EXAMINE HOW USEFUL ACCOUNTING INFORMATION IS IN PUBLIC CORPORATION.

1.1 INTRODUCTION

Public corporation can be defined as the types of business organization that are established by a special act (or ordinance) of the parliament. Public corporation and business owned and finance by the federal, state and local government, as the case may be in the public interest.

     They can be explained and described also as the type of business) organization thoroughly and solidly established by act of parliament to provide public utilities. This participation in the productive and commercial part of a country’s economy.

       There are some area in the economy where it is felt that the free enterprises system and private sector competition should not allowed, as they would exploit the public such art should be run by the government in the public interest. Therefore, in Nigeria, where there is a three-tier system of government; the local government, state government and federal government do run certain enterprise so as to provide essential service for the people.

TYPE AND FORMATION

    Public enterprise can be categorized into public corporations or boards or quasi government department.

  Government Corporation are enterprise that has commercial functions, which are normally established of level by an act parliament or decree, which specially refers to the corporation. Each corporation, board or authority had a particular or decree establishing it. The cart will take the objective and of the corporation and specify its power and how it is to be run and managed. At the state level, public corporation are established by a state judge at the local government level are established by social edicts.

      For instance, the National insurance corporation of Nigeria (NICON) was established. decree 22of July, 1969 to ‘write all classes of insurance  such as fire, motor accident, workmen’s compensation, marine and aviation, i did Risk.....Among  others.

   The Nigeria port authority (NPA) was established in 1955 to ’’identify and satisfy the demand for port facilities and services at minimum cost to the nation’’.

    While the Nigeria enterprise promotion board was established in 1972 to advance and promote enterprise in which Nigerians are encouraged to participate fully and play important roles’’.

    Others corporations and boards the federal level includes:

i.            The federal radio corporation of Nigeria (FRCN)

ii.          The Nigeria railways corporation (NRC)

iii.        The central bank of Nigeria (CBN)

iv.         The national electric power authority (NEPA)

v.           The Nigerian telecommunication limited (NITEL)

vi.         The Nigerian national petroleum corporation.(NNPC)

vii.       The Nigerian coal corporation (NCC)

viii.     The Nigerian cost corporation (NCC

Mention may be made to the universities, polytechnics, college of education and the research institute which is public sector educational enterprise established by relevant federal act, decree or state laws in the case is.

    Public corporations are to be independent of the central government as possible. Thus, they are by boards or councils each of which has the board of directors of a company. Each corporation also have general manager or similarly placed officer who is the chief executive reporting to the board and council.

THE FEAURES OF PUBLIC CORPORATION

      One of the main feature of the public corporations is that a manager s put in as supervisor in the running to the business. The board of directors in responsible to the minister of the government and he parliament. This is one reason why the public corporation type of business is described a being controlled by the government.

    Another special feature f the public corporation type of business to that it is sot-up and are financed, by the government initially. Only some have issued stock to the public obtain large capital and long-term capital. This means that the corporation has on shareholders except in some cases.

     One other feature in that public corporation is no aimed at malign profit. This does not mean that they do not aim at making profit. The government can supplement the public corporation with government grants.  If the earning of the business fall. The government can do this by taxing the citizens in order to meet its expense.

                    The public corporation does not share or distribute profit but they have and meet or pay interest on state issue to the previous owners of the business on their fixed rates.

      The feaster of the problem corporation in that it deals with those economic activities that the community may be benefit from but which offer. The businessman may was the fact that such a commodities or service is renewed essential to exploit the consumer. An example of such is electricity.

         Restriction of then commodities supplied and feature of the public corporation. An example is the services of the Nigerian Railways Corporation (NRC) whose services are available only to the area that are covered by real, the electricity corporation of Nigeria can only supply areas where their electric cable and wires reach.

Local monopolies are also brought by the business of the public corporation this important feature means that is difficult for other business to compete with the corporation. An example of this is that no other form of business may or will install in electric power station in a dies where the Electricity Power Authority of Nigeria has setup its station. In fact, paramagnet will not approve the move.                                                                                                                                                                           Another characteristics of public is discriminating services render or goods supplied. For example the NEPA can charge less on the supplied to factors or industries than on power supplied to private domestic consumers. This possible because their services generated cannot be transferred from one customer to another.                              

