FRAUD CONTROL IN THE LOCAL GOVERNMENT SYSTEM, CHALLENGES AND PROSPECTS (A STUDY OF EBONYI LOCAL GOVERNMENT AREA)

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Product Code: 00004006

No of Pages: 75

No of Chapters: 5

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ABSTRACT

This work titled “Fraud Control in the Local Government System; Challenges and Prospects; A Study of Ebonyi Local Government Area (2003-2014)” was aimed at ascertaining the extent to which Ebonyi Local Government Council keep adequate and reliable records of its activities, examining the extent to which auditing can help in minimizing fraud and mismanagement of resources among the local government workforce in Ebonyi Local Government Area among others. The research was motivated by the inability of the Ebonyi Local Government Council to ensure proper auditing as to limit the rate of fraud in the council. Expectancy theory propounded by Victor Vroom in 1960 was adopted to theoretically guide the study. A survey research design was adopted to study a population of 532 which was reduced using Taro Yamane’s formula to a simple size of 228. Simple random sampling and stratified sampling techniques were used and data were collected from primary and secondary sources. Structured questionnaire instrument was used for data collection while simple percentage method and frequency distribution tables were used to analyze the data gotten from the questionnaire instrument. Chi-square statiacted was used for testing the hypothesis that guided the study. This study however, revealed that Ebonyi Local Government Council keeps adequate and reliable records of its activities through the use of computers and certified receipts, the fraudulent behaviours of revenue officers such as falsification of receipts, non-remittance of collected revenue among others constitute major challenges of Ebonyi Local government council among others. The implication is that is computers and certified revenue receipts are used; fraud can be controlled in the local government system. Hence, this study recommended that Nigerian local government system should adopt the use of computers and certified receipts to effectively keep adequate records; fraudulent behaviours of revenue officers should be curbed in order to control fraud in the local government system among others.


TABLE OF CONTENTS

TITLE 

APPROVAL  ii

CERTIFICATION   iii

DEDICATION   iv

ACKNOWLEDGEMENTS  v

ABSTRACT  vi

TABLE OF CONTENTS  vii

LIST OF TABLES  ix

 

CHAPTER ONE: INTRODUCTION   1

1.1      Background of the Study  1

1.2      Statement of  the Problem   3

1.3      Objectives of the Study  4

1.4      Research Hypotheses  5

1.5      Significance of the Study  5

1.6      Scope and Limitations of the Study  6

1.7      Theoretical Framework  6

1.8      Operationalization of the  Key Concepts  7

 

CHAPATER TWO: REVIEW OF RELATED LITERATURE   8

2.1    The Concept of Local Government  8

2.2   Rationale for the Existence of Local government System in Nigeria  12

2.3   The Concept of Fraud  16

2.4    Evolution of Fraud t in Nigeria  18

2.5    Fraudulent Practices in Nigerian Local Government System   22

2.6    Main causes of Fraud in Nigeria Local Government System   25

2.7     Strategies for Fraud Prevention and Control in Nigeria Local  Government System   28

2.8     Challenges of Fraud control in the local Government system in  Nigeria  32

2.9    Relevance of Fraud Control in Nigerian Local Government System   34

 

CHAPTER THREE: RESEARCH METHODOLOGY   36

3.1      Research Design  36

3.2      Area of the Study  36

3.3      Population of the Study  37

3.4      Sample Size And Sampling Technique  37

3.5     Sources of Data collection  40

3.6      Instrument for Data collection  40

3.7      Method Of Data Collection  41

3.8      Validity and Reliability of the Instrument  41

3.9      Method Of Data Analysis  42

 

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS   43

4.1 Data Presentation  43

4.2 Test Of Hypotheses  52

4.3 Major Findings  57

 

CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS   60

5.1   Summary of Findings  60

5.2    Conclusion  61

5.3   Recommendations  61

       References 63

       Appendices 65

 


LIST OF TABLES

Table 1: Questionnaire Return Table  43

 

Table 2: Sex distribution of the respondents  43

 

