Local Government Budget and the Law
Budget is a yearly ritual every wise institution must make to achieve the most desired developmental goal with limited resources possible. Beyond the thoroughness of budget process, implementation is usually of greater concerns in measuring impact. Therefore, account audit is usually carried out at the end of each accounting year, to evaluate implementation of budget activities with evidences to justify such implementation. It is indeed a thorough process that attempts to check for consistency in the use of funds in line with relevant guiding principles, the whole essence of which is to ensure transparency and accountability for the general good.
As a matter of public policy and good governance, budget preparation and implementation are indispensable aspects of fiscal responsibility which entails clear accounting documentation that shows detailed expected revenue and sources, and planned expenditure and activities of government institutions targeted at the amelioration of human condition at the grassroots. At the end of careful execution of budget, usually an audit of the implementation of the budget is carried out by delegated/certified bodies in accordance to certain guiding principles; hence, the 2012 audit report for Local Government in Lagos State.
In order to establish the centrality of these fiscal exercises and as a matter of international best practice, government at all levels take strict measures by legislating on fiscal management. The Federal Government of Nigeria passed the Fiscal Responsibility Act 2007, the objective of which is “to provide for prudent management of the Nation’s Resources, ensure Long-Term Macro-Economic stability of the National Economy, secure greater accountability and transparency in Fiscal operations within the Medium Term Fiscal Policy Framework, and the establishment of the Fiscal Responsibility Commission to ensure the promotion and enforcement of the Nation’s Economic objectives; and for related matters” (FRA 2007).
In the light of this precedence, the Lagos State Government has also demonstrated a great deal of responsibility by passing similar laws; one of which is the recent Fiscal Management Regulation Law in 2011 which aims to help service delivery to the people by regulating Lagos State government and its 57 LGAs/LCDAs in the way funds put to the trust of public officers are managed prudently. It also seeks to ensure that public officers utilize those funds in a manner that deliver the greatest value for money to the people at the grassroots. In addition to this, the State developed Accounting Manual for Local Government to “improve the operational efficiency of the Finance and Treasury Staff as well as serving as a reference point on core areas of public sector accounting procedures” (Lagos State Accounting Manual 2013). This Manual has been revised and published with assistance from the Growth and Employment in States (GEMS3), financed by the British Government Department for International Development (DFID).
Prior to this effort, there were other laws and policy document earlier made toward enhancing fiscal propriety at the Local Government level vis., Model Financial Memoranda for Local Governments 1998; Local Government Administration Law No.7 of 1999, Budget Manual for Local Governments in Lagos State 2010; Local Government Levies (Approved Collection) Law 2010; Lagos State Guidelines on Administrative Procedure for Local Governments 2011, etc (LSAMLG 2013).
In the light of the review of the 2012 audited account of Local Government in Lagos State, a number of puzzles come to mind on the performance of Local Government and the application of the hitherto mentioned laws and statutory documents particularly the Fiscal Management Regulation Law 2011 to which the queries observed were tied. The Human Development Initiatives (HDI)/Local Government Budget Watch Project through this analysis has evaluated the performance of selected Local Government where it is working using this audit report and found them wanting. The analysis shows low-level compliance to the law vis-à-vis economic cost implication to the selected Local Government. Therefore, it calls the attention of appropriate authorities to issues that require urgent actionable response to ensure compliance to fiscal regulatory laws.