AUDITING AS AN AID TO ACCOUNTABILITY (A CASE STUDY OF ENUGU STATE POST PRIMARY SCHOOL MANAGEMENT BOARD (PPMB)

ABSTRACT

An economy moves as efficiently on inefficiently as the people who manage its affairs. Business cannot thrive if we do not have an adequate number of men with their requisite knowledge, skill and competence.

It is in recognition of these fact that an effort is made in this research work to show the impact of Auditing in public sector.

For the sake of clarity a and orderly presentation of relevant materials, the body of this work is divided into five chapters.

Chapter one is the introduction which considers among other things, the Auditing curiosity about Auditing. Historical background of the study, statement of problem, objectives of the study, research questions and hypothesis, significances of the study, limitations and delimitations and equally definition of some technical terms.

The second chapter discussed the review of related literature  which comprises different opinions from different authors. Auditing and accountability declined, origin and development of audit, public and short note of public accountability, government accounting procedures the role of internal audit unit, statutory positions, power and functions of auditor general and audit report.

The third chapter dealt with the methodology and design of the study that is made up of research design data analysis, test applied (personnal interview and questionnaires). oral interview, sampling procedures or methods, data collection (primary and secondary data) and questionnaire applied.

Chapter four x-rays the data analysis and presentation which includes analysis and interpretation of data from responses of the respondents.

The final chapter presents the findings, recommendation and conclusion. The samples of questionnaires and bibliography are under the appendix of the write-up at the back page. Also in the bank page is the application letter to the Enugu State Audit Department.

The structural arrangement was made to accommodate the size and complexity for audit work, which increases enormously with a corresponding effect on the operation of public offices.

These complexities resulted to the inadequate examination and verifications of the books and records in such a way as to uphold a true and fair view of transactions. This however leads to misappropriations and embezzlement of public funds. Sometimes even, defalcation occur. All these occur because there wasn’t effective control of book of accounts and the assets to the business.

In short, all these factors motivated the researcher to try into facts of and rudiment of auditing and explores the impact of auditing and the use of auditing as means of avoiding these anomalies. So auditing should be carried out in all public organisation if actually the yield by these organisation would be satisfactory.

CHAPTER ONE

Introduction

• Historical background of the study 6
• Statement of problem 7
• Objectives of the study 10
• Research questions 11
• Research hypothesis 13
• Significance of the study 14
• Scope, limitation and delimitations 17
• Definition of some technical terms 18

CHAPTER TWO

Review of related literature

• Auditing and accountability defined 22
• Historical origin and development of auditing 34
• The meaning of public and civil service 40
• Short note on public accountability 41
• Government accounting procedures 43
• The rate of internal audit department in public service50
• Statutory position, power and functions of he auditor general 54
• Audit report 59

 

CHAPTER THREE

Research design and methodology

• Introduction 64
• The research questions and hypothesis 64
• Research design 66
• Data analysis techniques 70
• Sample population 71
• Sample test applied 72
• Pilot study 74
• Questionnaire applied 74
• Limitations of the methodology 76

 

CHAPTER FOUR

          Presentation, analysis and interpretation of data

• Introduction 78
• Presentation of data 79

 

CHAPTER FIVE

          Findings, recommendation and conclusion

• Summary of research findings 84
• General examination of the problems of the auditors in the performance of their duties 86
• Conclusion 90
• Recommendations 91

Appendix 1                                                                    98

Appendix 2                                                                    99

BIBLIOGRAPHY                                                          102

 

 

CHAPTER ONE

INTRODUCTION

The question of how to increase efficiency and positive result in audit work in the public sector is a perennial problem in Nigeria, and one that is increasingly warring the generality of he people of this country.

The response has been to upgrade the quality of audit staff and widening of he powers conferred on audit institutions in the public sector. The need for the training of audit staff in modern techniques of auditing which is more effective and result oriented rather than restricting them to the traditional methods of ‘trick and turnover’ which is inadequate and outdated.

Public sector auditing is centered towards ensuring the proper and efficient use of public funds, development of sound financial management, the orderly executive administrative activities and the communication of information to the public through the publication of objective reports since these are necessary for the stability and development of the nation, there is the need to map out the machineries and methods of carrying out a research these functions effectively as to achieve a desired result.

In the past, the emphasis of an audit was on the traditional methods of auditing which has been mainly the compliance audit, seeing that all books and records comply with the laid down procedures and regulation. But now, there is the need for a shift of emphasis to modern concept of effectiveness and efficiency.

