Professional Documents
Culture Documents
Topic 1
(ii) The development of agriculture and natural resources, other than the
exploitation of materials
(iii) The provision and maintenance of health services; and
(iv) Such other functions as may be conferred on a local government council by the
House of Assembly of the State.
Topic 2.
Effective accounting systems are essential for local government, both to provide
managers with the financial information they need to manage their services and to
account to citizens and taxpayers for the use of public resources. There are two
• Financial accounting provides information for those outside the executive (elected
representatives, citizens and taxpayers), usually after the end of the financial year,
Government accounts are oriented towards working capital in that the accounts shall
show all inflow and application of funding. Working capital is equal to the difference
between current assets and short term debt. This means that the Local Government
accounts say something about the Local Governments’ ability to cover its payment
obligations.
The accruals principle in Local Government accounting is that the accounts shall be
entered in accordance with the ordinance principle. This principle means that all
known expenses/payments and income/receipts for the year are included in the
current year, whether or not they have been paid when the accounts are closed.
That a transaction is “known” means that goods or services must be
delivered/performed or received during the accounting period. It is thus not the date
of payment that is key to accounts entries but as a general rule the date of
acquisition or utilisation.
Local Government accounting has a balance sheet showing assets (fixed assets and
current assets), debt (long and short term) and equity. Under equity, funding for
specific purposes and funding that is reserved for investment purposes shall be
entered as separate items.
Tangible fixed assets are capitalised as fixed assets and shall be depreciated on the
balance sheet. The depreciations shall also be entered in the operations section of
the accounts, but these are not included in the Local Governments’ financial results
and are not included in the balance requirement for operations. The purpose of
these depreciations is primarily to identify the depreciation in value of the tangible
fixed assets.
The balance requirements mean that the Local Governments must have a financial
result that is sufficient to cover the operating expenses (including
TOPIC 3
Definitions and scope of Financial Memoranda (FM)
Financial Memorandum means the agreement between the Funding Body and the
relevant member of the Group that sets out the terms and conditions on which grant
is made.
More specifically, FM can be defined in the following ways:
The Financial Memoranda is the official statue which is provided to guide local
government financial reporting practice and also stipulate the judicious
management of funds for the benefit of the entire community. Financial
Memoranda is the statutory framework that regulates financial reporting at the
local government level.
In Nigeria, the Financial Memoranda consists of multiple provisions which
address Financial duties and responsibilities, the framework and purpose of
estimate and custody of local government funds, collection and receipt of
revenue and other monies and preparation of annual financial statements.
Local government councils are the third-tier level of government in Nigeria. The
aim of creating local government council is to decentralize government
activities so that the local council which is nearest to the people will enable the
people to participate in development process of their area. Nwosu and Okafa
(2013), Examine that governing body of the local government councils like the
state and central governments are elected for a fixed tenure. The local
government council discharges its responsibility under Financial Memoranda
through its own finance and budget committee to which it issues instructions
regarding the reports and other information it possesses in the collection and
disbursement of funds.
In accordance to Nwosu and Okafa (2013), 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. However, the
local governments' council, the chairman, the Executive committee and certain
categories of officers do have special responsibilities for financial matters and
these are set out in Financial Memoranda
According to Mathias and Uchenna (2012), the Financial Memoranda (Revised, 2009)
specifies the duties and responsibilities of the treasurer. The Financial Memoranda authorizes
the treasurer to be the chief accounts officer and head of the Finance Department of a Local
Government. The treasurer, as the chief accounts officer, shall be in attendance at executive
committee meetings and other committees to provide advice concerning the financial
implication of the proposed policies. Section 1.14 also empowers the treasurer to be
responsible for ensuring that there is strict compliance with financial memoranda in the
Finance and other departments of the local government.
Mathias and Uchenna (2012) also reiterated that section 7.1 requires the receipt book
register on form LGT 24 to be kept by the treasury to record the receipt of all revenue earning
books, the issuance of such books to the officials of local government, the ultimate returns of
the books to the treasury and their final deposit.
However FM third Edition (2009), section 7.12 noted that all revenue earning books unused,
used, partly used or obsolete must be safeguarded from theft or misuse and kept in a secure
place under lock and key. The books should be stored tidily in numerical order and each of
the four categories of books (unused, used, partly used and obsolete) kept in a separate
groups.
