CHAPTER ONE

INTRODUCTION
1.0 Introduction
The growth and development of any nation is highly dependent on the effectiveness and
efficiency in controlling it expenditures. As the supply side policies that a government can
ascertain productivity levels if it is efficient enough in mitigating it expenditure. Over the years,
subsequent governments in sierra Leone have been finding it extremely difficult in managing it
expenditures and this to larger extent have hindered economic growth, stability and development.
As a result of extravagant expenditure, our budgets have always been deficit. The realization of
high financial stability rate can be enhanced only if government design and implement prudent
financial policies that can help immensely in the control of public spending or expenditure. In
ensuring sierra Leone reaches it pick of rapid development through efficient financial stability in
the economy the researcher decided to ‘’ Investigate the role of accounting on the management
and effective control of public expenditure in Sierra Leone. In this chapter the researcher
digressed on the background of the study, problem statement, aim, research objectives, research
questions, significance of the study, scope of the study, limitation and delimitation and
definition of key terms.

1.1 Background of the study

The control of public expenditure over the years have been a serious problem in the overall
development of sierra Leone and it have affected our economic negatively in terms of enhance
the economic productivity, growth, stability and development of the economy. By extension this
problem has also affected the financial stability of the economy of Sierra Leone. In the aftermath
of the post 1999 war period, level of poverty driven by poor governance was identified as one of
the key underlying causes of the war. To that end, the government, since that time and supported
by donor partners, have supported reform programmes whose underlying theme has been the
improvement of the governance structures of Sierra Leone. Some of the reforms have been
aimed at the Security Sector, the Civil Service, Chiefdom Governance, Law, the Justice Sector,
the Financial Sector, and Good Governance including Anti-Corruption, Procurement,
Privatization, Public Sector Financial Management, Social Security, Media Development and

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Decentralization. These reforms have yielded significant gains in addressing some of the key
deficiencies in the governance structures and processes. Often, however, these reforms were
uncoordinated and to a large extent, reflect a donor driven agenda rather than as part of a
coordinated, comprehensive and holistic approach to improving governance in Sierra Leone.
These reforms will also help in further reducing the fragility of the state which is reflected in
higher unemployment, weak public services and weak capacity. Since the assumption of power
in October 2007, the new government has committed itself to a more coordinated and
comprehensive programme of public sector reform. To that end, the Governance Reform
Secretariat was restructured to become the Public Sector Reform Unit (PSRU) located in the
Office of the President. The PSRU is now charged with the responsibility of deepening the
reform process including the formulation of an over-arching public sector reform programme.

Freetown, Sierra Leone – the private sector of Sierra Leone appears to be vigorously competing
with the Country’s State-Owned Enterprises. As a nation, Sierra Leone has more than 20 state-
owned enterprises (SOEs). These institutions are functional in the utilities, transport, and
financial sectors. While there is no formal or far-reaching government-maintained list of State-
Owned Enterprises, there are notable examples of state-owned entities. These include the Guma
Valley Water Company, the Sierra Leone Telecommunication Company (Sierratel), the
Electricity Distribution and Supply Authority (EDSA), the Electricity Generation and
Transmission Company (EGTC), the Sierra Leone Broadcasting Corporation, Rokel Commercial
Bank, the Sierra Leone Commercial Bank, the Sierra Leone Housing Corporation, and the Sierra
Leone Produce Marketing Company. Sierra Leone is not a party to the Government Procurement
Agreement within the WTO Framework. More notable is that SOEs may participate in trade and
commerce with the private sector, but they do not compete on the same terms as private
enterprises. They often have access to government subsidies and other benefits.  Because of these
reasons, the SOEs have undue advantages. Besides, and unlike private sector businesses, SOEs
in Sierra Leone do not play a meaningful role in funding or sponsoring research and
development. Over the past one and a half decades, especially since 2002, the SOEs’
privatization became paramount and demanding.  In 2020, a National Commission for
Privatization was created to facilitate various SOEs in the country. With the World Bank’s
assistance, the body primarily focused on privatizing the country’s port operations.  At the

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moment, the authorities seek investments in public-private partnerships (PPPs) for port security,
telecommunications, and other infrastructure projects.

Taking into consideration the historical context of public expenditure and control, in France,
following the introduction of a new organic budget law in 2001, overhauled the budget execution
system by decentralizing it somewhat toward line ministries. In particular, the new law: (i)
divests the financial controllers of the responsibility for regularity control (contrôle de
régularité) of budget managers (administrateurs de credit), which was transferred/decentralized
to the line ministries; (ii) requires the financial controllers to assess the fiscal sustainability of
decisions taken by budget managers to reinforce macro-fiscal discipline; and (iii) also requires
the controllers of central agencies, such as the General Inspectorate of Finances (Inspection
générale des finances), to apply a risk-based approach to control. Morocco has been
implementing a reform of financial and expenditure control since 2006 that seeks to gradually
transfer this responsibility from the ministry of finance to line agencies while ensuring adequate
safeguards (through strengthened oversight) against the resulting risks of abuse. In this context,
the function of financial and expenditure control has been merged with the treasury and
verification of the regularity of certain current expenditures (such as salaries, leases and certain
procurement contracts) has been delegated to line agencies at the commitment level. For other
expenditure items, the devolution is based on the assessed effectiveness (through formal
“capacity audits”) of the internal control system of the line agency and its risk management
capacity. For this purpose, the spending units were grouped into two categories and the
devolution of financial and expenditure control started with the best-performing line agencies at
the superior level. This is what constitutes the hierarchical and risk-based control (control
modulé de la dépense) that Morocco has started to implement since 2008. Thailand introduced
a hurdle approach in the late 1990s to devolve budget execution control, moving this function
from the finance ministry’s Bureau of the Budget to line agencies. This approach comprised two
main components: (i) a set of core financial and performance management competencies (called
the hurdles) to be met by each line agency to qualify for delegation of financial management and
control; and (ii) semi-contractual arrangements between the Bureau of the Budget and line
agencies formally linking the reduction in central control to the achievement of the specified
competencies. The hurdles were based on the following indicators of performance by the line
agencies: (i) budget planning; (ii) output costing; (iii) financial and performance reporting; (iv)

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financial control arrangements; (v) procurement management; (vi) asset management; and (vii)
internal audit. However, these hurdles were set at such a high level that hardly any agency
cleared them. In addition, the approach did not stipulate any time frame for agencies to upgrade
their PFM standards, and there was an underestimation of their capacity-building needs. As a
result, progress stalled and the reform was not pursued further.

