Accountability on Non-profit Making Organizations
Chapter One
OBJECTIVE OF THE STUDY
The broad objective of this study is focused on enhancing accountability in non-profit making organizations. Specifically the study seeks:
- To ascertain whether there is adequate division or segregation of duties of various level of management in the organization.
- To ascertain if there are step taken when inefficiency is detected in the internal control system.
- To know whether there is a system of adequate authorization and recording to provide reasonable accounting control over assets liabilities, revenue and expenses in non-profit making organizations
- To determine if financial accountability has an effect on the performance of non-profit making organizations.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
INTRODUCTION
Our focus in this chapter is to critically examine relevant literature that would assist in explaining the research problem and furthermore recognize the efforts of scholars who had previously contributed immensely to similar research. The chapter intends to deepen the understanding of the study and close the perceived gaps.
CONCEPTUAL FRAMEWORK
“A Private Limited Company is composed of one or more people whose financial liabilities are limited to the total of their contributions. Such a company is designated by a corporate name in which the name of one or more partners can be incorporated and which must be preceded or immediately followed by the words and the amount of share capital held. Insurance companies, savings and lottery companies, and savings companies cannot have this legal status.
Private Limited Companies are legally bound to have directors (physical persons), who can be chosen from amongst the partners. Private Limited Companies cannot be managed by legal persons. In a Private Limited Company, the function of the extraordinary general meeting is to modify statutes or approve new shareholders. Decisions must be taken by partners holding at least three-quarters of the companyís shares. There are, however, certain exceptions: unanimity is required for changing the companyís nationality, increasing partnersí commitments, and changing status to a General Partnership, Limited Partnership or Simplified Business Corporation. An absolute majority is required to replace the manager. The function of the ordinary general meeting is to take decisions other than those involving modifications to the statutes or selling shares to third parties. Decisions must be adopted by one or more partners holding at least half of the companyís shares. If such a majority is not obtained and no contrary clause exists in the statutes, the partners can be convened again. Decisions are then adopted by simple majority vote, regardless or how many votes are cast.
The minimum share capital of a Private Limited Company is freely determined by the partners and defined in the statutes. It can be made up of a contribution in money and/or a contribution in kind (materials, etc.); if the contribution is in money, it is possible to contribute only a fifth of the capital on the day the company is set up and pay up the rest over the five-year period following the date of the companyís registration. The capital is divided into shares of equal value. Usually, Private Limited Companies are fixed capital companies, but they can also be variable capital companies.
ACCOUNTABILITY
The concept of accountability has a long tradition in both political science and financial accounting. In political science, John Locke‟s theory of the superiority of representative democracy built on the notion that accountability is only possible when the governed are separated from the governors (Staftan, 2009). As a concept in ethics and governance with several meanings, accountability is often used synonymously with such concept as responsibility, answerability, blameworthiness, liability and other terms associated with the expectation of account giving. As an aspect of governance, it has been central to discussion related to problems in the public sector, non-profit and private (corporate) worlds Bruce (2012) In leadership roles, accountability is the acknowledgement and assumption of responsibility for action, products, decisions and policies including the administration, governance and implementation within the scope of the role or employment position and encompassing the obligation to report, explain and answerable for resulting consequences Bruce (2012).
