Role Of Auditing In Public Sector
(A Case Study Of Imt Enugu)
Auditing plays a critical role in ensuring accountability, transparency, and integrity within the public sector. In governmental organizations, audits are indispensable for assessing compliance with regulations, evaluating the effectiveness and efficiency of operations, and detecting and preventing fraud, waste, and abuse of resources. These audits serve to uphold public trust by providing assurance that public funds are being utilized appropriately and that government entities are fulfilling their mandates effectively. Moreover, audits in the public sector help identify areas for improvement in financial management practices and operational processes, facilitating better decision-making and resource allocation. By promoting accountability and transparency, auditing enhances the overall governance framework of public sector organizations, ultimately contributing to the efficient delivery of public services and the achievement of organizational objectives.
This project invested the appraisal of internal control system in large firms. The study was aimed at determining the strength and weakness of internal control system in public limited liability companies and how the existing control has helped the management in the realization of the organizational objective
In this project the research found out whether
1. There is regular cash survey to ensure that amount voted into imprest in judiciously used.
2. Majority of the employees are paid through banks and all authorized deductions are remitted to their appropriate authorities.
3. Stocktaking is usually carryout by a team consisting of store and accounting staff preparation of pay roll and payment of salaries are not usually done by some person.
Data for research was collected from both primary and secondary. Primary data was conducted mainly through the use of questionnaires supplemented by oral interview, which was conducted among the staff of the company. Data was analyzed using the chi-square and percentage method of analysis. A test was carried out which showed that system of internal control in the company is effective.
Title page
Dedication
Approval page
Acknowledgement
Abstract
CHAPTER ONE
1.0 Introduction
1.1 Background
1.2 Statement of the problem
1.3 purpose of the study
1.4 The scope of the study
1.5 Research question
1.6 Statement of Hypothesis
1.7 Significance of the study
1.8 Limitation of the study
CHAPTER TWO
2.0 REVIEW OF RELATED LITERATURE
2.1 Origin and purpose of internal control
2.2 Definition of internal control system
2.3 Internal check and control
2.4 Types of internal control
2.5 Element of internal control and internal auditing
2.6 Limitations of internal control
CHAPTER THREE
3.0 Research METHODOLOGY
3.1 Research design
3.2 Area of study
3.3 population of the study
3.4 Determination of sample size
3.5 Instrument for data collection
3.6 Method of data collection / Administration of research instrument.
3.7 The validity of the instrument used.
3.8 Method used for water data analysis
CHAPTER FOUR
4.0 PRESENTATION AND ANALYSIS OF DATA
4.1 Interpretation of data.
4.2 Finding
CHAPTER FIVE
5.0 SUMMARY CONCLUSION AND RECOMMENDATION.
5.1 Summary of findings
BIBLIOGRAPHY
QUESTIONNAIRES
1.0 BACKGROUND OF THE STUDY
1.1 Internal control has attained greatest significance in large-scale business organizations. It is of great assistance to both the management and auditors of such organization because it enables them to carry on the business in an orderly and efficient manner. It safeguard its assets and secure the accuracy and reliability of records.
The primary aim of an organization that is profit oriented is to operate the business in the most efficient way. That is to maximize profit at a minimum cost. This can be made possible by establishing strong internal control which acts as regulator of an organization. The internal control can be compared to a persons nervous system. It embraces the entire organization internal control as the nervous system has five component that help it to coordinate the activities of the organization. They are:
1. The control environment
2. Risk assessment
3. The (accounting) information and communication system
4. Control activities and
5. Monitoring.
1.THE CONTROL ENVIRONMENT
The control environment set the tone an organization by influencing the control consciousness of the people. It may be viewed as the foundation for the other components of internal control. Control environment factors include integrity and ethical values; commitment to competence board of directors or audit committee, managements philosophy and operating style organizational structure; assignment of authority and responsibility to human resource politices and practices.
2. RISK ASSESSMENT
The second component of internal control is risk assessment. Management should carefully identify and analyze the factors that affect the risk that the organizations objectives will not be achieved and then attempt to manage that risk. Managements risk assessment involves consideration of those factors that effects all of the organizations objective.
3. The accounting information and communication system information is needed at all levels of an organization to assist the management in meeting the organizations objective of major concern to the auditors is the accounting information system, and the way in which responsibilities for internal control over financial reporting are communicated throughout the organization. Accounting information system should include a chart of accounts and a manual of accounting policies and procedure as aids for communicating policies.
4. CONTROL ACTIVITIES
Control activities are policies and procedures that help to ensure that management’s directives are carried out. These policies and procedures promote actions and address the risks that face the organization. There are many different types of control activities performed in an organization.
5. MONITORING
Monitoring is a process that assesses the quality of internal control overtime. It is important to monitor internal control to determine whether any modifications are necessary. Monitoring can be achieved by performing ongoing activities or by separate evaluations ongoing monitoring activities include regularly performed supervisory and management activities such as: continuous monitoring of customers complains or reviewing the reasonableness of management reports.
In Nigeria, much emphasis is plaid on account ability and the keeping of accurate records of transportation by those who manage the affairs of all business enterprises.
