Auditing As A Control In Public Sector Accounting
(A Case Study Of Federal Ministry Of Finance Enugu)
In public sector accounting, auditing serves as a critical control mechanism to ensure transparency, accountability, and compliance with regulatory standards. Auditing functions as a safeguard against mismanagement, fraud, and misuse of public funds by independently examining financial records, transactions, and processes within government agencies and organizations. Through rigorous assessment and evaluation, auditors verify the accuracy of financial reporting, assess the efficiency and effectiveness of internal controls, and identify areas for improvement in resource allocation and utilization. Moreover, audits play a pivotal role in enhancing public trust and confidence in governmental institutions, as they provide assurance that public resources are managed responsibly and in accordance with established legal and ethical frameworks. Thus, auditing serves as a cornerstone in maintaining the integrity and reliability of public sector financial management practices.
This work border on the auditing as a control in public sector accounting a case study of federal ministry of finance Enugu. Its main theme is the purpose auditing serve in the public sector as a control for all financial accountability and otherwise in the public sector. Importance of the study was to help the financial controllers of government agencies understand that auditing of public sector is as more important as that of the private sector. The area of the study was federal ministry of finance Enugu.
This study is divided into five chapter, chapter one gives the general introduction about the reason why the work was embarked upon. Chapter two report the views of other authors that have conducted work relevant to the theme of the study. Chapter three described the actual process and methods of the research the researcher used. Chapter four gives the details of researcher is analysis of data collected form the respondents using the t-test statistics in testing the null hypothesis.
Finally in chapter five the researcher presents recommendation as well as suggestion for further research.
Cover page
Title page
Approval page
Dedication
Acknowledgement
Table of contents
List of table
Abstract
Chapter one
1.0 Introduction
1.1 Background
1.2 Statement of problems
1.3 Purpose of the study
1.4 Scope pf the study
1.5 Research questions
1.6 Null hypothesis
1.7 Significance of the study
Chapter two
2.0 Review of related literature
2.1 History of auditing as a profession
2.2 Legal framework of public sector auditing
2.3 Auditing and corruption in Nigeria
2.4 Auditing and fraud detection in government institutions
2.5 Internal auditing in government agencies
2.6 Compliance and efficiency auditing in the public sector
2.7 Relevance of auditing standards in the public sector.
2.8 Auditing and internal control in the public sector.
2.9 Summary or related reviewed literature
Chapter three
3.0 Research methodology
3.1 Design of the study
3.2 Area of the study
3.3 Population of the study
3.4 Sample and sampling procedure
3.5 Instrument for data collection
3.6 Validation of the instrument
3.7 Reliability of the instrument
3.8 Administration of the instrument
3.9 Method of data analysis
Chapter four
4.0 Data presentation and result
4.1 Summary of result
Chapter five
5.1 Discussion of result
5.2 Conclusion
5.3 Implication of the research findings
5.4 Recommendation
5.5 Suggestion for further study
5.6 Limitation of the study
References
Appendixes
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
From time past productive resources owned by one person or group of persons. It has been a convention that the managers of the productive resources from time to time report back to the owner (s) of the resources on how thye fare with the resources entrusted to them.
In a similar view Millichmp 1999 opined that most business today are operated by limited companies, which are owned by their shareholder and managed by directors appointed by the shareholder. Corporally the public own central government resources including nationalized industries but they are managed by the government.
As a result of this divorce between resources management and ownership it has become expedient and pertinent that has become expedient and penitent that an independent body or person (s) different form both management and ownership be situated to examine the account rendered by the manager to the owner of the economic resources for such accounts to be reliable credible and trust writing by the owners and other interested user of financial report hence the emergence of auditing as a profession.
Auditing which has become the owners “third eye” is very important in the public sector of Nigeria economy in view of fact that over 65% of the assets base and other productive resources of the country come under the control of the public sector of the economy. These assets need to be safeguarded in order that the real owner (the public) can enjoy their full benefits.
The relevance of auditing as it regards proper accountability and safeguard to the nation asset base was borne out of the fundamental roles the public sector accounting play in effective and efficient governance of the country. Ani 2001 save the rotes of public sector accounting to include the following.
a. Control purpose: To ensure efficient financial administration through system of internal control and management
b. Planning Purpose: To provide historical bases for model budget and plans as guide to the formulations of policies
c. Accountability purposes: To provide a system of financial accountability by which will promote stewardship of assets deter waste dishonesty and extravagance and promote effectiveness of reasonable cost.
d. Appraisal Purpose: To provide outsider with financial data that will help them to reach informed decision.