The last main feature of the public corporation is that it always operates below full capacity. This is so because the establishment needs large fixed capital. Therefore, the existing demand of the public as a whole to be able to meet any future increases in demand.

SOURCE OF CAPITAL    

        Public corporation are normally set up by the government and financed wholly by it. Thereafter, they are expected to generate fund through their services to the public to be paid to government account. The major aims of establishing them is not to make profit although, the ones that have purely commercial functions are required nowadays to generate enough fund to cover their services and make profit for the government. The three sources of capital that can be identified in the financing of the public corporation are government financial grants, bank loans and internally generate revenue.                       

1.    Government Financial Grant: the government makes budgetary provision for the government department and financial grant to the statutory corporation which rendered social services and is prevented from charging the full price for their services. Subsidies became imperative to make up the deficit in internally generated revenue.           

2.   Loans from Banks: public corporations through their boards and councils are empowered to negotiate and dices loans from the local hank to executive certain project.             

3.   Internally Generated Revenue: statutory corporation, boards and authorities utilize their internally generated revenue to finance part of the operations.    

REASONS FOR THE ESTABLISHMENT OF PUBLIC CORPORATION

Ø Essential Services: the establishment provide services which are vital to the citizen end which   should to provide without the motive of profit for the overall god of the masses.    

Ø Avoidances waste And public publication: it should be more economical to run water and  electricity undertaking as states monopolies because laying water pipes and power lines across the roads and in people’s houses would be wasteful. Such activities would also give rise to public relationship problems, which are more easily solved by the government botches than the private enterprises.

Ø Capital requirement: the local needed to establish most of the public utilities are so large that it cannot be afforded by private enterprises.

Ø Good infrastructural base: a good network of road and railways, powers, communications etc. Will lay a solid foundation for paid economic development land progress of the country. They are strategies to the government and the people. Therefore, only the government can run them in the public interest.

Ø Even development: the policy of most government is encourage even development and bring about equitable distribution of the country wealth, to achieve these objectives the key industries and organizations should be in the ranks of the government.

Ø Social cost: the social cost of some undertaking make the government the most suitable candidate to establish and run them. For instance, to lay a rail or pipeline across towns, citys and village would result in the destruction of cash crops and dispossession of the citizens’ land; the establishment of a claim wouki involve the destruction of cash of crops and displacement of villages. Under these circumstances, the government in the only organization that can carry out the undertaking because of the coercive power, which it possess.

CONTROLS AND MANAGEMENT

The activities of statutory (public) corporation are checked by the following measures adopted by government policy.

The government department are responsible to the government through the appropriate minister of commissioner.

The government is to appoint member of their various boards and councils. The boards and councils run the corporation according to their government policy.

Public influence plays some parts too. The public maintains an eye on the activities of the public utilities and usually ready to voice their opinion and dissent through the press anytime something goes wrong.

PROBLEMS FACED BY PUBLIC CORPORATION

Ø   Poor condition of service for staff: it is often that the unified grading system makes it difficult for the public corporation and companies to attract staff with exceptional quantity.

Ø  Poor management: many board and council members see their appointments as opportunities to take a slice to the public take. It is often alleged that many board member spend all their time pursuing contracts and arranging for distributorship.

Ø  General laxity on the party of staff: in the private sector, staff work hard because they know that if the company fails to breakeven, it sold probably liquidate and they would lose their job, the situation does not occur in the public service where customers who have come to buy goods or services might be turned away or asked to’’ come tomorrow’’. Because the staff concerned might be busy doing other work.

Ø  Bad economic condition: the worldwide economic recession and the consequently poor condition of the Nigerian economy also affect the public corporation to the same extent.

Ø  Exclusive centralization: the lack of decentralization of public utilities like PHCN makes their management weak and decision making slow.

Frequent change of board members: the frequency with which the boards and councils are reconstituted tends to defeat the purpose for which they are appointed.