AUDITING AS AN AID TO ACCOUNTABILITY
(A CASE STUDY OF ENUGU EAST LOCAL GOVERNMENT AREA OF ENUGU STATE)
This research work titled ‘Auditing as an aid to accountability” with particular reference to Enugu East local Government Area of Enugu state. The researcher examined the impact of auditing in public sector accountability in Nigeria. Evaluated the relevance of auditing in Enugu East local government area. Examined the effect of auditing in the development of an organization. Identified the various problems facing the auditor in public sector accountability and also proffer possible solutions to the problems identified. Data for the study was sourced from two main sources which include Primary and Secondary sources of data Collection. Primary data: questionnaires and oral interviews were used to collect information from the respondents. Secondary data: journals, and other relevant materials relating to the area of my investigation was reviewed. Extensive literature review was carried out on the direct literature and indirect literature on books, journals and past works. The research instrument used in this study includes oral interview and questionnaire. The questionnaire is structural as to contain both close and open ended question. Simple tables and percentages were used in treatment of data. Chi-square was used in testing the hypotheses. At the end the researcher found out that it is observed that the staffs have clear understanding of roles of auditors in controlling fraud. This gives rise to their individual and collective effort aimed at safeguarding funds and properties. Furthermore, as a result of fraud government; Establishment is so organized in such a way that fraud could be detected easily and on time. This is because particular audit are assigned to particular personnel their result of which are reviewed by a senior officer who is not connected with the assignment before report is issued on such financial statement. The responses to the research question afford the researchers the opportunity of discovering that there are fraud. The researcher also discovered that the auditor in discharging his judiciary duties encounters difficulties in attempting to serve two major masters which are client and the third parties. Based on the findings the researcher recommends that The accounting and financial operation must be separated. An employee should not be in a position in which he has control of the operation given rise to entries in the record.
TABLE OF CONTENTS
Title page ii
Certification Page iii
Approval page iv
Table of contents ix
1.1 Background of study 1
1.2 Statement of problem 6
1.3 Objectives of study 7
1.4 Research Question 8
1.5 Research hypothesis 8
1.6 Significance of study 9
1.7 Scope and Limitation of the study 10
REVIEW OF RELATED LITERATURE
2.1 Conceptual Framework 18
2.2 Accountability 18
2.3 Public Sector Management 22
2.4 Today’s Democratic Nigeria 24
2.5 History And Development Of Audit 25
2.6 History Of Accounting Practice 27
2.7 Public Accountability In Democratic Nigeria: The
Situation So Far 34
2.8 Relevance Of Public Accountability In Nigeria’s
Democratic Setting 42
RESEARCH DESIGN AND METHODOLOGY
3.1 Research Design/Research Method Used 48
3.2 Sources Of Data 49
3.3 Population Of The Study And Sample Size
3.4 Sample Size Determination 53
3.5 Method Of Investigation 54
DATA PRESENTATION AND ANALYSIS
4.1 Data Presentation 56
FINDING, CONCLUSION AND RECOOMENDATION
5.1 Summary of findings 66
5.2 Conclusion 68
5.3 Recommendations 70
1.1 BACKGROUND OF THE STUDY
In an economy where resources abound, funds are being disbursed for the government to effectively carry out its assignments. Since a lot of public funds are being disbursed for government assignment it calls for accounting that is of the receipts and disbursements of these funds. The accountants in these units perform these assignments by preparing the profit and loss accounts and also balance sheet showing the state of affairs of the years in reviews.
Owing hugely to widespread public demands for transparency in governance and the global outcry against corruption, accountability is now of serious concern in many countries including Nigeria. One of the critical issues dominating public sector management in Nigeria, as Addison (1996) rightly observed, is lack of accountability and transparency. It is important to note that inspite of the accountant and the internal auditors (who serves as the custodian of financial resources and watch-dog respectively). There are still reports of large scale fraud in most of there government unit. The organization had to be addressed and it also needs various attentions Again, it is the requirement of law that the financial activities of the state should be subjected to audit section 83 (2) of the 1989 constitution states that the public accounts of the federal and state government shall be audited by the auditor-General of any person authorized on his behave shall have access to all book records, return and other documents relating to his accounts. Also some of government institutions has public influence like government companies allowing interesting members of the public to own a share.
Section 148 (2) of companies and Allied Matters Act of 190 states that a companies must be audited these people who has interests need to know about the operations of these companies through, the instance of audited reports. So, in the view of the above and also for the state government to maintain an effective financial base in the system. The role independent auditors in Enugu State cannot be over-emphasized the need for indigent bias free examination of the financial records books and accounts of Enugu State by an auditors is not only a matter of compliance with the law but also a means of protecting detecting and correcting of errors and frauds.