Section 7.13 provides that the treasurer must ensure that checks of stocks of revenue earning
books are carried out periodically and not less frequently than once in every two-month-
period. Moreover, Ijeoma and Oghoghomeh (2014) posits that the officers carrying out the
check will insert the date and his signature in column 10 of the Receipt Book Register, Section
14 (2-8) provides the following: No payment shall be made unless authorized funds are
available, each payment must be supported by a properly authorized payment voucher
prepared on one of the forms referred to.
On the 15th of June 2001, the Federation Account Allocation Committee (FAAC) set up an Ad
Hoc committee to carry out the review and standardization of the accounts of Federal, States and
Local Governments with the following terms of reference:
1. To examine and appraise the existing Public Sector Accounting Records and their relevance to
the Published Annual Accounts.
2. To study the current structure of Public Sector Accounting in relation to International
Standards with IFAC Exposure papers.
3. To determine the relevance of Current Public Sector records to the proposed standard models.
4. To determine various users of Public Sector Financial Statements and their Financial
information needs.
5. To harmonize the Federal, States and Local Government Financial Reporting System.
6. To recommend appropriate Financial Reporting Standards that are compatible with modern
information technology.
7. To set Accounting Standards that are capable of generating accurate Financial information on a
timely manner and
8. To make any other recommendations as may be considered fit and desirable.
According to the 2001 Committee Report, identified the following negative features in the then
existing financial statements of the three tiers of Government:
However, only the following statements are applicable to the Local Government Councils:
The third edition of the Model Financial Memoranda consists of seven parts and forty five
chapters as follows:
PART V: EXPENDITURE
CHAPTER 13: Control of Expenditure
CHAPTER 14: Payment Procedure.
CHAPTER 15: Staff Matters
CHAPTER 16: Personal Advance
CHAPTER 17: Contracts, Including Jobbing Orders and Local Purchase Orders
TOPIC 4
THE CHAIRMAN
The chairman is the chief accounting officer of a local government council and his duties and
responsibilities are specified in the Model Financial Memoranda for Local Government, third
edition 2009. According to the Memoranda, the Chairman of a Local Government shall be the
Chief Executive and Accounting Officer of the Local Government provided his role as
Accounting Officer shall exclude signing vouchers and cheques. The performs the following
functions:
1. Presides over the meetings of the Executive Committee.
2. He submits a report to the Local Government Council on the proceedings of the Executive
Committee as may be required by the Council.
3. He ensures strict compliance with the provisions of the Financial Memoranda throughout the
Local Government organization.
4. He observes and comply fully with checks and balances spelt out in the existing guidelines and
Financial Regulations governing receipts and disbursement of public funds and other assets
entrusted to his care and shall be liable for any breach thereof.
5. The Chairman as Chief Executive and Accounting Officer faces periodic checks in order to
ensure full adherence to the Finance (Control and Management) Act of 1958 and all its
amendments. To this end;
(a) All instructions relating to expenditure of public funds by the Accounting Officer shall be in
writing
(b) The Accounting Officer shall be responsible to account to the Public Accounts Committee for
all monies voted for each Department and shall be peculiarly liable.
(c) The Chairman as Chief Executive and Accounting Officer renders Annual Reports of his
Local Government in order to ensure accountability and enforce the performance ethic.
(d) The Chairman as Accounting Officer is bound by the provisions of any other rules,
regulations, guidelines and Laws governing the roles and functions of a Chief Executive and
Accounting Officer.
6 In consultation with the Secretary to Local Government and the Supervisors, the Chairman shall
set the target which each employee in the Local Government shall aim at, even in routine matters.
In setting target, for Local Government Employees, the Chief Executive shall first take into
account the relevant Local policies, the development plan and annual budgets.
7 He ensures that Audit queries addressed to him are answered within the time limit stipulated in
the Financial Memorandum 39.3. Where the query concerns him, it must be answered promptly
by him in person.
8 As the Accounting Officer, the Chairman shall have sole responsibility for the organization of
the financial/accounting function in the Local Government. However, delegates to the Treasurer
the day-to-day operation of the function in consultation with the Secretary.
