ABSTRACT
This study is to analyze those factors which will reveal the purpose of auditing being available too far proper accountability of public funds over the years, there has been continuing need to strengthen the role of auditing as a veritable tool for efficient accountability of local government councils. This is to prevent various problems militating against councils were created. Among the various means adopted to combat these problems. Auditing stand out as one veritable tool in ensuring that there is efficient accountability in local government council. The divergent views scholars were laid so as to achieve the stated objective of the study the study made use of both primary and secondary data questionnaires were distributed of the council secretariat coupled with discussions and observations for the collection of data. For research questions were put forward and were analyzed using the simple percentage statistical tool. Outcome of these analyzed showed that the audit function of the councils has always had far reaching positive impact on the efficient accountability of public funds of the council. Certain weaknesses were also revealed which were management reluctance at implementing auditor’s proposal to enhance the council role of auditing as veritable to for efficient accountability of public funds and extravagance. As a result of these finding, the study submits that management should objectivity and promptly respond to such proposal and prome wasteful spending. It was also recommended that management should make efforts to improve the perceived weak internal control system of the council.
TABLE OF CONTENTS
Title i
Approval ii
Dedication iii
Acknowledgement iv
Abstract vi
Table of contents vii
CHAPTER ONE – INTRODUCTION
1.1 Background of the study 1
1.2 Statement of problem 2
1.3 Objective of the study 3
1.4 Research Question 3
1.5 Significance of the study 4
1.6 Scope of the Study 4
1.7 Plan of the Study 4
1.8 Limitation of the Study 5
1.9 Definition of Terms 5
CHAPTER TWO – LITERATURE REVIEW
2.1 introduction 7
2.2 Development of Government Auditing in Nigeria 7
2.3 Statutory Auditing for Auditing in Nigeria 8
2.4 Public Accountability 18
2.5 Auditing 19
2.6 Internal Audit 19
2.7 External Audit 21
2.8 System Auditing 22
2.9 Audit Standard 22
2.10 Factors Affecting Efficient Fund Management 23
2.11 Financial Management 24
2.12 Aids to Proper Accounting of Fund 24
CHAPTER THREE – RESEARCH METHODOLOGY
3.1 Introduction 29
3.2 Research design 29
3.3 Population of the Study 29
3.4 Sample Size 29
3.5 Sampling Techniques 30
3.6 Research Instrument 30
3.7 Validity of the Instrument 31
3.8 Reliability of the Instrument 31
3.9 Method of Data Collection 31
3.10 Method of Data Analysis 32
CHAPTER FOUR – DATA ANALYSIS AND INTERPRETATION
4.1 Introduction 33
4.2 Presentation and Analysis of Data 33
4.3 Discussion of Findings 39
CHAPTER FIVE – SUMMARY CONCLUSION AND RECOMMENDATION
5.1 Summary 40
5.2 Conclusion 41
5.3 Recommendation 41
5.4 Suggestion for Further Study 42
References 43
Questionnaire 44
CHAPTER ONE
INTRODUCTION
Background of the Study
Accountability in its simplest form means the duty to answer for the responsibility that has conferred on someone. It indicates the existences of at least two parties, one who allocate responsibility (i.e higher authority) and the other its (i.e. lower authority). With the understanding to reports upon the manner or system in which it has been discharged or taken off.
More formally, accountability is an external control device by which public office holders and institutions are made to give documentary explanation for their action and decision. Accountability is regarded as synonym for stewardship. The document factor in accountability is control, there must be an existence of control measures before accountability can be present and it is safe to say that where there is no control there will be no accountability.
Public accountability is of various forms: political accountability, legal accountability, management accountability, financial accountability, fiscal accountability etc.
While auditing on the other hand is a process carried out by suitable qualified auditor. The account of business entities including limited liability companies, professional firm are examine in such detail as it enable the auditors to form an opinion as to their true and fairness. The opinion is their curtail in an audit report addressed to those parties who appointed the auditors.
Agbawe (2005), defined an audit as an examination and inquiry into statement of accounts the underlying record document, assets and liabilities by an independent person with a view to express an opinion as to the accuracy and the correctness of the financial statements. The role of an auditing in promoting accountability i.e. collection and disbursement of public fund requires special consideration and disciplined in a developing country like Nigeria be public fund is ought to be touched with most scrupulous consciousness of honor.
Statement of the Problem
In every research work is undertaken with the motive to solve a specific problem or to increase knowledge in a chosen area of study. The problem is usually in the form of a knowledge gap which the researcher wishes to fill by generating the needed information.
To this end, this research work aims to examine the following problems as they affect the efficient application of auditing in the management of public fund. The major problems this research aims to look into are:
- The prevention or prevalence of fraudulent practices in virtually all ministries and department in resulting in the loss of public funds.
- Focus also with the place on why well-qualified certified chartered accountant are not staying in public sectors.
- General apathy on the part that ministries and departments in reporting to audit queries.
