The Relevance Of Auditing In The Face Of Increasing Fraudulent Practices In Nigerian Public Service (a Study Of Ministry Of Health Enugu State)

THE RELEVANCE OF AUDITING IN THE FACE OF INCREASING FRAUDULENT PRACTICES IN NIGERIAN PUBLIC SERVICE (A STUDY OF MINISTRY OF HEALTH ENUGU STATE)

ABSTRACT

Lack of understanding of the purpose of auditing among the society in general, especially the management ministry of health Enugu become the problem of the study. The objective was to examine the role of auditing in controlling fraud in Nigeria public service. Population variable were 360 with the sample size of 189, simple percentage were used to analyse the research questions. One of the major findings was that auditors should receive proper education and training. This factor will only enhance the general efficiency and effectiveness of the audit function. The researcher also concluded that the auditor in discharging his judiciary duties encounters difficulties in attempting to serve two major masters, which are clients and the third parties. Finally, it has been recommended that the auditor should shift from an inspection style to advising and participating in team work approach with management.

TABLE OF CONTENT

Title page.       .       .       .       .       .       .       .       .       .       ii

Approval page  .       .       .       .       .       .       .       .       .       iii

Dedication       .       .       .       .       .       .       .       .       .       iv

Acknowledgement    .       .       .       .       .       .       .       .       v

Abstract   .       .       .       .       .       .       .       .       .       .       vi

Table of contents     .       .       .       .       .       .       .       .       vii

CHAPTER ONE:

INTRODUCTION

1.1      Background of the study .       .       .       .       .       .       1

1.2      Statement of problem      .       .       .       .       .       .       6

1.3      0bjective of the study       .       .       .       .       .       .       7

1.4      Significance of the study .        .       .       .       .       .       .       8

1.5      Scope of the study ..       .       .       .       .       .       .       8

1.6      Research hypotheses       .       .       .       .       .       .       6

CHAPTER TWO 

LITERATURE REVIEW

2.1 Definition and Concept of Auditing.       .      .      .      .      10

2.2 Generally Accepted Auditing Standards.    .       .       .       15

2.3  Auditors’ Responsibilities in Fraud Detection .  .      .      22

2.4   Auditors roles in controlling Frauds .      .       .       .       26

2.5   Control of Fraud Through Vouching Payment..       .       27

2.6   Auditor and his Contribution Towards Efficient Management of Government Establishment     .       .       .       .       .       29

2.7 Internal Auditing in Government.      .       .       .       .       32

2.8 Differences and Similarities between Internal Auditors and External Auditors.  .       .       .       .       .       .       .               35

2.9    Determination of the Extent of Reliance to be Placed on the Internal Auditors Work by the External Auditors..       .       44

2.10   Areas of Work Overlap between Internal Auditing and External Auditing.        .       .       .       .       .       .       .       .       48

References .     .       .       .       .       .       .       .       .       .       52

CHAPTER THREE

3.0 RESEARCH METHOD

3.1      Area of the Study     .       .       .       .       .       .       .       54

3.2      Population of the study    .       .       .       .       .       .       55

3.3      Sampling Method .  .       .       .       .       .       .       .       56

3.4      Research Instrumentation .     .       .       .       .       .       57

3.5      Validity of the instrument .      .       .       .       .       .       58

3.6      Method of Data collection .      .       .       .       .       .       59

3.7      Method of Data Analysis .        .       .       .       .       .       .       60

CHAPTER FOUR 

DATA PRESENTATION AND ANALYSIS

4.1 Data Presentation And Analysis         .       .       .       .       .       62

CHAPTER FIVE

FINDING, CONCLUSION AND RECOMMENDATION

Finding, Conclusion And Recommendation                             71

Bibliography    .       .       .       .       .       .       .       .       70

Appendix I       .       .       .       .       .       .       .       .       73

CHAPTER ONE

INTRODUCTION

1.1      BACKGROUND OF THE STUDY

The role of auditing in fraud and corruption management is essential. Damages done to public institutions by fraud and corruption can be enormous ranging from financial loss, damage to organizational performance, reputation and credibility loss. In many occasions if the case makes the headlines in the media, it permanently harms public confidence and undermines the legitimacy for administration and spending of taxpayer’s money by this institution. Therefore, good risk management as well as prevention detection and well designed control systems should be considered by every public sector authority as a must. Despite many initiatives, strategies and tools, there is a constant need for more effective control instruments, reporting mechanisms, investigation method and best practices.

