ACCOUNTING FOR PENSION AND GRATUITY IN PUBLIC SECTOR A CASE STUDY OF ENUGU STATE CIVIL SERVICE

CHAPTER ONE

1.0 Introduction

Pension and gratuity is commitment represent an agreement in which the employer promises to make periodic. Payment or allowance to an individual because of length service or when certain conditions like age. A pension plan is a contract between the company and its employees under which the company agrees to pay benefit to employees after their retirement. The government management, exports, shareholders and other users of accounting information are in desperate need to ascertain whether funds are utilized in compliance with approved accounting standard and government established financial control mechanism. Moreover there has been frequent case of exchange of public fund, non-adherence to accounting principle as regards pension fund administration especially in the public sector. In addition, in the public sector the funding of pension and gratuity schemes is done by the federal government of the federation. It is in line with the foregoing that this research becomes necessary to make ensuring into the remote cause of delay in the payment of retirement benefit in the remove the various measure by which pension and gratuity benefit are accounted for the bureaucracy involved in pension fund to peruse through the general theory of pension and gratuity.

1.1 Background of the study

Pension and gratuity commitment made b employers to employees are common characteristics of modern employment agreement. This commitment represents an agreement in which the employer promises to make periodic payment or allowance to an individual because of some meritorious work or when certain conditions such as age, length services etc. Infact, the quest for accountability in both the private and pubic sectors have really increased the drive for more graphic information about organization. A pension plan is a contract between the company and its employees under which the company agrees to pay benefit to employees after their, experts and other users of accounting information are in desperate need to ascertain whether funds are utilized in compliance with approved financial control mechanism. Besides there has been frequent case of mis-appropriation of public fund, non-adherence to accounting principles as regards pension fund administration especially in the public sector. Nevertheless, in the public sector the funding of pension and gratuity schemes is done by the federal government of federation that it is an exclusive preserve of the federal government; government means that it is derived from statue as pension decree 102 of 1979, pension right of decree 1985. This scheme is provided on the pay-as-you-go basis paid through the intermediaries of the federal government. The state and local government councils respectively from the foregoing, it is absolute crystal that as soon as one I gainful employed on pensionable post pension allowance and gratuity becomes a must as one will book up for it is the end of ones services period. Consequently, much appealing as the above sound it’s operation in the public sector is not without criticism. The plague being that retirement benefits are not often provides promptly to service the deserved purposes. Infact it was a result of this problem that the government decided to decentralized payment of gratuities.