, tagged ‘JAC’. Through these joint Accounts, Local government allocations are now tampered with or misapplied, under the guise of so-called “joint development projects”. Once the committees are through with LG allocations, the chairman and his councillors then get the lee-way to mismanage the rest without recourse to financial control mechanisms put in place. 110

The story was told of a south-east state where a million naira was reserved from each Local Governments allocation for the feeding of Governor’s nuclear family. Another awry example was given of a governor who supplied unsolicited operational vehicles to local government councils in his state only to deduct the cost at source on arrival of the allocations. Yet another governor was said to have slashed an LG allocation before handover to the chairman. For daring to challenge the governor’s illegality, the latter was suspended and nothing came out of the case (Daily champion Friday, March 13, 2009). Virtually all the chairmen interviewed complain bitterly about this undue interference on the council’s allocation by the state governors and said this has hampered developmental effort of their local governments. Our investigation revealed that this is as a result of the political control the respective state governors has on the local government chairman. This is as a result of the fact that state governor’s sponsors elections of most, if not all, of the chairmen. They are handpicked by the state governors rather than being elected. It is a clear case of who pays the piper dictates the tune. This again creates a problem of diversion of local government funds for personal use of the state governor, to the total abuse and neglect of financial control mechanisms. We insist that the LGs, having arisen from grassroots needs, should remain the third-tier administration in both words and deeds. This study was able to come out with the following findings: (i) In the Anambra state local governments, not all the control mechanisms are applied in practice. For instance, one of the problems of auditing as an instrument of control mechanisms is that internal auditor is not given the full autonomy to perform his duties and functions. (ii) Most of the auditors are unqualified and unskilled staff and this makes them incapable to perform their duties. Moreover, being employees of the local government, they find it difficult to raise audit queries where it concern his superiors, for fear of being victimized or transferred to a very remote area. 111

(iii) Under ideal circumstances, there should be prepayment audit. The internal auditor should check the payment voucher before payments. This is to ascertain whether payments are being made according to laid down procedures. But in most of the local governments investigated, this prepayment audit is lacking. (iv) Our findings also revealed that, there is lack of adequate manpower to carry out the work in the local government system. There is also lack of effective checks and control in the system. The internal auditor is not allowed to exercise his powers and as such cannot carryout effective checks and also try to control the purse of the local governments. Hence, the work of one is not routinely checked by another to ensure good public accountability. (v) The internal control existing in the local government is very loose. Functions are not clearly defined, duties are not routinely checked, physical stores verification do not exist, where they are done properly, adequate recording is neglected once, it is superior officer who is involved. (vi) Section 1.8 of the model financial memoranda stipulates the responsibilities of the finance department. Unfortunately, most of the local governments do not adhere to sub-section 2 of this section. Investigations carried out showed that most finance officers do not work with the financial memoranda. They ensure that money due to the local governments is paid in promptly but they do not make sure that these monies are paid into the local government purse. It was revealed that they connived with those involved to cheat the local government. (vii) Again, the provisions of the finance act 1958 as amended with regards to control of funds are neglected. This control mechanisms that will allow for proper financial accountability is deliberately by local government officials (Biase local government audit report 2005-2007). (viii)Moreover, the implementation of guidelines on audit queries and sanctions to local government is neglected once it involves a superior officer. If it is given at all to a chairman, the internal auditor stands the chance of losing his job or 112

being transferred. This is because he is an employee of the local government. He works at the expense of the local government in order to satisfy his boss and win favour from him. (ix) Section 31.2 enumerated the duties of the treasurer and these were found out into be partially complied during investigation carried out. It was also revealed that revenue collectors print fake receipts which are being issued to market women in lieu of local government original receipts. Recently, in Onitsha main market, in Onitsha south L.G. Area, one of the council under investigation, a revenue collector was apprehended by the market task force agents for issuing take receipts to traders in the market, thereby violating some of the sub-sections of the financial memoranda. (x) Another cause of worry is the issue of budget/estimate. Our findings revealed that the council budget is usually not presented to the council prior to state government approval. Workers interviewed confessed that “there is never a resolution on the floor of the council as required by the memoranda before bulk sums of money are withdrawn from the bank. Infact, there is no doubt that local government annual estimates in some local governments have continue to be an annual rituals with very little impact on resource allocation and management. (xi) Also noticeable, is the problem of planners of the budget, the executive committee and heads of Departments and the same group of people who operates them do not always realize that the principle behind annual estimates, particularly in the area of development (physical or otherwise) is that of programme performance, even where completion is expected to go beyond one year. Sequel to this is also the problem faced by the executive committee in budget preparation which is the lack of qualified personnel to meet the requirements of the specialized nature of budgeting involving research, forecasting and skilled costing. The nature budget of preparation demands 113