The activities of the public enterprises have been on the increase in recent times which
necessitated the introduction of the accounting practice to check and monitor the financial
activities of these enterprises. In this book, titled principles of accounting, by Bimage (1985)
Accounting is defined as a process by which data relating to the economic activities of an
organization are measured recorded and communicated to interested parties for analysis and
interpretation. The earliest methods of accounting records were kept in physical quantities. These
records came from the Eastern (early) civilization which involved in the countries around the
Mediterranean Sea such as Mesopotamia, Egypt, Crete, Italy etc. Money was recorded as soon as
money took the place of barter as a medium of exchange and unit of accounting practice has
been closely related to the economic development of the country. If the business organizations
grows in size and complexity management and outsiders groups which include owners of the
firm (stock holder) creditor, government, employer and the general public. The differentiation
necessitated the need to have accounting department in the enterprises to give accurate financial
of the management and to satisfy the outside demands or the general public who are already
interest on whether the enterprises in growing or not. The role of accounting in public enterprises
in Sierra Leone is primarily to ensure accurate accountability in these sectors and present the
time and fair financial position of the enterprises. The role is of utmost importance in any
organization. An organization can only grow or profit when the resources can only be well
managed if accounting department of the organization give accurate financial information to
know how much the enterprises having. It only when this is done that the firm allocate its
resources and knows what is to be done. The role of accounting seems to be more pounced in the
public enterprises. In recent times, there are cases of misappropriation of funds in the public
enterprises and improper accountability. No enterprises can more forward without having a well-
organized financial department to give accurate financial, information about the firm. This is
because if improper accounting records are not minimized or where possible eradicated these is

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bound to be cases of public enterprises failure. Consequently, staff of such enterprises will force
out of their job. This will result to economic and social activities in the society.

1.2 PROBLEM STATEMENT

The business sector of the economy of Sierra Leone is key and pivotal in the overall
development of the country. Public enterprises have been finding it very difficult to enhance
profitability, growth and competitive advantage as compared to the private enterprises this is as a
result of extravagant expenditure, misappropriation, embezzlement and inaccurate accounting
records. The records of these enterprises have been poor and unclassified and these effects have
affected their profitability and return on investment. In ensuring the public expenditure of
government is mitigated they should inoculate appropriate accounting principles in their
activities. About 75% of public enterprises have been experiencing low profitability and have
been losing competitive advantage to private enterprises as a result of total quality management
and low customer relationship management. Notwithstanding every privates and public
enterprise in Sierra Leone has their accounting department and there are increase cases of
financial mismanagement in virtually all the public and private organization in Sierra Lone. The
and another key problem affecting both public and private enterprises lies on how the
management of these enterprises are able to recognizes the role of accounting in their enterprises
so that these cases of improper accountability will be minimized.

1.2 Aim of the study

To vividly evaluate the role of accounting in the control of public expenditure in public
enterprises in Sierra Leone

1.3 Research Objectives

1. To determine the extent to which accounting records has controlled the effect of
expenditures in public enterprises.
2. To find out factor that affects the accounting department preventing them from carryout
their function as expected.
3. To determine government policies which promote accountability in public enterprises in
Sierra Leone.

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 4. To explore the negative effect of accounting system on budgetary control
5. To identify the challenges encountered by public enterprises in mitigating
misappropriation and embezzlement of public funds.

1.4 Research Questions

1. What is the role of accounting records in controlling the effect of expenditures in public
enterprises?

2 What is the factor that affects the accounting department preventing them from carryout their
function as expected?
3 What are government policies which promote accountability in public enterprises in Sierra
Leone?
4 What is the negative effect of accounting system on budgetary control?
5 What are the challenges encountered by public enterprises in mitigating misappropriation and
embezzlement of public funds?

1.6 Significance of the study

In this study, the researchers have set out to examine the role of accounting in the public sector
in this country. Sierra Leone with the aid of highlighting the inherent problem encountered in the
account department of most organizations. It is expected that this work will be of interest to the
owners of business enterprises, the government, students and the general public. To shareholders,
owners of enterprise, interested persons and the government, this study is expected to rekindle
their interest the more and they will take note of various recommendations mentioned here and
help steer the management team towards forming a study organizations to present accurate
financial information of their firm. This research will be of greater significance in strengthening
the business sector of the economy of Sierra Leone more especially the public sector. In terms of
appropriate management of public funds, making efficient financial and investment decisions
that determines profitability of public enterprises

Finally the study will also help to serve as literature to individual or corporate bodies that might
want to carry on further research on the role of accounting in the public sector in Sierra Leone.

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1.7 scope of the study

Scope of the study shows extent of coverage done in the study. The research topic suggests a
study on the role of accounting in the public enterprises in Nigeria. The focus of the study is on
various public enterprises in Freetown. The study started January 2021 and it ends December
2021. The researcher only limits the research in Freetown city and do not extend the research to
other part of Sierra Leone as a result of unavailability of resources. The researcher use a simple
random sampling technique and with a total of 30 respondents.

1.8 Limitations and Delimitations

1.8.1 Limitations

There are factors as constraints that normally follow this research work, some of them are;

1. TIME: This which was a major problem was adequately not managed by the researcher. There
is not enough time for the research to get the completed and approved.

2. LACK OF MATERALS: the materials related to the research are scarce in the library. Some
of the staff do not feel safe letting have access to some materials while other will change you
more than double the cost of Photostat before one can get what he wants.

3. FINANCE: lack of appropriate capital hinders the researcher from completing the research in
a high momentum.

4. TRANSPORTATION: Transportation was also a high challenge in terms of get the materials
or where to obtain the necessary information needed for the research.

1.7.2 Delimitation

As a result of the constrains encountered by the researcher during the process of conducting this
research, the researcher could not extend the research to other parts of the country.

1.9 Definition of key terms

MANAGEMENT: Its function, it is centered on the running and controlling of the organization,
the way the directors perform their function to attain a successful operation.

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ACCOUNTING: In this context, an accountants records, classify and summaries all public
expenditure in the Central Bank of Nigeria in a significant manner and in terms of monetary
events and transaction which are in part at least financial character and to interpreter the result
thereof.

FINANCIAL STATEMENT: An accountant makes an accounting report issued by a business

to describe its financial affairs and results of the operations

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 CHAPTER TWO
LITERATURE REVIEW
2.0 Introduction
The efficient management of public expenditure is a fundamental quality that any government
should have if economic growth and development is to be ascertained. The research on the
Investigation into the role of Accounting on the management and effective control of public
expenditure in Sierra Leone is very pivotal in enhancing the economic and financial stability of
our economy. The researcher cited authors, journals, text books and magazines on the topic
under study.

2.1 THEORIES ON ACCOUNTING

Accounting theory is a material field in Accounting. Historically, accounting predates monetary

economy. This was precisely, in the era of barter economy (i.e. exchange of goods for goods)
when transactions were not only pre-determined by measurement but also by exchange values.
The precept in which goods were exchanged at arms-length through concerted efforts of
gathering, determining and measuring values are both pre and postante accounting. The Trade by
barter period was characterized by measurement inequality, cumbersome in terms of production
variety and coupled with the problem of coincidence of wants, were all-inherent in barter
economy. However, the development of accounting theory was to ameliorate the inherent
problems encountered in barter economy, unlike monetary economy. It is pertinent to understand
the meaning, scope and application of a theory in humanities and management sciences in order
to appreciate the work of accounting theory.