9 He establishes and maintains an Internal Audit to provide a complete and continuous audit of
the accounts and records of revenue, expenditure, plant allocated and unallocated stores.
10 He ensures that the recommendations of the Internal Auditor, whether in respect of losses,
waste or the improvement of systems or procedures taker thereon including, if necessary,
reference to the Council for its decision 01 direction.
11 He ensures that any directions issued by the Local Government Council o the Governor's
Office concerning any aspects of the financial management of the Local Government, or any
decisions of the Auditor-General in regard to matters of disallowance and surcharge are properly
and promptly implemented.
12 At the beginning of each Financial Year, the he submits to the Executive Committee, the list
(by Name and Department) of each Head of Department in the Local Government who exercise
authority to approve expenditure within the limits refer to in the Financial Memorandum.
13 At the Expiration of his term of Office, or whenever he is leaving office for any reason
whatsoever, the Chairman shall prepare a comprehensive Handing Over Note for his successor.
14 He ensures the maintenance of strong accounting and internal control system
15 He appends his signature on "Statement Number I: "Responsibility financial Statements"
16 He ensures the practice of good corporate governance
17 He evolves continuous basis for effective risk practice.
THE DIRECTOR OF FINANCE /TREASURER TO THE LOCAL GOVERNMENT
According to section1.13 of the Memoranda, the Treasurer is the Chief Accounts Officer and
Head of the Finance Department of the Local Government. The Treasurer as the Chief Finance
Adviser to the Local Government is in attendance at Executive Committee meetings and other
Committees to provide advice concerning the financial implications of proposed policies, the
state of the Local Government's finances and financial matters generally. His duties and
responsibilities include:
1. He is responsible for the administrative control of the Finance Department of the Local
Government;
2. He perform .duties as Chief Accounts Officer of the receipts and payment of the Local
Government;
3. He facilitates the work of the Audit Alarm Committee;
4. He is responsible for the budgetary control and supervision of the accounts of all Departments
of the Local Government;
(5) He is responsible for the sound administration and effective organization and working of the
Finance Department;
(6) He prepares and publishes monthly and annual financial statements of the Government;
(7) He is a signatory to all Local Government cheques and vouchers, and contractual documents;
(8) He performs such other related duties as may be assigned by the Chairman;
(9) He is responsible for the maintenance of sound audit and internal control systems;
(10) He appends his signature on statement No. 1 “Responsibility for Financial Statements”
(11) He is the custodian of security documents of the Local Government;
(12) He ensures that accounting systems as laid down in the Financial Memoranda for Local
Governments are complied with by all the Departments and supervising the accounts for all
Department of Local Government.
(13) The Treasurer must not be the Cashier in the Treasury.
THE DIRECTOR OF BUDGET, PLANNING, RESEARCH AND STATISTICS
According to the Financial Memoranda, the Director of Budget, Planning, Research, and
Statistics is responsible for:
1. Co-ordinating the activities of the Department
2. Advising the Local Government on matters relating to Budget National (rolling) plans and data
collection
3. Controlling the vote of the department.
4. Budgeting control
REVENUE OFFICERS
All Revenue Officers in the Local Government are under the Treasurer. They collect revenue,
account for them and render returns to the Local Government Treasurer in accordance with the
provisions of the Financial Memoranda and other existing Financial Regulations.
By section 1.22 of the Financial Memoranda, It is the duty of a Revenue Collector:
(1) to keep such books of account and other records prescribed by Financial Memoranda and the
Treasurer as are needed to ensure to that all revenue and other monies due to the Local
Government and for which he is responsible, are collected in full.
(2) to collect promptly all sums due to the Local Government;
(3) to report to his immediate supervisor any instances of default in payment any sums due to the
Local Government;
(4) to issue, immediately on payment, receipt or licences in the prescribed form for all payments
made to him;
(5) to record, in a Revenue Collector's Cash Book details of all receipts, revenue and the payment
of such revenue collections to the Treasury or a Bank;
(6) pending the payment to the Treasury or a Bank, to safeguard all revenue collected by placing
it in the safe or cash tank provided by the Local Government;
(7) to keep all his revenue earning books under lock and key when not in use;
(8) to pay all revenue collected to the Treasury or Bank at intervals prescribe! by the Local
Government;
(9) when required to do so, to present all his revenue earning books, accoun books and cash to the
person responsible for checking his accounts;
(10) to submit used, partly used and unused revenue earning books, licence book and relevant
documents to the Treasury once a month or at such less intervals as may be prescribed, whether
or not there have been any collection or payments to Treasury;
and to return all exhausted revenue earnings book to the official from whom they were received.