specialists, working on full-time basis that makes budget preparation and financial planning an ancillary part of their duties. The above presentation shows why finance and general purposes committee is failing us and why all the existing internal and external control measures are not efficacious. (xii) One notable observation made was the fact that virtually all the local government studied, it was discovered that not all the revenue sources were fully tapped and harnessed. Beside a lot still needs to be exploited. For example, such things as tenement rates, births and death registration and fees for burial ground are not usually enforced especially at the Northern senatorial districts of the state where a bulk of the rural dwellers reside. It is only in some of the local governments in the southern and central senatorial district, specifically Akwa, Onitsha and Nneni probably because they are close to the seat of government, Akwa. Investigation from our findings revealed that these lapses is as a result of failure of council to enact and legislate on the existing byelaws on tenement rates and those enumerated above and to give backings to the activities of revenue collectors in these regards. (xiii)Activities of fraudulent staff is also worthy of mention here. Most of the revenue collectors and enforcement officers are found to be very corrupt. They device several tricks to perpetuate their nefarious act unabated. Apart from printing of take receipts, there is also the problem of short accounting. This is a situation where revenue collectors remit to the authority an amount less than his actual collections. Our findings revealed that revenue collection remittances in our local government are laden with leakage points. Provisions guiding revenue mobilization have been thwarted through various tricks thereby making financial control mechanisms an illusion. A case in point happened in Onitsha Local Government, one of the council under investigation, in the Northern senatorial district, where a revenue collector in connivance with the council’s 114

cashier collected the sum of one million, five hundred thousand naira (N1500,000.00) only paid as royalty by a G.S.M. telecom provider, and abscond to an unknown destination till date. All efforts made by the police and other security agents to track then down had remained futile. (xiv) There is also the problem of untrained and ill-motivated staff in position of revenue assessment and collection in the local governments in the state. Also majority of the finance and accounting staff are bereft of any accounting and professional ethics. There is no adequate training given to them. The importance of training was stressed by Obi, (1999) when she stated that the need and desire to acquire new knowledge and experience is a continuous one as long as one lives. The essence of any training therefore, is to serve as a sound foundation upon which latter knowledge can be build, since training and learning is a continuous activity. (xv) Another area of concern is that which involved the council’s stores. Manipulation of stores accounts leading to misappropriation of money or goods by the stores officers. Our findings have shown that stores records are deliberately amended, adjusted or falsified to cover up money or goods stolen by official(s) concerned. This is carefully done in connivance with the stores officer. Most times, it was discovered, he fraudulently issued out stores receipt vouchers (SRV) to contractors for unsupplied items, stationeries and equipments and shares the proceeds among themselves. At worst cases, he colludes with the political officials, and declare as unserviceable many stores valuables and assets and sells them off. The proceeds he shares with his collaborators. (xvi) Third –tier monitoring by the state is good in that the career civil servants will received some protection against undue marginalization and victimization by aggrieved politicians. But the point is that state government should not over- step their bounds and limit. My findings revealed that the rate at which state 115

government interferes with the activities of the local governments leaves much to be desired especially in the aspect of council’s finances. Investigation revealed that during the seven years of the immediate past civilian administration in the state, no local government election have been conducted, it is the state government that appoint local government chairman or the head of serve HOS will take the position of the chairman in so case and ever had access to his federal allocation sent to the local government. The state government completely seized local government’s allocation and remits only a paltry sum to the local government for payment of salaries and other miscellaneous expenses. Bello-Imam (1996) captures this flagrant violation of local government autonomy vividly when he said that “the state Governments consistently and systemically stultified the activities of local governments by siphoning the meager allocations to the council to other activities. This hampers a lot of developmental efforts. Nwachukwu, (2000) buttressed this fact when he stated that: “we must acknowledge that not much has been returned to the people as value for the big money received as Federal Allocation; not much has been returned to the people as value for paying development levy; bicycles license fees, motor park and market fees, vehicle and business operating permits..”