Going Concern Assumption (GCA) means that in drawing up financial statements; the entity
will continue to exist in its present form into the indefinite future (perpetuity) (Fremgen, 1968).
It is further stresses by (Fremgen, 1986) that organization will continue to exist for life as far as
the firm can meet its immediate and long term financial obligations. GCA, however ensure that
assets should also be valued based on their economic useful life, cost, degree of usage and
residual value for purpose of real income determination. The controversy to going concern
assumption is that a firm could be compelled to go into liquidation if it cannot meet its short term

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and long term financial obligations as they fall due. Other reasons for a firm's liquidation may
include:

i .On litigation by creditors or by an order of the court.

ii. Proclamation by the government

iii. When the firm operates outsides its memorandum and articles of associations. (ultra vires)

iv. When the activities of the firm are illegal, injurious to health and against the public policy

v. On mutual agreement by the owner and stake holders.

vi. On completion of a particular venture or contract and; vii. By an act of God (disasters, death
etc)

Accounting Period or Periodicity Assumption (PA) believes that the continuum of time can be
subdivided into a number of discrete time periods (accounting periods) (British Institute of
Management Information (BIMI, 1984). According to Keynes (1980), in the long run we are all
"dead", implies that the net income of a firm prepared under this assumption (discrete time
period), may not after all be realistic because of the presence of inflation and changes in price
level. He asserts that the net profit usually has the components of unrealized profit or
uncollectible realized revenue that may eventually go bad in the form of bad debts. The provision
for losses may however not cover the total debtors during the accounting period. Similarly, the
fundamental problem, be it in the short or long run, is the method of stock valuation. Stock
valuation could be based on full cost or marginal cost, straight-line or declining method,
especially when the firm is operating either at full-capacity or undercapacity. Where there is
under-capacity utilization the absorption rate is likely to be high if the depreciable amount is
always high, it reduces the profit figure in the financial statements, vice-versa.

2.2 THEORIES ON PUBLIC EXPENDITURE

Marginal Utility Approach

This is one of the important theories developed in the 1920s which suggested an economic
approach to determine the composition of expenditure and budgeting. According to this theory,
the government spends its limited income on alternative services in such a way that the marginal

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benefit is the same on all items. Just as an individual, in order to satisfy hisher wants, spends in a
manner to achieve a certain balance among different types of expenditure which would ensure,
some marginal return of satisfaction from all of these. According to Pigou, "Expenditure should
be so distributed between battleships and poor relief in such wise that the last shilling devoted to
each of them yields the same real return." The same principle has been restated by Dalton thus
"Public expenditure should be carried just so far that the marginal social advantages of
expenditure in all directions are equal and just balance thc marginal social disadvantages of all
methods of raising additional public income". Though the principle of maximum social
advantage is quite attractive in theory, there are practical problems in making it operational.
Firstly, it is not easy to quantitatively measure the benefits flowing from diverse. items of public
expenditure for instance, expenditure incurred on defence and social security. Secondly, this
theory cannot be subjected to a test. Evaluation of activities of the government is difficult due to
the vast a'rray of services and goals of the government and absence of an acceptable measure.
Thirdly, it is not only the level of present satisfactions of the 'Community' that a government will
be concerned with. The future interests of the community are also important. Fourthly, what the
community can afford also depends on how the money is raised and how it is spent. Expenditure
on unnecessary wars or departments of the government may result in social disadvantages.
Expenditure on sustaining loss-making public enterprises with a social service content may, on
the other hand, be easily justified. This principle is thus, at best, applicable to the use or
distribution of a fixed sum rather than as a standard for determining the total size of public
expenditure.

Wagner's Law

The earliest theory advanced is that of Adolph Wagner in 1876 which came to be known as
"Wagner's law". He propounded the "Law of increasing expansion of public and particularly
state activities" which is referred to as the "law of increasing expansion of fiscal requirements".
The law suggests that the share of the publicsector in the economy will rise as economic growth
proceeds, owing to the intensification of existing activities and extension of new activities.
According to Wagner, social progress has led to increasing state activity with resultant increase
in public expenditure. He predicted an increase in the ratio of government expenditure to
national income as per capita income rises. It is the result of growing administrative and

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protective actionsof government in response to more complex legal and economic relations,
increased urbanisation, and rising cultural and welfare expenditures. Another reason is the
decentralisation of administration and the increase in the expenditure of local bodies. According
to Musgrave, however, it is not fruitful to seek an explanation for the total expenditure. Tests
carried out by various researchers have shown that the increase in expenditures is far more
complex than is evident from the tests carried out on empirical data. Therefore, according to
Musgrave, it may be far more rewarding to adopt a desegregated approach (an approach which
divides the study of expenditures of government) through a study of expenditures of government
on capital formation, consumption and transfer payments. (Gowda Venkatagiri K, 1987. Jain,
P.C., 1989 & Prem Chand, A. 1983)

2.2 THE IMPACT OF PUBLIC EXPENDITURE

Public expenditure diverts economic resources into channels determined by the government in
accordance with national objecti4es and public policy. As a consequence, the scale and direction
of public expenditure may affect the pattern and levels of consumption of the community volume
of production allocation of resources distribution of incomes levels of prices and employment.
These effects are discussed below: Consumption Public expenditure enhances the quality of life
of people by providing recreational, cultural, and educational and public health facilities, such as
public parks, playgrounds, libraries, educational institutions, hospitals and dispensaries and
scientific, cultural and commercial exhibitions.

Consumption,

After all, is the end objective of economic activity of individuals. By promoting the level of
economic activity and a more equitable distribution of income, the state can bring about a greater
sense of social and economic security in the lives of individuals. The government enables them
to live a fuller and richer life.

Allocation of Resources

Public expenditure allocates resources in accordance with national priorities. The priorities may
be defense, agricultural production and self-sufficiency in food, industrial development, and
generation of employment opportunities, an equitable distribution of income, balanced regional
development, and population control, a better ecological. balance etc. Public expenditure in these

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areas is bound to raise the community's productive power. According to Dalton "increased public
expenditure in many of these directions is desirable in order to bring about that distribution of the
community's resources between different uses, which will give the best results, balancing
without bias the present and future". Changes in national priorities, from time to time, will be
reflected in the pattern of public expenditure. Again, resource allocation has to take into account
the balance between present needs and future requirements. Apart from imparting a sense of
fairness as between generations, projects with long gestation periods can be undertaken only by
the state. Hence allocation has to keep in view the fact that market economy cannot always take
care of social needs. These can be taken care of only by the state.

Production

The roles of private and the public sectors are complementary. The public sector provides the
infrastructure, transport and communications, power, education and public health programmes.
In the absence of goods and services provided by the government sector, private sector can
hardly make any meaningful contribution towards production and development: According to
Dalton, other things being equal, taxation should not adversely affect production and public
expenditure should increase it as much as possible. Public expenditure can affect (i) the ability to
work, save and invest, (ii) the desire to work, save and invest, and (iii) allocation of resources as
between different uses. Public expenditure can influence these factors either favorably or
unfavorably. The economies of, developing countries cannot make significant progress unless
they concentrate on development of investment goods sector. This may not result in production
in the immediate future, as in education and health programmes, infrastructural projects and
projects with long gestation periods. This would, however, certainly build up growth potential in
the economy, and help take the economy to a self-generating level.