TOPIC 5
Effective accounting systems are essential for local government, both to provide managers with
the financial information they need to manage their services and to account to citizens and
taxpayers for the use of public resources.
• Financial accounting provides information for those outside the executive (elected
representatives, citizens and taxpayers), usually after the end of the financial year, and so is
essential for public accountability.
Auditing is the mechanism which provides assurance to the public about the veracity of the
accounts, and hence is essential for public accountability.
Costs
Cost information is important in order to:
• Know the cost at which best value is obtained
• Determine the allocation of resources
• Set charges for services provided by the local government
• Monitor in-year spending
• Manage cash flow
• Review value for money as part of performance review or value-for-money audit
• Decide whether to continue to operate a particular service.
TOPIC 6
The following accounting documents, which are by no means exhaustive, are maintained by local
governments:
1. The local government accounting does not allow the publication of local
government account. This is a problem to the local government accounting system
because there will be no object of comparison between two local governments and
thus see how it stands. There is a lack of competition between local governments
(especially Enugu South) as provision of services and revenue generation. This
prevents local government indigenes of improved services, and the state and local
government lack sound criteria for allocating funds to local government.
2. The record keeping are seriously limited to mere clerical staff. Even the senior
staff of the local government are being restricted from the records of the local
government the clerical staff find it difficult to pint out the areas, that need adequate
attention. The implication of this is that the strategic aspect of managing local
government such as alternative source or revenue, performance appraisal, future
development project, staff straining do not get the adequate managerial attention they
deserve.
3. A few information is being provided for decision and planning. For example
comparable information on ratio of capital to recurrent expenditure, or revenue and
various analysis of such cost revenue over many years is not usually available in
Enugu south local government this is why it is difficult to set down criteria evaluating
the effectiveness of a particular course of action or for that matter for the effectiveness
of the local government.
5. Inadequate care over control and record keeping. This may mean that fraud,
theft, over invoicing and other irregularities may not be detected since accordingly.
This may also head to a tendency for ignoring the implication of such, records for the
effective utilization of resource.
d. To provide detailed costs of individual establishments, services and projects, to enable the
costs so ascertained to be used for control purposes, with a view, among others, to
eliminating excessive expenditure, losses and wastages.
The accounts of the local government are kept on the double entry principle:
1. A record of receipts and disbursement of monies must be kept to provide record of money
in the hands of local government officials and its bankers
2. Records of receipts and payments must be kept in the prescribed forms and analyzed
over the various heads and sub-heads contained in the annual budget to provide information
on progress of collection of taxes and other revenues and expenditures.
3. Monthly summaries of the main ledger accounts must be prepared in the prescribed form,
to show the financial position of the local government
4. Summary accounts should be prepared monthly, and financial statements produced
quarterly and prepared at the end of each financial year
Contains total monthly summary of revenue and expenditure for all Heads of revenue and expenditure
which should be posted to credit and debit sides respectively in the Revenue (Total) Account and
Expenditure (Total) Account
Where cheques are drawn to obtain cash from the bank and the cash withdrawn could not be received
on the same day or cheques issued to government agencies or other local government which, should
be cleared by the issuance of remittance voucher by the receiving organization, the amount involved
should be debited to an individual remittance account. This account represents cash.
These include amount allocated and paid in respect of personal advances, imprest advances, salary
and other advances to members of staff of the local government. The cumulative figures of the
Individual advances accounts are debited to this account.
A local government may set aside fund for renewal of its wasting assets or receive money on deposits
such as on-payment deductions and alimony. Such funds should be credited to the deposit account in
respect of all categories of deposits.
This represents an account designed to record financial transactions on an interim basis on unallocated
stores, until the ultimate entries can be made in the appropriate heads and sub-heads or other account
in the expenditure ledger of the local government or other funds received which is impracticable to
allocate immediately to an appropriate expenditure sub-head.
