CHAPTER ONEINTRODUCTION1.1 BACKGROUND OF THE STUDYPublic sector is that sector of the economy established and operated bygovernment and its agencies distinguishable from the private sector and areorganized on behalf of the whole citizens while Public sector accounting isthe process government agencies and municipalities use to record financialtransactions.Mathias, (2004:78). Said, similar to private sector accounting in theory, thefocus of public sector accounting is somewhat different. Most governmentagencies and municipalities need to track funds generated from taxrevenues and expenditures related to projects or appropriations. In addition,nations may need to follow a set of standard of accounting principlesdifferent from private sector accounting rules. The creation of aninternational accounting standard helps nations to follow similar rules inother to present information in a similar manner.Government accounting typically uses a set of rules that tracks financialinformation. Rather than attempting to determine how much money apublic sector entity has made, the entity must report financial informationto interested parties, primarily constituents. The separation of money intothese funds makes it difficult for government agency or municipality tospend money on unauthorized purposes. Elected officials or legislatures11must create appropriations or spending authorizations to transfer fundsamongst government fund accounts. This process attempts to restrict thespending of money on a free-will basis that will quickly deplete anagency‟s resourcesSimilar to private sector accounting, public sector accounting principlesoften seek to lay a framework for accounting practices.Afolabi,( 2004:320). Said rather than creating a hard set of rules to follow,the principles allow for an application of basic principles to either large andsmall entities or municipalities. An international set of accountingprinciples is also necessary for smaller nations to learn and adopt rules thatwill enhance their internal national accounting process. Most times,developing nations cannot or do not have the resources capable to createand instil a framework for their public sector accounting practices.Adopting an international set of accounting rules will help them overcomethis problem and typically helps them start on the path better infrastructuredevelopment.Another purpose of public sector accounting is to create a standardexpectation of ethics and accountability for a nation‟s financialinformation. Standard public accounting principles will also make it easierfor a nation to undergo an audit. it is also harder for countries to hideinappropriate financial transactions when using public sector accountingprinciples. This research study will therefore appraise the impact of public12sector accounting in Nigerian financial control system focusing on EsanSouth East local government.1.2 STATEMENT OF THE PROBLEMThe problems inherent in this research study as investigated by theresearcher are;1. INADEQUATE REVENUE: that is, the source of revenue available toEsan South East Local Government authority most often is not enoughfor them, as this invariably affects diverse activities that are carried outin the local government area.2. Poor administration of local government funds.3. Another problem is the fact that the control of public fund adopted by thelocal government is inappropriate. It is as a result of this that there arestill setbacks in the local government as regards to infrastructuraldevelopment.4. The adoption of inappropriate and ineffective public sector accountingprinciples and guidelines.5. Another problem is that the accounts of the local government arecharacterized by inadequacies such as, improper maintenance and bookkeeping of accounts and other necessary records, embezzlement ofpublic funds especially by the top officials.