- To examine the impact of ministries and local government incurring huge expenditure in excess of their budgetary allocation without asking for supplementary appropriation.
- Financial irregularities emanating from ignorance of non-competence with financial and stores regulations on the part of officer concerned.
Objectives of the Study
Yomere and Agbonifo (1999), the objectives of the research investigation refers to what the study seek to achieved, they are the purposes of the study in terms of knowledge gap it intend to fills. Objectives of the study will include amongst other things: - To ascertain how the prevalence fraudulent practices virtually amongst all the departments has resulted to the loss of public funds.
- To determine to what extent the general apathy on the part of Ministries and departments in responding to audit queries has helped the efficient management of public funds.
- To examine the roles of well qualified accountants in a proper management of funds in local governments.
- To ascertain the extend to which financial irregularities amounting from ignorance of regulation on the part of officers concerned has imparted on proper accountability of public funds.
Research Questions
Based on the foregoing research objectives which aims at providing answers to the following research questions: - Why there is a need for an audit in the council?
- Is there any indirect beneficial interest?
- And also does the audit department have access to every account in the council?
- Does the council have an internal audit department?
Significance of the Study
This research work remains very relevant and important because it is designed to elicit various ways of handing public monies. The responsibilities of officers controlling public funds also the base for which funds are collected. The researcher will also identify machineries used to enhance proper accountabilities and which organ of government is more independence an auditors will promote accountability, wisdom and management of fund in the public sector.
While to the public sector as a whole, it hoped that this research investigation will offered them the opportunity to adequate understand the workability technical characteristics as well as the consequences of the instrument of auditing and make necessary modification to its stewardship rule.
Again, the study will also prove important for those who are interested in having an in-depth knowledge of the subject matter. Most importantly, it could take off points in advancing the frontier in subjects matter.
Scope of the Study
In other to get true and well-focused analysis, the scope of the research work is limited to government funded agencies with a strict focus on Isoko South Local Government Council.
In addition, this study is not undertaken to revealed fraud or weakness in council rather it is carried out to see whether auditing could be an aid to effective and efficient utilization of the fund available to the council for its operation.
Plan of Study
This research work for the sake of convenience is divided into five chapters. Chapter one entails the general introduction in the project topic “auditing as a veritable to for efficient accountability of public funds”.
Chapter two talk about the review of relevant literature. Chapter three is on research methodology, chapter four deal with data presentation and chapter five have to do with the summary, findings, conclusion and recommendation.
Limitation of Study
The researcher in course of this work encounters the following factors which serious stoud as obstacle to this research work.
Time: The researcher is trying to meet up with the time of completion of the project had to work harder, pressure, most time I even had to miss lecture so as to up with appointment relating to data gathering.
The government policies which restricts civil servant from given out certain information also militated against this research work.
The attitude of many of the respondents towards the researcher was also factor to contend with.
Financial constraints – lack of enough funds was also another obstacle encountered by the researcher.
But in all this obstacles, the information at my disposal will be able to achieve the stated objectives
Definition of Terms
In other to avoid problems and misinterpretation of words some technical and unfamiliar terms that the non-specialist my stumble a cross in the course of reading this work are defined below:
Auditing: Auditing can be taken as an examination of accounting records and other operational material to a view to ascertaining whether they are correctly and competently reflect the transaction or purpose to which they are related.
Control: This is the monitoring of activities to ensure their conformity to laid down plans and procedures.
Stewardship: Used interchangeable as accountability that is the act of rendering account of what has been entrusted to one’s care.
This is an unnecessary delay either natural or induce in government establishment and other public enterprises.
Circumvention: This means to get better of a contract or prevent a contract from being carried out. Finding way to get round a contract so as to evade calling for tenders.
Deletion: Strike of or take out of contract imprinted or written forms. The act of striking of public funds.
Scrupulous: This is the act of being careful and paying attention to every detail being concerns in the act of getting information in the organisation.
Elicit: Is the act of getting information or a reaction from somebody.
CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
This chapter is aimed at making an in-depth and extensive review of related literatures that have been written generally and specially on the topic. It is also aimed specially or importantly at making critical analysis and evaluation of several texts in areas that will be helpful and instrumental to achieving the objectives of the research.
2.2 Development of Government Auditing in Nigeria
The development of auditing in Nigeria had its roots in colonial country’s experience. The U. K. Exchange and Audit development as it operates today from the basic on which the Federal Auditing Development in Nigeria Act was established by the Exchequer and Auditing Department Act of 1866.