This shows the loan obtained after appropriate authorization by the local government from an
approved source to either financial capital project or meet other financial commitments and must be
credited to a loan account until the loan is repaid.
This account represents the amount due to or from the State government to the local government at a
particular point in time. It could either be a credit or debit balance.
The summary of revenue and expenditure of the local government is compared in this account and
either result in surplus or deficit unless a break-even is achieved by the local government. A surplus
of income is recorded where the total revenue is greater than the total expenditure for a particular
period concerned but a deficit balance indicates excess of total expenditure over total revenue.
Amount transferred from the revenue account of the local government to meet specific needs is
credited into this account. The posting is usually made by means of adjustment voucher.
Bank Reconciliation
Bank reconciliation is an essential element of the process of internal control. Ideally, it should be
prepared by a person who has no recording responsibilities or physical control over cash receipts or
cash payments and should also be reviewed by a person who is independent of those functions. It
should be completed at least once a month and checked by the Council Treasurer and the Council
Manager.
The bank reconciliation compares information coming from an outside source, the bank statement,
with information contained in the books of the local government, in this case the Cash in Bank
Ledger.
While a reconciliation of the cheque register can be done, it is more important to use the
General Ledger account as the basis for reconciliation because the General Ledger is the
source of the information contained on the financial statements.
What the bank reports on its monthly statement is a record of the deposits that have been
made, the cheques drawn on the account and other items that the bank has recorded that affect
the account, and their effect on the bank account balance.
The General Ledger account shows all cash received, and all cash paid from that particular
account for the month.
From the bank statement, identify items which appear on the cashbook (the debits and credits
to Cash in Bank) that the bank has not recorded yet:
Deposits in transit
This occurs when there is a time lag between the time cash is received and when it is carried to the
bank as a deposit. This is likely to occur when the bank's statement date does not coincide with the
end of the period covered by the bank reconciliation.
Outstanding Cheques
These occur because there is usually a time lag between when a cheque is drawn and when it is
deposited by the payee, because the payee may have delayed collection of the cheque from the Local
Government or delayed lodgement with the payee's bank.
Bank Errors
These occur when the bank adds deposit or deducts a cheque belonging to some other account or
erroneously deducts charges in violation of account agreements, or wrongly records the amounts of
deposits or cheques.
On the cashbook side, there may be items in the bank statement which the Local Government had not
received the information or bank advice.
The Cashbook
All receipts and payments must be entered individually in the cashbook as they occur and
each entry must be supported by a receipt or payment voucher on the prescribed form with
all the relevant information. The cashbook can be combined (receipt and payment
combined) or there may be separate cashbooks for receipts and for payments and a
separate revenue collector cashbook.
The procedures set out in Financial Memoranda 18.6 18.7 18.9 should apply to the cashbook
in common with all other Books of Account. These include:
1. All receipts/payments must be entered individually in the Cash Book as they occur and
each entry must be supported by a receipt or payment voucher.
3. A treasury receipt must be issued in respect of every payment made to the treasury or
directly to the bank account of the local government.
4. All receipts of money, whether in cash or by cheque, must be entered in cash column on
the receipts (debit) side of the cash book strictly in the order in which the transactions
occurred.
5. All payments by the treasury are to be entered on the payment (credit) side of the Cash
Book. Cash payments must be in the bank column.
6. Where deductions are made on payment vouchers, salary vouchers or wages sheets, the
following procedures will be followed:
a. Where the payment is by cheque, the gross amount of the voucher or wages sheets must
be entered as the payment on the credit side of the cash book, the net payment and the
deductions being shown in the bank column and the cash columns respectively;
b. Where the payment is made in cash, the gross amount of the voucher or wages sheet
must be entered as the payment in the cash column on the credit side of the cash book;
c. A treasury receipt must be made out for the deduction which is then entered as a receipt
in the cash column on the debit side of the cash book
Receipts - All receipt of money (cash or cheques) should be entered in the cash column of
the receipt side (debit side) of the cash book, strictly in the order that the transactions occur.
Payments - All payments by the treasury should be entered on the payment side (credit
side) of the cashbook. Cash payments should be entered in the cash column and cheque
payments should be entered in the bank column.
