AN ASSESSMENT OF TREASURY MANAGEMENT PROBLEMS AND REMEDIES IN LOCAL GOVERNMENTS

ABSTRACT
          This
study examines the assessment of treasury management problems and remedies in
local government using Ado
locale government as the case study. Questionnaires were used to collect data
and supplemented with secondary data.
          The
analysis revealed that the problems facing local government authorities are
attributed to poverty and dwindling/scare resources (financial, manpower and
leadership) relative inelasticity of income and local revenue, lack of
administrative and development planning capacity. It is recommended that to get
a favourable result in the treasury management, negative attitudes such as
fraudulent act, misappropriation, e.t.c. should be changed into honesty and
loyally towards the co-existence of the local government.



TABLE CONTENTS
Title Page                                                                                 
Certification                                                                             
Dedication                                                                               
Acknowledgements                                                                  
Abstract                                                                                   
Table of Contents                                                                              
CHAPTER ONE
1.1     Background
of the Study                                                      
1.2           
Statement
of the Problem                                                      
1.3           
Objectives
of the Study                                                  
1.4           
Scope
of the Study                                                                  
1.5           
Significance
of the Study                                               
1.6     Distinguishing Between Hypothesis Research
Question       
1.7     Definition
of Terms                                                       
End Note                                                                        
CHAPTER TWO
2.0     Literature Review                                                          
2.1     Essential Characteristic of
Treasury Management                  
2.2           
An
Overview of Ado
Ekiti Local Government               
2.3  Sources of Funds of the Local Government
Treasury              
2.4     Function of the Local Government as Related
to
Treasury Management                                                   
2.5     The Management of the Local Government
Treasury    
2.6           
The
Roles of the Treasury                                             
2.7     The Role of Finance and General Purpose Committee   
2.8     The
Role of the Auditor                                                 
2.9     Types
of Auditing Work.                                                        
2.10   Functions
of Internal Auditor                                      
2.11       Funds Management Committee                                               
2.12   Finance
and General Purpose Committee.                     
2.13   The
Executive Committee                                              
2.14       Board Of Survey at Local Government                         
2.15   Local
Government Audit Alarm Committee                            
2.16   The Importance of Internal Control System
Treasury Management                                                   
2.17   Review
of Other Relevant Literature                           
End Notes                                                                    
CHAPTER THREE
3.1     Research Methodology                                                  
3.2     Research
Design                                                            
3.3.1    Data Collection                                                              
CHAPTER FOUR
4.0     Data
Presentation, Analysis and Interpretation             
4.1     Introduction                                                                            
4.2     Presentation
and Analysis of Data                                
4.3     Test
of Hypothesis                                                                  
4.3.1  Test
of Hypothesis  I                                                        
4.3.2  Test
of Hypothesis II                                                     
4.3.3 
Test of Hypothesis III                                                   
CHAPTER FIVE
5.0     Summary,
Conclusion and Recommendations              
5.1     Introduction                                                                            
5.2           
Summary
of Findings                                                  
5.3           
Conclusion
                                                                    