Distribution

In Dalton's words, "other things being equal, that system of public expenditure is best, which has
the strongest tendency to reduce the inequality of incomes?" A system of grants and subsidies is
equitable in the measure in which it is progressive. This leads to maximum social benefit. An
approximation to this principle would be provided by a system of grants which would bring all
incomes below a certain level to that level (say, above the poverty line), without adding anything
to incomes above that level. A public distribution system which makes available essential

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commodities at subsidized prices to the poor, will also achieve the same result. Free provision of
services to all members of the society e.g., free health service or free education, "narrows the
area of inequality". Social security measures and social insurance schemes, which are helped
partly or wholly from public funds, e.g. old age pensions, sickness and maternity benefits,
unemployment relief, industrial injury compensation, widows pension etc., improve distribution
by reducing inequality of incomes.

Economic Stabilization

Business activity in an economy is usually characterized by fluctuations of a cyclical nature. A

boom in the economy may burst and lead to a depression. While during boom, prices rise beyond
the reach of common person, spelling misery. During depression, employment and production
levels fall drastically causing colossal damage. During depression, when employment,
production and national income start declining, government can undertake compensatory
spending. This may imply heavy public works programmes so that employment and incomes
may pick up leading to economic recovery. During boom, public expenditure should be strictly
curtailed, leading to surplus budgets. During depression, public expenditure policy would lead to
heavy outlays on public works; expenditure would thus be in excess of revenues, leading to
deficit budgets. Thus public expenditure, if properly planned and conscientiously undertaken,
will have the favorable effect of raising employment, production and national income, after
pulling the economy out of depression and thus bringing about greater economic stability

GENERAL OVERVIEW OF ACCOUNTING

Over the years, the Nigerian public sector has increased greatly in important and this necessitated
to many people waiting on the role of accounting in this sector. Dule, E.1965 in his book titles
Management Theory and practice, describes the roles of accounting in the public and private
sector as the factor which to plan, organize direct and control their financial resources and
represent the organization to the third parties. He further stated that a reflection reveals that each
of these approach contains a significant financial dimension for instance, important financially
strategies can be used to measure whether resources are being effective utilized and co-ordinate
in order to express organization plans and control activities to the third parties. In addition to this
sheared 1974 shares, the views that accounting plays an important and inevitable role of
recording and management funds in any public organization in most suitable manner, using this

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funds as profitably as possible. Planning future operations and controlling financial accounting,
cost accounting, in different direction. In short, it can be said that sheared views is as follow up
of Dule’s 1965 idea on the role of accounting in any organization Kolade, O. and Peter M.Dean
1987 in third book, Financial Management in the Nigeria Public Sector looked at the role on the
number of staff employed by these sector to facilitated the work of accounting in an
organization. They said that the role of accounting in the public sector have become so important
that the number of people employed to carry out these accounting function in an organization are
very few compared to their work perform. However, they maintained that public sector to recruit,
train and develop accounting, sector with disproportional large number of the experience and
unqualified accounting staff. At the same time, the small numbers of qualified experienced
accountants remaining the service have been neglected. The financial function has been
concerned with the routine task of controlling, authorization, rewording and reporting the lack of
total view of the role of the financial function almost exclusively with middle-level managers
and the lack of good financial managers. Within top level management have predictable result in
our public enterprises future. The effects of this defect are:  Management information system
of which accounting is is a part, have been neglected: Accounting has been more convened with
the compliance and regulators than with serving management or other user needs.  Methods of
evaluating investment and performance have been inadequate with the result that management
have been deprived at useful information and utilization of information has been poor.  Policies
have been evolved without proper consideration of their financial effects and implications. 
Accountability and control have been inadequate because of lack of innovation in financial
sphere: Okafor on his own view classified role of accounting in the public enterprises into four
categories:  The owners of the business are primary state holders. The financial information
obtain from the accounting department determines how much the owner of the enterprises will
earn.  It is also from this information that the enterprise determines how many people the
enterprises will employ and how much each person will earn.  Creditor supply funds or service
to the business. Their states to enable it meet its contractual payments obligations to the
creditors. It is from this financial department that determines how much the organization earns as
their profit and finally how they will take their payment to their creditors.  The government is
interested in profit performance which determines the tax liability of the business. It is from the
accounting departments that the financial positions of the firm are known and this enable the

15
firm to know whether they are making profit or not. The government then tax the enterprises if
they are making profit.

2.3 To determine the extent to which accounting records has controlled the effect of expenditures
in public enterprises.

2.4 To find out factor that affects the accounting department preventing them from carryout their
function as expected

Accounting principle is the guidelines, law or riles accepted by the accounting profession to
service as guide to accounting practice. Accounting principle includes the accounting and
reporting assumption, standards and practices that a company must use when preparing external
financial statement. One objective of accounting principles is to reduce the difference and
inconsistencies in accounting practices, there improving the comparability and credibility of
financial report. The term General Accepted Accounting Principles are procedures that guide and
regulate accepted accounting practice at a certain period of time. It is the collective opinion of
time. It is the collective opinion of what the professionals consider good accounting practice and
procedure. GAAP are recommended by the authoritative bodies of each country. The term does
not imply a rule of law which the can be not deviations or exception? The application of
accounting principles in each country requires the accounting the accounting in each country
requires the professional judgment for an accountant and their principles are applied primarily to
material and significant items. Items which have little or no importance on the financial
statement can be dealt with on the basis of their necessity or application. The Accounting
Principles Board (APB) state that “ Generally accepted accounting principle”. In corporate the
consensus at a particular should be recorded in them should be measured, what information
should be disclosed and which financial statement should be prepared. 2.2 TYPES OF
ACCOUNTING PRINCIPLES The term generally accepted accounting principle has long been
used in accounting profession and entries into the public domain. These principle were not all
written down in one day, they evolved over several decades. These principles are supported and
justify by institutions legal authority and acceptability it present, there exist certain accounting
principles that all accountants recognizes applied in practices. They among others;  BUSINESS
ENTITY PRINCIPLES Financial accounting distinguishes the business entity from the
individuals connected with or coming into contact in the business , including the owners and

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managers of business. Therefore, accounts maintained for employ6ers, employees, customers
and other parties connected company as a separate legal entity from its members. The
shareholders, debenture holders, creditor seen as merely contributing the financial resources
entrusted as the directors of the company to manage the company in the over all interest of the
owners of the business. The system of financial accounting is designed to report on the
stewardship of the direction. This stewardship function would effectively Isolates values
belonging to the company from these belonging to the parties in order to enable it ascertain the
position of the business at a given time.  THE OBJECTIVITY PRINCIPLES This brings the
idea of dependent judgment by the accountants is expected to prepare accounts in such a way as
to make room for other accountants to verify the account. This then means that the same
conclusion should be reacted by different accountants working independently and following the
same measurement standards. In most cases, however curtail costs provide the most objective
data; capable of being independently verified. This implies that as much as possible that
accounting records should be based on verified evidence. According to the Nigeria statement of
Accounting and practice standards. The principle connotes independence of judgment on the part
of the accountant preparing the financial statements. An objective requires support by verifiable
evidence, in contrast to subjecting. Or dependence on the various opinions of the accountants
preparing the financial statement.  FAIRNESS The principle holds that in preparation of the
accounts and presentation of the financial statement the accountant. Should serve all the parties
interested in the report fairly and equitably. Investor, prospective, investors, creditors,
management and government agencies need accounting information to help them decision
regarding the allocation of their resources, and accountants should provide such information
without fawning any particular group. Auddors are expected its test whether the account
prepared by accountant show a true and fair view of the operation of the business and once this
position is certified –by an independent accountant reliance can be placed upon the accounts.
According to SASI, the principles is a extension of the objective principle, in view of the fact
that there are many users of accounting information, all having different need, the fairness
principles require that accounting reports should be prepared net to favors any group or segment
of society” In describing financial statement as presenting true and fair view of business
operations, such statements are taken as a whole. The idea is that though some minor mistake
may exist in the financial statement over all picture of the statement present a satisfactory

