ABSTRACT
Accounting system including the system of auditing in the public sector of the Federation was patterned to the system obtainable from the British system due to colonial influence before Nigeria’s independence in October 1960. As a result of this, there is no significant difference between the civil service operational systems in Nigeria from the system run by the British Government. In view of the above historical evolution, ministries and parastatals were established by government at both federal and state levels. Federal and state audit department were also established to ensure that public fund committed to these ministries/parastatals are judiciously accounted for and the department is headed by Auditor General. In recent times, regardless of the reasonable objectives, reasonable changes in the civil service structure and operations in the country have given rise to such problems for auditors in the public or government account. It is these problems that gave rise to the research on the strategies for the abatement of audit problems in the public sector in Nigeria. The research will introduce questions that will provide questions that will provide solutions to these problems, how these problems have been affecting the performance of the ministries/department and how these problems have been obstructing the auditors from expressing valid opinion on the accounts audited. In the objective of the study, there’s an expression of audit lapses that are obtainable in government accounts and also to address such problems that may arise from the statement of the problems. On the sources of data, observations, interviews and questionnaires are to be applied. Also, books, journals, papers presented at conference, magazines, unpublished handouts within the ministry/departments will be explored. The statistical method for data analysis will be the simple chi square methods which the researcher considers simple to use and easy to understand. In conclusion, this research identifies the problems associated with government audit , how to solve or minimize them, how efficiency will be introduced into government accounting/auditing and how the users of government financial Statements will benefit from improved auditing standards and practices.
TABLE OF CONTENTS
Title page … … … i
Certification… … … … … ii
Approval page … … … iii
Dedication … … … iv
Acknowledgement … … … v
Abstract … … … vi
Table of contents … … … vii
CHAPTER ONE
1.0 INTRODUCTION … … … 1
1.1 Background of the Study … … … 1
1.2 Statement of Problem … … … 3
1.3 Purpose of Study … … … 5
1.4 Significance of study … … … 6
1.5 Research Question … … … 7
1.6 Research Hypothesis … … … 8
1.7 Scope and Limitations of study … … 9
1.8 Definition of Terms … … … 10
1.10 References … … … 12
CHAPTER TWO
2.0 LITERATURE REVIEW … … … 13
2.1 Concept of Auditing … … … 14
2.2 Legal Considerations Involving Auditors in the
Public Sector … … … 20
2.3 public sector auditing … … … 25
2.4 Role of Financial Management Branch in ensuring
Accountability and Fraud Prevention … 29
2.5 The professional conduct of Auditors and their
Approach in the Public Sector ... … 32
2.6 Fraud … … … 39
2.7 Computer Auditing Systems … … 42
2.8 Internal Audit in the Public Sector and Obstacles
to its Efficiency … … … 45
2.9 public Accountability and External Auditing … 52
2.10 Issues in Government Accounting and Financial
Control … … … 55
2.11 government accounting issues and financial control… 62
2.12 Summary of Literature review … … 69
References … … … 75
CHAPTER THREE
3.0 RESEARCH METHOD AND DESIGN … … 77
3.1 Introduction … … … 77
3.2 Method and Sources of Data … … 78
3.3 Research Population … … … 79
3.4 determination of Sample Size … … 79
3.5 instrument … … … 80
3.6 validity and reliability of the measuring instrument… 81
3.7 sampling technique … … … 81
3.8 Description of Respondents … … 81
3.9 Method of data presentation and Analysis… … 82
References … … … 83
CHAPTER FOUR
4.0 DATA PRESENTATION, ANALYSIS AND INTERPRETATION 84
4.1 Presentation of data … … … 84
4.2 Analysis of data … … … 90
4.3 Formula for the Tools … … … 90
4.4 Decision Rule … … … 91
4.5 Statement of Hypothesis … … … 92
4.6 test of hypothesis 2… … … … 95
CHAPTER FIVE
SUMMARY OF FINDINGS,RECOMMENDATION AND CONCLUSION 99
5.1 summary of research Findings … … 100
5.2 Recommendations … … … 103
5.3 Conclusions … … … 105
BIBLIOGRAPHY
APPENDIX I
APPENDIX II
CHAPTER ONE
1.0 Introduction
1.1 Background of the Study
Having observed that Auditors in Nigeria have a lot of problems in the audit of government accounts, this research work will identify these audit problems which are inherent in the public sector of the economy and ways of minimizing them. The accounting system including the system of auditing in public sectors and specific organizations of the federation of Nigeria is an increasingly demanded part of accounting profession initially developed in the United Kingdom (Britain) and United States over hundred years ago (Rowan: September 1, 2010).
