ABSTRACT
The quest for improving corporate governance as a pre-requisite for better performance has become an increasingly important issue in Nigerian Universities.
Efficient corporate governance is the bedrock for proper and effective management of institutions world over including managing finances in Nigerian Universities of which this study examined. The obvious corporate failures in Nigerian universities are associated with poor management for recognising risk management and poor internal audit. Therefore the problem this study unravels was the value of corporate governance in financial management of the University of Nigeria. The data for this study was generated through structured questionnaires and interpersonal interviews. The data obtained were analysed using frequency percentage, mean and chi-square statistical method. From the result of data analysed, it was found out that the major sources of finance to the university include Government grant, student school fees, Income from investment, donations from friends of the university and income from subsidiary companies. The objectives of financial management in the university were also identified to include reduction of fraud in the system, increase accountability and transparency in the system and to promote effective financial regulation. Furthermore, the value of corporate governance was found to include the following; independent of Auditor is emphasized, effective internal control is maintained and due process of financial management is ensured. The study recommended among others that the Bursar, who is the head of finance, should be a member of related accounting professional bodies like ICAN, ANN, ACCA.Also, since it was obvious that corporate governance aims to minimise chances of corruption, mal-practice and financial fraud. The object of good corporate governance is attained when an institution demonstrate their public accountability and conduct their businesses within acceptable ethical standard.
CHAPTER ONE INTRODUCTION
1.1 BACKGROUND TO THE STUDY
The higher education system in Nigeria is composed of universities, polytechnics, technological institutions, colleges of education that form part of, or are affiliated to universities and polytechnic colleges, and professionals, specialised institutions (IAU, 2000). They can be further categorised as federal, state or private universities, and as first, second or third generation universities (Harnett, 2000:1).
Federal universities are owned and funded by the federal government while state universities are owned and financed by the states . The private universities are owned and financed by individual owner(s).All federal universities receive the backup of their financing (almost 95%) from the federal government through the National University Commission NUC, (Harnett, and 2000:1).
Furthermore, the federal university budgeting processes and expenditures have to adhere to budgeting and expenditure formula stipulated by NUC as follows: 60 percent total academic expenditure; 39 percent for administrative support and 1 percent for pension and benefits (Harnett.2000: 7).
Ogunlade sighted in Ania (2004), stated four sources of finance in Nigerian university education: (a). Support from federal and state governments consisting more than 98% of the recurrent cost and 100% of the capital cost. (b). student fees/ educational fees; (c). Occasional grants, (d). interest earnings on short term bank deposits and rents of university properties. Other sources of finance to higher education in Nigeria include endowments, fees/levies, gifts and international aids from international organisation, for example, World Bank, (Sikiwibole and Suleman, 2000).
Within the Nigeria university system and management function, the Bursary department is in direct control of finance. The Bursar is the chief financial officer of the university, and is appointed by the council and is responsible to the Vice Chancellor, Rector, Provost.. The Bursar ensures that the funds of the institution are spent in accordance with the provisions of Government financial regulations and university Act laid down by the council and that no funds of the institutions are spent without proper authority and accounting. Financial management is a necessary tool for supporting the organisations goals and objectives. Financial management according to (Miller, 2000:2) states that financial management involves controlling, conserving, allowing, and investing the organisation’s resources including personnel, equipment, supplies and the non monetary contributions of volunteers and donations.
Federal government controls the universities through the following organs: Federal Ministry of Education, national University Commission (NUC), which among other things allocates funds to federal universities and also prescribes the spending formula .Each university, is administered by a council and the senate and is headed by and appointed. The duties of the bursar as the financial manager are controlled by the Vice Chancellor while the Vice Chancellor is the Accounting officer of the university answerable to and appointed by the Council. The governing council of a university is the highest regulating and policy making organ of the institution, while the Senate is highest authority in terms of academic matters in the university. The Council of every higher institution is been headed by a pro chancellor who is appointed by the Federal Executive council. The Senate equally have members representing them at the Council level while the congregation and convocation have two of their members each representing them at the council. The council have so many sub committees under it that assist it in different capacities. The Council is like the board of directors (BOD) of any public enterprise. The governing council has absolute responsibility for the university and is fully accountable to the shareholder for such performance. The university governance represents the structure of corporate governance.(see fig .1)
Corporate governance is the system by which organisations are directed and controlled. Typical objectives are clear rights and responsibilities among different participants, transparency, accountability and probity (Wilmoth, 2004). Business corporations in all countries including Nigeria are addressing these issues as a matter of good practice and of some famous scandals, corruption and different species of financial mismanagement. Corporate governance is no longer an issue with universities in developed countries like U K, USA, etc. The Nigerian universities face greater requirements for good corporate governance, particularly with respect to the way that governing do their business and the roles of owners, governing councils, management, staff, students and clients.