17
expression of the operation for the period covered by the accounts. It cannot be guaranteed that
every item which appear in the balance sheet and profit and loss account is accurate. It is
possible, that any errors that exist in the financial statement are not sufficient to mislead those
relying on the statements.  MATERIALITY According to SASI, this principle holds that only
items of materials values are recorded strict accounting treatment. The analysis of accounting
data can be costly while the inclusion of a range of data in the accounting report may be
confusing to the range of data in the accounting report may be confusing to the render. Hence,
the significance of item in relation to other item in the account should be considered. The
relatives rather than absolute value of item should be within. Items of insignificant values are
usually group together and reported under one heading for example general or miscellaneous
expenses. Materiality is a relative term, so that what may be consider material in smaller firm
may be in material in large firms but generally, the materiality of an item would have on ultimate
user of the accounts. If the omission of an item in the financial statement would mislead those
relying on them, such an items is considered material.  PRUDENCE They are many instance in
the past when accounting statement were prepared on the basis of speculation or optimizing
rather than reality. So that if revenues were expected on the future, they could be recognized in
the current year accounts. Accounts have learnt through long and sometimes better experience to
be cautions and this attitude is expressed in the principle demands exercising great care in the
recognitions of profit while at all know losses are adequately prouder for. This is however to a
justification for the creation of secrete or hidden reserves.  DISCLOSURE This principle is not
started in the SAS, but it implies it. It stipulates that the present financial statement should
includes all material data that informed the reader to arrive at appropriate conclusion accounting
statement should not be misleading and should be accompanied by adequate notes to explain
their contents. The fundamental accounting contents are expected to the followed in the
preparation for this needs to be disclosed and reasons for it. The SAS, 8th schedule of the
companies Act, section 335, subsection (ii) (iii) of the companies and Allied Matter Decrees are
concerned with the details and form of financial rewards of companies.

FACTORS AFFECTING ACCOUNTING PRINCIPLES

The following condition has to exist before the rules of general application for recording and
reporting information about whether that is accounting principles will be needed if possible.  A

18
recognized medium of exchange and a developed market for goods so that values could be
provided for incorporation in the account.  Business carried on a continuing basis where period
reports become necessary.  Large scale enterprises where it difficult for any one of ultimately
acquainted reports and valuations embedded in such report are more difficult to come by, hence
the need for recognized accounting role is greater.  Separation of ownership and management
rule for accounting are not essential when the manager is responsible only for himself.  The
existence of an undefined group of owners. The problem of separation of management and
ownership are reinforced when ownership is divided up among many people and the right of
ownership is freely transferable as in the case with public companies listed in the stock
exchange.

2.6

BUDGETING AND BUDGETARY CONTROL

In other to have an effective control expenditure in our organization. It is advisable to adopt and
consider the effect to budget and budgetary control. In a simple term, a budgeting is a financial
plan for activities an objective set out. This is based merely forecast, past experience, expectation
etc. As defined by ICMA, A budget is a financial and or qualitative statement prepared and
approved prior to a defined period of time for the purpose of attaining a give objective and
employment of capital. Budgetary control is a system of controlling lost which includes the
preparation of budgets co-coordinating the department and establishing responsibilities
complaining actual performance with that budgeted and letting results to achieve maximum
control. The essential fractures of a budgetary control process include: 1. A financial plan to
actives the objective or target 2. A monitoring process which measures the actual performance
during the period. 3. Comparison of actual performance with budgeted performance in order to
determine the extent to which they are in line with one another. 4. As corrective process
designees to eliminate the divergence, if any between budgeted any actual performance. Type of
budgets Generally, we have two type of budgets:  short term budget  long-term budget

SHORT-TERM BUDGET: This is usually referred to as current or operational budget. It relates

to current or operational budget. It relates to current condition and is normally prepared for a
period not exceeding one year. It is common to prepare short-term budget, for one year is broad

19
outline only and them to phase the one year budget into quarterly, monthly, or even weekly plan
in greater detail depending on the nature of the business operations and also on other
environmental factors.

LONG-TERM BUDGET: This is the budget designed for long term development of the
business. A period of between three and five years may be used depending on the nature of
business and the environment in which the business operates; such budget are in variably
prepared in broad outline only and then expanded and detailed as the implementation period in.
USES Budgeting helps immensely to the achievement of expenditure control in both public
sector: 1. Authorization: it is used as an authority for the expenditure control for instance, if five
thousand naira (N 5,000) is approved for the purchase of raw materials in any month, the
purchasing officer do not need any formal approval of this expenditure in the budget and it
expected that he must not expand beyond.

2.6

STANDARD COSTING AS A TOOL FOR CONTROL

There is no double that standard costing plays an important role in production cost/expenditure
control. This is clear when a survey of accounting and management literature is taken. It is not
contestable that the high cost of goods and services produced in Nigeria are a sort or worry not
only to the consumers but also to the produces of the goods and service i.e firms. Therefore for
some of these firms, who are both on retaining many of their customers, they are always seeking
ways of minimizing their cost of production so as to finally have product with low prices, when
compared with other product of the same quality, one of such way is the use of standard costing
which compares actual cost incurred with pre-determined cost of production. This has the effect
of keeping cost work pre-determined limits thereby increasing efficiency in production.

ESTABLISHMENT OF STANDARD COST

The establishment of standard cost for the element of production is along and difficult task in
that all the factors affecting production to be taken care of and their cost pre-determined as
closely as possible. Some of the factors are: A. production specification: This implies that
materials to be used in the production of a particular production must be specified both as to
quality and quantity. The amount of wastage which are expected to be incurred should be as

