ABSTRACT
Auditing is an essential tool for
proper governance in the public sector. It constitutes an indispensable control
mechanism for ensuring proper management of economic resources and for ensuring
compliance with prescribed financial policies and regulations.
Effective audit procedures become
important to the public sector organization in order to curtail the rate of
financial mis-management and abuse which hampers the growth and proper
administration of the organization.
Auditing in the public sector has
extended more than the traditional financial statement audit to the value for
money audit. This audit is concerned with the economy, efficiency and
effectiveness of a particular function or department within the body whose
affairs are being audited.
For the purpose of the study, data
were collected through the use of questionnaire, observation and other written
documents.
Major findings of the research shows:
-
That auditing cannot exist without the
preparation of accounts.
-
That auditing has helped to uncover
irregularities, error and other financial mismanagement.
-
That auditing is imperative in public
sector as it would help them motivate and maintain operational autonomy and
will alongside help them ensure economic stability.
TABLE
OF CONTENTS
PAGES
Title
page i
Certification
ii
Dedication iii
Acknowledgement iv
Table
of Content v
Abstract vi
CHAPTER ONE:
INTRODUCTION
1.1 Background to the Study 1
1.2 Statement of Problems 3
1.3
Aims and Objectives of Study 3
1.4 Scope of the Study 4
1.5 Significance of the Study 5
1.6
Limitations of the Study 6
1.7 Statement of Hypothesis 7
1.8 Definition of terms 8
1.9 Historical Background of Case of Study 9
CHAPTER TWO:
LITERATURE REVIEW
2.1 Origin of Audit 10
2.2 Development and Growth of Audit in Nigeria
Definitions of
Audit purpose of audit 10
2.3 Types of audit 11
2.4 External audit 13
2.5 Auditing guidelines Planning Controlling
and Recording Internal
Audit Value for Money Audit 14
2.6 Distinction between Accounting and Auditing
Functions 14
2.7 Auditing Guidelines and Procedures:
Planning, Controlling
And Recording Planning 20
2.8 Audit Evidence 25
2.9 Internal Controls 29
2.10
Internal Audit 35
CHAPTER THREE:
RESEARCH METHODOLOGY
3.1 Introduction 48
3.2 Research Design 49
3.3 Population Description 50
3.4 Sample Description and Techniques 50
3.5 Research Materials/ Instruments 51
3.6 Method of Data Collection and Organization
of Data. 51
3.7 Organization of Data 53
3.8
Statistical Treatment of Data 53
CHAPTER FOUR: DATA
PRESENTATIONS AND ANALYSIS
4.1 Introduction 55
4.2 Analysis and Evaluation of Data 55
4.3 Test of Hypothesis 62
4.4 Findings of the Study 68
CHAPTER FIVE:
SUMMARY, CONCLUSION AND RECOMMENDATIONS.
5.1 Summary 71
5.2 Conclusion 71
5.3 Recommendations 72
Appendix
CHAPTER
ONE
INTRODUCTION
1.1
BACKGROUND TO THE STUDY
As it will be practically impossible
to talk of a building without a foundation, so also it will be professionally
imbalance to talk of Audit procedure in a public sector organization” without
actually bringing to time light what public sector organization portrays.
Public sector organization refers to
those organizations set up by government for the purpose of providing social
services with profit motive if any, at the background.
“organization” in the eyes of the law
is an actual being. It is an intangible person with many of legal rights,
powers and obligations of an individual. It may take contracts, hold and sell
property, sue and be sued in its own name. Organizations therefore, owe their
births to creation and they are owned and managed differently precisely because
of their unique artificial legal make up. Such organizations include Kaduna
State Water Board, National Electric Power Authority, to mention but few.
Every human organization, however,
simply require written records which the management or administration needs to
keep decisions formulation of general rules, the making of policies and the
legal validation of the organization status, procedures and relationships with
other organizations or individuals.
Every civilization, ancient or modern
that had a commercial background or that which had any difficult problems of
governmental organization or administration to solve had to have financial or
at least numerical records of some sort.
Auditing being the exercise aimed at
ensuring that the accounts being reported on show the auditor’s opinion, a true
and fair view of the financial position as at the balance sheet data and of the
profit and loss for the period ended the date, it is suffix to say that as
erroneously being carried about, it is not the objective of an audit to detect
fraud, although fraud or defalcation may surface during audit.
The auditing of an organization
financial statements involves the verification of the balance sheet and the
income and expenditure accounts and the examination of the underlying records
to test their reliability and the basis from which these statements had been prepared.
It means going through financial transaction which had given rise to the
records.
In a public sector like Kaduna State
Water Board, auditing, and audit programme has to be drawn up and this will be a
guide for the audit work. The audit programme will seek to verify the efficient
working of internal control system with particular reference to the internal
check, division of duties and managerial supervision.
The proper working of the system of
book keeping and accounting with particular reference to the accuracy,
completeness and reliability of the records being compiled and the extent of
the true and fair view of the financial statement as produced there from.
In analyzing an audit, it involves a
set of procedures which include: general financial control procedure, cash
controls and the procedures involving receipt and payment, salaries and wages
control, sales and trade debtors control procedure contract award procedure and
fixed asset and investment control.
1.2 STATEMENT OF PROBLEMS
This research work is set out to
examine effective analysis of Audit procedure in a public sector organization
so as to have an insight into how it affect individual, and government as well
as how proper analysis of audit procedure helps in attracting and retaining the
financial position in public sector.