The basic functions of auditing therefore are of two types :
Primary and secondary functions.
The primary function of auditing is to enable the auditors to report as to whether the financial prepared my manager presents a true and fair view of the state of the financial affairs of the organization during the period under review while the secondary functions as are to detect fraud and errors and prevent fraud and errors in the accounting system. But how relevant has public sector auditing become in view of the current decay in the management of public resources in Nigeria? In the nutshell corruptions bribery mismanagement of government resources and lack of honesty that characterize the economic life in Nigeria has dragged the efficiency and proficiency of public sector auditing in Nigeria to the mud.
Public office holder and the entirely of the agents of government at all levels in Nigeria have made the public sector audit system which to was enshrined in our constitution to ensure proper accountability transparency and good government a mere subject of contemplators system should not permit looting of real asserts and public funds and mismanagement of the scare economic resources as it obtain in Nigeria public sector.
The factors or problem that lead to the ugly scenario described above are not far fetched. This is because most of the auditors appointed by the executive arms of government at all level of governance to take the mantle of auditors responsibilities in the public sector are benefit of the contravention ethical and professional qualities and standards which an auditor must have.
The professional qualities and auditing standards issued and approved by American institute of certified public accountants and adopted by Nigeria Accounting Standard Board (NASB) includes:
a. Competence: An auditors must be thoroughly trained and move his competence before he can sign an audit report. This implies that he must belong to a professional body approved by the parliament.
b. Independence: An auditor cannot give an unbiased opinion unless he is independent of all parties involved and must be seen to be so.
c. Integrity: Qualified accountants are renowned for their honest discretion and tactfulness.
In Nigeria these qualities and standards enumerated above are almost absent and auditors are not appointed inconsonance with relevant statutory provision of audit regulatory authorities or laws such as relevant sections of company and allied Matters act 1990 (CAMA) and the Nigerian constitution. Nepotism tribalism and police affiliation and compensations are criteria used in Nigeria to appoint auditors into the public sector. These have made audit system in the public sector a weak ineffective and above all unreliable when it is compared with what obtains in the civilized world where we repatriated the practice of auditing to Nigeria. The independence of auditors in the public sector do not consider whether guaranteed and therefore are impaired. The manner in which auditors are also appointed in the public sector as not consider whether the person to be appointed has competence and all the technical where withal and know how required of an auditor the qualities of honesty discretion and tactfulness which are paramount and the aroma of auditing world over are exiting in Nigeria only in theory.
Based on these distortions and decadence in the system of auditing in the public sector it has become a clarion call that a reappraisal of public sector auditing in Nigeria be done to reposition and revamp the system so as to reap all the benefit inherent in an functional audit system hence my choice of the topic (auditing as a control in the public sector accounting)
1.2 STATEMENT OF PROBLEM
The enumerated problem below are found to be inherent in the audit system of the public sector in Nigeria.
1. The impact of auditors role to promote transparency accountability and encourage good governance are not felt in the public sector.
2. It was difficult to ascertain the extent professional ethics and auditing standards were applied by auditors in the public sector
3. Bribery and corruption in the public sector has reduced the efficiency and proficiency of auditing in serving its control purpose
4. It was difficult to ascertain the extent nepotism and political affiliation interfere in the appointment and removal of auditors in the public sector.
1.3 PURPOSE OF THE STUDY
This research top auditing as a control in public sector accounting a case study of federal ministry of finance Enugu was set towards establishing the following objectives.
a. To ascertain the roles auditors play to promote transparency accountability and encourage good governance in the public sector especially in the federal ministry of finance Enugu.
b. To find out the extent professional ethics and audit standards were applied by auditors in the public sector.
c. To ascertain the extent bribery and corruption in the public sector has reduced the efficiency and proficiency of auditing in playing its control purpose in federal ministry of finance Enugu.
d. To find out the extent nepotism favoritism and political affiliation interfere in the appointment and removal of auditors in federal ministry of finance Enugu.
1.4 SCOPE OF THE STUDY
This research work is limited to the role auditing system play in public sector accounting in federal ministry of finance Enugu.
1.5 RESEARCH QUESTIONS
To guide this study four research questions were formulated as follows
1. To what extent do auditors role promote transparency accountability and encourage good governance in the federal ministry of finance.
2. To what extent do profession ethics and auditing standards were applied by auditors in the federal ministry of finance Enugu
3. To what extent does bribery and corruption in the public sector reduce the efficiency and proficiency of auditing in serving its control purposes in the federal ministry of finance Enugu.