20
certain as they yield from the materials in some cases. As to the quality of the material to be
used. It must be decided whether conditions demand that it be classifieds into: i Unspecified ii
whatever can be obtained iii whatever the harvest This classification must be done in such a way
as to avoid exceeding the quality and dimension of material require to be used in production. B.
Purchasing: Adequate procedures should be established such that raw materials are obtained
under competitive tender at lower prices. The quantities purchased should be enough so as to
avoid frequently purchasing purchased should be enough so as to avoid frequent purchasing with
the result that capital is always tied up. The firm should also establish methods for maintaining
adequate record at commitment and others outstanding. C. Receipt of Materials: This involves
procedures which will sure that the material derived by suppliers meet the specification required
for production, Assurance is however quarried by carrying through inspection of the goods
delivered by the supplier before the material are taken into stores. D. Issued of Materials: The
firm should also establish method procedures to take adequate account of material that is issued
of the stores. E. Defining of Operations: The firm would have to determine the type of operations
to be performed, who will perform the operation and where they are to be performed. They
would also determine the square in which the operation is to be carried out and the timing
operation. This is done to guarantee efficient operation of production activities. F. Division of
Factory into functions: This is matter of policy depending on the organization concerned. This is
decision has to be made on how to group the different function of the organization. Usually these
groupings or divisions are termed. Cost centre each being a work centre in which district
operations are performed on the product. Having taken care of all the above factors, the firm
would then decide on the type of standard it want to achieve an effective control over
expenditure. The following are the standards: (1) Ideals standard (2) Expected standard (3) Basic
standard (4) Normal standard i. Ideal standards: In this case, a target is set, which it achieved will
represent the highest level of the efficiently is the standard can be attained under the most
favorable condition possible. This therefore presupposes the most efficient operating conditions
and that the firm’s plant adaptation perfects labor performance maximum of the efficient
material usage and absolute absence of operating hitches. Machine break down are not expected
to occur therefore to produce a particular particular product, an absolute minimum of direct
material at the lowest possible prince are assumed, so also the direct labors in which cases of the
time and rates allow no deviation, no matter the extent from the very high standard of efficiency

21
are also taken into accounting when settle standard for overhead cost as a result, an ideal
standard is always better than the actual performance. ii expected standards: standards set on the
basis of expected standard could be of a great advantages so far as they are set with the objective
of obtaining the best result out of the available facilities. Though the variance generated under to
this condition will show divergences. They are likely to reflect more accurate, measurement of
superior or normal performance this fact in itself constitutes a recommendations. As a result,
sub-unit managers and superior or normal performance this facts in it constitutes a
recommendations. As a result, sub-unit managers and supervisors are expected to come to grips
with the target set and the resulting variance represents a reduction in efficiency. Iii Basic
standards: These are standards based on the ideal of suing existing or past performance in the
case future performance will not be better than the past and are therefore established to be used
over a long period of time without an adjustment to it. A standard of the type is similar to the
standard of measurement of length; volume etc. that is to say, it serves as a fixed standard of
measurement for a long period of time and to this extent is extremely useful. Iv Normal standard:
These are standard which are set lacing into account the pre-determined cost of production for a
business cycle rather than for a fiscal year. In other words, they represents an average figure,
which hopes will smooth out fluctuations caused by seasonal and cyclical change using this
standard as a base for setting standard cost will have for reacting implication since they do not
contribute much to incentives to the workers to perform better and also for the fact that they are
of a long range time duration.

2.7 ROLE OF ACCOUNTING IN PUBLIC EXPENDITURE This in other words can be

referred to as financial management in the public sector. A very important development initiative
(FMI) accounting. Accounting to him, the public expenditure survey, minister’s decision
thereon, periodic policy reviews and the discipline of cash limits should suffice to determine and
control the tool of public spending and its allocation between competition services. The rote
accounting system and the associated federal executive council and audit procures should guard
against spending without constitution authority and misappropriation of public funds

22
2.8 To explore the negative effect of accounting system on budgetary control

The need for better management of financial resources of county government in Kenya requires
proper financial budgeting in order to perform county operations effectively,(Nyongesa A,
Odiambo A. and Moses N. 2016).County government resources are limited and budget provides
a means to allocate resources among competing operations (Ronald,Frank and Michael
2008).Most counties in Kenya do not effectively apply budgetary control techniques on financial
resources (Nelson and Miller 2008).In absence of budgetary control, many counties spend all of
their time dealing with daily demands. According to Garrison and Norren (2000), the budgeting
process provides a means of allocating resources to those parts of the organization where they
can be used most effectively. With the new constitution of Kenya promulgated in 2010, offices
and government institutions have established in regard to management of public funds. The
independent office of the controller exercise budget control in authorizing withdrawals from
public coffers as per the stipulation of the constitution. The office of the auditor general ensures
that the accounts of all funds and authorities of national and county government and accounts of
the national and county government are audited and reported to the parliament. Budgetary
control is the process of developing a spending plan and periodically comparing actual
expenditure against that plan to determine if the spending patterns and need adjustment to stay
on track (Dunk 2009). Budgetary control is a system of controlling cost which embraces;
preparation of budgets, coordinating the department and establishing responsibilities, comparing
actual performance with budgeted and acting upon results to achieve maximum profitability
(Brown and Howard 2002). 2 In other words, budgetary control is a process for managers to
align financial and performance goals with budget, compare the actual results and adjust
performance (Maina 2017). Budgetary control therefore relates to the use of budget as a control
device whereby predetermined plans or standard output, income and expenditure are compared
with actual attainment so that if necessary, corrective actions may be taken before it is too late
(Nwoye 2015). As a tool for measuring performance of financial resources, budgetary control
provides comparison between the budget target and actual targets and deviations determined.
Performance of each department is reported to the top management which enables introduction

23
of management by exception (Thuita and Kibati 2016). According to Carr and Joseph (2000),
budgetary controls helps management teams in making future plans through implementation of
short-term plans and monitoring activities aimed at conforming to those plans. They further state
that effective implementation of budgetary control techniques is a guarantee for effective
implementation of budgets in the firm. Budgetary control techniques reflect financial implication
of a business plan as well as identifying the amount, quantity and timing of resources needed
(Shield and Young 1993).

According to Pundit (2016) some of the objectives of budgetary control are; to plan, which is the
most important feature of budgetary control because management is forced to look ahead, set
target, anticipate problems and give the organization purpose and direction, to communicate
ideas and plans to everyone affected by them as it is necessary, to coordinate the activities of
different department or sub-units of the organization. This implies that for example, purchasing
department should base its budget on production requirement and that production budget should
in turn be based on sales expectation, to establish system of control by having a plan against
which actual results can be progressively compared and finally, to motivate employees to
improve their performance. 3 Neely (2001) did a study on weakness of budgetary control. The
study based on review on empirical literature from similar studies. The findings included
weakness such as; restraining of responsiveness and acting as barrier to change, budget are rarely
strategically focused and often contradictory, they did little value especially given the required to
prepare them, they concentrate on cost reduction and not value addition, they do not reflect
emerging network structure that organization are adopting, they encourage gaming and perverse
behaviors, they reinforce departmental barriers rather than encourage knowledge sharing and
make feel undervalued. Prendergast (2000) identified three main problem associated with
budgeting. First, a lot of guess work involve in budgeting process. Secondly, budgets are
increasingly inaccurate as a result of shorter product life cycle and rapidly changing business
environment. Finally, there is the extend of budget gamesmanship. He argues that over the year,
budgets have resulted in a conflict between top management and their subordinates. While top
management attempt to get the best out of their staffs subordinates on the other hand work to
build stack in their budget in an effort to make budget numbers easier be attain. This could lead
to budget slack.