In view of the historical background that Britain was Nigeria’s colonial master prior to her independence on 1st October, 1960 (Atlan:1980) there is no significant difference between the system operational in Nigeria today from the system emulated from the British Government. Therefore, various Ministries and Parastatals were established by Nigerian Government at both the Federal and State level while in each Ministries/Parastatals, accounts units were created which handles all accounting problems and systems of the Ministries/Parastatals, in order to ensure that the public funds committed to these ministries/parastatals are judiciously accounted for; the Federal/State Audit Department was established. This department is headed by the Auditor General of the Federation or State. The Audit Act of 1956 directs the Auditor General to prepare and transmit a special report to the National Assembly where it appears to him at anytime to be desirable and to make enquiries into any issue, programme, project, activity, function or transaction concerning fraud or misappropriation of public funds and property.
Recently, there have been several changes in the civil service structure and specific organizations operational in Nigeria which brought a lot of problems in the audit of government accounts. Though, the changes were effected with reasonable objectives in view but still it has given rise to problems for the auditors in the audit of public or government which made this research work to focus on the study of the “strategies for the minimization of Audit problems in Nigeria.”
1.2 Statement of the Research Problem
The distinctive problems that are inherent in the audit of government accounts are consequences of improper, poor and ineffective monitoring and accountability of funds. The accounting and auditing units in each level of governments whether Federal, State or Local governments including each ministries/department in public service, introduces good accounting principles and guidelines for proper recording of funds. These principles and guidelines as established, became very necessary to ensure appropriate procedures for monitoring and proper accountability of public funds and properties.
In the crucial but narrow sense of Auditing as a control that ensures financial probity and guarantees against corruption, the Federal or State Audit Department must be fully involved in monitoring and accountability of funds. The Auditors demonstrates that these funds have been fully deployed having regard to economy efficiency and effectiveness. The traditional response to these problems have been to limit the role of accounting in the public service and in the country to matters of financial probity, the proper recording of transactions, the control of spending against the budget and the minimization of spending. But the auditors have not been able to achieve this because of the problems apparently caused by the recent structural changes in the public service.
However, in the course of carrying out this research work, the underlisted questions will be addressed and determined whether:
1. The Internal Auditors in the public sector are independent.
2. The internal control system in the public sector is very effective.
3. There is lack of co-operation between the State Audit Department and the Financial Management Branch of Treasury Division in the area of investigation, inspectorate and monitoring of Government account in the State.
4. Public Sector Auditors can be skilled to cope with the present computerization of government accounts.
5. There are factors that constitute hindrances to internal audit efficiency in public service.
6. The level of competence of public sector auditors in doing their work.
1.3 Purpose of Study
The Researcher embarked on this study for the purpose of expressing lapses that are present in the audit of government accounts and public service. The objectives of this study includes the following:
1. To ascertain the extent to which Internal Auditors are independent in the public sector.
2. To assess if the Internal Control System in the public sector is very effective or deficient.
3. To explain and ascertain the need for co-operation between the State Audit Department and the Financial Management Branch of Treasury Division in the area of investigation, inspectorate and monitoring of Government Account and fraud prevention.
4. To ascertain the level of skill displayed by public sector auditors in order to cope with the on-going computerization of the State Civil Service.
5. To identify the factors that constitute hindrances to internal audit efficiency in the State Public Service and recommend solutions.