1.2 STATEMENT OF THE PROBLEM
The statement of research problem serves to explain in detail the information in the title of the study. This research seeks to find out the extent to which the system of internal control has helped to prevent both employee fraud and fraudulent reporting, assuming control over manufacturing and other process through the following questions.
1. How far has the existence of internal control audit has helped to minimize errors in the company?
2. do all staff see the company’s goal as a joint responsibility?
3. are all empolyee’s motivated by the process of strong internal control?
4. are all transportations from beginning to the end been carried out by the same set of individual?
5. Whether the internal control has successes in protecting the company against errors and irregulatives and ensure the reliability of accounting data?
1.3 PURPOSE OF THE STUDY
The purpose of the study is the aim of the researcher to undertake the study. It examines the overview of internal control in making sure that objectives of the organization are achieved by strictly adhering to the management policies without deviation.
1. SCOPE OF THE STUDY
The scope of the study is the appraisal of internal control in large firms. The firms are made up of several departments and sections. For a better approval, one has to visit several departments to assess their system of control. How ever this is not feasible judging from the set backs that the researcher encounters.
RESEARCH QUESTIONS
1. Does internal control system exist in large firms
2. How effective is the internal control system in large firm
3. Does internal control system help in minimizing fraud and loss of property in your firm?
4. How far does staff respond to their responsibilities
5. Does the internal audit exist in your company
6. Does the Audit section achieve the goal for which it has been set?
7. Does the staff see the company’s goal as a joint responsibility
8. Does the large firm take adequate steps to safeguard their assets?
9. For large firms to safeguard their assets, what step do they take?
10. How far does the step taken by companies help in safeguarding their assets?
1.6 STATEMENT OF HYPOTHESIS
NULL HYPOTHESIS
The hypothesis is the core of the study and therefore acts as a beacon light in the course of the research. It is therefore a suggested answer to the problem of the research under investigation.
For the purpose of this research, null hypothesis will be used which is deviated by HO HO: I: I internal control system in public limited companies are not effective 1:2 internal control system in public limited company are effective.
1.7 SIGNIFICANCE OF THE STUDY
This refers to the usefulness of the research to the public limited companies. The individuals, the government and society. The ultimate aim of every research is to provide knowledge and information that will about a better understanding of the topic under review. It is aimed at providing an understanding of the effectiveness of internal control system as obtainable in the private and public limited companies in Enugu State.
The researcher will be able to know the extent to which internal control system has held the management in the realization of their firm’s objectives. It will enable the management to appraise the internal control system in operation with a view to correcting any lapse, which may be evidence during the investigation process.
1.8 LIMITATIONS TO THE STUDY
This study is limited to the availability or time, finance and the semesters work load.
Role Of Auditing In Public Sector:
Auditing plays a crucial role in the public sector to ensure transparency, accountability, and proper management of public funds and resources. It serves several important functions in the public sector context:
- Accountability and Transparency: Public sector organizations, including government agencies and entities, handle public funds and resources. Auditing ensures that these organizations are accountable for their financial activities and that their financial statements accurately represent their financial position and performance. This transparency helps maintain public trust in the government’s financial management.
- Fraud and Mismanagement Detection: Auditing helps identify instances of fraud, mismanagement, or misuse of public funds. By examining financial records and transactions, auditors can uncover irregularities, unauthorized expenditures, or instances where public funds were not used in accordance with regulations and policies.
- Compliance with Laws and Regulations: The public sector is subject to a variety of laws, regulations, and policies that govern financial practices, procurement, and resource management. Auditors ensure that public sector entities adhere to these legal and regulatory frameworks, helping prevent violations and ensuring that resources are used appropriately.
- Efficiency and Effectiveness: Auditing goes beyond financial statements; it also assesses the efficiency and effectiveness of public programs and projects. Performance audits examine whether programs achieve their intended goals and if resources are being utilized efficiently. This information helps policymakers make informed decisions about resource allocation and program improvements.
- Recommendations for Improvement: Auditors provide valuable insights and recommendations to improve financial and operational processes. These recommendations can lead to more effective resource utilization, cost savings, and enhanced service delivery to the public.
- Risk Management: Auditing helps identify and mitigate risks that public sector entities might face, such as financial risks, operational risks, or risks related to compliance. By addressing these risks, auditors contribute to the overall stability of the organization.
- Strengthening Governance: Auditing contributes to good governance by ensuring that public sector entities follow proper procedures and internal controls. This enhances decision-making processes, reduces the potential for corruption, and promotes a culture of accountability.
- Public Confidence: Effective auditing practices enhance public confidence in government institutions. When citizens see that their tax dollars are being managed transparently and responsibly, they are more likely to trust and support the government.
- Legislative Oversight: Legislative bodies often rely on audit reports to monitor government activities and hold public officials accountable. These reports provide evidence-based insights into the government’s financial and operational performance.
- Long-Term Sustainability: Auditing contributes to the long-term sustainability of public sector organizations by identifying areas where improvements are needed. By addressing financial inefficiencies and mismanagement, governments can better allocate resources for the future.
In summary, auditing in the public sector serves as a vital mechanism to ensure the proper management of public funds, maintain transparency and accountability, detect fraud and mismanagement, and improve overall governance and efficiency in government operations.