24
Budgetary control can be viewed as a system of controlling costs which embraces the preparation
of budget, coordinating the departments and establishing responsibility, comparing actual
performance with budgeted and acting upon results to achieve maximum profitability (Brown
and Howard 2012) A budget provides a detail plan of action for a business over a define period
of time. For effective budgetary control, an organization needs to prepare a detailed plan in both
financial and quantitative terms for the coming financial period (Robinson and Last 2009).
According to Premchand (2004), the first step in budget process is planning for budget
preparation and setting out goals and timelines for its production. Budgeting in public
organization start from identifying departments of an organization and ends in the apex of the
hierarchy. The basic reason for requiring estimates from subordinates is that higher officials do
not have enough detailed information, time or specialized skills to prepare the plans themselves
(Lewis 2005).Detailed plans relating to production, sales, raw materials requirements, labor
needs, advertising and sales promotion, research and development activities, capital additions
among others should be formulated. By planning, many problems are anticipated long before
they arise and solution sought through careful study thus, most business emergencies can be
avoided. In a nutshell, budgeting forces management to think ahead, to anticipate and prepare for
anticipated conditions. Waren (2011) noted that within an organization, different departments
have a bearing on one another, this therefore makes co-ordination of various executive and
subordinate necessary in achieving budget targets. Budgeting aids managers in coordinating their
effects so that objectives of the organization as a whole harmonize with the objectives of its
departments. The development of budgetary control system is an activity which requires
coordinated efforts from different departments and at various levels. There should be
coordination in budgets of various 11 departments. For instance, production budget should be
prepared in coordination with purchases budget. To ensure staff become involved and participate
in a useful and meaningful manner, all efforts need to be coordinated. Since different
departments are involved, conflicts are likely to arise. The organization should develop a
mechanism to resolve such conflicts without affecting the basic objectives. Management must
ensure that people actively participate in the budget process. It is only through active
participation that staff feel motivated and encouraged to work towards the common goal and
objectives of an organization. Hansel et al (2003), suggest that for an effective budget
implementation, the budget should be clearer and more accurate, the financial resources readily

25
available and sufficient, while actively involved in the budget making should be motivated to
facilitate successful implementation of the budget process. If employees actively participate in
budget preparation and are convinced that their personal interest are closely associated with the
success of the organization, they will be motivated to ensure effective implementation of the
budget. Budgets will therefore motivate workers depending on how management engage them
mentally, emotionally and physically during the budgeting process. Controls check whether the
plans are being realized and put into effect corrective measures and determines where deviation
or shortfall is occurring (Egan 2007). Egan emphasized that without effective controls, an
enterprise will at the mercy of internal and external forces that can disrupt its efficiency.
According Koontz et al 1979, control is the regulation of work activities in accordance with pre-
determined plans, such as to ensure the accomplishment of the organization’s objectives. Control
operates through standards and also measures the work performance according to these standards
and correct deviations from standards. Steps involved in control include; establishing plan, goal
or objective decision rule, recording of actual performance of activities, creation of mechanism
to compare the above steps’ extraction 12 of variance between the planned and actual
performance, investigation of the causes leading to the variances or taking appropriate action and
the variances. According to Simiyu (2002), evaluation is the process of developing a plan in co-
operation with an evaluation workgroup of stakeholders who foster common objectives for
effective budgetary control. Budget are the basis of performance evaluation as they reflect
realistic estimates of acceptable and expected performance. Most managers are interested to
know what is expected of them so that they monitor their own performance. It is more accurate
and reliable to measure current performance against a budget rather against results of previous
year when conditions might have changed. Once the budgets have been implemented, they need
to be monitored and controlled to ensure effectiveness in aligning budgets over a given period of
time (horngion et al 1997). A budget supports a manager’s efforts to monitor operations, identify
variances and enact corrective action if necessary. It allows on evaluation of activities in terms of
contribution to organizational objective

Relationship between budgetary controls and financial management Budgetary control is a

management tool used by organization to effectively manage their limited financial resources.
The success off financial management in any firm depends on effective budgetary control, a
process which calls for continuous administration (proctor 2006). Hensing and baker (2013)’

26
carried a study on effect of tight budgetary control on managerial behavior in Swedish public
sector. They used descriptive survey design and sampled 62 managers from different
municipalities and universities in Sweden. The findings established majority of local managers in
Swedish public-sector experienced tight budgetary controls. The study never captured the effect
of budgetary control uses on an organization’s financial management. Therefore, there is a gap in
the literature in relation to effect of budgetary control on management of financial resources at
the county level. According to Jones at all (2009), budgetary control in government entities entail
financial planning, controlling, financial evaluation and performance of budgets in order to
efficiently achieve the public finance management goal, on proper allocation as per proposed
budget. Adongo and jagongo (2013), did a study which investigated the relationship between
budgetary control and financial performance of state corporations in Kenya. It sought to establish
the features of budgetary control in State Corporation, establish the human factors within the
budgetary controls, establish the process of budgetary control in public organization and
determine the challenges affecting budgetary controls. A descriptive survey design was used to
gather data from managers of sampled State Corporation. 14 corporations were selected from a
population of 138 to participate in the study. Purposive sampling was used to select 42 corporate
services managers, finance managers and budget officers from each corporation to participate in
the study. The study focused on independent variables including; human factors within
budgetary control, processes of BC and challenges of BC which are different from those
considered by the study. A literature gap therefore still exists on effect of budgetary control 15
uses such as control, planning and coordination on financial management of county government
in Kenya. Marcomick and Hardcastle (2011), did a study on the relationship between budgetary
control and organizational performance in government parastatals in Europe. A sample of 40
government parastatals were selected for the exercise. Secondary data was used and a period of
ten years considered. A regression model was used for data analysis. The results revealed a
positive relationship between budgetary control and organizational performance of government
parastatals. Government parastatals in Europe and county governments in Kenya have different
revenue streams, financing methods, system of operation and objectives. Therefore, a gap in
literature exists in relation to effect of budgetary control on financial management of resources at
the county government of Kenya.

27
2.9 CHALLENGES

To identify the challenges encountered by public enterprises in mitigating misappropriation and

embezzlement of public funds.

According to Killen (2009) Problems faced by Public Enterprises are outlined thus’
Bureaucratic management: The organizations are run by bureaucrats who may not have
knowledge of running an enterprise or knowledge of the industry trends and practices. Lack of
autonomy: These enterprises lack freedom and flexibility. They are subject to the control of the
politicians and bureaucrats. Due to this, their performance is affected. Delayed decisions:
Decisions are delayed due to red-tapism and bureaucratic procedures. A file may have to pass
through many officials for approval before a decision can be taken. By the time a decision is

taken, the business environment might have undergone considerable changes. Delays and cost
overruns: Due to poor planning, lack of funds, mismanagement etc. many projects face
delays and the consequent cost overruns. overheads: Many of these organizations incur
high overheads. There is very little focus on cost control and cost reduction. Wastage of
resources are rampant. Many organizations even maintain entire townships and incur
high costs.
Over-staffing: The salary costs and pension costs of many of these organizations are
high. It is because government considers these organizations as generators of
employment and many of them are overstaffed.
 Poor productivity: Due to reliance on outdated technology, lack of Upgradation and
inefficiencies, low levels of employee motivation and poor work culture, the productivity
of many of these enterprises is quite low. Lack of proper planning: Planning is poor and
in some cases even absent. Projects are commenced without detailed analysis and
planning. This results in losses and delays. Common to find new projects being
announced without earlier projects being completed.