Table 3: Age distribution of the respondents  44

 

Table 4: marital status of the respondents  44

 

Table 5: Educational qualification of the respondents  45

 

Table 6: Working experience of the respondents  45

 

Table 7: Ebonyi Local Government council keeps adequate and reliable records of its activities through the  use of computers and certified receipts. 46

 

Table 8: Adequate and reliable records of the council’s activities have been kept for the period of 2003 to 2014  46

 

Table 9: Proper financial accounting is one of the ways Ebonyi local government council keeps adequate and reliable records of its activities. 47 

Table 10: Fraudulent behaviors of revenue officers such as non remittance of collected revenue, falsification and issuance of fake receipts and invoice constitute major challenge to Ebonyi local government council in keeping adequate and reliable records of its activities. 48

 

Table 11: The use of computer and certified receipts has significantly contributed to fraud control in Ebonyi local government council. 48

 

Table 12: Lack of qualified revenue personnel is a challenge of Ebonyi local government council in keeping adequate and reliable records of its activities. 49

 

Table 13: Frequent financial auditing has significantly helped in reducing fraud and mismanagement of resources in Ebonyi local government council. 49

 

Table 14: There is regular and prepayment auditing of the records and activities of Ebonyi local government council. 50

 

Table 15: Auditing mechanism has significantly reduced fraud and resources mismanagement between 2003 to 2014 in Ebonyi local government council.  50

 

Table 16: The existing internal auditing mechanism is adequate in controlling fraud and resources mismanagement in Ebonyi local government council. 51

 

Table 17: Lack of qualified auditing personnel accounts for the fraud and mismanagement of resource in Ebonyi local government council. 52

 

Table 18: Contingency table from table 7  53

 

Table 19: Chi-square tables from table 18  53

 

Table 20: Contingency table from table 13  55

 

Table 21: Chi-square table from table 20                                                                     55


CHAPTER ONE

INTRODUCTION

1.1   Background of the Study

       The idea of checks and balances were conceptualized as a result of outrageous increase in man’s avarice and crooks, which often result to fraud and aggrandizements.

       Fraud is a false representation of matter of fact whether by words or by conduct by false or misleading allegations or by concealment of what should have been disclosed that deceives and is intended to deceive another so that the individual will act upon it to here his legal injury.

       However, the introduction of monetary economy and the growth of capitalist exploitative lenders have led to stratification of the society using wealth as prime index, thus increasing the incidence of fraud.

       Furthermore, the increased membership of various business organizations, managerial inefficiency poor span of control and lack of effective internal control system sky rocket the incidence of fraud in both private and government establishment.

       To minimize wide spread of this problems, certain control and regulatory measures were put in place by government similarly, local government system, which is also a form public sector organization with people of heterogeneous character and background equally adopted these measures.

       The emergence of auditing as an administrative tool of checking frauds, errors and other financial irregularities has inevitably contributed to successful existence of several local government system especially where management was in efficient for instance, from it humble beginning, auditing has increased cutting across every activities of an organization both financial and other wise it embraces all forms of internal control mechanism and as an independent examination of book to book to from opinion on whether the financial statement of an organization represent a true and fair view of the business undertaken within a period of time under view.

       Through auditing members of local government, the reliability, credibility and authenticity of their administration were assumed. Also fraud and other financial irregularities were to be minimized

       However, it is appalling that several local government have not really embrace the significance of auditing of their economic endeavours. This often result to embezzlement and mismanagement of their funds, also poor literacy levels of members and lack of accounting experience make some local government to keep scarcity records of their business which cannot from a strong basis for detailed audit work.

       In order to see the extent fraud has dome more harm than good to the success of local government administration a research will be carried out within Ebonyi State, using Ebonyi local government as a case study.

1.2   Statement of the Problem

       The inhabitant of Ebonyi State Nigeria has found a lot of local government administration through integrated effort but not all these local government administration perform satisfactorily due to inadequate audit exercise and its underlying consequences on the other hand, some local government which recognized the importance of auditing as one of their statutory obligations have experience some problems which are stated below in a verifiable form.