This was followed by the Exchequer and Audit Department Act of 1902. The Act extended the Controller and Auditor general’s interest into stores account, factory, dockyard account etc. In 1906 the Colonial Auditor Department was set up as a separate organisation responsible for colonial audit under a Director General to which the Auditor of Lagos was responsible in the manner prescribed by the general instruction and rules of Colonial Audit Department. There was a fixed formula applicable to all the colonies, there was also a programme of work approved by the Director General, who later become known as the Director General of Overseas Audits to be followed as a Manner report was expected to convene a number of prescribed items. The annual report was to be accomplished by certain prescribed statement In order to ensure a uniform audit in the country Nigeria, some Act of law were promulgated; some of these are examined below:
2.3.1 Audit Act of 1958
The first statutory authority for audit in Nigeria came in 1956 with the publication of the Audit Ordinance passed by parliament on 1st April 1957 now the Audit Act. This was purported to give the achievement of internal self-government. It was a reflection of the British Exchequer and Audit Department Act and still basically provided the supervision office of the Direct Oversea Audit. The Federal Government was that he should satisfy himself that:
i. All responsible precaution have been taken to safeguard the collection of public monies and that law relating to them have been duly observed and that all directions and instruction relating to have been obeyed.
ii. All monies appropriated for and otherwise have been expanded and applied for which the grant made by the legislature were intended to provide and that expenditure confirming to the authority which governs it.
iii. Adequate regulation existed for the guidance of storekeepers and store accountant and that they here been duly observed with regards to the annual Account submitted to the Auditor general and the Accountant-general the Audit stipulates that within 8 months of the close of each financial years the account signed and presented to the Auditor-general of the federation with the certificate of Audit and a report upon his examination and Audit of all account relation to the money. Stamps, securities store and other government properties.
This act was amended subsequently to the attainment of independence in 1960 to erase the last vestiges of u.k control, by the 1979 constitution, however, the Auditor-general now transmits the account report to the natural Assembly.
2.3.2 Constitution of the Federal Republic of Nigeria 1979
i. There shall be an Auditor-general for the federation who shall be appointed in accordance with the prevision of section 80 of this constitution.
ii. The pubic account of the federation and of all officers court and authorities of the federation including all persons and bodies established by laws entrusted with the collection and administration of public monies and assets, shall be Audited and reported on by the Auditor-General for the purpose, the Auditor-general or any other person authorized by him in that capacity returns and other document relating to account.
iii. In the exercise of his function under the constitution the Auditor-general shall not be subjected to the director.
iv. The Auditor-general shall submits his report to the house of national assembly and the house shall course the report to be considered by a committee of the house of the national assembly responsible for public accounts.
2.2.3 Section 80 of 1979Constitution States
i. The Auditor-general of the federation shall be appointed by the president on the recommendation of the federation civil service commission subject to confirmation by the national assembly.
ii. Power to appoint person to act on that capacity shall vest in the president.
iii. Except with the section of a resolution of national Assembly, no person shall act in the office of the Auditor-general for a period exceeding 6 months.
2.3.4 Section 81 States
The person holding the office of the Auditor-general of the federation shall be removed from office by the president acting in an address supporter by two-third majority of the committee of the national Assembly responsible for public account praying that he be so removed for inability to discharge the function of his office (whether arising from infinity of mind or any cause) or for misconduct.
The Auditor-general shall be removed from office before such retiring ages as may be prescribed by law, services in accordance with the prevision of this section.
2.3.5 Provision of Decree 43 of 1988 Civil Services Reform
Section 39, the Auditor-general
Shall have power to sanction and surcharge any officer as stipulate as guideline for government offences and sanction.
Have access to the president of representative of significant importance of serious.
May notify the president of Audit of Significant importance and serious prepayment of Audit quires for which the accounting officer of the ministry or extra-ministerial department is liable or responsible.
2.3.6 Implication of the 1988 Civil Service Reform for
Accounting in local Government Administration
The local government chairman as chief executive and accounting officer.
The 1988 civil service reforms have among other things also significantly altered the location of the primary responsibility for accounting and financial work in the local government tier, constituent with the new policy to least primary financial responsibility on the three level of government, the present desperation is that the local government chairman is also the chief executive and accounting officer. This affected the former arrangement (as contained in regulation 103 of finance control and management Act) which made the permanent secretary of a ministry of the Administration head of a department all reference to the secretary in the prevailing local government financial memoranda are therefore have forth to be constructed as the chairman of the local government. The responsibilities of the chairman are as follow:
He shall observed and comply fully with cheek and balances spoilt out in the existing guidelines and function governing receipts and disbursement of public funds and other asset entrusted to his care and shall be liable for any bleach therefore.
His accountability shall not case by virtue of his leaving office and he may be called at any time offer leaving office to account for his tenure as chairman.
Give chairman as chief executive and accounting officer face periodic check in order to ensure full inference to the financial Act of 1988 and all its amendment to this end.
All instruction relating to expenditure of public account by the accounting officer shall be in writing.
All accounting as chief shall responsible to account to the public accounts committee for all monies votives for each department and shall be peculiarly liable.
AUDITING AS A VERITABLE TOOL FOR EFFICIENT ACCOUNTABILITY OF PUBLIC FUNDS A CASE STUDY OF ISOKO SOUTH LOCAL GOVERNMENT COUNCIL