Based on these individual views of auditing and its functions, the researcher took a keen inherent to rest empirically auditing as an aid to accountability with to the Enugu state post primary school management board (PPMB).

The increasing incidence of fraud and misappropriation of public fund and property by the accounting officers and chit executives in the Enugu state post primary school management board posses a question as to whether auditing plays any role towards ensuring proper accountability in the state public service.

Auditing is ment to control, deter and find out any fraud or misappropriation of public fund or property by officers entrusted with such duties. It is because of this onerous task that the Enugu state audit department was established to appraise the work of those entrusted with the responsibility of accountability.

Government undertakes various transactions through its representatives or agencies and as such, they are required by law to give account of their stewardship. To achieve these purpose, the constitution of the federal republic of Nigeria provides a law established audit departments both at the federal and state levels section 125(1) of the 1999 constitution provides that there shall be an audit general for each state of the federation who shall be appointed in accordance with the provision of section 126 of this constitution. The sub-section (2) of this section provides that the public accounts o a state and all offices, ministries, parastatals and the courts of the state shall be audited by the auditor – general for the state who shall submit his reports to the House of Assembly of the state concerned, and for that purpose the auditor –general or any person authorized by him in that behalf shall have access to all the books, records, returns and other documents relating to those account.

The sub-section (3) of this constitution also states that nothing sub-section (2) of this constitution shall be constrained as authorizing the auditing – general to audit the accounts of or appoint auditor for government statutory corporations, commissions authorities, agencies, including all persons and bodies established by law but the auditor – general shall, (a) provide such bodies with

1. A list of auditors qualified to be appointed by them as external auditors, and from which the bodies shall appoint their external auditors and
2. A guideline on the level of lies to be paid to external auditors and

• Comment on their annual accounts and auditor’s report there on. The sub-section (4) of this section also states that the auditor – general for the state shall have power to conduct periodic checks of all government statutory corporations, commission, authorities, agencies, including all persons and bodies established by a law of the House of Assembly of the state.

Inspite of all these provisions and safeguards. One still hears or reads every now and them of the alarming rate of fraud and misappropriation of public funds and properties by those entrusted with their safeguards. In view of the foregoing, this study is aimed at appraising the functions of the Enugu state audit department, problems affecting its efficiencies performance and possible suggestion to enhance its effectiveness.

The researcher aims to examine the major cause of fraud or misappropriation of public funds in the state public service and offer useful suggestions to arrest the ugly situation. this study will be of immense importance for it will appraise the performance of the Enugu state audit department and assess the extent it has been able to achieve its objective.

The research will also offer useful suggestions on how best to achieve accountability in the state public service.

 

 

 

• HISTORICAL BACKGROUND OF THE STUDY

In oral interview with the chief internal auditor in the Enugu state audit department on the origin the audit department, he said. “the audit department is as old as Nigeria”. he said that the present Enugu state audit department had its root from the colonial masters. As of the time, there was one audit in the federation known as the colonial audit. The colonial master had their representatives in Nigeria and they were responsible to the Queen of England. The country was divided into four regions, East West, North and South. Each of the regions had its own audit department but still under the control of the colonial administration. This give rise to regional audits.

Section 61 (1) of the Eastern Nigeria 1958, constitution state, “there shall be a director of audit for the region whose office shall be an office in the public services of the region. In 1976, thee was a further creation of states in the country and it was then that the former Eastern Central State was divided into two viz; Anambra state and Imo state following this each of the states no w has her own audit department with a director of audit.

Section 118 (1) of the constitution of the federal republic of Nigeria 1979 states, ‘the director of audit of a state on the recommendation of the state commission subject to the confirmation by the House of Assembly of the state.

Following the creation of Enugu state in 1992, the state was empowered by section 25 (2) of the 1999 constitution of the federal republic of Nigeria and section 4(2) of chapter 13 of the audit law, to have its. Audit department in the state respect of post primary school management board, and is being headed by the state auditor –general and other members of staff are responsible to him.

 

• STATEMENT OF PROBLEM

There has been an entry of poor accountability in the states public services. A case in point is the recent radio announcement of over N27.3 million fraud in Lagos state and also a report on champion newspaper of the embezzlement of over three million naira methodology for Enugu state ecology last time. The problem is the identification of the reasons for the ugly situation and why the state audit department has not been able to bring it to a health.  The Enugu state government is loaded with a lot of financial burden and as such cannot afford to continue losing most of her funds by way of fraud and misappropriation. This calls for proper accountability and effective working of the machinery public established for excreting control over public fund.