(xvii) Our findings also observed that, in all the councils investigated, the state government had bluntly refused to remit her 10% of her total recurrent revenue to the local government as required by law for many years now. In fact, this provision only exists on paper as far as the Anambra state government is concerned. What is tenable is where the state government creates illegal heads and subheads at the state levels which are used as conduit pipes through which they siphoned council’s finances. A case in point is the one currently under investigation by the Independent Corrupt Practices and other Related Offences 116

Commission (I.C.P.C) published in the vanguard newspaper of Tuesday 19 th February, 2009 which reports the alleged financial scam of about N1.728 million in which the immediate past governor of the state mandated the chairmen of the eighteen local government councils to pay the sum of one million naira (N1m) only monthly to the account of his wife under an imaginary non-governmental organization (NGO) for a whooping period of eight years. This is quite alarming and frustrating indeed! (xviii) Lastly, during our findings, we discovered that the problem of corruption among local government functionaries need to be given serious attention; if the local government is to be relevance on the task of bringing the much needed development to the grassroots our investigation shows that corruption in the local government system has been institutionalized and is almost becoming a norm. Cases of corruption are rampant in the financial transactions of the local governments. These range from overvaluation of contracts, purchase invoices, signing of uncompleted job order certificates, manipulation of stores figures, embezzlement of funds, foregery, falsification of accounts, inclusion of ghost workers in the salary payment vouchers etc. More worrisome is the fact that, the treasurer by virtue of his position in one way or the other assists/or aids in the perpetration of these corrupt practices and crimes. (xix) The executive classes are the worst in this ugly trend. More recently, the Daily Sun Newspaper of Thursday, December 10, 2009, carried a banner headline captioned “Anambra L.G. boss in N20 million contract scam”. The paper expressed concern at the spate of financial recklessness going on in some councils across the state. One then wonder why should the vice-chairman who was just been sworn in, in an acting capacity following the suspension of the chairman raised a cheque of about N20 million from project account to be used for over head cost without recourse to due process. These and many more are some of my findings and observations which forms the major reasons why the 117

lack of adequate financial control mechanisms is the bane of administrative inefficiency resulting to underdevelopment of the local governments area in the country and in Anambra State in particular. 4.4 DISCUSSION ON FINDINGS A lot of findings have been identified arising from our 1 st , 2nd and 3 rd hypothesis that Lack of adequate financial control mechanisms is the cause of insufficient fund in the local government system in Anambra State and Lack of efficient financial control mechanisms and effective management is the bane of underdevelopment in the local government system in Anambra State. This has notable implication which shall be highlighted in the ensuring discourse. This is done under the following headings: i. Poor revenue base ii. Lack of “on the job training’ iii. Non enforcement of Audit queries and sanctions. iv. Unrealistic revenue estimates. v. Non compliance with budgetary provisions vi. The competence and integrity of high level finance officers vii. Prebendal orientation of Nigerian public officers. i. Poor Revenue Base: Perhaps, one of the major implications arising from our findings is that virtually all the local governments in Anambra state are operating on a very poor revenue base despite the huge chunk of monthly federal allocation made to them. As was rightly observed, finance is the resources in the management of any organization. In fact, no organization can function well without a stable source of revenue. In the same vein, where the resources, that is (revenue), are not effectively controlled and applied, the organization is heading for a total collapse. This statement is all the more relevant in the Nigerian Local Government system whose inefficiency is generally attributed to poor management of funds and absence of financial accountability. 118