28
According to explinert, (2015) public sector faced the following in the economy,
Inefficient Management It has been found that these enterprises are managed by public savants.
They are not professionally qualified nor experts in the management of industrial enterprises.
Lack of Efficiency: They are not run on commercial principles. Their main motto is social
welfare, not profit earning. If a public enterprise in-cursed losses due to efficiency, it is
overlooked. Whereas private enterprises are run for profit. Profitability is the man criterion of
their efficiency. It is assumed by the private sector that competition can be faced on the basis of
efficiency. Lack of competition is one of the causes of the insufficiency of public enterprises.
Delayed Decisions: Delayed in decision making is one of the key problems. Lack of personal
interest No one wanted to take responsibility for making decisions. Lack of Innovations:
Innovations are essential for economic development. Public enterprise lacks it due
to monopoly or lack of competition. The private sector is always busy with innovating new
techniques, new production methods, etc. The loss in public enterprises is a loss of public. It is
not a personal loss. 

CONCLUSION

The control and the management of public expenditure is the sole responsibility of government
and therefore it is prudent for government and other state public enterprises to reduce it
expenditure strategy if overall profitability and sustainability is to be enhanced in the public
sector. This can be done by effective monitoring and evaluation of governmental activities that
occur in the public sector.

29
 CHAPTER THREE

RESEARCH METHODOLOGY

1.0 Introduction
This chapter sets out various stages and phases that were followed in completing the study. It
covers an overall scheme, plan or structure conceived to aid the researcher in answering the
raised research questions. The chapter deals with techniques and procedures in capturing and
analyzing related data of the study. This chapter captured personal data of respondents and
equally captures data on public institutions in Freetown with emphasis on an investigation into
the control and management of government expenditure in enhancing overall sustainability . The
researcher used various data analysis techniques to reach a logical conclusion. This chapter will
contain the research design, research methods, target population, research sample, data
collection instruments, data collection techniques, reliability, validity, and ethical conclusion.

3.1.1 Research Design

Research design, according to Creswell (2003), is the scheme, outline or plan that is used to
generate answers to the research problems. The study adopted a cross-sectional survey research
design. The research design was preferred for this study since it provided a quick, efficient and
accurate means of accessing information about the population and it is more appropriate where
there is limited secondary data. In addition, descriptive cross sectional research design was
appropriate for this study since it is useful when the problem has been defined specifically and
where the researcher has certain issue to be described by the respondents about the problem
(Kothari, 2004). The researcher also used a case study research design; it will give the researcher
an opportunity to concentrate on a single entity in digging the data need for the research under
study.

3.1.2 Research Method

For this study, the researcher used both quantitative and the qualitative research methods the
research used qualitative research method because of the exploratory nature of the research

30
questions: and quantitative methods as a result pragmatic nature of the research under study.
Moore and Bailey (2013) stated that the qualitative method is appropriate to achieve a detail
understanding of a particular phenomenon. Qualitative method helps the researchers to extract
data sets for the quantification process. In this study qualitative data method helps the researcher
to understand the perceptions and emotions of respondents on the effects of control of
government expenditure in the determination of overall public enterprise sustainability. Whilst
quantitative research design is used to quantify the opinions and responses from the
respondents on the effect of working capital management on economic growth, the quantitative
nature analyses data derived from questionnaire and interview by using mean deviation as the
main tool in analyzing data by using charts and tables in micro soft excel. The quantitative
method will ensure mathematical accuracy in terms of totals and percentages from the
researcher’s sample size and it will also enhance a clear numerical interpretation (percentages)
on the research questions asked by the researcher to the respondents on the topic under study.

3.2 Target Population

Mugenda and Mugenda (2003) explained that the target population should have some observable
characteristics to which the researcher intends to generalize the results of the study. According to
Bryman and Bell (2007), population is the larger set of observations in which the sample is
derived. The target population that the researcher used was 130 respondents in the public sector.

3.3 Research Sample

The researcher used a sample size of 45 respondents that workers in public enterprises etc.The
researcher used Cross sectional sampling technique Cross sectional sampling technique is used to
select participants from different banks . According to Ngechu (2004), it is important to select a
representative sample through making a sampling frame from the target population. In this study,
the proportionate stratification was used which was based on the stratum’s share of the total
population to come up with the sample in each stratum.

3.4 Data Collection

The researcher is responsible to determine the most suitable technique for collecting data (Leedy
& Ormrod, 2013). In this study, the researcher used primary and secondary sources of data. The
primary sources of data include data from questionnaires and interviews whilst the secondary

31
sources are books, journals and peer review that are cited/ referenced in this research. In this
study thirty (35) questionnaires were issued and collected. 10 respondents were interviewed
which constitute a total of 45 respondents. A questionnaire is a research instrument consisting of
series of questions for the purpose of gathering information from respondents (Leedy & Ormrod,
2013). The questionnaire was design using close ended question format. However the researcher
decided to use questionnaire because it allow quick, accurate and easy data collection. An
interview is a conversation for gathering information. A research interview involves an
interviewer, who coordinates the process of the conversation and asks questions, and an
interviewee, who responds to those questions (M. Easwaramoorthy & Fataneh Zarinpoush,
2006).

3.5 Data Analysis Techniques

Once data was obtained from the field it was coded and analyzed by computer using Excel
spread sheet. After data collection using questionnaires the obtained information was arranged
and grouped according to the relevant research questions. The data was then organized, tabulated
and analyzed in frequency table; frequency of occurrence, degree and percentages. According to
Moore and (Leedy & Ormrod, 2013), in data analysis, percentages have a considerable
advantage over more complex statistics. The researcher specifically use Mean Deviation as the
main technique in analyzing data by using tables and pie charts because of easy
understandability and it’s also enables the reader to see the data comparison at a glance and make
immediate analysis. Mean deviation can be described as a statistical measure that is
used to compute the average deviation from the average value of the given data
set. (M a d h u r i m a D a s , 2021)
3.6 Reliability and Validity

Researchers establish the reliability and validity of their study findings to ensure trustworthiness
of their findings. To establish rigor in a research, researchers use the term trustworthiness to
describe credibility, conformability, dependability and transferability of the research findings
(Elo et al., 2014).

3.6.1 Reliability
To enhance reliability in this study, the researcher documented the data collection and analysis,
record data in a table to provide an overall assessment of the data collection. This will help the
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researchers to interpret the findings as per the responses of participants. In order to ensure
accuracy, for some respondents that have little knowledge on the terms used in the questionnaire,
I sat with them and guide in filling the questionnaire.

3.6.2 Validity
The stability of findings over a period of time is referred as reliability (Anney, 2014). To
enhance reliability on this research that’s why the researcher used closed ended questions on the
questionnaire, this will ensure that there is control over the information given by respondents by
avoiding the possibility of respondents giving non related answers.

3.7 Ethical considerations

According to Moore and Bailey (2013), Researchers should address ethical issues relating to
human research. Whilst conducting a research, the researcher must consider Confidentiality,
informed consent, and risks the study poses for participants (Killawi et al., 2014). In other to
ensure ethical consideration during this research the researcher sought for approval from the
selected heads of public enterprises before embarking on data collection. Before distributing the
questionnaire to participants, the researcher wrote to seek their permission and approval. Also on
the questionnaire, the researcher assures the respondents that the research is for academic use
only and the information they give will be treated confidential.

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