Corporate governance aims to minimise chances of corruption, malpractice, financial frauds and misconduct of management. The object of good corporate governance is attained when institutions demonstrate their public accountability and conduct their business within acceptable ethical standards. This demonstration will take the form of effective financial reporting, both internally and externally, and the unqualified encouragement of public debate in respect of such financial reports.
To this extent, the aim of this study is to look at corporate governance in financial management of the University of Nigeria.
1.2 STATEMENT OF PROBLEM
The issues of corporate governance and the role of institutions in the development of corporate governance are widely discussed in the literature. The academic have paid attention to variety of issues regarding corporate governance. The likely arrears of reference are ethics, management principles, owners’ role regarding mechanism and policies of state centred for good governance.
From personal studies, the obvious corporate failures in Nigerian universities are associated with poor arrangements for recognising risk management and poor internal audit. Arrangements have failed to uncover report and remedy poor performance, greedy remuneration, excessively risky behaviour, fraud and corruption.
It is surprising that the issue of critical importance such as corporate governance in financial management in the Nigerian university education system has not attracted the attention of researchers in Nigeria. Therefore, the problem the study intended to unravel was the value of corporate governance in financial management of the University of Nigeria.
1.3 OBJECTIVES OF THE STUDY
The primary objective of this study is to examine the practice of corporate governance in the financial management of the University of Nigeria. Specifically the objectives include:
(1)To ascertain the sources of finance in the university of Nigeria
(2) To identify the objectives of financial management in the university
(3) To determine the value of corporate governance in the financial management of the university.
(4) To examine the impact of corporate governance mechanisms on the University management performance.
(5) To examine the challenges to the implementation of corporate governance in the university financial management.
1.4 RESEARCH QUESTIONS
The following research questions will guide this study.
(1) What are the sources of finance in the University of Nigeria?
(2) What are the objectives of financial management in the university?
(3) What is the value of corporate governance in the financial management of the university?
(4) What is the impact of corporate governance mechanisms on the university management performance?
(5) What are the challenges to the implementation of corporate governance in the university financial management?
1.5 RESEARCH HYPOTHESES
Ho Effective Corporate Governance has no significant influence on the sources of finance in the university
Ho Effective management of finance has no significant influence on accountability and transparency in the university system
Ho There is no significant influence of Corporate Governance in management of finance in the university.
Ho Corporate Governance mechanisms have no significant influence on university management performance.
Ho There is no significant influence challenges to the implementation of Corporate Governance has on the university financial management
1.6 SCOPE OF THE STUDY
The study will be delimited to the University of Nigeria Nsukka. The choice of this university is because of its historic position as the first indigenous university in Nigeria and its administrative standards. The time frame of this study will cover the years between 2004 and 2009. This period of time is significant in the sense that it marked the beginning of new administration innovations within some sector of the economy of which University is part of, and also when the concept of Corporate Governance gained currency in Nigeria economy. It also covers the span of administrative of the immediate past Vice Chancellor of the university of Nigeria, Prof. Chinedu Nebo(2004-2009).
1.7 SIGNIFICANCE OF THE STUDY
This study will assist current and future members of council, heads of units, deans and heads of departments of the university in carrying out their specific responsibility financial management. Furthermore, it is intended to inform staff and student members of the broader university community about governance processes at the university, while also serving a similar purpose for the external community including stakeholders such as government.
Finally, this study will add to the body of knowledge existing in the area of financial management. It will also encourage researchers for further studies in corporate governance and financial management in Nigeria universities.
1.7 OPERATIONAL DEFINITION OF TERMS
CORPORATE GOVERNANCE: Corporate governance is the system by which organisations are directed and controlled.
FINIANCIALMANAGEMENT:
Financial management involves controlling, conserving, allowing, and investing the organisation’s resources including personnel, equipment, supplies and the non monetary contributions of volunteers and donations.
UNIVERSITY GOVERNANCE: This is a means by which university is formally organised and managed.
UNIVERSITY EDUCATION SYSTEM: This refers to all the federal universities, State universities and Private universities.
FINANCE: Finance is the science and art of determining if the funds of an organisation are being used properly, through financial analysis, companies and businesses can take decisions and corrective actions towards the sources of income and the expenses and investments that need to be made in order to stay competitive.
GOVERNING COUNCIL: This is a body charge with the responsibility of over seeing the affairs of the Universities, Polytechnics and Colleges of Education
This material content is developed to serve as a GUIDE for students to conduct academic research
CORPORATE GOVERNANCE IN NIGERIAN UNIVERSITIES: A STUDY OF FINANCIAL MANAGEMENT IN THE UNIVERSITY OF NIGERIA NSUKKA.
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