Effectiveness Of Internal Audit As An Instrument Of Improving Public Sector Management

This study was carried out to examine the effectiveness of internal audit as an instrument of improving public sector management, using Imo State ministry of finance as a case study. The study was carried out to review the implementation of corporate policies, plan and procedures in all areas of the public sector management with a view to solving the problem of under staff and under resources and prevent arrears of work in the public sector management through the internal audit, review the accounting systems and related internal controls in the public sector management to solve the problem of inadequate knowledge of electronic data processing this causes ineffectiveness in auditing computerized systems, examination of financial and operating information for management implement, including detailed testing of transactions, payment balance so that the staff of the internal audit will renumerated, special investigation of ways of improving the public sector management through the education of the staff of the internal audit, and advice management and ensure that the internal audit staff are adequately remunerated and motivated. The survey design was adopted and the simple random sampling techniques were employed in this study. The population size comprise of auditors of ministry of finance, Imo State. In determining the sample size, the researcher conveniently selected 65 respondents and 50 were validated. Self-constructed and validated questionnaire was used for data collection. The collected and validated questionnaires were analyzed using frequency tables. While the hypotheses were tested using Chi-square statistical tool. The result of the findings reveals that the application of effectiveness of internal audit improve public sector management. Furthermore, the study also revealed that effectiveness of internal audit eliminate fraudulent activities in the public sector management. Therefore, it is recommended that since internal audit can assist management in meeting its desired goals, there is need for proper empowerment of internal auditors to acquire the requisite skills and technique in order to be able to face the changing complex operation in public sector organizations. To mention but a few.

Introduction

1.1 Background to the Study

The significance of public sector management can be assessed in terms of its impact on the nation"s economy. The public sector is represented by the tiers of government, federal, State, local government and the parastatal. The objective of the public sector is the provisions of goods and services at reasonable cost, in contrast with the privet sector. The extent of Management economy, effectiveness and efficiency in the sector determines how well a government can cater for the welfare of the populace. There is therefore an every rising need all over the world for improvement in the public sector.

In fine turning the public sector management, internal audit serves as a good instrument.

Imo state ministry of finance owerri is as old as the state itself. The ministry came into being in 1976, following the state creation carried out by the then head of state, Late General Murtalar Mohammed. What is today known as ministry of finance Owerri Imo. It started operation at No. 145 Douglas Road Owerri when it became necessary that civil public servant of Imo Sate origin to leave Enugu for their own state.

Accordingly, the first military government of Imo state, Navy Commander Ndubisi Kanu, through the ministry of works awarded a contract of two secretariats complex Orlu Road and Okigwe Road following the completion of the secretariat spanning to Orji Town. Until 23rd may 2005 when the two secretariat complex were relocated to their permanent/new site at port Harcourt road. The permanent site has ten structural blocks, however ministry of finance is in block four (4).

Department, ministry of finance owerri has six departments namely:

Department of planning research and statistics.

Department of accounts.

Department of administration and finance.

Department of accounts production.

Department of treasury operation.

Department of investment and loans.

Each of the department is headed by a director on grade level sixteen. The commissioner is a political head while the permanent secretary is the accounting officer. The department of treasury operation is headed by the accountant general of the state. The ministry of finance has another quiz bodies like board of internal revenue, the finance brokers etc

1.2 Statement of the Problem

These problems have been identified to account for inadequate internal auditing in the public sector. Internal audit department have become a dumping ground for incompetent and unqualified staff. Those staff through and higher qualify job always expected from the internal audit department. The event of computer has affected performance of the staff because the lack of knowledge of electrical data processing (EOP).

The staffs of internal audit department are poorly enumerated and this makes them to lose interest in their job and works are done ineffectively. Hostility of other staff affects the objectivity desire from the internal auditors and they end up with poor reports. The high fraudulent tendencies make its sight of internal auditors repulse other staff..

1.3 Objectives of the Study

The purpose of the study is to examine the the effectiveness of internal audit as an instrument of improving public sector management, using Imo State ministry of finance as a case study. Specifically, the objectives of the study are as follows:

The review the implementation of corporate policies, plan and procedures in all areas of the public sector management with a view to solving the problem of under staff and under resources and prevent arrears of work in the public sector management through the internal audit.

