COMPARATIVE STUDY OF EXPENDITURE CONTROL METHODS IN GOVERNMENT ESTABLISHMENT AND PRIVATE ESTABLISHMENT
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Expenditure control or cost control is part of management control process, in every organisation.
This process is very important to any organisation be it profit making organisation or non-profit making organisation. Thus, lack of
this practice in any organisation will cause misapplication of cash in cash disbursement process and this will create a very big
problem leading the organisation into deficit and at an extreme case, the organisation might wind up. Many researches have been
conducted in the reason for winding up of companies and organisation in which lack of expenditure control process had found
responsible.
Expenditure control has been defined as the process by which managers utilize effectively and efficiently, the scarce resource in the
achievement of the organisational goals. At this juncture, let us look at expenditure and control from separate perspective.
2 Expenditure is the total amount spent on the process of trying to achieve a particular organisational goal. Control means to order,
limit, instruct or rule something or someone’s actions. It is used by either government officials or organisation managers to make
restrictions on wages increases, immigrate credit and so on (which are all expenditure).
As regards, this research work, which is the comparative study of expenditure control methods in government and privately owned
Hospitals, A study of the University of Nigeria Teaching Hospital Enugu (UNTH) and Toronto Hospital and Maternity Onitsha; this
implies a comparative study of non-profit making organisations, since UNTH is government owned Hospital while Toronto Hospital
is privately owned Hospital as a category of profit making organisation. Non-profit making organisations are characterized by the
following:
a) There is neither a conscious profit motive nor an expectation of earning net income.
b) No profit of any excess of revenue over expenditure is distributed to those who contributed support through taxes and voluntary
donations.
3 In profit making organisations, the reverse of these characteristics is the case in the sense that their major objective is to maximize
profit and excess of revenue over expenditure are given to the owners of the organisation.
Government owned hospitals pay more attention to services they render to the public, as their major objectives is to provide
services that fulfill a social needs for those who do not have the purchasing power to acquire these services themselves. Irrespective
of the fact that privately owned hospitals try to render good and quality services to the public, they pay more attention to maximize
of profit which their major objective.
Comparative study of expenditure control in Government and privately owned Hospital which is major research question in this
research work has to with the different ways and methods by which expenditure is being controlled in each of the hospitals so that
they will not run into deficit or liquidations.
According to Johnson (1976), the management control concept which imbibes the expenditure control are the same both in profit
oriented and non-profit oriented organisations, but the implication of these concepts differ in important respect. We will want to
find out if also the expenditure control methods are the same or differ in the two hospitals under study, owning to the fact that one
is profit oriented and the other is non-profit oriented.
1.2 STATEMENT OF THE PROBLEM
The problems encountered by the Government and privately owned Hospitals in expenditure control are as follows:
The problem of daily control method and the vote card method. The problem encountered is to know the effective method to use
in the two hospitals. Here, the problem encountered is to check whether the daily control method will be efficient and effective in
the Government owned hospitals or whether the vote card method is the best.
Another problem encountered by the hospitals in expenditure control is the problem of internal control. Internal control is the
essential feature of an organisation, be it profit making or non-profit making, and it is expected to be well managed effectively and
efficiently. Any 5 problem or limitation of the internal control will pose a problem to the expenditure control of the organisation.
Therefore, the above problems encountered by the two hospitals are the problems of expenditure control methods encountered by
the government and privately owned hospitals by the government and privately owned hospitals that attracted the attention of the
researcher.
The problem definition in this research work is to investigate and analyse the different ways and methods by which expenditure is
controlled in government owned hospitals and privately owned hospitals so that they will not run into deficit and liquidation. As a
comparative study, two hospitals has been selected for the study, they are: University of Nigeria Teaching Hospital Enugu (UNTH) for
government owned Hospitals, and Toronto Hospital and Maternity Onitsha for privately owned hospitals.
In this research, we study the different methods of expenditure control being adopted by these hospitals and their practical
application and their level of effectiveness.
This study will form a basis for our analysis which will help to answer some research questions.
61.3 OBJECTIVES OF THE STUDY
This study is conducted to:
- Ascertain the expenditure control method adopted by the government and privately owned hospitals.