6. To ascertain the level to which Auditors in public sectors are competent in the course of their work.
1.4 Significance of the Study
This research will be of immense benefit to the following category of people in the Nigerian society:
1. Government: The three tiers of government will benefit from this study by enjoying the improved auditing standard that will arise from the identification and solution of the audit problems which will result to audit efficiency.
2. Universities and Polytechnics offering Accounting Courses: These government owned educational institutions will also benefit from this study, the findings of this research work will reveal the improved auditing standards for academic purpose.
3. To experts in the financial sector: This research will be significant to intellectual and external Auditors in that they will now improve on how to audit government accounts in accordance with the relevant auditing standards.
4. Private sector and specific organizations: In a much wider sense, the improved auditing standards will become systematically relevant and associated with proper accounting and the use of money to measure the performance of business profession in the country. However, in a business the value of services provided is given by the money the business collects from the sales it makes. Therefore, this research work will be significant because money is used to measure the cost of services a business provides as a result of improved auditing standards.
1.5 Research Questions
This study has the following research questions from which hypothesis will be formulated.
1. Are the internal auditors in the public sector independent?
2. Is the internal control system in the public sector very effective?
3. Is there lack of cooperation between the State Audit Department and the Financial Management Branch of Treasury Division (FMB) in the area of investigation, inspectorate and monitoring of Government accounts in the State?
4. Are the public sectors auditors skilled to cope with the present computerization of government accounts.
5. Are there factors that constitute hindrances to internal audit efficiency in public service.
6. What is the level of competence of public sector auditors in the course of their work.
1.6 Research Hypotheses
To carry out the work efficiently, it was deemed appropriate to formulate the following tentative hypotheses as a guide to choice of data for proper statistical treatment and as a framework for conclusions:
1. H0: Internal Auditors in the public sector are not independent.
H1: Internal Auditors in the public sector are independent.
2. H0: There is no effective internal control system in the public sector.
H1: There is effective internal control system in the public sector
3. H0: There is no co-operation between the state audit department and the financial management branch (FMB) of Treasury Division in the State.
H1: There is co-operation between the state audit department and the financial management branch (FMB) of Treasury Division in the State.
4. H0: Auditors in public service have no skill to cope with computerization of Government accounts.
H1: Auditors in public service have skill to cope with computerization of Government accounts.
5. H0: There are no factors that constitute hindrances to internal audit efficiency in public service.
H1: There are factors that constitute hindrances to internal audit efficiency in public service.
6. H0: Auditors in public sector are not competent in the course of their work.
H1: Auditors in public sector are competent in the course of their work.
1.7 Scope and Limitations of the Study
This study is designed to deal thoroughly with Government Accounting and Auditing in all areas including the problems inherent in public sector. However, in the course of this research i stumbled with series of constraints, pressure of work and non-availability of relevant materials that will aid this research work.
Auditing in public sector has since the beginning of the profession, become systematically associated with a much wider sense of Accounting. Transparent and prudent financial management has come to be recognized as critical to the integrity of a country and for gaining and retaining the trust of its citizens, such integrity and trust are sometimes lacking in developing countries especially Nigeria.
In carrying out this research work, I discovered that there’s need to Reconstruct the Auditing Standards, cash management, interest controls, debt management and to improve and modernize budgeting, accounting and reporting system so as to enhance efficiency and effectiveness in the economy.
1.8 Definition of Terms
The following terms are defined to show authority and scope of responsibility.
i. Accountant-General: This means the Accountant General of Nigeria who is the Chief Accounting Officer of the Government.
ii. Accounting System: means a systematic way of recording, analyzing, interpretation and presentation of transaction in financial terms.
iii. Auditor-General: is the Auditor General of a country who by his position is the chief Auditor of the Government accounts prepared by the Accountant General.
iv. Economy: is defined as the condition under which human and material resources of the appropriate quantity and quality are exchanged at the lowest cost.
v. Efficiency: This means the extent to which productivity is enhanced with a given input at a lower cost.
vi. Effectiveness: This is defined as the extent to which objectiveness or goals are achieved.
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