THE IMPORTANCE OF ACCOUNTING INFORMATION IN PUBLIC CORPORATION
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Public corporation can be defined as the types of business organization that are established by a special act (or ordinance) of the parliament. Public corporations and business owned and financed by the federal, state and local government, as the case may be in the public interest.
They can be explained and described also as the type of business) organization thoroughly and solidly established by act of parliament to provide public utilities. This participation in the productive and commercial part of a country’s economy.
There are some areas in the economy where it is felt that the free enterprises system and private sector competition should not allowed, as they would exploit the public such as should be run by the government in the pubic interest. Therefore, in Nigeria, where there is a three-tier system of government; The local government, state government and the federal government do run certain enterprise so as to provide essential service for the people.
TYPES AND FORMATION
Public enterprise can be categorized into public corporations or boards or quasi government department.
Government corporations are enterprises that have commercial functions, which are normally established of the federal level by an act of parliament or decree, which specially refers to the corporation. Each corporation, board or authority had a particular or decree establishing it. The cat will take the objectives and of the corporation and specify its power and how it is to be run and managed. At the state level, public corporations are established by a state judge at the local government level are established by social edicts.
For instance, the National Insurance Corporation of Nigeria (NICON) was established. Decree 22 of July, 1969 to ‘write all classes of insurance such as fire, Motor accident, workmen’s compensation, marine and aviation, I did Risk…Among others.
The Nigeria ports authority (NPA) was established in 1955 to “identify and satisfy the demand for port facilities and services at minimum cost to the nation”.
While the Nigeria enterprises promotion board was established in 1972 to advance and promote enterprise in which Nigerians are encouraged to participate fully and play important roles”.
Other corporations and board the federal level includes:
- The federal radio corporation of Nigeria (FRCN).
- The Nigerian railways Corporation (NRC)
iii. The central bank of Nigeria (CBN).
- The National Electric Power Authority (NEPA).
- The Nigerian telecommunication Limited (NITEL)
- The Nigerian national Petroleum Corporation. (NNPC)
vii. The Nigeria coal Corporation (NCC)
viii. The Nigeria cost corporation (NCC).
Mention may be made of the universities, Polytechnics, College of Education and the research institute which is public sector educational enterprise established by relevant federal acts, decree or state laws is the case be.
Pubic corporations are to be independent of the central government as possible. Thus, they are by Boards or councils each of which has the board of Directors of A Company. Each corporation also have general Manager or similarly placed officer who is the chief executive reporting to the board a council
THE FEATURE OF PUBLIC CORPORATION
One of the main features of the public corporations that a manager is put in as supervisor in the running of the business. The board of Directors in responsible to the minister of the government and the parliament. This is one reason why the public corporation type of business is described as being controlled by the government.
Another special feature of the public corporation type of business to that it is sot-up and are financed, by the government initially. Only some have issued stock to the public to obtain large capital and long-term capital. This means that the corporation has on shareholders except in some cases.
One other feature in that public corporation is not aimed at malign profit. This does not mean that they do not aim at making profit. The government can supplement the public corporation with government grants. If the earning of the business fall. The government can do this by taxing the citizens in order to meet its expenses.
The public corporation does not share or distribute profit but they have and meet or pay interest on state issue to the previous owners of the business on their fixed rates.
The feaster of the problem corporation in that it deals with those economic activities that the community may be benefit from but which offer. The businessman may was the fact that such a commodity or service is renewed essential to exploit the consumer. An example of such is electricity.
Restriction of then commodities supplied and feature of the public corporation. An example is the service of the Nigerian Railways Corporation (NRC) whose services are available only to the area that are covered by real, The electricity corporation of Nigeria can only supply areas where their electric cable and wires reach.
Local monopolies are also brought by the business of the public corporation this important feature means that is difficult for other business to compete with the corporation. An example of this that no other form of business may or will install in electric power station in a dies where the Electricity Power Authority of Nigeria has setup it stations. In fact, paramagnet will not approve the move.
Another characteristic of public is discriminating services rendered or goods supplied. For example the NEPA can charge less on the supplied to factors or industries than on power supplied to private domestic consumers. This possible because their services generated cannot be transferred from one customer to another.
The last main feature of the public corporation is that it always operates below full capacity. This is so because the establishment needs large fixed capital. Therefore, the existing demand of the public as a whole to be able to meet any future increases in demand.
SOURCES OF CAPITAL
Public corporation are normally set up by the government and financed wholly by it. Thereafter, they are expected to generate fund through their services to the public to be paid to government account. The major aim of establishing them is not to make profit although, the ones that have purely commercial functions are required nowadays to generate enough fund to cover then services and make profit for the government. The three sources of capital that can be identified in the financing ct the public corporation are government financial grants, bank loans and internally generated revenue.
- Government Financial Grants: The government makes budgetary provision for the government department and financial grants to the statutory corporation which rendered social service and is prevented from charging the full price for their services. Subsidies became imperative to make up the deficit in internally generated revenue.
- Loan From Banks: Public corporation through their boards and councils are empowered to negotiate and dices loans from the local hank to execute certain project.
- Internally Generated Revenue: Statutory corporation, boards and authorities utilize their internally generated revenues to finance part of the operations.
REASONS FOR THE ESTABLISHMENT OF PUBLIC CORPORATION
- Essential Services: The establishments provide services which are vital to the citizen end which should to provide without the motive of profit for the overall god of the masses.
- Avoidances Waste And Public Publication: it should be more economical to run water and to run water and electricity undertaking as states monopolies because laying water pipes ands power lines across the roads and in people’s houses would be wasteful. Such activities would also give rise to public relationship problems, which are more easily solved by the government botches than by private enterprises.
- Capital Requirement: The local needed to establish most of the public utilities are so large that it cannot be afforded by private enterprises.
- Good Infrastructural Base: A good network of roads and railways, powers, communications etc. will lay a solid foundation for paid economic development land progress of the country. They are strategies to the government and the people. Therefore, only the government can run them in the public interest.
- Even Development: The policy of most government is encourage even development and bring about equitable distribution of the country wealth, To achieve these objectives the key industries and organizations should be in the ranks of the government.
- Social Cost: The social cost of some undertaking make the government the most suitable candidate to establish and run them. For instance, to lay a rail or pipelines across towns, cities and village would result in the destruction of cash crops and dispossession of the citizens’ land; the establishments of a claim wouki involve the destruction of cash crops and displacement of villages. Under these circumstances, the governments in the only organization that can carry out the undertaking because of the coercive power, which it possess.
CONTROLS AND MANAGEMENT
The activities of statutory (public) corporation are checked by the following measures adopted by government policy.
The government departments are responsible to the government through the appropriate minister of commissioner.
The government is to appoint member of their various boards and councils. The boards and councils run the corporation according to their government policy.
Public influence plays some parts too. The public maintains an eye on the activities of the public utilities and usually ready to voice their opinion and dissent through the press anytime something goes wrong.