There is no doubt that the implementation of control mechanisms as contained in the Revised Financial memoranda will ensure accountability in the local government system. Hence, there is the need to implement the memoranda and imposed and enforce sanctions arising thereof. This is important because if the procedures and processes of the memoranda are poorly implemented, it will consequently lead to poor accountability in the system. The implications of these findings include the need to faithfully implement the memoranda in respect of its accounting framework and to address the factors which hinders its implementation. ii. Lack of “on the job training”: Unprofessionalism as a result of non training of personnel as was earlier noted in the findings; most of the treasurers and accounting personnel lack “on the job training”. Very few treasurers are trained accountants and possess the relevant professional knowledge and skills required for efficient performance on their job. The implications of this is that, most local government treasurers and accounting staff indulge in practices that are not only criminal and fraudulent, but unethical to the profession. The absence of professional training invariably affects the observance of professional ethics and code of conduct necessary for efficient and good performance on the job. Therefore, the appointment of people without the relevant training, qualification, experience, knowledge and skills is partly responsible for the large-scale fraud and mismanagement often associated with local government financial management. iii. Non enforcement of audit queries and sanctions: The non enforcement of audit queries and sanctions to defaulters need to be discussed here. On enforcement of sanctions, it should be noted that what happens in the system affects the attitude to work of those in that system. If, for instance, staff within the same system have exhibited a high degree of dishonesty and corruption in their work are promoted at the expense of the hardworking staff, this will definitely affect the morale of other staff. Lack of adequate sanctions on erring 119

local government staff tends to de-motivate committed staff and result in negative attitude to work. It is high time it was erased from the minds of employees that knowing people in strategic positions will excuse them if they misbehaved. Once it is clear that hard work and honesty attract important rewards, then expected rewards will encourage the staff to develop positive attitude to work. This will lead to setting the correct group standards which will minimize corruption and favouritism within the system. The end result will be proper accountability in the local government system. iv. Unrealistic Revenue Estimates: Budgeting as discussed in our findings is a central activity in financial management as well as a crucial factor in revenue mobilization. This is because the successful provision of service as contained in the annual estimates depends on the realization of the targeted revenue. On the contrary, a realistic budget estimate can provide additional device for controlling fake receipts and avoidable revenue shortfalls since such acts would make it difficult for the revenue collectors to meet the required target. v. Non compliance with budgetary provisions: Also worthy of mention is that of public officers with compliance with budgetary provisions and financial regulations. Expectedly, all items of expenditure must be backed up with appropriate budgetary provisions and in compliance with financial regulations. The chairman and treasurers are to ensure that the treasury avoids overspending a vote of charge and where this is inevitable, approval for virement, supplementary estimates, etc has to be sought for and obtained. Unfortunately, in most cases, there is no strict adherence to the budgetary provisions by local government functionaries to the extent that the preparation of annual estimates are considered as normal exercise to satisfy the demands of state government and the relevant states. There is also this erroneous impression that the budgetary process is a technical issue that should be left only to designated experts – the accountants, economists and 120 the planning officers, whereas it should involved the whole gamut of public officers in the local government system. vi. The Competence and Integrity of High level Finance Officers: Effective financial control mechanism depends on the competence and honesty of the treasurer, the chief accounts officer, revenue officials and effective leadership of the chairman. This statement is informed by the fact that at one stage or the other, each of these actors are involved in the mobilization process. Avoidable lapses which might result in revenue losses can occur where the treasurer or account officer is incompetence. Incompetence on the part of revenue officers as earlier on discussed can lead to poor accounting while an incompetent chairman can create serious problems of coordination and accountability. Honesty, more than any other measurer, can eliminate fraud in revenue mobilization. An honest treasurer or account officer will not collude with the cashier to defraud the government. Similarly, an honest chairman will not misappropriate council’s funds, thereby setting bad precedence for other finance officers to follow. More so, a competent chairman sets in motion all the necessary machinery for effective financial control mechanisms and financial management. He ensures that all the necessary materials are available and insists on strict adherence to financial regulations. vii. Prebendal Orientation of Nigerian Public Officers: The greatest obstacle to efficient financial control mechanism has been identified as corruption demonstrated in “short accounting” resulting, from fraudulent practices of finance staff and public officials in the local government system. This problem is rooted in the orientation of public office holders which Onyishi (1995) describes as prebandal in character. Drawing from Joseph’s theory of prebendalism, he posits that official positions in Nigeria are seen as instrument for promoting the social and economic interests of their holders. Thus, it is 121 viii. Within this background that we can explain the widespread appropriate and misappropriation of public funds that are rife among public officials in Nigeria local governments. Finally, judging from the foregone, one can easily conclude that it is this lack of efficient financial control mechanisms that is the bane of administrative ineptitude in the council and it is equally this gross misappropriation of government funds due to lack of efficient control mechanisms that has caused the underdevelopment of the local governments areas in Anambra State 122

