Full Project-FUND – ACCOUNTING

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1.0     RESEARCH BACKGROUND

1.1            INTRODUCTION 

The term “fund accounting”  is as old as the world itself. The origin of fund accounting could be traced to the parable of talents in the holy Bible (Mathew 25: 14-30) about a man who delivered his goods to three of his servants and traveled to a far country two of them traded with their and made profits while the third went and buried his in the ground. When the time for accounting for the fund came they all rendered  their accounts for the activities to  their master accounting has been defined as a discipline concerned with identifying analysis forecasting of income and expenditure and recording of  financial information” generally , it records in monetary terms the flow of economic value between or within entities.

The term “fund accounting’s often associated with either government accounting or non-profit making entities such as clubs societies and churches “ fund” in accounting may connote different meanings.  In private sector it may be used to describe net current asset (current assets less current liabilities) as when used in the statement of sources and  application of funds” it may also be used to describe an asset set aside for particular purpose it may also denote cash or securities.

A very fundamental point to note is that a fund is an accounting entity. A successful organization whether private public profit or non profit making needs to keep proper account of cash inflows and outflows. Therefore the importance of fund accounting in public sector including  local government cannot be over-stressed local government by their nature an concerned with the provision of prescribed services at local level and carrying out certain local functions thus the accounts kept by the local governments is designed to,.

i.                   Provide an analysis of the revenue and taxes raised by the  local government and;

ii.                 Provide an analysis of the extent to which such revenue has been used in providing each separate service and sub-service for which the local government is responsible. Therefore the accounting procedures must be directed towards ensuring that maximum possible benefit is obtained from the limited resources it owns.

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