To review the accounting systems and related internal controls in the public sector management to solve the problem of inadequate knowledge of electronic data processing this causes ineffectiveness in auditing computerized systems.

Examination of financial and operating information for management implement, including detailed testing of transactions, payment balance so that the staff of the internal audit will renumerated.

Special investigation of ways of improving the public sector management through the education of the staff of the internal audit.

To advice management and ensure that the internal audit staff are adequately remunerated and motivated..

1.4 Research Questions

The following questions were formulated to guide the study based on the research objectives;

Does the application of effectiveness of internal audit improve public sector management?

Can the use of effectiveness of internal audit improve public sector management?

To what extent does effectiveness of internal audit improve public sector management?

Does effectiveness of internal audit aid management in the achievement goal?

Does effectiveness of internal audit eliminate fraudulent activities in the public sector management?

1.5 Research Hypothesis

Ho: There is no significant effect of internal audit on the efficient accounting system and strong internal control in the public sector management.

Ha: There is a significant effect of internal audit on the efficient accounting system and strong internal control in the public sector management.

1.6 Significance of the Study

The need for effective internal audit in the public sector cannot be over emphasized. The public sector concerns everybody in the society and the welfare of the populace depends on the effective management of the public sector resources. Internal audits departments maintain goods, records and protect cash and other assets; hence the importance of this study is obvious and includes:

It will help to achieve effective management by management being tied with quality analysis, appraisal, findings and recommendations in every activity reviewed.

The appraisal of the soundness adequacy and application of accounting financial and other operating control will ensure efficiency in all units of the sector at reasonable cost.

It will help to ensure that management policies and government policies are adhered to by all the departments and members of organizations.

The society at large will benefit if the internal audit department in the public sector are able to monitor the use of resources in the pursuit of the defined government objectives.

The external auditors job will become much easier and assistance of the organization safe guard..

1.7 Scope of the Study

This study focuses to examine the the effectiveness of internal audit as an instrument of improving public sector management, using Imo State ministry of finance as a case study. However staff of ministry of finance, Imo State will form our respondents.

1.8 Limitation of the Study

Like in every human endeavour, the researcher encountered slight constraints while carrying out the study. Insufficient funds tend to impede the efficiency of the researcher in sourcing for the relevant materials, literature, or information and in the process of data collection, which is why the researcher resorted to a limited choice of sample size. More so, the researcher simultaneously engaged in this study with other academic work. As a result, the amount of time spent on research will be reduced.

Moreover, the case study method utilized in the study posed some challenges to the investigator including the possibility of biases and poor judgment of issues. However, the investigator relied on respect for the general principles of procedures, justice, fairness, objectivity in observation and recording, and weighing of evidence to overcome the challenges.

1.9 Definition of Terms

Internal Checks:

These are those checks on day to ay transactions which operate on continuous basis. It covers the detection of fraud or errors and of inferior quality of work. It involves a lot of matters such as the delegation of authority and division of work, the method of recording transactions and the independently ascertain totals against which a large number of individual transaction can be proved.

Accounting Controls:

Accounting control are those portions of internal control system which affect the reported accounting figures.

Financial Regulations:

These are set of rules of procedures issued by the government to guide the conduct of financial transactions in all department of government; they are issued under the authority of the financial (control and management) act of 1958 as amended and therefore have force of law.

1.10 Organization of the Studies

The study is categorized into five chapters. The first chapter presents the background of the study, statement of the problem, objective of the study, research questions and hypothesis, the significance of the study, scope/limitations of the study, and definition of terms. The chapter two covers the review of literature with emphasis on conceptual framework, theoretical framework, and empirical review. Likewise, the chapter three which is the research methodology, specifically covers the research design, population of the study, sample size determination, sample size, and selection technique and procedure, research instrument and administration, method of data collection, method of data analysis, validity and reliability of the study, and ethical consideration. The second to last chapter being the chapter four presents the data presentation and analysis, while the last chapter(chapter five) contains the summary, conclusion and recommendation.

Summary, Conclusions and Recommendations:

5.1 Introduction

This chapter summarizes the findings on the the effectiveness of internal audit as an instrument of improving public sector management, using Imo State ministry of finance as a case study. The chapter consists of summary of the study, conclusions, and recommendations.