An audit has been defined by many authors such as: According to Clive an Attwood (1999) auditing is an examination by the auditor of a balance sheet and profit and loss account prepared by other so as to be able to express his opinion that such a balance sheet and profit and loss account have been properly drawn up to show a true and fair view of the state of affair and of the particular concern and comply with the relevant states.
According to Bigg (2001), an audit is an examination of the books, account and voucher of any business, as will enable the auditor to satisfy himself that the balance sheet is properly drawn up so as to the a true and fair view of the state of affairs of the business according to the best of his information and explanations given to him and as shown by the books and if not in what respects he is not satisfied.
Sontochi (2001) defined audit as an examination and evaluation of the authenticity and therefore the reliability of an organization business documents and records it also involves making inquires to ascertain that financial statements on which the auditor is reporting and which have been prepared form the records display a true and fair view of state of affairs at the year’s end.
The auditing standard and guideline define audit as the independent examination of the financial statement of any enterprise by an appointment auditor in pursuance of that appointment and in compliance with any relevant statement obligation from all these definition given above, an auditor is one whose job is to examine the records of a business in order to be able to give an opinion on the state of affairs of the business at a particular time. He may also examine the records of non-trading organization. Club sets for the same purpose. He may also perform specialized investigation work when asked to do so by proprietor of business or by court.
It can be seen from the above definitions that the auditor is presented with the account and balance sheet himself, his role is to complete and audit work.
In the course of his work, if the auditor notice any form of inefficiency and weakness in the working system he has to bring such matters to the notice of the client or his staff. Here, he is doing the sense that since as the auditor, it is his duty to advocate certain methods of working. But never the less, with his still and experience, the auditor can be most helpful to these by whom he is engaged but any accounting work he does must always be considered a part from the audit. Auditing of public funds entrusted to him. Auditing in that sense serves as deterrent to public officers and those in fiduciary.
1.2 Statement of the Problem
Lack of accountability in the public sector creates opportunities for corruption with its attendant negative consequences. For instance, through corruption the commonwealth of Nigerians is being diverted by a few, leaving the nation at a loss. Due to the poor culture of accountability, corruption has become a way of life in Nigeria; to the extent that it is trite to say that officials are not only corrupt, but corruption is official. The scandalous revelations of large scale corruption and mismanagement of public funds by government officials contained in the audit report recently released by the office of the Auditor General of the Federation on the Accounts of the Federation of Nigeria for the year ended 31st December, 2009 lends credence to this assertion.
The aforementioned audit report (Nigeria, 2009) found that virtually all Ministries, Departments, and Agencies (MDAs) of the Federal Government bureaucracy had contravened the Public Service Rules, Financial Regulations, and Due Process procedures in spending government funds. The audit report also found that massive fraud occurred in revenue calculation, collection, and remittance to the federal government by revenue generating agencies and oil firms in the country.
It is obvious that corruption remains unabated in Nigeria despite the purported efforts by successive administrations particularly since 1999 (when the country returned to democratic rule) to stamp it out by strengthening public accountability. Usually, political leaders in Nigeria talk the talk but do not walk the walk as far as combating corruption is concerned – the management of the fight against corruption is still cosmetic. Perhaps democracy as a system of governance offers the best hope for entrenching and enhancing public accountability in a society. This is because accountability is one of the basic norms of democratic rule. In this regard, Huges (1998:225) posited:
It is accountability which is fundamental to a democratic system. Any acts of the government are supposed to be, in the final analysis, acts of the citizens themselves through their representatives. The pursuit of the common interest requires a carefully designed structure of accountability that ensures for citizens the best efforts of those who act on their behalf.
Since government functionaries who manage the public sector wield enormous public powers with potential for abuse, the challenge to tackle is how best to ensure that these officials are held accountable for their deeds. This paper addresses this and other issues pertaining to accountability in the management of Nigeria’s public sector.
1.3 Objective of the Study
The aim of this research work is to evaluate auditing as an aid to accountability with particular reference to Enugu East local Government Area of Enugu state. The specific objectives of this research work includes the following;
1. To examine the impact of auditing in public sector accountability in Nigeria.
2. To evaluate the relevance of auditing in Enugu East local government area.
3. To examine the effect of auditing in the development of an organization.
4. To identify the various problems facing the auditor in public sector accountability and also proffer possible solutions to the problems identified.
1.4 Research Questions
The researcher developed the following research questions;
1. Does auditing have any impact on public sector accountability in Nigeria?
2. What are the relevance of auditing in Enugu East local government area?
3. To what extent does auditing affect the development of an organization?
4. What are the various problems facing the auditor in public sector accountability?