·     Lack of adequate according records could contributed to ineffective audit in local government administration how literacy hard of the local government administration in Ebonyi State is responsible for them poor financial record keeping.

·     Irregular auditing give room for fraud and other practice among local government in Nigeria do not participate actively in their business due to lack of confidence arising from infrequent auditing of their local councils.

·     The importance of auditing are not well told when auditor are denied to vital accounting record.

·     Lack of qualified local government auditors.

The inability of the Ebonyi Local Government Council to ensure proper auditing as to limit the rate of fraud is the problem of this study. In view of the problem, the following questions will guide the study.

(1) To what extent does Ebonyi Local Government Council keep adequate and reliable record of its activities?

(2) To what extent can auditing help to minimize fraud and mismanagement of resources among the local government workforce in Ebonyi Local Government Area?

1.3   Objectives of the Study

        The general objective of this research is to find out how fraud can be minimized in Ebonyi Local Government council.

The specific objectives included

(1)      To ascertain the extent to which Ebonyi Local Government council keep adequate and reliable records of its activities

(2)      To find out the extent to which auditing can help in minimizing fraud and mismanagement of resources among the local government workforce in Ebonyi Local Government Area.

 

 

1.4   Research Hypotheses

The following hypotheses were formulated for the study:

HA1: Ebonyi local government council keeps adequate and reliable records of its activities through the use of computers and certified receipts.

HO1: Ebonyi local government council neither uses computers nor certified receipts to ensure adequate and reliable records of its activities.

HA2: Frequent financial auditing in Ebonyi local government has significantly helped in reducing fraud and mismanagement of resources.

HO2: Fraud and mismanagement of resources has not in anyway reduced despite the frequent financial auditing in Ebonyi local government council.

1.5   Significance of the Study

       This study will be very significant at its possible beneficiaries abound. Thus the study will enable the students who will use it in future to get sight on auditing and its usefulness to local government system.

       It will also, reveal the actual meaning of auditing as tools used in controlling fraud in the local government and its objects and relevance to any concerned individual.

       This research might be of great help to member of local government who experience fraud and other financial irregularities, since it will help them to device some workable and reliable remedial strategies toward curbing such threat. More proficiently, this research with obviously assist in widening the research intellectual horizon text his ability to collect, analyze and interpret data as will as assisting the researcher in accomplishing practical requirements for the award of B.Sc (degree) in his discipline.

1.6   Scope and Limitations of the Study

       This study covers the entire department in Ebonyi Local Government Area, particularizing on fraud control, challenge and prospects from 2003-2014.

       On the other hand, the limitations of the study include time factor, coupled with the coming examination and financial inadequacy, which made it difficult for a research to extend his investigation as he planned. Also the response might not be 100 percent accurate since the sample of the population was only studied. These were overcome through hard work, borrowing and assistance.

1.7   Theoretical Framework

       This work adopted the expectantly theory.

The expectancy theory states that the strength of an expectation and the strength of a tendency to act on particular way depends on the strength of an expectancy and the will be followed by a given outcome and attractiveness of that outcome to the individual.

 

       The relevance of the expectancy theory to this study are as follows

       The expectancy theory provides a logical way of analyzing the performance of workers. The reason for this is because the theory state, if an individual perceives a relationship between his effort (expectancy) and his ability to perform successfully (first level of outcome), and a relationship instrumentality, he will work very hard. This theory is therefore very relevant to this study.

1.7   Operationalization  of the Key Concepts

Local government: This is the system of government of a town or an area by elected representatives of people who live there.

Auditing: It is the independent examination of financial statement of an organization with a view to express out opinion as to whether these statements gives a true and fair view and comply with the relevant statutes.

Fraud: could be defined as dishonesty calculated for advantage.

Challenges: This is a statement or an action that shows that somebody refuses to accept something and questions whether it is right legal etc.

Prospects: It is an idea of what might or will happen in the future.


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