Accountability is generally defined as accepting and meeting one’s personal responsibilities, being and feeling obligated to another individual as well as oneself, and having to justify one’s actions to others (Wilson et al., 2010). Accountability has frequently been presented as rational practice to ensure responsibility by individuals and institutions, which should be implemented in all civil societies, economic institutions and organizations (Agwor and Akani, 2017). He noted that the traditional tools of accountability are often considered by non-profit organizations as unnecessary formal tasks and excessive bureaucracy, which can have important consequences both organizationally and managerially. According to (Onuarah and Appah, 2012), accountability focuses on the extent to which feedback recipients perceive they are responsible for, utilizing feedback information for development. A sound system of public expenditure management needs to take into account the wider values and requirements of society. Accountability, transparency, predictability and participation are important instruments for sound budget management, but also have an intrinsic value, and are generally seen as the four pillars of good governance. If budget managers do not comply with parliament’s authorizations, or if public funds are used for private purposes, it is doubtful whether either aggregate fiscal discipline or efficient resource allocation, or both, will be achieved. Financial accountability is about assuring its stakeholders regarding the use of public resources (stewardship) as well as to underpin decisionmaking about how to allocate scarce resources like time, personnel, space, equipment and money (Doussy and Doussy, 2014). The allocation of resources may affect the entire operation and success of an organization, which often hinges on the quality of its financial management.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitute of individuals or elements that are homogeneous in description.
The scope of this study is focused on enhancing financial accountability in non-profit making organizations using African Artists’ Foundation as case study. Management and Staff were selected which form the population of the study.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
SUMMARY
The broad objective of this study is focused on enhancing financial accountability in non-profit making organizations using African Artists’ Foundation as case study. The study ascertained whether there is adequate division or segregation of duties of various level of management in the organization. It ascertained if there are step taken when inefficiency is detected in the internal control system. It determined whether there is a system of adequate authorization and recording to provide reasonable accounting control over assets liabilities, revenue and expenses in non-profit making organizations. it determine if financial accountability has an effect on the performance of non-profit making organizations
Survey research design was adopted for the study and with the aid of convenient sampling method, the researcher selected Eighty (80) participant who are Management and Staff in African Artists’ Foundation as the respondent of the study. Well structured questionnaire was issued to the 80 respondent of which total of 77 responses were retrieved and validated for the study. Data was analyzed in frequencies and tables using simple percentage, mean and standard deviation.
CONCLUSION
Financial accountability entails the recording, communicating, summarizing, analyzing and interpreting financial statement in aggregate and in details. Thus it is expected that non-profit making organizations consider this aspect as crucial to ensure adequate internal control. The internal control system is central in the discourse of operational performance of any organization because it encompasses all efforts put in place by management to ensure efficiency, effectiveness, compliance and reliability of business transaction and communication.
Findings from the study revealed that there is adequate division or segregation of duties of various level of management in the organization in African Artists’ Foundation. The study revealed that there step taken when inefficiency is detected in the internal control system. More so that in African Artists’ Foundation there is a system of adequate authorization and recording to provide reasonable accounting control over assets liabilities, revenue and expenses in non-profit making organizations. However that more can be done to enhance financial accountability such steps includes: Reduce tolerance of corruption through big data and analytics, Ensure accrual accounting is central to the whole PFM system to provide an accurate financial picture. Company can apply a whole systems approach to improve scrutiny and ensure Properly plan for reform.
RECOMMENDATION
From the findings of the study, the following recommendation s are made:
- Management of non-profit making organizations should always practice proper recording of transactions and each and every other transaction should always be recorded and kept for references.
- Management should improve on some internal control systems such as documentation of transactions that can best suit the organization’s operations.
- Approval of transactions should always be done every time the transaction is carried out by reasonable personnel and maintain regular internal audits of their accounts systems.
- Segregation of cash duties should always be done so that no one carries out a transaction right from the recording to the balancing of a transaction.
- There should always be strong tools in authorization of responsible personnel to access the organization’s assets.
- Generally internal control systems put in place should be strengthened to yield profits to the organization hence the performance.
- non-profit making organizations should pay attention to human resource management practices. In clear terms, SMEs should commit more to integrity, ethical value, competence, accountability, as well as development of preventive and detective control activities through the engagement of technology, and standardization of policies and procedures for transaction approval, verification and
- Finally, issues surrounding risk assessment, information and communication as well as monitoring activities should be addressed systematically based on the reality of the operational structure of each enterprise, so as not to undermine the role of the internal control system with a lopsided approach to risk assessment, information and communication and even monitoring activities.
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