CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Money is an organization tool that is used for proper management, control, and coordination.
Economically, it is said to be scarce in supply and the scared nature of it makes it necessary for good and effective management. Every organization whether small or large requires a good Accounting system for efficient management and control of her finances which may be done through a specified method as:
i. Controlling of Assets
ii. Internal/External Auditing
iii. Keeping of Proper Books
iv. Preparation of Financial Statement
v. Compliance with Legislation/Statutory Requirement.
A good Accounting System would provide an orderly assembly of Accounting Information and from the basis of continuity. Polytechnics through tertiary institutions like any other organization are required by law establishing them to prepare accounts that are in conformity with generally accepted principles of accounting so also with Kaduna Polytechnic which form the basis of this study.
Higher institutions of learning established by Decree/Act (Kaduna Polytechnic) been one, operate accounting system somehow similar to a great extent. It is of paramount importance at this juncture to have a broad knowledge of accounting systems and funds accounting as it applies to a tertiary institution.
The accounting system is the art of recording and controlling an organization by keeping accurate book-keeping of business transactions articulate to form an accounting process.
Finney and Miller (1971) define Funds Accounting as “an independent fiscal and accounting entity with a self-balancing set of recording cash and other resources together with all related liabilities, obligation, reserves, and equities which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restriction or limitation.
Public funds accounting tends to vary due to management policy differences. Though this higher institution of learning which is established for objective reasons are not profit-oriented, their accounting systems are based on Historical cost concept, which indicates that Assets and liabilities are shown in the accounts at their Historical cost rather than current market value.
It is common knowledge that all businesses and nonbusiness organizations including government runs on money equally like there is a wide range of ways of spending (expending funds). So also there are also a variety of ways of generating it.
Source of fund refers to the different ways available to business enterprises through which it can mobilize money (fundsO to finance its operation i.e. from planning, conception, take up buying of fixed assets to day to day operations. Example of this are:
a. The decrease in assets i.e selling off your business assets such as land, building equipment, machinery to raise funds which can be recycled back into the business.
b. An increase in liabilities i.e borrowing from banks and other financial institutions in a form of loans, overdraft and debentures.
c. Plow back profit (Net profit re-injection). Instead of paying a dividend to shareholders, the •profit is recycled back into the business.
d. Reserves and depreciating: This is an amount kept aside for some special purposes and for the rainy day. It is normally taken out of the net profit yearly during appropriation.
e. An increase in equity holding: That is the creation and issuance of additional common stock and preferred stock to raises more funds.
f. Sales of stock of goods: By stock of goods, we mean both raw materials, work in progress and finish goods. Any of them can be disposed of off, to a willing buyer to raise additional funds.
g. Grants, Aids, and Donations from government and nongovernmental agencies both local and foreign donor agencies, multilateral organizations, economic and financial institutions across the world.
h. Internal sources, sale of forms, transcript forms employment forms, sales of bread and tender fee.
Just like funds are generated through different means and ways, so also its usage. Organizational funds are primarily spent in any or combination of the under listed ways:
a. An increase in assets i.e buying more assets such as land, buildings, equipment, and machinery etc.
b. A decrease I liabilities, that is paying off debts, debentures, and other sundry liabilities and commitments.
c. Payment of dividend to equity holders — funds generated can be used to settle dividend darning payable to shareholders of the business firm.
d. Purchase and or retirement of shares, stock, and bonds. That is a business concerned investing its surplus funds to buy shares and bonds of another company, with a view to diversifying its investment portfolio and risks.
e. Net operating loses. Net operating loses when recorded have the potentials of eroding firm or business assets base. If the enterprise, therefore, wants to maintain its former position, it will then have to source additional funds to bridge the gap.
f. Purchase of stock i.e raw materials and other inputs that are necessary for day to day operations in the firm (inventories).
1.2 STATEMENT OF PROBLEM
The key to the success of an organization is the development of its source of revenue and effective use of the acquired revenue. Therefore the above statement will guide the researcher in the adopted approach to get answers to the following questions. What are the sources of funds available to Kaduna polytechnic? After acquiring the funds, how does Kaduna polytechnic utilized these funds?
1.3 OBJECTIVES OF THE STUDY
The main objective of the study is to examine how revenue is generated and utilize in Kaduna polytechnic.
1. To find out whether there is a good accounting system in Kaduna polytechnic.
2. To examine the effectiveness of the internal control system in Kaduna polytechnic
3. To determine whether the revenue generated by Kaduna polytechnic are utilized properly
4. To find out ways of improving the management and control of funds in Kaduna polytechnic.
1.4 RESEARCH QUESTION
1. Is there a good accounting system in Kaduna polytechnic?
2. Is the internal control system in Kaduna polytechnic effective?
3. Is the revenue generated by Kaduna polytechnic utilized properly?
4. How can Kaduna polytechnic improve the management and control of funds generated?
1.5 SIGNIFICANCE OF THE STUDY
Kaduna Polytechnic has been in existence for more than 50 years, and there is no gain-saying that school has made any contribution in the area of staff development for the northern states, and the country as a whole.
This project will serve as a guide to the management, a staff of any institution where planning, budgeting, forecasting, directing and coordinating the activities of the institution concerned. Also, this project will be of greater importance to both the policymakers, the executives and the colleges respectively.
A well-designed accounting system and control of public funds of any organization, form a good basis for management and utilization of the available resources.
1.5 SCOPE OF THE STUDY
The study will pay attention to one of the highest institutions of learning that is Kaduna polytechnic, with emphasis on the Bursary department as they are the operator of all accounting systems. The project intends to look at the rang & significant of good accounting system since the establishment of the polytechnic and controlling of public funds to enhance good management of the institution
This material content is developed to serve as a GUIDE for students to conduct academic research
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