THE IMPORTANCE OF INTERNAL AUDIT OF PUBLIC SECTOR MANAGEMENT A CASE STUDY OF MINISTRY OF FINANCE, IMO STATE

TABLE OF CONTENTS

Title page

Approval page

Dedication

Declaration page

Acknowledgement

Abstract

Table of contents

CHAPTER ONE

Introduction

Background of the  study

Statement of research problems

Purpose and objectives of the study

Research questions

Hypothesis

Significance of  the study

Scope of the study

Limitation of the  study

Definition of term

CHAPTER TWO

Literature review

Historical background

Conceptual framework

Theoretical consideration

Review of current literature

CHAPTER THREE

Methodology

Design of the study

Population of the study

Sample size of the study

Sampling techniques

Instrumentation

Instrument validation

Reliability of the instrument

Procedure of data collection

CHAPTER FOUR

Data presentation, analysis and interpretation

Result and data analysis

Test of hypothesis

Discussion of findings

CHAPTER FIVE

5.0  Summary, conclusions and recommendation

5.1  Summary

5.2  Conclusion

5.3  Recommendations

5.4  Suggestion for further research

Bibliography

Appendices – Research questionnaires workings

CHAPTER ONE

1. INTRODUCTION

There is a general awareness all over the world of the need to pay greater attention to the improvement of public sector management. The reason is obvious government in most if not all nations, constitutes the largest single business entity and in many places the care of the economy. It’s pattern of expenditure through various parastatals, agencies and commissions or manners of resources allocation determines the extent to which accountability for economy, efficiency and effectiveness can be achieved. Hence, initiative is being taken all over the world towards improvement of the standards of accounting and auditing in government. The United Nations department for technical co-operation for development and international consortium on government (1987) has also joined in a world wide crusade for more effective management functions in public sector of which the key ingredients is “AUDITING”.

The development of modern accounting and auditing should be credited to great organization in commerce and industry which ahs taken place since the industrial resolution. At the time when there were small business transactions and properties took active part in the management of their business, it was perhaps felt  that there was little or no need for auditing. But as business transaction increased and investment in public sector came along, the need for accountability for find and properties of the business became necessary. On this note, government made provision for the account of public sector to be examined and reported on by persons other than the people managing the business. Thus, auditing and internal audit continue to grow with the increasing complexity in the modern business and accounting systems.

In the public sector management, internal audit serves as a good instrument, internal audit cannot be discussed without discussing internal control and it’s nature. Internal control is defined according to the auditing guidelines as the “whole system of control financial and otherwise established by the management in order to carry on the business of the enterprise in an orderly and efficient manner, ensures adherence to management policies, safeguard the asets and secure as fara s possible the completeness and accuracy of records”. Internal control extends beyond accounting and financial functions. It includes method adopted by management to delegate authority and assign responsibilities for various functions. Apart from internal audit, it comprises also of internal checks, accounting controls and other forms of control.

According to  Okezie (1995:46) internal audit is therefore defined as an independent appraisal function within an organization for the review of systems of control and quality of performance, as a service to the organization. It objectively examine, evaluate and reports on the adequacy of internal control as a contribution to the proper economic, efficient and effective sue of resources. Internal audit department is responsible to the accounting officer. The public sector accounts and records are audited by the internal auditor and a report to that effect is submitted to the accounting officer.

According to Ogbonna (1938:20) public sector accounting deals with the account of government institutions or organization and as an information tool that provides management with primary data which can be sued with other data generated else where in the system to develop analytical device for purposes of preparing economic development plans. Public sector auditing on the other hand means an independent examination of an expression of opinion on the financial statement of government establishment and in compliance with the enabling decree. The public sector auditor has to satisfy himself that the account have been prepared in accordance to statutory and constitutional requirements and regulations and that proper accounting practices have been observes in their complication. The duties of an external auditor in relation to internal audit in government establishments are similar to those applied other business organizations. The external auditor should consider to which extent he should rely on the work of the internal auditor.

Since modern internal auditing began to flourish as organizations rapidly expanded, the problems of widespread operations posed serious challenges to management control and hence the need to delegate responsibility and authority to many levels, supervision to become necessary.    

In view of the delegation, management had to turn to internal auditors for assistance in maintaining surveillance over management control network. Hence, internal audit has direct bearing on public sector management.

1.1  BACKGROUND OF THE STUDY

       The ministry of finance is one of the twelve ministries of the Imo state government. It came to being on creation of Imo state in 1976. The ministry has the ultimate goal of working towards the attainment of health economic growth. It’s basic objective is to formulate and execute ideas designed to facilitate the effective management of the financial resources of the state. The chief executive of the ministry is an honourable commissioner in the person of chief Ekwegh. A permanent secretary in the person of Mr. C. Okoye and the accountant general Dr. Emeka Adinmadu are assisting him.

       There are six functional departments in the ministry, these departments are:

Department of administration and finance

Department of accounts

Departments of planning research and statistics

Investment and loan department

Department of planning operations

Department of accounts operations

This is the historical evolution of the topic which is seen and explained briefly above with the permanent secretary and the accountant general who is also assisting him in the Imo state ministry of finance.