CHAPTER FIVE SUMMARY, CONCLUSION AND RECOMMENDATIONS 5.1 SUMMARY This study focused attention on the control mechanisms and the management of the funds of local governments in Nigeria with particular reference to Anambra state as its case study. It discussed in details the various control measures put in place such as the previsions of the financial memoranda, the structural management in terms of checks and balance, the Audit Alarm and sanctions, the various implementation guidelines as well as other control systems that are meant to promote prudent financial management and accountability in the local government system. The problems militating against the efficient implementation of these control measures were also highlighted. Some of these factors include, the attitude of most chairmen/HOS toward internal control mechanisms, lack of security of the internal Auditor, inconsistencies in government policies, inadequate training and motivation, undue interference of state government in the finances of local government amongst others myriads of problems. A lot of findings were made. Among them are lack of pre-payment Audit, unqualified and unskilled audit personnel, lack of adequate supervision of roles, non- adherence to the provisions of model financial memoranda and other financial guidelines, large scale corruption of staff and political office holders, budget indiscipline etc. These findings are not without some implications. We have identified some of them to include, poor revenue base, leading to poor management to limited funds, lack of accountability, poor implementation of policies and programmes, non rendering of democratic dividends among others. All these have resulted to gross underdevelopment of the local government system in the state. Finally, recommendations were proffered toward entrenching a more effective and efficient control mechanisms in the management of the funds of local 123 government. These recommendations if implemented would usher in a more dynamic, functional, prosperous and result- oriented grass root development in the Anambra State local government system.

5.2 CONCLUSION This research work has discussed the control mechanisms in the management of the funds of local government in Nigeria using Anambra state as the case study. The various control mechanisms provided for the local government system and their applications for financial management and accountability to be achieved were discussed. Attention was also paid to the factors that causes the non-adherence to these control mechanisms. Findings from the study suggest that whereas local government functionaries in Nigeria know about these control mechanisms in the management of the limited financial resources at their disposal, they posses certain negative application stereotypes. This development does not augur well for the country as a whole and the local government system in particular. This is because; local government career officials and the elected officials as well are the pillars behind the progress of Nigeria local governments. They are the means through which the local people view the central government. However, these negative application stereotypes possessed by the workers affect the well being of the local people at the grass roots. A framework for a new and sustainable order for implementation of these mechanisms simply has to repudiate this order and replace it with a more wholesome system. Hence, it is the present setting in which the application of the mechanism has been consigned to neglect and despondency with their places hijacked by imported procedures that reduce everything to gratification of material desires. We believe that if the measures of improvement outlined above are implemented, financial sanity will be restored and the local government will be able to survive to meet the 21 st century challenges of deepening democracy, fostering good 124 government, reducing unemployment, enhancing security, preserving the environment and reducing poverty of the rural dwellers. This is the mandate it owes its people.

5.3 RECOMMENDATIONS Judging from what has been said so far, one can easily agree with me that for proper control mechanisms to take place in the Nigeria local government system, there is the need to look into these areas: • Granting of full autonomy: It is therefore recommended that full autonomy be granted to internal auditors. They should work independently of any one and report matter as they are. It is only when they are independent, qualified and competent, that their information could be relied on. • Employment of qualified and honest personnel: Furthermore, qualified, honest and sincere personnel should be employed as auditors. This is the bedrock upon which any successfully internal control rests. Sincere and honest personnel with integrity is perhaps the best internal check and control mechanism. Dishonest and negatively ingenious staff with dubious motives can beat any system no matter now tight, while the honest and disciplined staff will be less inclined to commit fraud. It is therefore, a control weakness for an enterprise to have very strict and advanced mechanism manned by unqualified staff with history of fraud and incompetence behind him. • Proper remuneration: Poor salary contributes immensely to fraud and embezzlement. Public workers salaries in the Nigerian local government system are nothing to write home about. It is therefore, recommended that the salaries of auditors, accounting staff and Auditor-General’s staff should be reviewed upward. • Strict adherence to FM and Financial guidelines: Furthermore, strict adherence to the provisions of the Revised Financial Memoranda and the hand book on local government administration should also contribute immensely to 125