- Establish whether government and privately owned hospitals are operating the same of different system of accounting.
- Compare the expenditure method or model adopted by the privately owned hospitals with that of the government owned
hospital if there is a difference. - Ascertain the efficiency and effectiveness of these expenditure control methods in the operation of the privately and government
owned hospitals. - 5. Make recommendations based on the findings.
- 1.4 RESEARCH QUESTIONS
- What expenditure control methods are adopted in the two hospitals?
- Do privately owned hospitals and government owned hospitals operate the same method of expenditure control?
- Are there any similarities and differences in their method and application?74. How efficient and effective are they to their users?
1.5 FORMULATION OF HYPOTHESIS
In this study, we will have two main types of hypothesis; the null hypothesis denoted by (H0) and Alternative hypothesis denoted by
(H1). The null hypothesis is constructed such that it can be accepted if the alternative hypothesis is rejected.
Accordingly, the researcher would examine the following hypothesis.
HYPOTHESIS 1H0: Government and privately owned hospitals do not adopt the daily control method of expenditure control.
H1: Government and privately owned hospitals adopt the daily control method of expenditure control.
HYPOTHESIS 11H0: Government and privately owned hospitals do not use the same method of expenditure control.
8H1: Government and privately owned hospitals uses the same methods of expenditure control
HYPOTHESIS 111H0: The methods of expenditure control used by government and privately owned hospitals are not effective and
efficient.
H1: The methods of expenditure control used by government and privately owned hospitals are effective and efficient. - 1.6 SIGNIFICANCE OF THE STUDY
Control has to be exercised over all aspect of a business organisation as a guard against any form of derailment from the
organisations objective.
Therefore, the need to install an effective and efficient expenditure control method in any organisation be it profit making or nonprofit oriented cannot be over emphasised. This is because lack of this practice (expenditure control) in any organisation (profit
oriented or non-oriented) will cause misapplication of cash in cash disbursement exercise. Thus may create a very high problem
which may lead the organisations into deficit and in extreme cases, the organisation may wind up.
9This defines why this research hopes to create awareness to management team of government and privately owned hospitals in
order to put in place an effective control system.
It will also improve the various ways and methods by which expenditure are being controlled in each of the hospitals.
Being a comparative study, it will be useful to policy formulations in health related issues, hospitals management board and
potential managers of the hospitals. - 1.7 SCOPE OF THE STUDY
The study is on the expenditure control method on government and privately owned hospitals, as a comparative study, it will be
limited to the accounting sections of the hospitals, which deals with its income and expenditure. However, other issue which has
direct implication on the control aspect will be treated. - 1.8 LIMITATIONS OF THE STUDY
Like every other research work, a lot of things posed as limitations to the research. They include:10a) Financial: The present
economic constraint in the country makes it difficult for some families to feed well. Parents are faced with the difficulty of training
their children, especially those who have children in the university find it difficult to pay their fees much more sponsoring the
research project work. The researcher of this project is not an exception. So also, she uses the limited resources within her reach to
make this research work a reality.b) Time: The interval between chosen of project topic, the submission of the project and the
preparation for the degree exams is very infinitesimal, but these are mandatory activities and hence, the researcher was deprived of
many other activities to ensure their fulfillment. - c) Attitude of workers: owing to the fact that so many workers (employees) are not
aware of what research is all about and its importance, they have nonchalant attitude towards the researcher making it difficult
for her to get the information’s needed - 1.9 DEFINITIONS OF TERMS
- For the purpose of clarity, the following terms used in this context
are hereby elaborated.11 Expenditure control: Management tools that guides and ensures that company/organizational spending
are in accordance with the policy plans. Misappropriation: To steal something that you have been trusted to take care of and use it
for your own personal benefit. Comparative study: to examine the difference between two or more things. Deficit: Being run at
losses. Privately owned Hospital: Hospital owned and financed by an individual or group of people. Audit guidelines: These are
basic principles and practices which members are expected to adhere to in the conduct of audit work. Government owned
hospitals: Hospitals owned and controlled by government either federal or state government. Liquidation: To cause a business to
fold up so that its assets can be sold to pay