4. To what extent do nepotism favoritism and political affiliations have interfered in the appointment and removal of auditors in the federal ministry of finance Enugu?
1.6 HYPOTHESIS
Ho1: There was no significance difference (P<:05) between the mean
perception of the senior and junior staff of federal ministry of finance on whether the impact of auditors role to promote transparency accountability and encourage good governance are felt in the ministry.
Ho2: There was no significance difference (P<:05) between the view of
senior and junior staff of federal ministry of finance on whether the extent professional ethics and auditing standards were applied by auditor in the ministry
Ho3: There was no significance difference (P<:05) between the mean
perception of the senior and junior staff of federal ministry of finance on extent bribery and corruption in the public sector has reduced the efficiency and proficiency of auditing in the ministry.
Ho4: There was no significance difference (P<:05) between the view of the
senior and junior staff of federal ministry of finance on the extent nepotism favoritism and political affiliation interfere in the appointment and removal of auditors in the ministry.
1.7 SIGNIFICANCE OF THE STUDY
This work will be of immense benefit to the federal ministry of finance because of the elaborate emphasis placed on the role auditing play in ensuring proper accountability transparency waste determinate and promotion of good governance which the ministry is striving to achieve.
The entire stakeholder in the management of centrally owned economic resources will find the research work very beneficial especially now that fight against corruption and bribery is one of the priorities and challenges of present dispensation.
The work will also be immense benefit to all the following peculiar ways:
1. The study attached serious emphasis on the auditing standards such as independence competence integrity and objective as the fundamental criteria to serve as bench marks in measuring the qualities of auditors to be appointed in the public sector.
2. The study exposed a lot about corruption in the public sector and this will serve as means of complimentary government effort in the fight against corruption in the sector.
3. The knowledge that accounting and auditing activities are geared towards guiding against misuse of scare economic resources is vital indispensable in the management of public financial affairs. The study gives knowledge to the key player in the public sector. The study also highlighted area of significance in the public sector auditing which need serious and immediate improvement such areas includes auditor independence auditor’s liability auditors appointment and removal.
Auditing As A Control In Public Sector Accounting:
Auditing is a critical control mechanism in public sector accounting, aimed at ensuring transparency, accountability, and the proper management of public funds. Public sector entities, such as government agencies, departments, and municipalities, handle vast amounts of taxpayer money and must be held accountable for their financial activities. Here’s how auditing functions as a control in public sector accounting:
- Financial Accountability: Auditing helps establish financial accountability by verifying that financial statements accurately represent the financial position and performance of a public sector entity. This ensures that public funds are being used for their intended purposes.
- Compliance with Laws and Regulations: Auditors in the public sector assess whether financial transactions comply with relevant laws, regulations, and accounting standards. This is crucial for preventing fraud, waste, and abuse of public resources.
- Fraud Detection and Prevention: Auditors play a vital role in detecting and preventing fraud within public sector entities. They examine financial records, transactions, and internal controls to identify any irregularities or red flags.
- Efficiency and Effectiveness: Auditing goes beyond financial matters. Performance auditing assesses whether public sector entities are achieving their objectives efficiently and effectively. This can lead to recommendations for improvements in operations and resource utilization.
- Transparency: Audited financial statements and reports provide transparency to the public and stakeholders. This transparency builds trust and confidence in the government’s financial management.
- Risk Management: Auditors evaluate the risk management processes of public sector entities. They identify potential risks and assess whether adequate measures are in place to mitigate them. This helps protect public funds from unexpected losses.
- Accountability and Oversight: Auditors provide an independent assessment of an entity’s financial and operational activities. This oversight ensures that public officials are held accountable for their stewardship of public resources.
- Budget Compliance: Auditing ensures that public sector entities adhere to budgetary constraints and spending limits. It helps prevent overspending and helps ensure that financial resources are allocated as intended.
- Long-Term Planning: Auditors may provide insights into long-term financial sustainability by evaluating the financial health of the public entity. This can be valuable for strategic planning and decision-making.
- Recommendations and Improvement: Auditors often make recommendations for improvements based on their findings. These recommendations can help public sector entities enhance their financial management practices and internal controls.
- Public Confidence: Regular auditing activities contribute to building and maintaining public confidence in the government’s ability to manage public funds responsibly.
In summary, auditing in public sector accounting serves as a crucial control mechanism to ensure fiscal responsibility, transparency, compliance with laws and regulations, and the efficient use of public funds. It helps detect and prevent financial misconduct, provides oversight, and offers valuable insights for improving financial management practices within the public sector.