Auditors often have the best access to detailed information on financial transactions, project management, procurement procedures and use of finding and grants in their institutions. As a person responsible for risk management and internal audit in an institution, the auditor is responsible for guarding the ethical standards and being a good example by ensuring adherence to rules, procedures and recommended practices. Therefore, the auditor needs to be fully prepared for implementing innovative prevention methods and tools for an organization to be efficient and effective and be able to achieve its desired objectives, it needs to have amongst others good leadership, competent manpower, adequate resources and good measures of internal control. Connor (1979) said that internal control is considered important in an organization because today’s economic environment requires that management of every organization weather public or private should take adequate steps considered necessary to establish and sustain an effective internal control system with a view to ensuring effectiveness, efficiency and economical operations. It also ensures the accuracy and the completeness of accounting information as well as compliance with the rules and procedures. The system of internal control is seen as the integrated collection of control mechanisms used to achieve desired results, among which is the internal audit, which is an essential element of the internal control system. Many organizations lack mechanisms for adequate monitoring of activities and operations, thereby not giving room for easy achievement of the business goals (Adeniji, 2004).

Flaws and loopholes may still exist in an organization despite the existence of internal control system, which can easily be circumvented by individuals who are inclined towards fraudulent activities. Therefore, measures have to be put in place to checkmate such fraudsters. One best way of curbing and/or minimizing the menace of fraud is through the institutionalization of a vibrant and effective internal audit. The presence of an effective internal audit in an organization is not only to checkmate fraudsters, but also serves as a managerial control which function by measuring and evaluating the effectiveness of other controls (Dandago, 2002). The primary function of an auditor is to evaluate processes that are in place to identify any weaknesses in internal controls that might lead to undetected fraud. When any such weaknesses are identified, they are reported to management for corrective action. The internal audit is expected to anticipate problems, visualize improvements and propose preventive actions (Effiok, 2003). The auditor has the responsibility to appraise the activities of other departments in an organization, and provides management with information that is useful in assessing operational effectiveness.

That an auditor has the responsibility for the prevention, detection and reporting of fraud, other illegal acts and errors is one of the most controversial issues in auditing, and has been one of the most frequently debated areas amongst auditors, politicians, media, regulators and the public (Gay et al 1997). This debate has been especially highlighted by the collapse of both small and big corporations across the globe. The auditing profession in Nigeria has caught the media’s attention following financial scandals in some of the Nigeria banks such as Intercontinental Bank, Oceanic Bank, Afribank, and PHB among others.

There seems presently to be a misconception that auditors’ duties are largely the preventing, detecting and reporting of fraud, for example, Idris (2009). The aim of this paper is to identify financial report users,Perceptions of the extent of fraud in Nigeria, and to determine their perceptions of the auditor’s responsibilities in detecting fraud and the performance of related audit procedures. The paper also aimed at ascertaining whether the report users’ perceptions of auditors’ responsibilities on fraud are consistent with those of the auditing profession as expressed in auditing standards in Nigeria.

1.2      STATEMENT OF THE PROBLEM

Public embezzlement always create a consciousness on the part of the supervisory authorities as to the quality and disagreement of protective management in government

1.          Lack of understanding of the purpose of auditing among the society in general.

2.          Lack of a well-defined goal oriented policies aimed at building up a strong and sound financial system.

3.          Inherent weakness in the existing Administrative arrangement for government establishment accounting function.

4.          Improper supervision of over all officers under the authority entrusted with the receipts expenditure of public money.

5.          Inability of the government establishment to maintain a sound system of internal control.

1.3      OBJECTIVE OF THE STUDY

The aim this research work is to evaluate the relevance of auditing in the face of increasing fraudulent practices in Nigerian public service with specific reference to Ministry of health Enugu state. The general objectives of this research work includes the following;

1.  Evaluate the rate of fraudulent practices in Enugu state ministry of health.

2.  To examine the role of auditing in controlling fraud in Nigeria public service.

3.  To examine the effect of fraud on the growth and development of Nigerian public service.

4.  To identify the causes of fraud in Enugu state ministry of health. And also suggest possible ways of detecting and controlling fraud in Nigerian public service and Enugu state ministry of health in particular.

1.4  SIGNIFICANCE OF THE STUDY

This research work will be of immense help to:

The Researcher: it will help the researcher to know more the relevance of auditing in the face of increasing fraudulent practices in Nigerian public service.

Stake Holders: It will serve as an eye opener to the stake holders and management of public enterprises in the area of identifying the relevance of auditing in the face of increasing fraudulent practices in Nigerian public service  as well as possible ways forward.

The country at large: This study will be of great importance to the country Nigeria as it will help the policy makers to prorogate laws that will guide the activities of public organization.    

1.5   SCOPE OF THE STUDY

The study shall focus on the relevance of auditing in the face of increasing fraudulent practices in Nigerian public service with specific reference to Enugu state ministry of health.

1.6 RESEARCH HYPOTHESES

The research formulated the following hypotheses to enable him carry out extensive study on the subject matter;

Ho: The rate of fraudulent practices in Enugu state ministry of health is very low.

H1: The rate of fraudulent practices in Enugu state ministry of health is very high.

Ho: Auditing does not play any role in controlling fraud in Nigeria public service.

H1: Auditing plays role in controlling fraud in Nigeria public service.

Ho: Fraudulent practices does not have any effect on the growth and development of Nigerian public service.

H1: Fraudulent practices has significant effect on the growth and development of Nigerian public service.

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