The problems of auditing affect both the management and audit unit, company’s shareholders board of directors, researchers and businessmen. It therefore need to be discussed to find solutions. From the view point of misconceptions, superstitions, and prejudices of auditing and its functions as mentioned earlier, we are sure:

1. That inadequate auditing leads to misappropriations, embezzlements and insincerity.
2. That organisations do not perform well due to inadequate auditing.
3. Inadequacy of information in an organisation hinders the efficiency of the operation of audit in the post primary school management board.
4. Non-challent attitude on the part of some staff in an organisation constitutes a problem to the internal audit department of an organisation.
5. Inadequate payment of salaries and remunerations of the workers in an organisation causes fraud, embezzlement and misappropriation of fund in the post primary school management board.
6. Poor line of communication existing between the management and the internal audit unit causes inadequacy of internal control in the post primary school management board (PPMB).
7. Poor division and assignment of responsibilities in a public sector causes mismanagement of public fund.
8. Lack of management skills hinders auditing practice in the post primary school management board.
9. Poor delegation of authority and improper appointment of people to assume duties also contribute to the mismanagement of public fund.

Among other problems, this research work will be keenly undertaken as part of my efforts to find out though the methodology and design of the study whether or not auditing is an instrument for ensuring accountability or whether the impact of auditing is positive or negative. It is my belief that this research work will not only after solutions to the problems but will highlight the main functions of auditing and useful suggestions.

 

• OBJECTIVE OF THE STUDY

The sole aim of this research work is to evaluate and identify.

1. The roles being played by external and internal audit department towards the protection of public funds and properties.
2. The extent these roles have been achieved in the state.
3. The extent of compliance with the financial regulations on public fund by the authorities concerned.
4. The problems facing the government auditors, which hinder their performance.
5. The effectiveness of audit report and their implementation.
6. The find out whether the standard of auditing has fallen in recent year and if so.
7. What is responsible for this.
8. To evaluate the impact of auditing in a public sector with a view of making useful suggestions for the improvement of the programme in the post primary school management board.
9. To make management understand that public fund is not an individual fund and as such should exercise professional skill on it.
10. It is also aimed at making the staff on the internal audit designation of carrying out continuous internal audit.             
11. The study also aims at making the auditors understand that they should act as watch dog and not bloodhound.

 

• RESEARCH QUESTIONS

          The researcher made use of the following sleeted research questions in this study. They are:

1. What are the role being played by the internal and external audit department towards the protection of public fund and properties?
2. To what extent have these have these roles been achieved in the Enugu state post primary school management board?
3. what is the extend of compliance with the financial regulations in fund by the authorities concerned?
4. what are the problems facing the government auditors that hinders their performance.
5. Has the standard of Audit fallen in recent year? And if so.
6. What are responsible for this?
7. What are the impact of Audi tics in a public sector.
8. Do management understand that public fund is not a individual fund and as such should exercise professional skill on it?
9. Do the staff of the internal Audit department understand what Audit is all about and the important of caring out continues internal Audit
10. Do Auditors understand that they should act as watch dog and not bloodhound.

1.5       RESEARCH HYPOTHESIS

      In order to arrive to a reasonable conclusion in the study of Auditing as an Aid to accountability, it is very eminent to formulate a set of testable hypothesis based on available data. To ensure the true and fairness of this study, the under mentioned hypothesis should be tested in the study.

 

Hi.  Auditing Aids accountability in the Enugu state post primary school management board.

Ho.   Auditing does not Aid accountability in the Enugu state post primary school management board.

Hi.    Inadequate auditing leads to misappropriation embezzlement and defecation.

Ho.  Inadequate auditing does not lead to misappropriation embezzlement and defalcation.

Hi.      Internal Audit unit in the management board is a watchdog.

Ho.      Internal Audit unit in the post primary school management board is not a watchdog.

Hi.         Auditing has lost its public taste.

Hi.         Auditing has not lost its taste.

 

• SIGNIFICANCE OF THE STUDY

     The growing nature of the Nigeria society and the complexity of Governmental operations have today given rise to frequency loss of public fund. The significance of this study can be from the no of tribunals, special investigation panels (SIP) being set up to look into loss of public fund. If the field auditors are given a free hand to conduct their inspection in a manner capable of achieving a desired audit result, the tribunals and panels should not arisen. To some accounting clerks and other staff, accounting sound fearing, shivering and at time swearing. With the help of this research, they will be exposed fully to the main rudiments and purpose of auditing in the management of public fund. No doubt, the outcome of the research will be of great aid to the non-accountants managers, students, the staff of the state of post primary board and the interested readers by revealing some of the important solution that need to be considered in the programme. The solutions if considered properly will not only increase the effectiveness and efficiency of the programme but will also will stimulate the management board and the businessmen whom the Auditing is meant for. This material will also be significant in the sense that it will highlight  the functions of Auditing, the role it plays in our society and the auditors in the state post primary school management board communicate with their functionaries. Again, the concept of compliance and efficiency were examine to determine whether to sacrifices complain totally for efficiency or to modify it and in what precise way, may the criterion by pursed .What administrative, legal or constitutional adjustment are necessary ie any to effect the desired change and to what extent may the change be brought to any adjustment in the constitution, law and administrative regulations and financial circulars. In a nutshell the significance as follows;