good accountability. This will go along way to minimize fraud and make auditing an instrument of public control mechanism of local government limited finances. • The use of audit alarm committee: Also the audit Alarm committee should be taken seriously and its sanctions administered whenever necessary, irrespective of who is involved, even where it concerns the accounting officer. • Pre-payment audit: There should be entrenched in the system pre-payment audit and the internal Auditor should check the payment vouchers before payments. This is to ascertain whether payments are being made according to laid down procedures. • Implementation of Audit reports: In cases where external Audits are carried out, it will be better if the results are released on time and implemented. This will contribute a lot to the process of auditing in the process of maintaining efficient control mechanisms in the system. • Checks and balances: There should also be established in the system checks and counter checks. The work of the internal Auditor should be routinely checked by the Auditor General for Local Government without prejudice. • Regular monitoring and supervision: Regular supervision is very imperative and should be encourage. When well-trained and experienced officers do not regularly and appropriately supervise the works of employees, fraudulent staff may use the chance to their advantage. Moreover, poor supervision also enables staff manipulate the application of these mechanisms to their benefits. Regular supervision is therefore of paramount importance to ensure successful application of these mechanisms. • Enforcement of effective control mechanisms: Emphasis on the use of the control mechanisms is imperative is the daily transaction of the affairs of council. Therefore, career and elected officials should insist on the application 126

of these mechanisms while discharging their duties. Staff that does not adhere to the rules should be adequately punished without considering his or her position. • Instituting taskforce: Instituting task force to monitor the activities of staff is pertinent in sustaining these control mechanisms. Task force should be instituted to oversee the activities of local government functionaries. Moreover, monitoring the activities of the Finance and General Purposes Committee (FGPC) and ensure full adherence to the constitution of local government should be the prime responsibility of this team. • Good monitoring mechanisms: On the whole, there should be the need to put in place good monitoring mechanism to avoid the problem of fraud, embezzlement, misappropriation and mischievous revenue agents who initiate devious ways of defrauding the council of her resources. More so, accountability of the revenue collected by the collectors should be the watchword of the local government. • Checking printing of fake receipts: The need to check reckless printing of receipts by revenue collectors and their agents should be constantly monitored and not allowed to operate or the use of fake receipts should not be tolerated. • Training and retraining of staff: It has become patently reasonable that training be given prominence in the local government system. The training fund should be utilized to the benefit of the local government workers. Staff to be sent on training should be selected based on areas of specialization and need. This will contribute to a better and more complete understanding of the overall knowledge and application of these control mechanisms in the Nigeria local governments. • Organizing workshop and seminars: Workshops, symposia and seminars should be organized at regular intervals and more frequently for both the career 127

civil servants and the political office holders in the third-tier level of governments. More so, in-service training should be provided for members of staff of the local government to exposed and educate them in current trends in financial management, modern techniques in revenue collection and current methods of book keeping and accounting procedures. • Motivation of staff: When workers are not encouraged properly through promotion, remunerations in form of cash, refurbishing loans, etc, it affect their will to work. A worker who stays in a particular position for ten years and above is bound to think of what to do to defraud the organization if he is not properly motivated. In Nigeria, local government functionaries are poorly paid and in most case, there is back log of arrears of unpaid salaries. Workers, in a bid to make ends meet, violate these control mechanisms of public financial management and accountability. • Rotation of Duties: When a member of staff overstays in a position, this provides him with avenues for short cuts to sidetrack policies and actually perpetuate frauds and errors. A lot of fraud is committed by the officials who, due to longevity in one office develop the techniques to milk the organization while covering up their tricks. Usually, they refuse to go on annual leave pointing to a very heavy work schedule as an alibi. • Deliverance of democratic dividends: There should be the need for the political leaders to deliver good services as a source of encouragement to the tax, levies and rate payers in the local governments to do so. This will engender voluntary compliance amongst the citizenry and tax paying public. • Accountability of budgetary control: An efficient financial administration in the local government system in Anambra state and indeed Nigeria should have accountability, transparency and budgetary control as its bedrock. 128