Receipts
Receipt forms should be in triplicate and pre-numbered by the printer.
The original is given to the person making the payment.
One copy is for the cashier's records and one is retained in the booklet for the
Council Treasurer.
A separate receipt should be issued for all monies received, including amounts
received from other tiers of government.
In these cases the original receipt should be attached to the detailed statement
accompanying the remittance and kept in the file.
This form provides spaces for all information pertaining to the receipt of money.
The information must be filled in at the time of the transaction and is necessary for
making entries in the accounting records and for providing supporting documentation
for all receipts.
Local Government Council in accordance with the provisions of the Finance (Control and
Management) Act 1958 as amended. The Financial Statements comply with generally accepted
accounting practice.
The Treasurer is responsible for establishing and maintaining a system of internal controls designed
to provide reasonable assurance that the transactions recorded are within statutory authority an
and properly record the use of all public financial resources by the Local Government Council. To
the best of my knowledge, this system of internal control has operated adequately throughout the
reporting period.
Sign
Treasurer Date
We accept responsibility for the integrity of these Financial Statements, the information they
contain and their compliance with the Finance (Control and Management) Act 1958 as amended.
In our opinion, these Financial statements fairly reflect the financial position of the Local
Government as 31 st December 20xx and its operations for the year ended on that date.
Treasurer Chairman
Date Date
,
In this statement, the State Auditor-General for Local Government confirms that he has examined
and audited the financial statements on pages---------------------which have been prepared under the
accounting policies set out on pages--------------------------. His report covers the following key areas:
The Auditor-General states clearly that he has conducted the audit in accordance with the
generally accepted auditing standards. The approach and methodology adopted for the
audit is also be stated.
3. OPINION
The Auditor-General certifies whether the financial statements present fairly the financial
position of the Local Government Council as at 31st December, 20xx in accordance with the
appropriate section of the Audit Act 1956 as amended.
NOTES CURRENT
PREVIOUS
YEAR YEAR
N’000 N’000
Cash Flows from Operating Activities
Receipts
Internally Generated Revenue 3 X X
Grants/Subventions 4 X X
VAT 5 X X
Statutory Allocations 6 X X
Miscellaneous 7 X X
Total Receipts X X
Payments
Personal Emoluments 8 (X) (X)
Dividends Received 12 X X
Repayment of Loans 13 X X
STATEMENT NO. 4
---------------------------LOCAL GOVERNMENT COUNCIL
STATEMENT OF ASSETS AND LIABILITIES FOOR THE YEAR ENDE D 31 ST DECEMBER, 20XX
ACTUAL
NOTES CURRENT PREVIOUS
YEAR YEAR
N’000 N’000
ASSETS
Cash and Bank Balances 14 XX XX
Investments 15 XX XX
Advances 16 XX XX
Others 17 XX XX
XXX XXX
LIABILITIES
Deposits 18 XX XX
Loans 19 XX XX
General Revenue Balance 20 XX XX
XXX XXX
The accompanying notes are part of these statements.
STATEMENT OF REVENUE AND EXPENDITURE FOR THE YEAR ENDED 31 ST DECEMBER, 20XX
ACTUAL NOTES BUDGET ACTUALVARIANCE
xx Opening Balance xx xx
x xx Rates 21 xx xx x xx
Fines, Fees and Licences 22 xx xx x xx
Earnings and Sales 23 xx xx x xx
Rent on Government Property xx xx x xx
Interest and Dividends 24 xx xx x xx
Taxes 25 xx xx x xx
Statutory Allocation 26 xx xx x xx
Miscellaneous Revenue 27 xx xx x xxx
Total Revenue (a) xxx xxx x
Less: Expenditure xx
General Administration 28 xx xx x xx
Health and Environment 29 xx xx x xx
Works and Housing 30 xx xx x xx
Education 31 xx xx x xx
Agriculture and Social Development 32 xx xx x xx
Grants and Subsidies 33 xx xx x xx
Capital Projects 34 xx xx x xx
Miscellaneous Expenses 35 xx xx x xxx
Total Revenue (b) xxx xxx x xxx
Operating Balance (a)-(b) xxx xxx xx
STATEMENT NO. 6
NOTES TO THE FINANCIAL STATEMENTS
The notes to the Financial Statements include a section stating clearly the accounting
policies adopted in the preparation of the financial statements. Notes to the accounts are
normally presented in the following order:
The audit of Local Government Councils is provided for in the Model Financial Memoranda
for Local Governments. The Memoranda make provision for both external and internal
auditing. The External Internal auditing is carried out by the states Auditor General for Local
Government of that state while an internal audit department in each local government
council handles the internal audit.
