Wealth maximization : Wealth maximization (shareholders’ value maximization) is also a main objective of financial management. The functional and broader definition of internal control includes such actions as supervising management to ensure they have an adequate level of funding to deliver services; ensuring all transactions comply with legal frameworks; and ensuring practices are consistent with stated policies, organizational objectives, and performance criteria.
Consequently, reasonable governance is required to establish a sound public financial management system that is responsible for planning, budgeting, implementation and follow-up of government financed projects in the rural areas so as to create better conditions for sustainable development (Hallgerd, D. 2005:8).
Sound public financial management supports aggregate control, prioritization, accountability and efficiency in the management of public resources and delivery of services, which are critical to the achievement of public policy objectives, including achievement of the Millennium Development Goals (PEFA Steering Committee, 2004).
Therefore, to carry out effective delivery of public services in the local government areas, the key issues to be examined, inter alia,involve the quality of the budget process which include degree of discipline, efficiency in revenue mobilization and extent of transparency, accountability and control in the local government administrative system.
Emanating from the risks faced in agency theory, researchers on small business financial management contend that in many small enterprises the agency relationship between owners and managers may be absent because the owners are also managers; and that the predominantly nature of SMEs make the usual solutions to agency problems such as monitoring and bonding costly thereby increasing the cost of transactions between various stakeholders (Emery et al.1991).