• Development of action plan: To perform efficiently, each local government in Anambra state and in the country should develop a vision and mission, coupled with the related sub-objectives and action plan. They should plan to develop the capacities required to meet the challenges of transparent reporting; efficient management of available limited resources and accountability. Rotation should be done whenever possible especially where the job does not require the possession of special skill or training but merely the acquisitions of experience on the job. • Documentation: Written document are needed for effective control mechanisms to be achieved, thereby leading to good financial accountability “paper work” is a derogatory name for the poor use of written documentation for record purpose especially in government bureaucracies. Adequate recording and storage of records are therefore an indispensable part of good internal control system. • Physical stores verification: For effective internal control to be achieved there should be physical stores verification. Assets and other items stated to be in the stores should be physically verified to check if they actually exist or not. The internal Auditor should personally inspect the assets in the stores, and should not declare worthy assets unserviceable and scrapped. • Proper authorization: Proper authorization is also very important feature of internal control mechanisms, which also helps in prudent financial management and accountability in the local government system. Who authorized the purchase of an asset? Does the person have the approval to authorize the purchase of such times? These questions are very relevant as they help in financial accountability. • Bonding: Bonding is not a particular distinct part of internal or external control system, but it has been found useful and consequently applied in some 129

organizations. Bonding is the act of taking out insurance cover against embezzlement of staff. One way of doing this is to ask an employee to bring a surety to guarantee him up to a certain amount of money. This does not obviate the need for internal control measure such as rotation and compulsory vacation already outlined. Bonding is particularly useful when dealing with staff occupying sensitive positions, e.g. cash and stores. • Enactment of byelaws: Local government should enact byelaws to control high cost of funeral and traditional marriages. • Revitalizing the economy: Thereby increasing national output, which will reduce inflation in the country. • Declaration of assets: Recent government action on the code of conduct Bureau is very encouraging. This will help to know the assets of workers if they have more than what they are suppose to have, they should give account of how they get such wealth. Government should please take this serious and every civil servant and those in power should declare their assets every three years. This will go along way to check fraud. • Reorientation of Nigerians: For effective operation of efficient control mechanisms to be enforced, there is need for change of attitude of local government functionaries and the elected officials. This is because, Nigerians have very negative altitude to work and to the application of the existing mechanisms in government parastatals. The reason behind this ugly phenomenon lies in the fact that proper application of these mechanisms do not benefit them hence everybody is interested in the sharing the national cake. This attitude is further reinforced by the widespread lack of commitment towards the protection of public property. In fact, there is that general belief that government/public property belongs to no one, hence its misappropriation 130

does not attract as much vehement condemnation from the populace as anticipated. This prebendalism has constituted the clog in the wheel of Nigeria development. The solution to the problem needs to be as drastic as it is acute. But it can neither be coercive nor legislative. It is a moral issue which can only be solved by appealing to the conscience of the populace and re-orientating them towards more noble ideals of life. We therefore, call for the various religious bodies, educational institutions and the National Orientation Agency (NOA), to set the necessary machinery in motion to carry out this much needed national wide re-orientation. • Eradication of corruption at all levels: On the part of Nigerian government in general and Local Governments in particular, they should begin to pay more than a lip service to the processes of eradicating corruption of all levels. Logistics must be provided to enhance service delivery and promote accountability. • Prudent application of the financial memoranda: The legislature of Local Governments, the Local Government Chairmen and the Finance and General Purpose Committee have all an important role to play in ensuring a Prudent application of the Model Financial Memoranda and other operating guidelines for local government administration. Finally, all Local Government employees, Local Government practitioners and stake holders alike should embrace the principles of sound financial administration and accountability whose dedicated application in their places of employment will engender efficiency, accountability and transparent leadership.

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APPENDIX I

University of Nigeria, Nsukka Department of Public Administration & Local Government December, 2009.

LETTER TO RESPONDENTS

Dear Respondents, Control mechanisms and the management of the funds of local governments in Nigeria: A case study of Anambra State. I am a postgraduate student of the above named institution carrying out a research on the topic above in selected local governments in the three senatorial districts of the state. Your local government is one of the council chosen for this purpose. This in partial fulfillment for the requirements for the award of Master of Science (M.Sc) degree in Public Administration. The researcher is purely for academic purpose and demands objective responses. Please be assured that all the information provided will be used solely for the purpose of this research work and will be given strict confidentiality. You are further required to supply the information needed by ticking ( P) where appropriate and other relevant information as requested. Thanks for cooperation.