The following are the statement of
problems:
i.
To what extent do the auditors
exercise procedures in a public sector organization.
ii.
What constraints are there that
inhibit auditors procedure on internal control.
iii.
What is the relationship between the
company’s auditing process and the level of accountability.
1.3 AIMS AND OBJECTIVES OF THE STUDY
Auditing in the public sector
organization especially those in public corporations like Water Board, have
been so neglected by government these days. Most of the relevant books
consulted so far in the field of auditing, little or nothing have been said
about auditing of public corporation. Major concern has been towards the audit
of limited liability companies.
This research however, is designed to
enable the readers understand the procedure in the auditing process in the
public sector organizations with reference to Kaduna State Water Board and
also, to know the role of auditors of public sector organization.
1.4 STATEMENT OF HYPOTHESIS
In order to have a bearing for this
study, formulation of hypotheses is necessary which is an opinion statement on
research question and data to be obtained during the research work will be used
to test the hypothesis.
Nnadozie and Akuzuito (1995 P.32) “The
research hypothesis is a tentative answer to a research problem/question. It is
an educated or intelligent guess of an answer to the problem of the research
under investigation. It is however, an answer which has no evidence supporting
it until a full investigation is carried out. The research hypothesis may
therefore be seen as an opinion statement”.
Considering the problems already
stated data gathered during this study will be used to test the following
hypothesis:
Hi:
Auditing process has a positive and
significant relationship with the level of accountability in a public sector
organization.
Ho:
Auditing process has no positive and
significant relationship with the level of accountability in a public sector
organization.
Hi:
Lack of effective and efficient
performance of internal control inhibit auditor’s procedures.
Ho:
Lack of
effective and efficient performance of internal control does not affects
auditor’s procedures.
Hi:
Lack of independent mind of most
internal auditors does not affect effectiveness of internal control system.
Ho:
Lack of independent mind of internal
auditors affects the effectiveness of internal control system.
1.5 SIGNIFICANCE OF THE STUDY
With the rapid growing of economy
crises in the country, the effect of audit procedure can be highly detrimental
to the users of a company’s report if not properly carried out.
Kaduna State Water Board being one of
the public sector organization in Nigeria economy. It is necessary to work into
how the audit procedures is been carried out in such public organization.
The effect of this audit procedures to
individual investors, customers and other governmental agent are of paramount
importance. it is with the believe that the research work will bring about
relevant questions that will require further analytical investigation, thereby
increasing the existing knowledge on the subject matter.
1.6 SCOPE AND LIMITATIONS OF THE STUDY
The study has been basically limited
to areas that is concerned by Kaduna State Water Board that is, the analysis
and the procedure in a public sector organization. The process of this study
covers the control and procedure of expenditure of the Board as well as that of
receipts. it is also pertinent to mention that the project research is purely
an academic exercise.
Time
Constraint: Time is an important factor in a
research work. For a researcher to exhaust all the requirements for a
particular study, a lot of time must be invested. However, the time allowed for
this research work is short coupled with other academic activities.
Financial
Constraint: Closely following the above constraint
was finance. Research of this nature requires large fund, indequate fund does
not allow for a large scale research to include the organizations.
Respondent
Constraint: Most of the audit and account staffs
confronted for information felt somehow skeptical to release them for fear of
leaking official secret, this actually make it difficult for the researcher to
obtain adequate information needed to the study.
1.7 DEFINITION OF TERMS
The following are some terms used in
this project work.
Audit
Programme: Is a schedule of operation to be
carried out in the course of any particular audit exercise.
Audit
Planning: Audit planning refers to the plan of work by a
firm of accountants or a government audit department to ensure that during a
year it covers the entire audit job it has at hand.
Audit
Evidence: All information obtained by the auditor in
arriving at his conclusion on any matter within the scope of his audit.
V.F.M:
Means
value for money audit
Audit
Working Papers: Working papers consit of file of
evidence obtained during audit work, the details of the methods and procedures
the auditor followed and the conclusion he has reached concerning the object of
the audit.
Testing:
Selecting
and examining representative items from a large set of similar items for the
purpose of drawing conclusions about the charactertics of the set.
Audit
Procedures: The acts performed by the auditor in
the course of attaining the objectives of the examination.
1.8 HISTORICAL BACKGROUND OF KADUNA STATE WATER
BOARD
The Board was created by Kaduna State
(then North Control State of Nigeria) through Edict No. 2 of 1971. Since then
the Board is operating separate set of books of Accounts and treasury, for
payment of vouchers, time to time new set of procedures and accounting system
were introduced through circulars while sometime through instruction on the job
training, to bring the Board’s Accounting system on modern lines. However, all
these circulars and instructions are in lose form and some are unwritten too. The
introduction of commercial accounting system at Kaduna State Water Board is to
provide suitable, sufficient and authentic management information to help in
decision making and planning of operation.
This data falls under two categories
viz:
i.
Financial and management information
ii.
Control and flow of financial data for
future planning.
Classification and coding of
accounting data is necessary to process the data speedily. In pursuance to this
objectives revenue and expenditure have been coded and classified.
The general managed/chief executive,
is the accounting officer of the Board. Any officer expending money within the
board does so on behalf of the chief executive. The limits of power of the
chief executive in this regard are stipulated in circulars issued from time to
time by the government and in conformity with the edict.
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