5.4           
Recommendations                                                                   
Bibliography                                                                 
CHAPTER ONE
1.1     BACKGROUND OF THE STUDY
          Local Government in any nation like Nigeria is an
entity through which government and its policies are carried to the grassroots.
The governing body is selected or otherwise elected. It constitutes an integral
part of country’s overall political structures.
          The
creation of local government is made by the law of a state government with the
intention of bringing government to the people. It is clearly understood that
even if the machinery of the state government stops functioning, law and order
will still prevail if local council in Nigeria continues to exist.
          According
to Okoli (1998) local government exist to fill the gap which the national
government is too far away or too remote to fill, it brings the national government
closer to the people and makes its impact felt in all the rooks and crannies of
the society. The national government through this medium caters for those in
the grassroots. Local government plays vital roles in the development of the
country.
          According,
attempts have been made out different stages of the country’s political life to
modify the local administrative system and to make them perform their roles and
functions. But in spite of these efforts, the local government continue to
exhibit evidences of poor performance, this had led to the federal government
direct intervention in local government affairs eventual entrenchment of the
system in the country’s constitution.
          It
can also be maintain that they are the overall authority and it is through them
that the provisions of all social services and maintenance of law and order can
be realized.
According to Gboyega (2001) local
government can be defined as an entity through which government and its
policies are carried to the grassroots. It was stressed that during the early
stage of local government in Nigeria
(GOWON’S REGIME) which lasted from 1967 – 1975, different states operated
different system of local government. In the Northern states, the emirs
retained some of their power and influence because the councilors appointed by
the military governors were traditionally 
and spiritually expected to  defer
to the authority of the emir. The Eastern state and mid exist state abandoned
the councilor system adopted in the 1950s for development administration
modeled after the French system. In the West states, the governor who had
initially posted sole administration of local government were forced by the tax
revolts of the late 1960s to re – introduce local government participation.
          Mustapha
(2003) local government also became a conduct pipe for looting of national
treasury, for instance, the Association of  local government of Nigeria (ALGON) chairmen
reportedly mandated the military leader to deduct local government funds for
the purchase of two Toyota Jeeps for all local government chairman, while the
other belong to the police to facilitate effective policing and combat of armed
robbery.
          Harriman
(2006) Local government is not a creature of state government but one of
the  tiers of government of the country.
Every effort should be made to allow local council to operate with prestige and
not as beggars.
          Therefore,
the provision of funds and its disbursement in a local government area is a
measure that enables the local government to perform its stated roles. So, the
importance of sound and effective management of the treasury of a local
government authority cannot be overstressed.
          Without
effective treasury management, the polices adopted by the local authority in a
great variety of field may not be successfully implemented. Comprehensive
arrangement are therefore in force in all states for the exercise of internal
and external control over the treasury of the local government authority but
very little and in some cases, virtually no regard has been paid to the need
for effective and progressive management of treasury of local management
council. The management of treasury in the local council should be taken as a
tool for controlling the activities of local authority in the country since
without proper and effective management of funds of local government, the
overall affairs of the local government will be poorly managed as there will be
no constant payment of staff salaries, maintenance of law and order, provision
of infrastructure and execution of capital project. The treasury management is
a type of control exercised by the management within an organisation. It is
very important where the size of the organization is large and where the
government of a state is found. It is very difficult to have direct contact
with the routine operations of the organization.
1.2           
STATEMENT OF THE PROBLEM
Large- scale misappropriation of fund
in public office has now become a common practice in the society and the local
government is not exempted. This had led to modification of local
administrative system for a better performance in terms of service rendered to
the people. Inspite of this modification, there still exist a poor performance
which is evident in the case of the local government. This ineffectiveness can
be traced to some factors of which poor treasury management is one so in the
study we will consider which constitutes an effective treasury management and
also how inefficiency in the treasury can avoided.
1.3           
OBJECTIVES OF THE STUDY
This study will make an appraisal of
the treasury management policy and practice employed by Ado local government concerned with a view to
determine.
A.              
The
extent at which proper treasury management has helped the local government in
performing their specific function
B.              
The
procedure and techniques employed by the local government in monitoring the
effective treasury management.
C.              
What
principal difficulties are being faced by both the management and lower level
staff in treasury management planning and implementation?
D.              
What
conditions are necessary in a board government to ensure effective treasury management?
E.               
What
(if any), the possible causes of deviation in the planned and actual operation
of treasury management are and how they are re-dressed.
F.               
What
roles are being played by the treasurer of a local government in treasury management?
1.4           
SCOPE OF THE STUDY
The study focuses on treasury
management systems as a means of promoting proper accountability within an
organisation with a particular reference to Ado local government. This study will perform
test and review the internal control system and the internal check that already
exist in the organisation. There will be a careful study of the operation of
the following divisions.
Finance/ Treasury Division, Audit
Division, Budget Division, Chairman/Sole Administrator.
1.5           
SIGNIFICANCE OF THE STUDY
The outcome of this research work
will be useful to the organisation under reference because if the
recommendation were adopted, loopholes and other weaknesses in the existing
internal control system would be exposed. This will urge the management to
strengthen or if necessary build a new comprehensives treasury management,
which would promote proper accountability within an organisation.
The research work will also serve as
a valuable document for students, business executives, middle management staff
and other people who wish to consolidate their knowledge on treasury
management. The result will also be very essential to all government offices
who are presently witnessing large scale of misappropriation of fund and poor
accountability.
1.6     DISTINGUISHING
BETWEEN HYPOTHESIS RESEARCH QUESTION
          The
following are working hypothesis, which would be tested. Null and Alternative
hypothesis which are usually by H0 and Hi
H0:
a)                
That
well qualified personnel are not employed as accounting
staff.
b)               
That
an effective treasury management is not capable of
detecting frauds and error.
c)                
That
the contribution of the state and federal government is not
sufficient to cover all the capital
expenditure of the council.
Hi  
a)                
Those
well qualified personnel are employed as accounting staff.
b)               
That
an effective treasury management is capable of detecting
frauds and error.
c)                
That
the contribution of the state and federal government is
sufficient to cover all the capital
expenditure of the council.
1.7     DEFINITION OF TERMS
TREASURER:- He
is the head of the treasury department, he manages and controls the finance of
the local authority he keeps records of all money received and spent.
AUDITOR:- He
sees to the checks and balances of all financial transaction of the local government.
VOTE BOOK: It is
used in recording all expenditure and liabilities incurred by the vote
controller entrusted with the management of fund of the department.
PETTY CASH BOOK: it is a book which is kept to meet the expenditure of items whose
payments voucher cannot be presented immediately.
CAPITA  PAY OFFICE: responsible for the physical cash
and cheques payment of wages and salaries, pensioners and contractors
FINANCIAL ACCOUNT UNIT: involved in preparation 
of final account as well as other financial statement of local
government.
RECEIVING ORDER: responsible for collection of cash from an outsider who makes payment on
fines, licenses e.t.c and also revenue collected by revenue collected.
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