According to the provisions of the financial memoranda, there shall be established in each
state, the office of Auditor General to e appointed by the Governor of the state. The
following are the functions and powers of the Auditor General for Local Government:
1. Power to carry out the audit of accounts of all the local government councils in the
state on a regular basis.
3. Power to function as the chairman of the Local Government Audit Alarm Committee.
4. To notify the Public Accounts Committee and the Local Government Audit Alarm
Committee on issues relating to serious audit queries for which the Accounting
Officer of the local government is liable, and other alarms of significant importance.
5. Inform both the public accounts committee, the Local Government Chairman and
the governor in writing where a Local Government Accounting Officer does not
respond within the stipulated time to a query that affects his office.
6. Power to impose necessary fin or punishment where the failure to answer an audit
query is by an officer or chairman of a Local Government Service Commission. The
erring officer, however, has the right of appeal to the public Accounts Committee.
The Financial Memoranda for Local Government make it the individual and joint
responsibility of the above officers to alert the Local Government Audit Alarm Committee
before any irregular or illegal payments are made.
ILLUSTRATION 1
The following balances were extracted from the books of TRUMP STATE GOVERNMENT OF
NAIJA as at 31s' December, 2000:
1999 2000
N '000 N'000
644,997 Statutory allocation 4,841,017
119,102 Value Added Tax 160,133
Collection
403,020 Internally Generated 498,843
Revenue
58,256 Other Revenue 79,397
490,110 Personnel Cost 1,170,666
280,095 Overhead Cost 739,646
137,081 Consolidated Revenue 382,936
Fund Charges
246,400 Other Capital Receipts 379,237
394,969 Capital Expenditure 2,753,553
591 Other Fund Deposits 591
28,288 ' Cash at Bank 69,604
67,799 Deposit with Banks 740,352
62,772 Investments 27,987
11,252 Advance 74,474
i. The following amounts expended on unfunded Internal Debt Servicing have been
included in the Consolidated Revenue Fund Charges:
(000)
1999 36,970
2000 45,364
CAPITAL ACCOUNT:
Transfer from Recurrent Account 318,089 3,286,142
Other Capital Receipts 246,400 379,237
564,489 3,665,379
Capital Expenditure (394.969) (2.753,553)
Capital Development Fund c/f. 169,520 91 1,826
STATEMENT OF ASSETS AND LIABILITIES FOR THE YEAR ENDED 31 ST DECEMBER, 2000
1999 2000
LIABILITIES ^ (000) ^ (000)
Public Funds - 169,520 911,826
C.R.F.
ASSETS
Cash at Bank 28,288 69,604
Deposit with 67,799 740,352
Banks
Investments 62,772 27,987 "
Advance 11,252 74.474
170,111. 912,417
TOPIC 12
Expenditure Process
Any expenditure to be incurred by a local government must be covered by a provision in the
annual or supplementary estimate (budget), failing which it becomes unlawful to incur the
expenditure
In addition, all expenditure must be approved by the appropriate authority and no payment
should be effected without supporting it with a payment voucher.
The central pay office should observe the following with regard to payment of any amount:
After payment:
Duly endorsed by the payee, by obtaining his/her signature on the original payment voucher
or on the sub-receipt
Chronologically posted by the Accounts Section in the cash book on the credit side
Receipted in lieu of signature where the payment is to a corporate body
Posting entered in the appropriate ledger (expenditure abstract, Advances or deposit)
Reconciled with the departmental vote expenditure account books and treasury
record at the end of every month.
Bank Accounts
The number of bank accounts a local government uses should be restricted to four;
Main allocation or Grant account,
Development account for capital projects,
Revenue accounts, and
any accounts as may be prescribed by the Executive committee.