5.2 Summary of the Study

In this study, our focus was to examine the the effectiveness of internal audit as an instrument of improving public sector management, using Imo State ministry of finance as a case study. The study was specifically focus to review the implementation of corporate policies, plan and procedures in all areas of the public sector management with a view to solving the problem of under staff and under resources and prevent arrears of work in the public sector management through the internal audit, review the accounting systems and related internal controls in the public sector management to solve the problem of inadequate knowledge of electronic data processing this causes ineffectiveness in auditing computerized systems, examination of financial and operating information for management implement, including detailed testing of transactions, payment balance so that the staff of the internal audit will renumerated, special investigation of ways of improving the public sector management through the education of the staff of the internal audit, and advice management and ensure that the internal audit staff are adequately remunerated and motivated.

The study adopted the survey research design and randomly enrolled participants in the study. A total of 50 responses were validated from the enrolled participants where all respondent are auditors of ministry of finance, Imo State.

5.3 Conclusions

In the light of the analysis carried out, the following conclusions were drawn.

The application of effectiveness of internal audit improves public sector management.

The use of effectiveness of internal audit can improve public sector management.

The extent the effectiveness of internal audit improve public sector management is high.

Effectiveness of internal audit aid management in the achievement goal.

Effectiveness of internal audit eliminate fraudulent activities in the public sector management.

5.4 Recommendation

Based on the findings the researcher recommends that;

Since internal audit can assist management in meeting its desired goals, there is need for proper empowerment of internal auditors to acquire the requisite skills and technique in order to be able to face the changing complex operation in public sector organizations.

The internal auditors at all level should be adequately independent of members of various departments within the organization so that they can carry out their duties effectively.

There should be regular evaluation of internal control system in order to determine their effectiveness in operation and identify and report to the appropriate authority the weakness, so that corrective action can be taken. Prompt implementation of internal auditors report will encourage them to improve in their functions.

The internal control system should be documented and properly communication to all staff of the organization.

Management should establish and implement periodic review of internal audit unit to ensure that its role and value to the hospital is maximized.

Continuous professional training and development of internal auditors is necessary. This is because the quality of internal control system is only as effective as the quality of the personnel who performs and implements the controls.

Title Page

Certification

Dedication

Acknowledgement

Table of Content

List of Tables

Abstract

Chapter One:

Introduction

1.1 Background of the Study

1.2 Statement of the Problem

1.3 Objective of the Study

1.4 Research Questions

1.5 Research Hypothesis

1.6 Significance of the Study

1.7 Scope of the Study

1.8 Limitation of the Study

1.9 Definition of Terms

1.10 Organisations of the Study

Chapter Two:

Review of Literature

2.1 Conceptual Framework

2.2 Theoretical Framework

2.3 Empirical Review

Chapter Three:

Research Methodology

3.1 Research Design

3.2 Population of the Study

3.3 Sample Size Determination

3.4 Sample Size Selection Technique and Procedure

3.5 Research Instrument and Administration

3.6 Method of Data Collection

3.7 Method of Data Analysis

3.8 Validity of the Study

3.9 Reliability of the Study

3.10 Ethical Consideration

Chapter Four:

Data Presentation and Analysis

4.1 Data Presentation

4.2 Analysis of Data

4.3 Answering Research Questions

4.4 Test of Hypotheses

Chapter Five:

Summary, Conclusion and Recommendation

5.1 Summary

5.2 Conclusion

5.3 Recommendation

References

APPENDIX

QUESTIONNAIRE

• Internal Audit Effectiveness And Public Sector Financial Reporting Quality Of Selected Federal Government Health Institutions
• Effectiveness And Efficiency Of Internal Audit As Tool For Management Control
• Comparative Analysis Of The Effectiveness Of Internal Control System In A Computerized Accounting System
• Effectiveness Of Internal Control System And Procedure On Product Innovation In Nigerian Banks
• Appraisal Of Internal Auditors On The Effectiveness In Fraud Detection And Prevention
• Evaluation Of Effectiveness In Internal Control System In Banking Industry
• Effectiveness Of Internal Control In A Trading Company

• Accounting Project Topics and Materials