DibuaTochukwu Benedict Dept of Public Administration and Local Government University of Nigeria Nsukka.

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APPENDIX II

QUESTIONNAIRE 1. What position do you occupy in this council? a. HOS/ Chairman [ ] b. Secretary [ ] c. Treasurer [ ] d. Internal auditor [ ] e. Store officer [ ] f. Revenue officer [ ] g. Accounting staff [ ] h. Revenue collectors [ ] 2. For how long have you been a local government staff? a. less than 1 year [ ] b. 1-4yrs [ ] c. 5-9yrs [ ] d. 10-14yrs [ ] e. 15-19yrs [ ] f. 20-25yrs [ ] g. 25-30yrs [ ] h. 30 years and above [ ] 3. Do you think there is financial accountability in your local government council? a. agreed [ ] b. strongly agreed [ ] c. disagreed [ ] d. strongly disagreed [ ]. 4. Is the internal audit unit independent in your Local Government council? a. Agreed [ ] b. strongly Agreed [ ] c. Disagreed [ ] b. Strongly disagreed [ ] 5. How often does external auditing take place in your local government council? a. Regularly [ ] b. Not regularly [ ] c. Undecided [ ]. 6. Does your council adhere strictly to the provisions of the Financial Memoranda and other operational guidelines for local government administration? a. At frequent intervals [ ] b. Very often [ ] c. Seldom abide by this provisions [ ] d. These guidelines are completely ignored [ ] e. No idea [ ] 7. Are audit queries and sanctions effective in your local government council? a. Not usually issued [ ] b. Even if issued, sanctions not enforced [ ] 140

c. Issued periodically [ ] d. No idea [ ] 8. Are the internal control mechanisms properly installed in your local government? a. agreed [ ] b. strongly agreed [ ] c. disagreed [ ] d. strongly disagreed 9. Does the state government interfere with the local government activities, finance and programs in your council? a. agreed [ ] b. strongly agreed [ ] c. disagreed [ ] d. strongly disagreed 10. Is the budget of your council properly implemented? a. agreed [ ] b. strongly agreed [ ] c. disagreed [ ] d. strongly disagreed [ ] 11. Has Corruption adversely affected your local government council? a. agreed [ ] b. strongly agreed [ ] c. disagreed [ ] d. strongly disagreed [ ] 12. Is local government facing the problem of insufficient funds to execute projects/programmes? a. agreed [ ] b. strongly [ ] c. disagreed [ ] d. strongly disagreed [ ]. 13. Are the local government stores are so badly utilized for personal purpose rather than public interest? a. Agreed [ ] b. strongly agreed [ ] c. disagreed [ ] d. Strongly disagreed [ ]. 14. Are the enabling bye-laws enforced on the application of the control mechanisms in your local government council? a. agreed [ ] b. strongly agreed [ ] c. disagreed [ ] d. strongly disagreed [ ] 15. Does the non-application of efficient and effective control mechanisms adversely affect the development of your local government council? 141

a. agreed [ ] b. strongly agreed [ ] c. disagreed [ ] d. strongly disagreed [ ] 16. Are the employees of your local government council properly motivated? and trained? a. agreed [ ] b. strongly agreed [ ] c. disagreed [ ] d. strongly disagreed [ ] 17. Lack of adequate financial control mechanism is the cause of insufficient funds in the local government system in Anambra state a. agreed [ ] b. strongly agreed [ ] c. disagreed [ ] d. strongly disagreed [ ] 18. Are the internally generated revenues of your local government council properly recorded? a. agreed [ ] b. strongly agreed [ ] c. disagreed [ ] d. strongly disagreed [ ] 19. Lack of efficient financial control mechanism and effective management is the bane of underdevelopment in your local government area? a. agreed [ ] b. strongly agreed [ ] c. disagreed [ ] d. strongly disagreed [ ] 20. Adequate and effective financial control mechanisms will reduce or eliminate corruption in your council? a. agreed [ ] b. strongly agreed [ ] c. disagreed [ ] d. strongly disagreed [ ]