• The auditing will find this work very eminent for it will explore deeply their areas of operation and the section of the constitution that empowered the operation of Audit in the public service.

• A though this work is referenced to the state board, the member of the board of directors and the shareholders will also find this work useful for it will make them understand the usefulness of carrying out a research contemnors audit in their establishment.
• It will also make them understand that adequate remuneration of their staff will reduce misappropriation and embezzlement in their establishments.
• The management both in the private and in the public sector will also be taught the need to put the machinery in motion towards establishing adequate internal check which will certify the efficiency and effectiveness of their internal control.
• The state Audit department which is the central focus of this work will also be benefit from this research ie the suggestions made to them will be fully implemented.
• The students and would be researchers who would want to research on a similar topic will also has provided some researchable question for them.

1.7               SCOPE AND LIMITATIONS AND DELIMITATION

The scope of the study centered on the usefulness of auditing in a public sector titled, “Auditing as an aid to accountability” with a particular reference to the Enugu state post primary school management board. It also looked into the problem of the internal audit department and solution to their problems. The internal audit  units of some selected government establishment s in the state were also part of this work. coming to limitation of this study, the writer spend much time and money on transportation, writing of this manuscripts and collation of data. Again, a lot of difficulties such as harassment, redtap office procedures were uncounted during the curse of the research work. Time and space also limited the volume and ingredients of this paper. Some of this limitations forced the researcher to purposefully eliminate some aspects of this research. All thing being equal, all department in the state were supposed to be and reported upon, but this will make this work look too voluminous and time consulting. However, these limitations did not prevent the writer from bringing this project to justifiable end.

 

1.8    DEFINITION OF SOME TECHNICAL TERMS

It is very eminent to define some professional terms and language used in this work to make it easily understandable to interested readers of other disciplines.

PUBLIC FUND; This the government independent and accounting entity with a self-balancing set of accounts recording cash and or other resources together with all related liabilities, segregated for the purpose of caring on specific activates or attaining certain objectives in accordance with special regulation, restriction, or limitation.

AUDIT;      Ajembi O.A (1995) describe audit as an examination by an individual or a firm of a set of financial statement and to the underlying books and records which result, the auditing provides an opinion on the financial statement.

ACCOUNTABILITY;   This simply defined as the process of keeping and documenting all the relevant data of a event.

STEWARDSHIP A COUNT: This is an account required of the stewards or agents to render to the person they are subject to the management of a firm render stewardship account to the members of the boards of directors.

COMPLIANCE AUDIT: This is a kind of audit method carried to ensure that all books and records are in agreement with the laid down procedures and regulations.

 

NOTES

Howard R. Leshie, Principles of Auditing, 20^th Edition (MacDonald

and Evans: London and Plymouth (1981) P. 1 and 2.

Millicamp A. H. Auditing, An instructional manual for accounting

students, 3^rd Edition (D. P. publications Ltd Estheigh, Hampshire 1984).

Ikeoma A. N, “Definition of Audit, objectives of audit and qualities of

an auditor”. Introduction lecture to newly recruited auditor at Audit department/headquarter Enugu 11^th Jan 1988.

Ibueze J. C. “Accountability and social objectives”  Business Time,

Monday, March 31, 1995. p 8.

Federal Republic of Nigeria – company and Allied Matters Decree,

1990. Federal Government printers Lagos, 1990

Institute of Chartered accountant s of Nigeria members

Handbook.

1. C. Nwabueze: Guide to Audit. Immaculate Publication Ltd,

Enugu, 1997.

 

Chinedun Nwodo, Internal Control 2^nd edition. Gethsemane

Consulting & publishing. Enugu 1997.

Okorie Onovo, Understanding Advanced financial accounting part two

immaculate publication Ltd Enugu, 1998.

Watter W. Bigg – Spicer & Pager’s practical Auditing 15^th Edition,

HFL publishers Ltd London, 1972,

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