The effect of proper budgeting and accountability to the development of the public sector

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO THE STUDY

The world today has embraced globalisation, a complicated process, focusing on how events,

decisions and activities in one part of the world can have consequences in other parts of the

world (Lee & Collin 2005), to achieve a defined business purpose. However, just when we

thought we had seen the depth to which an otherwise healthy economy can reach, world

events continue to occur that change every business plan significantly (Lalli, 2003). The

harsh reality of this decade is that it is comprised of massive corporate layoffs, lower profits,

bankruptcies and even in the public sector, cases of corruption and mismanagement of funds

remain rampant. In fact, resources are drained and redirected but the greatest accountants,

brightest economists, most insightful analysts, and professional budget masters still continue

to evolve theories to ensure that financial information is produced, implemented and

adequately accounted for.

According to CIMA, a budget is defined as “a quantitative statement for a certain period of

time, which include revenues, assets, liabilities and cash flows. According to Dubnick (2002),

the beginning of the contemporary concept can be found to be the reign of William I, in the

many years succeeding the 1066 Norman conquest of England. Accountability is one of those

golden concepts that no one can be against (Bovens, 2005). It is used as a synonym for many

loosely defined political desiderata, such as transparency, equity, democracy, efficiency,

responsiveness, responsibility, and integrity (Mulgan 2000; Behn 2001; Dubnick 2002). The

term ‘has come to stand as a general term for any mechanism that makes powerful

institutions responsive to their particular publics’ (Mulgan 2003) and for O’Connell (2005),

Accountability is present when public services have a high quality, at a low cost and are

performed in a courteous manner.

Accountability could be looked at from two different angles. In its broad sense, it is an

essentially contested concept, because there is no general consensus about the standards for

accountable behavior, and they differ from role to role, time to time, place to place, and from

speaker to speaker. Accountability in its narrow sense however, refers to a specific set of

social relations that can be studied empirically and a great many social relationships carry an

element of Accountability within (Bovens, 2006). In all, Accountability forces administrators

to trace connections between past, present and future ( Hart,2001) and Public Accountability

is equally of importance because ultimately, it can help to ensure that the legitimacy of the

public administration remains intact or is increased and “public processes of calling to

account would create the opportunity for penitence, reparation, and forgiveness and can thus

provide social or political closure” (Harlow 2002).

However, Accountability is not complete without Accounting, Transparency and

Responsibility. Transparency, which is often used as a synonym for Accountability is not

enough to qualify as a genuine form of Accountability, because it only sees to the element of

“public” in public Accountability, to the disclosure of information, the accessibility of the

debates to the general public or the disclosure of the judgment (Fisher, 2004). Also,

Accountability cannot exist in the absence of proper accounting practices and an entity is

required to give account only when it has been given responsibility over something by

another entity as ’an agent is accountable to a principal only if the principal can exercise

control over the agent’ (Lupia,2003).

In the case of the public sector, the government is accountable to the citizens and members of

the public as it has been given responsibility to use the resources of the country to provide

security and economic stability. Accountability’ does not refer to sovereigns holding their

subjects to account, but to the reverse, it is the authorities themselves who are being held

accountable by their citizens (Bovens, 2006). But these hierarchical, financial or legal

mechanisms are not mechanisms of Accountability per se, because they do not in themselves

operate through procedures in which actors are to explain and justify their conduct to forums

(Mulgan,2003), hence the need for a sound budgeting system.

Budgeting has been a concept which has been applied widely in different sectors and works

of life, from the private to the public, to even meager not for profit organizations and

associations. Budgeting is also viewed as a process of identifying, gathering. summarising

and communicating financial information of an organization’s future activities.

Blumentritt (2006) further explained that budgeting

processes include a review and study of the prior period’s financial results, projections

for sales, operating expenses (fixed, variable, and semi-variable) and financing expenses,

examination of proposals for capital expenditures, and means of rolling up and rationalizing

figures from different functional departments to ensure they meet company-wide profit

expectations. Budgeting, according to Hyde (1992), is partly political, partly economic,

partly accounting, and partly administrative and distilling the wisdom of the budget theorists

(Stourm, 1917; McKinsey, 1922; Stedry, 1960; Hofstede, 1968; Wildavsky and Jones, 1994;

Schick, 1997; Campos and Pradhan, 1999), we can conceive a hypothetical government

budget control system as having five major components—focus, estimation, scarcity, criteria,

and choice

Budget, a word derived from the French word ‘bougette’, is simply a quantified financial plan

for a forthcoming accounting period (Eaton, 2005), but what this definition fails to identify is

its reverence as a tool for Accountability and stewardship at all levels. Olabode (2005)

described Budgeting as the annual statement of income and expenditure at the National, State

or Local Government levels. He also stated that it functions as a tool for Accountability and

control government finance, tools for planning and management and for economic policy

prescriptions. In fact it was the Budget preparation and implementation of Tekunbo (2006)

that contributed to the trends which led to economic planning and budgeting as a tool in

political administration.The annual budget is a relatively new invention but its origins

however lie in centuries of monarchs mismanaging their countries’ finances and many

minorities in countries down the ages and around the world have taken steps to preserve

wealth from rulers, both unelected and elected, who have them simply because of their beliefs

and colours and this remains a problem even today according to Cotterill (1990).

In Nigeria, numerous budgets have been set and many of them have been policies. These

budgets have all tried to match our standard of living as a nation and even though some have

fallen just short of depicting our socio-economic crisis, the constant problem has been the

proper implementation of this laid down policies. This problem of proper implementation has

stemmed out of the lack of Accountability in the system especially in the public sector and in

this study, with particular reference to the Ministry of Finance in Lagos state, we would

attempt to understand the relationship between these concepts looking at the current and past

affairs of the ministry and we would try to identify new measures that could improve the

level of Accountability and Budget Implementation in the ministry and subsequently in the

world at large

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APA

Okoye, K. (2019). The effect of proper budgeting and accountability to the development of the public sector. Afribary. Retrieved from https://afribary.com/works/the-effect-of-proper-budgeting-and-acxountability-to-the-devrlopment-of-the-public-sector

MLA 8th

Okoye, Kingsley "The effect of proper budgeting and accountability to the development of the public sector" Afribary. Afribary, 24 Jul. 2019, https://afribary.com/works/the-effect-of-proper-budgeting-and-acxountability-to-the-devrlopment-of-the-public-sector. Accessed 21 Dec. 2024.

MLA7

Okoye, Kingsley . "The effect of proper budgeting and accountability to the development of the public sector". Afribary, Afribary, 24 Jul. 2019. Web. 21 Dec. 2024. < https://afribary.com/works/the-effect-of-proper-budgeting-and-acxountability-to-the-devrlopment-of-the-public-sector >.

Chicago

Okoye, Kingsley . "The effect of proper budgeting and accountability to the development of the public sector" Afribary (2019). Accessed December 21, 2024. https://afribary.com/works/the-effect-of-proper-budgeting-and-acxountability-to-the-devrlopment-of-the-public-sector

The effect of proper budgeting and accountability to the development of the public sector

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